Alphabet (GOOG, GOOGL) is scheduled to report quarterly results after the bell on Tuesday, beginning a big earnings week for the U.S. tech giant after a volatile run on Wall Street.
The company is expected to provide an update on its efforts to turn large-scale AI investments into new revenue streams and its position in the large-scale digital advertising market.
Here’s what Wall Street expects from some of Alphabet’s most important metrics in its fiscal third quarter, according to Bloomberg data.
Revenue: $86.44 billion forecast ($76.69 billion in Q3 2023)
Adjusted earnings per share: $1.83 expected ($1.55 in Q3 2023)
Cloud revenue: $10.79 billion forecast ($8.41 billion in Q3 2023)
Advertising revenue: $65.5 billion expected ($59.65 billion in Q3 2023)
Last year, Google was widely seen as trying to catch up with Microsoft (MSFT), which was early to enjoy the cultural excitement around consumer AI chatbots in the tech industry. But since then, Google has sought to improve its leadership position. Earlier this month, Alphabet CEO Sundar Pichai sent a memo to employees outlining a new internal restructuring that would change staffing to prioritize AI development.
And last week, The Information reported that the company is developing AI-driven technology that can take over your web browser and complete tasks like purchasing products and booking flight tickets. According to reports, Google could preview the technology as early as December.
Analysts will likely look into the company’s progress on AI integration to get a better idea of the cost of developing advanced AI technology. Capital spending for the quarter is expected to exceed $12 billion.
Earlier this month, Alphabet CEO Sundar Pichai sent a memo to employees discussing personnel changes to prioritize AI development, including bringing the Gemini apps team under Google DeepMind. (AP Photo/Alastair Grant) · ASSOCIATED PRESS
Industry observers also expect expansion of Google’s cloud business, an increasingly important area for investors because of its use in developing artificial intelligence. Wall Street expects Google Cloud’s revenue to reach nearly $11 billion, an increase of about 28% year-over-year.
“We believe GOOGL has the best cloud infrastructure for the AI era, allowing us to better manage our cost profile compared to other cloud providers, while also benefiting from numerous new revenue opportunities. ” said Angelo Zino. CFRA Research equity analysts said in a note.
Alphabet’s report arrives at a turbulent time for the company.
Earlier this month, the U.S. Department of Justice said in a court filing that it may recommend breaking up the company to increase competition in the search engine market. The Justice Department plans to submit a more detailed document outlining its proposed relief by Nov. 20.
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Megacap revenues fell just a week before a close race between former President Donald Trump and Vice President Kamala Harris, adding an additional element of unpredictability.
Alphabet is in the bottom half of the Magnificent Seven, up 20% since the beginning of the year. That’s well below the impressive gains of Meta Inc. (META) and Nvidia Inc. (NVDA), but ahead of Tesla Inc. (TSLA) and Microsoft Inc. (MSFT). ) increases of 14% and 10%, respectively.
Some analysts who are bullish on the stock see its relatively affordable price as an attractive factor.
“While we do not believe the upcoming quarterly report is likely to be a catalyst for Alphabet, the stock’s price remains low at current levels, trading below market multiples,” Wedbush analysts said in a preview note. “I think it’s attractive,” he said.
“We believe Alphabet could expand multiple businesses in the coming quarters and years as investors gain more comfort regarding regulatory risks and the impact of generated AI in Google search.”
Hamza Shaban is a reporter for Yahoo Finance, covering markets and economics. Follow Hamza on X @hshaban.
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