Alphabet Could Beat Q2 Estimates on Cloud Strength, Anthropic Gain: BofA

Bank of America has raised its earnings estimates for Alphabet Inc. (NASDAQ:GOOGL) for the second quarter, predicting the company will beat expectations due to robust growth in its cloud computing business and a sharp increase in the value of its stake in AI company Anthropic.

Rating Change

Bank of America maintained its "Buy" rating on Alphabet stock while raising earnings per share estimates. The report did not specify a new price target, but the bank believes the stock is undervalued.

Analyst Rationale

Analysts at Bank of America see accelerating growth in Google Cloud, boosting Alphabet's revenue. Additionally, the sharp rise in Anthropic's valuation—in which Alphabet holds a stake—has led to an unexpected increase in asset value.

Context

Investors are closely watching Alphabet's Q2 results amid intense competition with Microsoft and Amazon in the cloud market. Alphabet's investments in AI, including its stake in Anthropic, provide a competitive edge. The stock (GOOGL) is trading near its 52-week high.

What to Make of It

Bank of America's outlook suggests Alphabet is well-positioned for a strong Q2, but investors should monitor developments in cloud and AI sectors closely.