Alphabet (GOOG, GOOGL) will report its earnings for the second quarter of 2023 on the Tuesday after the market closes.
Investors will be looking forward to parent company Google’s cloud growth, advertising revenue, and of course, its artificial intelligence efforts.
Here’s what Wall Street analysts expect to see from key metrics for Alphabet, as compiled by Bloomberg:
he won: $72.75 billion expected
EPS: expected $1.32
Google Ads Revenue: $57.45 billion expected
YouTube Ads Revenue: $7.41 billion expected
Google Cloud revenue: $7.83 billion expected
operating income: $19.94 billion expected
Overall, the outlook for Alphabet will be somewhat muted this cycle, JPMorgan analyst Doug Anmuth wrote July 20 in a note to investors.
(Read more: Big Tech earnings: Everything you need to watch)
“Sentiment remains somewhat muted, and AI will continue to be a contentious topic for investors, particularly whether GOOGL can generate incremental income through generative research in AI (we think yes),” he wrote. “Accordingly, we believe GOOGL’s benchmark is lower than that of other megatechnologies. However, beyond accelerating revenue, the 2H drivers for GOOGL are less clear, and progress on cost optimization and AI narratives could take several quarters.”
This revenue acceleration is likely to be seen in the company’s advertising revenue, which is expected to see a slight uptick as last year’s digital advertising slowdown begins to plateau. Last quarter, Big Tech competitor Meta (META) made it clear that the digital advertising slowdown was almost entirely over.
Cloud revenue will also be key – in the first quarter of 2023, Google Cloud is profitable for the first time, with the division growing 28%.
Artificial intelligence and regulators loom large in Alphabet’s long-term plans
Artificial intelligence has been a general tailwind in technology and is particularly and inseparably linked to Alphabet.
Since 2022, Alphabet has been pitted against artificial intelligence company Microsoft (MSFT), which has relaunched the Bing search engine after doubling its investment in ChatGPT maker OpenAI. Although Google still has a lot more users than Bing, Microsoft has managed to get back in the game, facilitating questions from Some analysts About Google’s ability to innovate.
Google co-founder Sergey Brin It said Alphabet has become increasingly involved as Alphabet has sought to step up its AI game.
Notably, Alphabet — and Big Tech in general — has also been in the crosshairs with regulators recently. For example, the leading regulator in the European Union, the European Commission, is interested in breaking up Alphabet’s advertising technology business. The alphabet is Also in talks with EU regulators About creating guardrails on artificial intelligence. In addition, in January, the US Department of Justice Lawsuit against Googleclaiming the company’s monopoly on online advertising.
Alphabet shares are up about 36% year-to-date.
Ali Garfinkel Senior Technical Correspondent at Yahoo Finance. Follow her on Twitter at @employee and on linkedin.
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