Needham reiterates Alphabet stock rating on Waymo concerns
Needham has maintained a Buy rating and a $450.00 price target for Alphabet stock (NASDAQ:GOOGL), but they have concerns regarding the company's investment in Waymo, the autonomous vehicle unit. Analyst Laura Martin anticipates Alphabet will spend around $4 billion on Waymo by the end of 2028, alongside ongoing losses. This follows Alphabet's decision to allocate $200 billion for annual AI-related capital expenditures.
Despite a market cap of $3.86 trillion and a 20% revenue growth over the past year, Alphabet is currently valued at $100 billion for Waymo. Martin suggests that Waymo is merely a distraction for Alphabet in the AI race and proposes offloading hardware costs to a third party or spinning off part of Waymo while retaining data rights.
The firm believes capital should be focused on AI over the next three years to safeguard Alphabet's share price. Alphabet appears undervalued according to InvestingPro analysis, with a recommendation to consult a comprehensive Pro Research Report for further insights.
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