Key Takeaways
- Alphabet shares have tumbled approximately 11.6% in the last month, including an 8% decline in just one week.
- Nobel laureate John Jumper and other top DeepMind scientists have departed for competitors Anthropic and OpenAI.
- Jefferies maintains its Buy recommendation with a $445 target, describing the decline as “tactical rather than fundamental.”
- The company delivered impressive Q1 results: $5.11 earnings per share and $109.9 billion in revenue, surpassing analyst forecasts.
- Wall Street remains optimistic: 47 out of 54 analysts recommend buying GOOGL, with a consensus target of $413.13.
Alphabet (GOOGL) shares started Monday trading at $337.39, marking a steep 11.6% decline over the previous month as a series of high-profile departures from its AI division shook market sentiment.
The downturn intensified last week with an 8% weekly plunge after reports emerged that John Jumper, the Nobel Prize-winning scientist serving as Vice President at Google DeepMind, would be joining rival Anthropic.
Jumper’s exit marks the second major departure from DeepMind in rapid succession. Previously, Noam Shazeer, co-lead of the Gemini project, moved to OpenAI — barely two years after Google essentially invested $2.7 billion through the Character.AI acquisition to lure him back.
Adding to the exodus, Alphabet’s Head of AI Go-to-Market has also transitioned to OpenAI.
These departures have fueled investor anxiety that Google may be falling behind in the artificial intelligence arms race against a new generation of heavily-funded competitors preparing for public offerings.
Jefferies Urges Investors to Stay Calm
Jefferies analyst Brent Thill remains unfazed by the recent turbulence. On June 22, he reaffirmed his Buy rating while maintaining a $445 price target, viewing the selloff as an opportunity to reinforce his optimistic stance.
Thill identified three primary drivers behind the stock’s weakness: the researcher departures, institutional investors rotating away from Magnificent 7 stocks in anticipation of upcoming AI startup IPOs, and valuation multiples normalizing from previously stretched levels.
Regarding the talent drain specifically, he characterized the “musical-chairs dynamic” among AI researchers as an industry-wide phenomenon rather than a problem unique to Google.
He also acknowledged the company’s recent $85 billion equity offering as creating “near-term overhang,” noting it reflects heightened AI infrastructure investment and temporary market imbalances.
Nevertheless, Thill views the current rotation as purely tactical. “Headline-driven pullbacks like this one create noise, but the bottom line is unchanged: the AI franchise is intact, the bench is deep,” he stated.
Financial Performance Remains Robust
Despite the talent-related headlines, Alphabet’s core business metrics continue to impress. The company posted Q1 earnings per share of $5.11, crushing the consensus estimate of $2.64 by a substantial margin. Revenue reached $109.9 billion, exceeding the $106.98 billion forecast.
Net profit margin stood at 37.92% while return on equity reached 38.99%. The Street anticipates full-year earnings per share of $14.30.
Thill’s investment thesis centers on Alphabet’s unmatched distribution advantages — five distinct products each boasting more than three billion users — coupled with its proprietary TPU chip technology, which materially reduces computational expenses. A “competitive Gemini” model, he contends, is sufficient. Leading the model rankings isn’t necessary.
Wall Street consensus largely supports this view. Among 54 analysts covering the stock, 47 assign Buy or Strong Buy ratings, with only five recommending Hold.
The mean 12-month price target stands at $413.13 — approximately 27% above current trading levels. Guggenheim maintains a $450 target, Loop Capital projects $490, and Needham reiterated its Buy rating at $450 on June 3.
Alphabet has also increased its quarterly dividend to $0.22 per share, distributed on June 15, up from the previous quarter’s $0.21.
The shares have traded between $171.73 and $408.61 over the past 52 weeks, with the 50-day moving average currently at $368.94.
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