In Ruth Porat's first full quarter as Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) CFO the company not only continued its recent trend of cost management but also developed a willingness to return capital to shareholders in a new buyback plan. Since revenue growth is accelerating while operating expenses remained stable (as a % of revenue) there is no need to add more spice to the mix yet management decided to implement a buyback that is 2 times the size of Pandora's marketcap.

The improved results combined with shareholder friendly actions and increasing visibility into a company that was once a black box, makes an increase in valuation reasonable. Taking it one step further, with earnings growing at 25% next year, a P/E ratio expanding to 30 is very reasonable. If Heather Bellini's estimates set the pace for consensus (which they often do) and next year's EPS consensus is $35, a 30 multiple would offer a price target of over $1000.

Despite its size, top line growth is getting stronger driven by a shift to mobile clicks and expanding traffic and margins at Youtube. Revenue growth actually accelerated to 21% Y/Y from +18% Y/Y growth 2Q15.

Alphabet's $5.1 billion share repurchase authorization sounds massive but in reality, it accounts for only 1% of the current market cap leaving the balance sheet large enough to engage in acquisitions.

JP Morgan analyst , Doug Anmuth, believes that "YouTube will capture more video dollars shifting online", and that "Google Play strength will continue" allowing the company to grow revenues between 18 and 22% through 2017. He reiterated his Outperform rating and raised his PT to $900.

Goldman Sachs analyst, Heather Bellini, is encouraged that the company is "including capex (in addition to revenue and profitability) with its segment reporting", a testament to management’s commitment to better transparency. She maintained her Buy rating and raised her PT to $800 from $750.

Wedbush analyst, James Dix, is more conservative on the name because he is not convinced that ad budgets are expanding as rapidly as Alphabet's top line which would limit upside in future quarters. He maintained his Neutral rating but raised his price target to $740 to account for the upside in the quarter.