Alphabet reaches $170? 1 Wall Street analyst thinks so

Alphabet (GOOG 1.57%) (GOOGL 1.50%) is down significantly from its previous peak in recent months as concerns about new search competition, excessive spending on artificial intelligence (AI) infrastructure and the broader health of the economy pressured the stock lower. Shares are now down 22% from their July peak.

Some see a buying opportunity in this selloff, and one Wall Street analyst recently weighed in on coverage of the stock.

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DA Davidson is bullish on Alphabet

DA Davidson initiated coverage of Alphabet with a neutral rating this morning, arguing that the core search business faces growing threats and the valuation will be based more on the rest of the business, including Google Cloud, which has recently become profitable.

Davidson analysts also said the company is at a crossroads with AI, and Alphabet and its big tech peers have recognized how high the stakes are in the new technology. Despite the general caution, Davidson gave the stock a price target of $170, implying a 13% upside for the stock.

Is Alphabet stock a buy?

In addition to challenges for AI start-ups like Perplexity and now OpenAI search product SearchGPT, Alphabet is also facing an antitrust lawsuit after a judge found Google’s search business to be an illegal monopoly.

Alphabet shares look cheap, trading at a price-to-earnings ratio of 21. The company also has a history of coming back from selloffs, rewarding buyers who have fallen short in the past.

Barring a significant antitrust ruling such as a breakup, the stock appears to be a good bet to recoup its recent losses as the business remains robust and growing.

Davidson makes a good point about the long-term risks facing stocks, but those could take years.