Google stock may benefit from anticipated job cuts, according to Piper Sandler.

According to analysts at Piper Sandler, Alphabet, the parent company of Google, is poised for a significant stock price increase due to anticipated cost-cutting measures.

The firm believes that reductions in both headcount and operational expenses could help mitigate ongoing antitrust challenges faced by the company.

Piper Sandler noted, “While we have previously discussed Alphabet’s antitrust situation, which we consider complex yet manageable, the arrival of new CFO Anat Ashkenazi presents a fresh opportunity to control expenses.”

Analysts identified a key opportunity in Ashkenazi’s potential to streamline the company’s expenditures. Their analysis benchmarks Alphabet against 17 other technology companies and explains that there is a clear path to savings primarily through “moderating headcount” and “lower operational expenses per employee.”

The firm’s findings suggest that these cost reductions could positively impact Alphabet’s stock performance, projecting a potential upside of around 12%. This prospect is particularly appealing in light of Google’s recent stock underperformance.

Piper Sandler elaborated on the broader tech industry, noting that layoffs last year reached 317,000—a 31% increase year-over-year. However, they observed that the combined headcount among 17 major tech firms remains only slightly below peak levels, indicating that the industry is not as lean as the high-profile layoff figures might suggest.

They also indicated that Alphabet’s cost of revenue per employee, at $820,000, exceeds the average of $570,000, which may be deemed appropriate. Conversely, the operational expenses per head at $510,000 are considerably higher than average.

The firm concluded that there is significant opportunity for Alphabet to reduce its workforce and lower operational expenses. Piper Sandler maintained its Overweight rating and set a price target of $200 for Alphabet’s stock.