Analysts at Mizuho express optimism regarding Alphabet’s (NASDAQ:GOOGL) cloud revenue growth and operating margins, as outlined in a recent note. Despite maintaining a Buy rating and a price target of $155 per share, the analysts point out key operating metrics that lead to their positive stance.

In terms of cloud revenue, Mizuho conducted an AWS case study on cost optimization, indicating a potential decline in Google Cloud’s revenue growth in the near future. This could result in performance below Street expectations. Regarding operating expenses (opex), Mizuho suggests that consensus estimates may not fully account for challenges related to NFL Sunday Ticket licensing costs and potential legal expenses in the fourth quarter of 2023. Additionally, Mizuho notes that continued investments in AI may limit margin expansion for FY24.

While Mizuho acknowledges the possibility of negative earnings revisions, they emphasize that the long-term fundamentals of the company remain intact.