Alphabet, the parent company of Google, is set to release its fourth-quarter earnings report on Tuesday, with investors closely watching its performance in the AI landscape. Analysts predict strong earnings but caution remains due to the ongoing antitrust case against Google.
Alphabet , the parent company of Google , is set to release its fourth-quarter earnings report on Tuesday after the stock market closes, an event eagerly anticipated by investors. The company, which owns YouTube and Fitbit, is facing scrutiny over its position in the rapidly evolving artificial intelligence (AI) landscape.
Investors are particularly interested in Alphabet's strategy for maintaining its dominance in search engine growth, its investments in AI infrastructure, and its progress in developing innovative AI products. Analysts surveyed by LSEG predict Alphabet will earn $2.13 per share on revenue of $96.56 billion. This follows a strong performance in the previous quarter, where the company surpassed expectations on both revenue and earnings, driven by robust growth in its cloud computing business.Alphabet's stock has risen approximately 8% this year, fueled by optimism surrounding its advancements in AI and expectations that a new chief financial officer will enhance its cost structure. Analysts surveyed by FactSet have a consensus buy rating and a target price of $217 for Alphabet, indicating a potential upside of about 8% from Monday's closing price. Shares of GOOGL climbed as much as 2.7% intraday on Tuesday ahead of the earnings announcement, reaching an all-time high. Several prominent firms, including JPMorgan, Citi, and Bank of America, have reiterated their positive ratings and price targets on Alphabet.Many analysts anticipate that Google will benefit from a surge in advertising spending and believe the company is well-positioned to capitalize on Meta's recent results, which indicated that generative AI is contributing to ad price growth. Oppenheimer analyst Jason Helfstein stated in a note last week that Meta's earnings should also benefit GOOG, solidifying its status as an AI leader. Helfstein maintained his outperform rating but increased his price target by $10 to $225, citing confidence in Google's user engagement with its search engine and the expectation that ad spending will be bolstered by robust consumer spending. Similar optimism is shared by Bank of America and JPMorgan, who are confident in continued search growth, supported by strength in e-commerce and ad spending, the success of AI overviews (AIOs) in Google Search, and AI targeting in YouTube, leading to increased user engagement. Meanwhile, despite the overall positive sentiment, some analysts remain cautious. Citizens JMP recently downgraded the stock to market perform from market outperform, citing risks associated with the Justice Department's antitrust case against Google. The bank believes this case could potentially harm Google's search business in the U.S. and its overall revenue.
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