Alphabet (GOOG, GOOGL) is expected to report quarterly results after the bell on Thursday, continuing a big week for U.S. tech giants emerging from a punishing run on Wall Street. The company is expected to offer updates on the race to turn massive AI investments into new revenue streams and the state of the massive digital advertising market.
Alphabet’s report will come a day after advertising rival and Big Tech peer Meta (META) offered downbeat forecasts for the second quarter and noted that spending for the year is increasing and it will be some time before that investments in AI generate significant revenue. Meta stock fell 14% after the results.
Wall Street’s reaction underscored the high expectations investors have for the tech giants and indicates that Google will also be closely scrutinized for any perceived missteps.
Here’s what Wall Street expects for some of Alphabet’s most important metrics for the company’s fiscal first quarter, according to Bloomberg data:
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Revenue, excluding traffic acquisition costs: $66.07 billion expected ($58.07 billion in Q1 2023)
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Adjusted earnings per share: $1.53 expected ($1.17 in Q1 2023)
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Cloud revenue: $9.37 billion expected ($7.45 billion in Q1 2023)
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Advertising revenue: $60.18 billion expected ($54.55 billion in Q1 2023)
Heading into earnings season, Alphabet sits squarely in the middle when it comes to the stock performance rankings of the “Magnificent Seven,” gaining 15% so far this year — well ahead of Apple’s (AAPL) losses. ) and Tesla (TSLA), but below those of Meta. (META) and Nvidia (NVDA) saw significant percentage gains.
But even tech sector winners are under pressure.
Many of the biggest names in the market are just coming back from a mid-month losing streak. Worried investors heeded warnings that the Fed could keep interest rates high for several more months and perhaps the rest of the year.
Cooling sentiment on Wall Street raises the stakes for tech profits this week and next. Robust company updates could further insulate tech giants from broader interest rate concerns, giving the market another reason to reignite the stock rally. But Silicon Valley’s lackluster results could exacerbate uncertainty. And with these high-flying companies, even good performance may not be enough against a near-perfection standard.
Analysts expect Alphabet’s revenue to rise more than 13% from the same period last year, following last quarter’s strong results and leaving behind single-digit growth that defined much of 2023.
Google has put a lot of effort into both augmenting its search tools with AI and offering new, extensive and advanced language models, like Gemini. Analysts will seek to assess the company’s progress in AI integration and better understand the costs of developing sophisticated AI technologies. Capital spending is expected to exceed $10 billion for the quarter.
Last year, Google was widely seen as playing catch-up to Microsoft (MSFT), which was among the first in…
