Alphabet Stock’s Q4 Outlook Alphabet’s Fiscal Q4 2023 Outlook: Above the Rest or Lost in the Crowd?

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Alphabet (NASDAQ: GOOG) is set to unveil its fiscal Q4 2023 results on Tuesday, January 30, 2024. Market consensus expects revenues to tread just below expectations, while earnings may fall short. Despite an 11% surge in top-line figures last quarter, propelled by robust performances in Google Search, Google Cloud, and Google Other segments, the question remains – can the tech giant counter the erratic stock performance that led to a 40% outperformance of the S&P 500 since the start of 2023? The road ahead is anything but certain in the tumultuous macroeconomic climate. Will Alphabet manage to maintain its stellar performance, or is it poised for a stumble?

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The Perilous Path of Prior Performance

In the ever-unpredictable world of stocks, Alphabet’s journey has been a roller-coaster ride. With returns of 65% in 2021, a staggering -39% in 2022, and a solid 59% in 2023, Alphabet’s stock performance has been far from consistent. Unsurprisingly, taming the S&P 500, especially during turbulent times, remains an arduous task for all heavyweights in the Communication Services sector. From META, NFLX, and TMUS to TSLA, MSFT, and AMZN, the struggle to consistently outperform the S&P 500 has been the same. This unpredictable terrain raises a crucial question – can Alphabet conquer the S&P 500 barriers or will it succumb to market pressures, regressing into the shadows of uncertainty?

A Glimpse Into the Future

Trefis projects Alphabet’s valuation at $148 per share, a marginal 1% dip from the current market price of approximately $150.

What Lies Ahead in Q4?

Despite an impressive 7% year-on-year growth to $221.1 billion in the first three-quarters of FY2023, Alphabet’s Google search and other segments have faced a slower climb amidst a challenging macroeconomic environment.

  • Google Cloud and Google Other segments witnessed robust revenue hikes of 26% and 18% respectively. The looming question is whether the Q4 results will echo these patterns.
  • Overall, the forecast predicts Alphabet’s revenues to reach $306.1 billion in FY 2023.

Trefis anticipates Alphabet’s fiscal Q4 2023 net revenues to hover around $84.96 billion, fractionally below the $85.23 billion consensus estimate.

Furthermore, the adjusted earnings per share (EPS) for Q4 2023 is expected to be $1.56, marginally lower than the consensus of $1.59. This aligns with the trend of a 15% year-on-year surge in adjusted net income to $53.1 billion in the first nine months of FY 2023.

What Signals Are In The Stock Price?

Using an EPS estimate of around $5.72 and a P/E multiple of just below 26x in fiscal 2023, Alphabet’s valuation sums up to $148, culminating in a 1% deficit from the current market price.

Returns Jan 2024
MTD [1]
Since start
of 2023 [1]
2017-24
Total [2]
GOOG Return 7% 69% 290%
S&P 500 Return 2% 27% 118%
Trefis Reinforced Value Portfolio 0% 38% 609%

[1] Returns as of 1/25/2024
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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