Piper Jaffray analyst, Gene Munster, thinks that core Google (NASDAQ: GOOG) (NASDAQ: GOOGL) EBITDA margins could be 500-800 bps higher, (mid to high 50% range) for Q4 as investors separate the core business from the "moonshots". This focus on margins could propel the stock to the analyst's unchanged price target of $812. Google reports Monday after the market close.

During the Q2 earnings call, CFO Ruth Porat mentioned that she does not believe revenue growth and expense management are inconsistent goals. They believe many investors were encouraged by that message given the relative maturity of the core business. While less important than the company's segment profitability disclosure or overall revenue, continued emphasis on this message would be viewed positively by investors.

For the first time in Q4, Alphabet will disclose additional segment information about the profitability of its core Google business and investment in its other businesses. Last quarter, Google's CFO stated that the other segment would include Access (Fiber), Energy, Life Sciences, Nest, investment arms (Google Capital/Google Ventures) and X (autonomous vehicles, etc). We believe the company's prior 70/20/10 commentary about investment points to "other bet" investments of $3-5B in total annual expenses. If those projections are accurate, it would imply core Google EBITDA margins would be 500-800 bps higher than reported assuming minimal revenue from the other bets.

No change to Overweight rating and $812 price target.

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Shares of Alphabet closed at $742.95 yesterday.