KTX Remains Positive on Alphabet’s Cloud Business, Seeing 33% Upside to GOOG80 DR

Krungthai XSpring Securities (KTX) highlighted that Alphabet’s recent Q2 2026 results were stronger than expected, propelled by exceptional growth in the Cloud segment and ongoing AI adoption. Despite Alphabet’s positive momentum—with total revenue surging 24% year-on-year to $119.8 billion and twelve straight quarters of double-digit growth—the stock faced pressure, dropping 6.89% yesterday (Thursday). The broker notes that Google Cloud revenue soared 82% YoY, significantly outpacing forecasts, backed by enterprise demand for AI infrastructure and solutions. Operating margin improved to 34%, driving normalised earnings per share up 32% to $2.85. Including unrealised investment gains, EPS would reach $9.11, representing a sharp 294% YoY gain. Alphabet’s aggressive investment strategy, especially in data centers, led management to raise its 2026 capital expenditure target to $195-205 billion from $180-190 billion, resulting in negative free cash flow for the first time in several quarters. This near-term financial pressure, according to Krungthai XSpring, weighed on share price performance. However, Krungthai XSpring believes the current pullback was a short-term negative sentiment over the financial concerns. The broker maintains a positive outlook and a target price of $432.15 for GOOG, citing the accelerating Cloud business and strong core growth as key reasons for optimism. Meanwhile, KTX set a target price for GOOG80, a depositary receipt of Alphabet in the Thai stock market issued by KTB, at THB 7.20 per share, representing a 33% upside from the current trading price at THB 5.40 per share.