Piper Sandler ups Alphabet, Reddit stock targets on positive ad checks

Piper Sandler has raised its price targets for Alphabet to $285 and Reddit to $290, while reiterating Overweight ratings, citing distinct positive developments for both companies. Alphabet's upgrade is attributed to a favorable U.S. antitrust ruling that removed a long-standing overhang, alongside accelerating ad spending trends and expectations for its Gemini AI model to achieve market leadership. For Reddit, the increased target reflects stronger advertising performance, including a 5.7% rise in August spend, and significant upside potential from data licensing, which Piper Sandler believes could substantially exceed current Street expectations.

Analysis

Piper Sandler has issued a strongly positive outlook on both Alphabet (GOOGL) and Reddit (RDDT), reiterating Overweight ratings while significantly raising price targets to $285 for GOOGL and $290 for RDDT. For Alphabet, the upgrade is predicated on three core factors: a favorable U.S. antitrust ruling that avoided major structural remedies like divestitures, thereby removing a long-standing valuation overhang and warranting a multiple re-rating; accelerating advertising spending, with firm data pointing to low-double-digit growth for YouTube and mid-single-digit growth for Search into Q3 2025; and high conviction (over 75% chance) that its Gemini model will secure a top position among large language models by the end of 2025, driving further multiple expansion. For Reddit, the bull case is driven by strengthening advertising performance, evidenced by a 5.7% increase in August ad spend and a 3% rise in monthly active users on its Ads Manager. Crucially, the analysis highlights a significant, and likely underappreciated, revenue opportunity from data licensing to AI companies, with estimates suggesting potential revenue could be 'well above' the $150 million currently forecasted by the Street.

Key Decisions for Investors

• Given the favorable U.S. antitrust ruling that removes a major overhang for Alphabet, investors should re-evaluate the stock's potential for multiple expansion, as a key investment risk has now been mitigated.
• Investors should assess the significant upside potential in Reddit from its data licensing opportunities, which the analysis suggests could generate revenue far exceeding the current Street consensus of $150 million.
• The accelerating advertising trends for both companies, with YouTube's spend expected in the low double digits and Reddit's August spend up 5.7%, provide a strong fundamental tailwind that supports the bullish outlook from the analyst.
• The perceived leadership potential of Alphabet's Gemini AI is cited as a key driver for future multiple expansion, making its competitive progress a critical factor to monitor for long-term holders.