According to data compiled by Bloomberg, analysts project around $96.61 billion in Q4 revenue and $2.12 in adjusted EPS, reflecting a 12% and 29% YoY increase, respectively.
Alphabet is set to release its fourth-quarter earnings report on Feb 4 after the market closes.
Previous Quarter Review
Google parent Alphabet reported third-quarter earnings that beat on top and bottom lines with strong revenue growth from the company’s cloud unit.
Earnings per share: $2.12 vs. $1.85 expected by LSEG
Revenue: $88.27 billion vs. $86.30 billion expected by LSEG
Here are other numbers Wall Street was watching:
YouTube advertising revenue: $8.92 billion vs. $8.89 billion, according to StreetAccount
Google Cloud revenue: $11.35 billion vs. $10.88 billion, according to StreetAccount
Traffic acquisition costs (TAC): $13.72 billion vs. $13.53 billion, according to StreetAccount
Alphabet’s revenue grew 15% year over year, which is stronger than the same quarter last year.
The company reported blowout cloud revenue at $11.35 billion, up nearly 35% from the $8.41 billion a year ago. The company attributed its strong cloud results to its artificial intelligence offerings, which include subscriptions for enterprise customers.
Q4 Results Outlook
Google Cloud sequential growth could continue at a high single-digit pace due to traction with enterprises deploying AI use cases on Vertex. Alphabet's 2025 capex forecast will be key on the 4Q call, given Microsoft's view of $80 billion in AI spending this year.
Search will likely be aided by robust holiday ad spending, despite competitive pressures from rivals such as ChatGPT, Claude and Perplexity.
While uncertainty remains around the DoJ's proposed divestiture of Chrome, the integration of Gemini LLM with its Android OS, TV and smartphones could offset the risk outside of desktops.
YouTube subscription growth may stay above 20% with possible gains from a TikTok ban.
Waymo's Uber pact and expansion in more cities suggest an inflection in the segment's contribution to top-line growth. Currency could be a slight headwind.
Analyst Opinions
Wall Street analysts are strongly optimistic about GOOG’s stock, with a "Strong Buy" rating overall. Among 50 analysts covering the stock, 39 recommend "Strong Buy," three indicate “Moderate Buy,” and eight suggest “Hold.” This configuration is slightly more bullish than three months ago, with 38 analysts suggesting a “Strong Buy.”
Jay Woods, global strategist at Freedom Capital Markets, said Wall Street’s line of questioning for Big Tech could shift from spending on AI toward the results as Alphabet and Amazon try to increase usage of assistants like Gemini and Rufus.
Vulcan Value Partners stated the following regarding Alphabet Inc. in its Q4 2024 investor letter:“Alphabet delivered strong results during the third quarter. In particular, Google Cloud revenue grew 35% during the period and the segment’s margins expanded materially. Disruption risks to core search from generative AI have not completely abated, but Alphabet’s technical prowess and historical investments in leading technologies are becoming more apparent. We continue to monitor the antitrust cases against the company, and we will follow our discipline as we receive more information."
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