Google parent company Alphabet is scheduled to release its earnings report after the market closes on Thursday, adding to the lineup of Big Tech companies reporting this week. Shares of the tech giant have seen a significant increase, up by 13.9% in the current year and a staggering 50% over the past 12 months. Investors have been pleased with Alphabet’s growth in its cloud business, artificial intelligence investments, and tools. The recent layoffs at the company have also been well-received by investors.
Analysts polled by LSEG are anticipating earnings of $1.51 per share on revenue of $78.59 billion for the first quarter. This represents an expected growth of around 29% for earnings per share and 12.6% for revenue year-over-year. Apart from the headline figures, analysts are particularly interested in Alphabet’s revenue from the Google Cloud business, YouTube ads, and its traffic acquisition costs. Updates on the company’s AI products and advertising trends will also be closely watched.
Analysts are generally positive on Alphabet stock, with around 80% of them rating it as a buy or overweight. Consensus price targets suggest a 5.5% upside from Wednesday’s closing price. Jefferies analyst Brent Thill remains bullish on Alphabet, expecting a strong first-quarter performance driven by a robust ad business, resilient consumer spending, and likely in-line cloud demand. Thill has a buy rating and a $180 price target on the stock.
Canaccord Genuity Capital Markets analyst Maria Ripps also has a buy rating on Alphabet stock with a $190 price target. Ripps anticipates solid Q1 results for Google, with advertising revenue growing at a low double-digit rate year-over-year. She also expects the Cloud segment to maintain healthy mid-20s% year-over-year growth in the first quarter. With improving momentum in the core ad business and increased visibility into potential AI tailwinds, there is optimism for Alphabet’s future growth prospects.
Alphabet faced a post-earnings slide in the fourth quarter, with ad revenue for YouTube falling slightly below Wall Street estimates. Despite this, the company reported its fastest revenue growth since early 2022, with revenue reaching $86.31 billion, a 13% increase from the previous year. Earnings for the period were $1.64 per share, surpassing analysts’ expectations. The stock experienced a 7.5% decline following the fourth-quarter earnings report.
Alphabet is grappling with changing user behavior, growing competition, and increasing regulatory challenges. The company’s search boss, Prabhakar Raghavan, acknowledged these challenges while addressing employees recently. With a focus on AI, Alphabet is both innovating and investing in the technology. The company recently introduced its rebranded generative AI chatbot and voice assistant Gemini, as well as incorporating new AI capabilities into products such as Maps. Additionally, Alphabet made a significant investment in OpenAI competitor Anthropic.
Alphabet’s upcoming earnings report is highly anticipated as investors and analysts await insights into the company’s performance across various segments. With a track record of strong growth and successful investments in AI and cloud technologies, Alphabet remains a key player in the tech industry’s ever-evolving landscape.