Alphabet, the parent company of Google, is gearing up to release its earnings report after the closing bell on Thursday, making it one of many Big Tech companies reporting this week. Analysts are predicting that the company will post earnings of $1.51 per share on revenue of $78.59 billion for the first quarter. This would represent a 29% growth in earnings per share and a 12.6% growth in revenue year-over-year. Investors have been particularly pleased with Alphabet’s performance in its cloud business, as well as its investments in artificial intelligence tools and technologies.
When analyzing Alphabet’s earnings report, analysts will be closely monitoring the revenue generated from the Google Cloud business, YouTube ads, and traffic acquisition costs. Additionally, updates on the company’s AI products and advertising trends will be of particular interest, especially given the current landscape of the digital advertising market. Other companies in the tech sector, such as Meta Platforms, have already set expectations with their earnings reports, with Meta indicating heavy spending to meet its AI goals.
Despite uncertainties in the market, analysts generally hold a positive view on Alphabet stock. Approximately 80% of analysts covering the stock have given it a buy or overweight rating, with consensus price targets suggesting a 5.5% upside from the previous day’s closing price. Analysts like Brent Thill from Jefferies remain bullish on Alphabet, anticipating a strong first-quarter performance driven by a solid ad business and resilient consumer spending. Maria Ripps from Canaccord Genuity Capital Markets also maintains a positive outlook, expecting solid results from Google in the first quarter.
Recovery from Previous Earnings Performance
Alphabet faced a setback in its last earnings report, as its fourth-quarter revenue growth was the fastest since early 2022, surpassing analysts’ forecasts. Despite this, the company’s ad revenue for YouTube fell slightly short of expectations, leading to a 7.5% decline in share price following the earnings release. With competition from platforms like TikTok and evolving user behaviors, Alphabet is navigating a new landscape where regulatory challenges and increased competition pose significant risks.
One area where Alphabet continues to excel is in the realm of artificial intelligence. The company has been actively investing in AI technologies, both as an innovator and as an investor. In addition to releasing new AI products like the rebranded chatbot Gemini, Alphabet has also integrated AI capabilities into existing products like Google Maps. Last year, Google committed to investing $2 billion in Anthropic, a competitor to OpenAI, further solidifying its position in the AI space.
Alphabet’s upcoming earnings report is eagerly anticipated by investors and analysts alike, with a focus on key areas such as cloud growth, ad trends, and AI developments. Despite past challenges, the company’s strong performance in key areas like its cloud business and AI investments continue to drive positive sentiment among analysts. As Alphabet navigates a rapidly changing tech landscape, its ability to innovate and adapt to new challenges will determine its future success in the market.