Alphabet gains 2% reaching a new all-time high ahead of earnings report today 📈

Alphabet Inc. (GOOGL.US) is set to report its highly anticipated Q4 2024 earnings after the market closes today, with investor sentiment overwhelmingly bullish. The stock has surged over 42% year-over-year, recently touching record highs, and analysts remain optimistic about continued growth in advertising, cloud services, and AI innovations. Investors await to see 'AI monetization' across Alphabet core digital ads business, with positive impact on net earnings, similar to Meta Platforms (META.US). 

The earnings report will be a major sentiment driver for the broader tech sector, particularly in the wake of strong results from Meta and ongoing AI competition with Microsoft (MSFT) and Amazon (AMZN). If AI monetization and cloud revenue meet or exceed expectations, Alphabet could extend its bullish momentum. Also, digital ads sector may be in focus, as a key area of quite 'fast' AI monetization. However, any signs of slowing ad growth or rising AI costs could spark a pullback. With Google's AI, cloud, and ad businesses firing on all cylinders, will Alphabet continue its rally—or will AI cost concerns weigh on investor sentiment? Investors also await on company comments about its legal risks related to China and Europe.

Expectations for Alphabet’s Q4 Earnings

• Revenue: Expected to hit $96.6 billion, marking a 12% YoY increase.
• Earnings per Share (EPS): Analysts forecast $2.12 per share, a 29% jump from last year's $1.64.
• Net Income: Projected at $26.2 billion, significantly up from $20.7 billion a year ago.
• Ad Revenue & YouTube: Investors are eyeing continued strength in ad spending, particularly on YouTube, which surpassed $50 billion in annual ad and subscription revenue last quarter.
• Cloud Computing: Google Cloud remains a growth engine, competing fiercely with AWS and Azure, and is expected to deliver another quarter of double-digit revenue expansion.

The AI Factor: Competitive Edge or Rising Costs?

• Alphabet’s ongoing AI transformation is both a growth driver and a cost concern. The launch of Gemini 2.0, Google’s most advanced AI model yet, positions the company as a leader in generative AI. CEO Sundar Pichai’s ambitious goal of hitting 500 million Gemini users by 2025 underscores the company’s aggressive push into AI-driven services.
• However, the emergence of Chinese AI startup DeepSeek—offering high-performance AI at lower costs—has raised concerns about Alphabet’s capital efficiency and spending in the AI race. While AI investment fuels long-term growth, investors will be keen on management’s commentary regarding profit margins and cost controls.
• Wall Street is largely bullish, with 15 of 19 analysts rating GOOGL as a "buy" and an average price target of $219, implying 7% upside from current levels. Also, Jefferies maintains a $235 target, citing strong ad revenue recovery and robust cloud demand. Alphabet has exceeded earnings expectations in the last four quarters, often leading to post-earnings stock gains. 

Alphabet (GOOGL.US)

Shares of Alphabet are fluctuating around all-time-high level, up 2% ahead of the earnings report today;.

Source: xStation5