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KeyBanc analysts said Alphabet's (GOOGL) - Get Alphabet Inc. Class A Report biggest source of long-term opportunity is machine learning and artificial intelligence.

Benefits from these machines will be Alphabet's biggest incremental driver and largest source of efficiency across businesses. KeyBanc said Alphabet is an early leader in the machine learning and AI space given its "investment and massive amounts of consumer data."

Analysts said in a Tuesday note that Alphabet's ad growth outlook remains strong and growth opportunities for YouTube and cloud services are significant. They rate Alphabet as "overweight" with a $1,100 price target. That implies a 10% upside from Monday's closing price.

Alphabet stock traded down over 2.5% premarket Tuesday following second quarter earnings that showed rising costs might hinder profit margins.

Alphabet is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells GOOGL? Learn more now.

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