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Analysts and investors are breathing a slight sigh of relief after Alphabet's latest quarterly earnings release, as the results eased concerns about the company's progress in artificial intelligence and the state of Big Tech following a sell-off in the broader sector. The Google parent company reported a first-quarter profit that exceeded profit and revenue expectations. The search engine giant also announced its first-ever dividend and a $70 billion buyback, sending its shares up 10% to a record high on Friday. Analysts at major companies ranging from UBS to Bank of America were encouraged by the accelerated growth in Google Search, Cloud and YouTube that the company reported in the previous quarter. Some touted Alphabet as the next big AI play and believe the tech giant has plenty of room to grow. At the same time, some wondered how well the stocks can do this consistently against the backdrop of such large AI spending. GOOGL YTD pile of Google shares this year. JPMorgan analyst Doug Anmuth reiterated his overweight rating and raised his price target by $35 to $200. He said he is “incrementally positive” about the tech giant's ability to deliver strong revenue growth and realize profits from its efforts to reshape its cost structure. He expects Alphabet to increase its spending to about $50 billion this year to support its AI ambitions in collaboration with its peers. “In AI, we believe that after what appeared to be a year or more of lagging behind, Google is starting to go on the offensive,” Anmuth wrote in a note. “The company is starting to put AI responses on the main search results page and is seeing an increase in search engagement and satisfaction among AI users.” “Management also expressed confidence that the shift to generative AI in Search will increase opportunities in the search market, just as GOOGL saw with the shift to mobile and voice,” Anmuth added. Barclays analyst Ross Sandler also shares a bullish view on the stock. “Google is in a sweet spot to accelerate growth, expand margins while shipping products faster, and return capital — essentially proving the naysayers wrong,” Sandler wrote in a note Thursday, adding adding that market slowdown and competition are some of the threats that could pose a threat. the share, but not in the short term. Sandler maintained its overweight rating and raised its price target by $27 to $200, implying a potential upside of 28% from Thursday's close. Brent Thill of Jefferies maintained a buy rating and raised his price target by $20 to $200, saying the shares are trading at an attractive valuation. The acceleration of Google's core advertising and cloud revenues has been a bright spot for Thill, but the analyst remains wary of Google's spending – which is expected to rise more than 50% this year, fueled by AI investments. Oppenheimer analyst Jason Helfstein raised his price target $20 to $205 and maintained his outperform rating, citing Google's accelerating advertising business as a driver of operating leverage despite the company's significant investments in AI. Catalysts for the stock include increased revenue from YouTube and profitability at Google Cloud, the analyst said. He expects the company's net advertising revenue to increase at a compound annual growth rate of 9% between 2023 and 2026. Still, some analysts expressed some near-term concerns. Bank of America analyst Justin Post maintained his Buy rating and $200 price target, believing Alphabet is well positioned for the long term — even if current earnings suggest the company's “future growth rate could be more challenging.” “The quarter exceeded expectations for all major business units and supported a narrative shift: Google is benefiting from AI. Search is still not without disruption risks, but we remain constructive on Google's infrastructure, data and distribution benefits,” Post said in a statement note. . “We think a dividend will support a higher long-term multiple, but expect some slowdown in sector growth in the second quarter on a tougher quarter/quarter calendar.” Still, Post said Alphabet should trade at a higher price than its media peer group, given its technology leadership, high margins and strong cash flow generation for buybacks. UBS analyst Ken Gawrelski similarly praised Google's cost discipline and “overdue” dividend, but maintained a partially cautious stance on the stock. He noted that it is “not clear that GenAI can drive a major new product cycle” and that certain parts of advertiser demand could see a slowdown. He reiterated his neutral rating and raised his price target by $7 to $173, mainly due to growth in YouTube, which he believes will recover and add about $5 billion in revenue by 2024. Its target price suggests only about 11% potential. up compared to Thursday's closing price. “Accelerating search growth avoids our concerns about the slowdown of search, but does not change our view of the loss of digital ad share and the risks associated with a transition to search formats,” Gawrelski said in a note.