Alphabet Q3 2024 earnings preview: latest insights into investor expectations

Key date for your calendar

Alphabet Inc. will release its Q3 earnings on 30 October 2024 at 7.05am (AEDT). Alphabet’s share price has lagged behind the benchmark S&P 500 so far this year.

Will the upcoming earnings provide the boost needed for the tech giant to catch up?

Expectations for Alphabet's Q3 earnings

• EPS: estimated at $1.84, representing an 18% increase from Q3 2023
• Revenue: estimated at $86.23 billion, up 10% from the year-ago quarter

It’s worth noting that Alphabet Inc. has consistently exceeded Wall Street’s projections for both earnings per share (EPS) and revenue over the past four quarters. In Q2, the tech giant reported an EPS of $1.89, exceeding the anticipated $1.84.

Key areas to watch in Q3

• Cloud growth vs advertising pace

The strong demand and growth from cloud services have driven Alphabet’s impressive 14% year-over-year growth in the recent quarter. This division saw a remarkable 28% increase in quarterly revenue, surpassing $10 billion for the first time.

In contrast, Google's advertising business — the cornerstone of its revenue — has been growing at a slower pace in recent quarters. Investors will be keen to evaluate how the company’s advertising revenue has performed amid economic uncertainties and intensified competition from rivals like Meta Platforms Inc.

Alphabet Q2 2024 revenue breakdown by segment

• Advancements in AI integration

Despite the waning artificial intelligence (AI) frenzy, investors are eager to learn about Alphabet's advancements in AI integration across its platforms and the resulting technical synergies. Beginning in Q2, Alphabet consolidated the teams of Google Research and Google DeepMind to concentrate on developing AI models and accelerating integration efforts. Any positive update from this newly formed AI Plus division is likely to boost investor confidence in Alphabet's outlook for future tech.

• Recent concerns and financial risks

Despite reporting stronger-than-expected Q2 earnings, Alphabet's stock price dipped on the previous earnings date (24 July), primarily due to its conservative forward guidance, which resulted in a 5% decline in a single day.

Additionally, concerns grew regarding the returns from the tech giant's significant investments in artificial intelligence. As of 30 June, Alphabet's research and development expenses had risen to $23.8 billion, up from $22.05 billion in the same quarter last year.

Alphabet share prices

Compared to benchmarks like the broader S&P 500 and Nasdaq 100 indexes, Alphabet's share price has underperformed over the past two quarters and year-to-date.

Market performance comparison: S&P 500, Nasdaq, and Alphabet 6-month and YTD returns

However, analysts maintain a generally positive outlook for Alphabet shares. According to TradingView, 44 out of 67 analysts have assigned the stock a "strong buy" rating, with no analysts recommending a sell. In terms of price targets, the average one-year projection from 58 analysts stands at $202, indicating a 22% increase from the closing price of $165 on 22 October 2024.

Alphabet stock price target and analyst consensus

Alphabet technical analysis

From a technical standpoint, as of 22 October, the price has risen to test the descending trendline established since July. A breakout above this critical resistance could pave the way to the early October peak at $168 and the 100-day simple moving average (SMA) around $169.

Conversely, failing to surpass this major hurdle heightens the risk of losing current support, potentially resulting in a decline toward the 200-day SMA, located in the $160–161 range. A drop below $160 would position the price under all major moving averages (MA), indicating a potential bearish shift.

Alphabet daily chart

Conclusion

Alphabet Inc.'s Q3 2024 earnings report is poised to provide deeper insights into the tech giant’s financial vitality and future prospects. Investors will closely examine critical areas like advertising, cloud services, and AI advancements, all while reflecting on the intriguing movements of its share price. With heightened scrutiny, this report promises to shed light on how well Alphabet is navigating the complexities of the tech landscape.