Alphabet's earnings are coming up. Here’s what analysts are looking for

Google parent Alphabet is set to report earnings after the bell on Thursday, adding to the slate of Big Tech earnings this week. As of Wednesday's close, shares of the tech giant were up 13.9% this year, and they have surged 50% over the past 12 months, as investors have cheered the company's growth in its cloud business, as well as its artificial intelligence investments and tools. Alphabet's recent layoffs have also appeased investors. For the first quarter, analysts polled by LSEG are calling for earnings of $1.51 per share on revenue of $78.59 billion. On a year-over-year basis, that's an expected growth of roughly 29% for earnings per share and 12.6% for revenue. What the Street expects to see: AI, Cloud growth, ad trends Beyond the headline figures, analysts are paying close attention to Alphabet's revenue from the Google Cloud business, YouTube ads and its traffic acquisition costs. Updates on the company's AI products and ad trends will also be top of mind, particularly amid an apparently improving digital advertising market. Meta Platform's earnings on Wednesday shook the market , as the company indicated that it would be spending heavily to meet its AI goals . Analysts generally like Alphabet stock. About 80% of the analysts covering the stock rate it either buy or overweight, and consensus price targets suggest 5.5% upside from Wednesday's close, per FactSet. Jefferies analyst Brent Thill is staying bullish on Alphabet, expecting a solid first-quarter print with strong ad business, resilient consumer spend and likely in-line cloud demand, he said. He has a buy rating and a $180 price target on the stock, which he said has a reasonable valuation even after a slow start this year. “We would stay long GOOGL into 2H as we see it grind higher on improving momentum in the core ad business and as visibility improves into the eventual ('25?) AI tailwind,” Thill said in an April 19 note, adding that “Google Cloud could be the next break-out play for shares.” Canaccord Genuity Capital Markets analyst Maria Ripps kept her $190 price target and buy rating on the stock. “We expect Google to report solid Q1 results, with advertising revenue growing in the low double-digit rate y/y thanks to a combination of an easier comp, an improved macro backdrop for ad spending, and growing traction with AI solutions,” the analyst wrote in a Sunday note. “We forecast the Cloud segment to maintain healthy mid-20s% y/y growth in Q1,” she added. Recovering from last quarter's post-earnings slide The fourth quarter was Alphabet's fastest for revenue growth since early 2022, as the company reported revenue of $86.31 billion, reflecting a 13% increase from the year-ago period and beating analysts' forecasts for $85.33 billion, per LSEG. Earnings for the period were $1.64 per share, compared to $1.59 per share expected from analysts. The company's ad revenue of $65.52 billion came in lower than analysts' estimates of $65.94 billion, however, according to StreetAccount. That sent shares 7.5% lower on Jan. 31, the session following the print. GOOGL YTD line Alphabet (GOOGL) shares performance in 2024 Fourth-quarter ad revenue for Alphabet-owned YouTube came in at $9.2 billion, just shy of Wall Street's estimates. Although YouTube has been a growth driver for the tech giant, TikTok represents a threat to its dominance in the short-form video space. Alphabet is confronting a world of changing user behavior, increasing competition and greater regulatory challenges, which Google search boss Prabhakar Raghavan addressed in front of thousands of employees earlier this week. “Things are not like they were 15 to 20 years ago,” he said. With AI, Alphabet is working on both sides of the technology: the innovator and the investor. The company released its rebranded generative AI chatbot and voice assistant Gemini in February . It has also embedded new generative AI capabilities into products, including Maps . On the investment side, Google last year committed to invest $2 billion in OpenAI competitor Anthropic, after previously confirming it had taken a 10% stake in the AI systems developer.