The recent decline in Alphabet shares is a great buying opportunity, according to one Wall Street firm.

Stifel raised its rating for Alphabet shares to buy from hold, citing its new growth opportunities including cloud computing.



Alphabet shares declined 4.8 percent Tuesday, a day after it reported its first-quarter earnings results. Analysts lowered profit margin projections for the company due to its aggressive investment plans.

"Alphabet continues to drive growth at scale through strength in mobile search, YouTube, and programmatic advertising, while investing in other key initiatives (cloud, hardware, AI) that should serve as multi-year growth levers," analyst Scott Devitt wrote in a note to clients Tuesday. "Alphabet's products seem to have more proven durability and utility in the lives of consumers than Facebook's products, as displayed in recent weakness of users and usage in Facebook's most mature and highly monetized market of North America."

Alphabet's stock were 0.5 percent higher at Wednesday's opening bell.

The analyst raised his price target for the company's shares to $1,234 from $1,150, representing 21 percent upside to Tuesday's close.

Devitt noted Alphabet's stock fell nearly 14 percent since its fourth-quarter earnings results in early February. He said the company's services are more important to the daily lives of internet users versus its industry peers.

"We are increasingly comfortable with Alphabet's positioning in the digital media space given Alphabet's private relationship with consumers and the high utility and durability of Google's core business. Current valuation levels offer a reasonable entry point for GOOGL share ownership," he wrote.

— CNBC's Michael Bloom contributed to this story.