Alphabet's (GOOG, GOOGL) next key catalysts following Q2 results are the launch of its Gemini 4 artificial intelligence model suite and greater visibility into its long-term Tensor Processing Unit, or TPU, revenue opportunity, Morgan Stanley said in a note Thursday.

The firm said the company is expected to launch its Gemini 3.5 Pro and Gemini 4 family of AI models, including lower-cost versions, to reassure investors that it remains on the frontier. However, the launch timeline is still unclear, the firm said.

"That said, management's comments about being focused on staying on the frontier and increasing the cadence of model shipping as we reach Gemini 4 (monthly) is notable," the firm added.

The firm also said the market is underestimating Alphabet's long-term opportunity in TPUs. It added that investors are overlooking both the scale of capital spending required and the potential revenue from cloud-hosted and third-party TPU sales.

Morgan Stanley kept the company's overweight rating but lowered the price target to $400 from $415.

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