Pivotal starts Google, Meta stock coverage at Buy

Investing.com -- Pivotal Research Group initiated coverage of Google owner Alphabet (NASDAQ: GOOGL) with a Buy rating, highlighting the company's strong competitive position and potential for growth in cloud computing and AI.

Google, which holds about 90% of the global search market share outside of China, is also recognized for its dominance in video/audio streaming through YouTube and its leading web browser, Chrome.

Google's search business was deemed a monopoly in August, and the Department of Justice (DOJ) and a judge are considering remedies that could significantly impact the company's ability to leverage its market position.

Despite this, Pivotal views the current valuation of Google as reflecting conservative post-2027 search revenue declines. Potential regulatory outcomes are not expected to be resolved soon, but Pivotal suggests that a Kamala Harris victory could lead to more favorable settlements for Google.

In a separate note, Pivotal also initiated coverage of Meta Platforms (NASDAQ: META) with a Buy rating, setting a year-end 2025 target price of $780.

Meta, known for its extensive portfolio of social media platforms including Facebook, WhatsApp, and Instagram, is praised for its management's ability to innovate and respond to competition.

“Looking forward we see a strong revenue growth outlook from increased usage/new products/better targeting/higher prices boosted by cost efficiencies (enabled by AI) and eventually materially declining Reality Labs losses combined with what appears to be an attractive valuation at 24X ’25 EPS,” Pivotal analysts said in the note.

The firm also acknowledges risks such as potential regulation and market dominance investigations, as well as the challenges posed by Google and Apple (NASDAQ: AAPL) in AI. Nevertheless, the investment firm believes that Meta's positives, including its aggressive management and attractive valuation, outweigh the potential negatives.

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