Alphabet Inc. Faces Expectations as Q3 Earnings Approach
Alphabet Inc. (GOOG), the parent company of Google, is gearing up to announce its Q3 earnings on Tuesday, Oct. 22. With a market cap of $2 trillion, this tech behemoth generates approximately 90% of its revenue from Google services, such as online advertising, YouTube subscriptions, and the Play Store. The remaining revenue is derived from Google Cloud, hardware sales, and innovative projects like Waymo and Verily.
Analysts Predict Strong Growth in Profits
Analysts anticipate a profit of $1.83 per share, reflecting an 18.1% increase from the previous year’s $1.55 per share. In recent quarters, Alphabet has consistently outperformed Wall Street’s earnings forecasts, surpassing estimates by 2.2% in the most recent quarter.
Future Earnings Outlook Appears Positive
Looking ahead to fiscal 2024, Alphabet is projected to report an EPS of $7.64, an increase of 31.7% from $5.80 in fiscal 2023. By fiscal 2025, EPS is expected to grow 13.1% year-over-year to reach $8.64.
Stock Performance Remains Mixed
GOOG stock is up 17.4% year-to-date, but it has underperformed compared to the S&P 500 Index’s ($SPX) 21.9% gains and the Communication Services Select Sector SPDR ETF Fund’s (XLC) 24.8% returns.
Investors React Cautiously to Recent Earnings
Despite reporting strong Q2 earnings, Alphabet’s stock dipped over 5% on Jul. 24 due to investor concerns over future guidance. Although the company reported earnings of $1.89 per share and revenue of $84.7 billion, management’s warnings about potential margin pressures from increased expenses in AI and tech infrastructure raised eyebrows. Additionally, the stock fell 2.4% on Aug. 14 following news that the U.S. Department of Justice was exploring a possible breakup of the company over antitrust concerns regarding its default search engine agreements.
Overall Sentiment Remains Optimistic
Despite the recent volatility, analysts maintain a positive outlook on Alphabet stock, reflecting an overall “Strong Buy” rating. Out of 47 analysts, 36 recommend “Strong Buy,” three suggest “Moderate Buy,” and eight recommend “Hold.” This is an improvement from three months ago when only 33 analysts had a “Strong Buy” rating. Currently, GOOG is trading below the average analyst price target of $202.43.
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On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
