Key insights
- Piper Sandler significantly raised its price target for Alphabet (GOOGL) based on strong growth in AI-assisted search citations, indicating rapid adoption and increased engagement. The firm also sees positive implications for Meta and Reddit. This AI-driven search expansion is viewed as a key growth driver for Alphabet, potentially boosting search revenue in the coming years and signaling a positive trend for companies leveraging AI in their platforms.
Investing.com - Piper Sandler raised its price target on Alphabet Inc. (NASDAQ:GOOGL) to $445 from $425 on Monday while maintaining an Overweight rating on the shares.
The firm published its first analysis of citations data across searches in Google’s AI Overview and AI Mode. The data shows AI-assisted search is expanding rapidly, with daily citations up approximately 16 times since early 2025.
Alphabet leads citation share at 19.2%, up 11 percentage points year-over-year, driven by YouTube and Google properties. The step-function growth in citations since early 2025 aligns with management commentary that AI Mode generates queries three times longer than traditional search and that queries are at all-time highs.
Piper Sandler raised its search revenue estimates by 1% in 2026 and 5% in 2027. The firm noted that citations does not equal search query or revenue growth per se, but the expansion is consistent with reported search revenue results.
The firm views the AI search expansion as most positive for Alphabet, Reddit, and Meta. A handful of companies are dominant content sources in the AI-assisted search environment. Meta, with a market capitalization of $1.61 trillion and trading at a P/E ratio of 22.85, has posted 26% revenue growth. According to InvestingPro analysis, the stock appears slightly undervalued relative to its Fair Value, placing it among opportunities on the most undervalued stocks list.
In other recent news, Meta Platforms Inc. has announced plans to introduce subscription offerings under the Meta One umbrella for its major consumer services. This development was disclosed through an Instagram post by Head of Product Naomi Gleit and covered by media outlets such as TechCrunch and Bloomberg. Additionally, Meta has partnered with Stripe to enhance its checkout experience, allowing buyers to complete purchases more efficiently using saved credentials. The company’s focus on expanding its enterprise AI initiatives has also been highlighted, with the establishment of a new Enterprise Solutions unit aimed at customizing AI tools for corporate clients.
BofA Securities reiterated its Buy rating on Meta, citing the potential of this AI expansion. Rosenblatt also maintained a Buy rating, setting a price target of $1,015.00, reflecting optimism about the subscription plans. Meanwhile, RBC Capital and Citizens both reiterated Outperform ratings, with RBC emphasizing Meta’s role in AI-enabled entrepreneurialism and Citizens focusing on the strategic partnership with Stripe. These developments indicate a strategic shift in Meta’s business model, which could influence the broader social media landscape.
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