Alphabet's earnings preview: steady growth with eyes on its AI story
Alphabet, Google's parent company, is scheduled to report its second quarter earnings on 23 July 2024 after US markets close. Here's a breakdown of what to expect and watch for.
Alphabet earnings: what to expect
Alphabet Inc - A (All Sessions) consensus EPS forecast for the second quarter of the year is $1.85, a slight decrease from the previous quarter at $1.89, but still a 28% increase compared to the same quarter last year.
Total revenue is projected to reach $84.3 billion, reflecting a 4% increase from the first quarter and a 13% rise over the year-ago period.
Based on the company’s actual results over the past four quarters, Alphabet has delivered an average upside surprise of 10.62%.
Alphabet earnings: key watches
Google Cloud, Alphabet’s revenue powerhouse, has skyrocketed more than threefold in the past quarter (as table below) and shows no signs of slowing down. With diversified revenue streams on the horizon, the booming demand for Google’s cloud services is set to be supercharged by its unwavering commitment to AI development, which keeps clients firmly locked into its ecosystem.
When it comes to AI, the hot topic investors are eagerly watching, the spotlight will be on how generative AI is rolled into Google’s market leading search and cloud services. Moreover, all eyes will be on how the tech giant is turning their massive AI investments into profits, with their quarterly results set to reveal this crucial step.
Alphabet share price
Alphabet’s earnings report arrives just as the market begins shifting away from high-flying tech stocks, following this year’s impressive rally. Alphabet's stock has surged 28% up until July 22nd.
However, the recent rotation away from tech has pulled the price back to its 50-day moving average, raising the risk of a correction, with the price now 10% below its recent peak.
The critical price point to watch for around the earnings date will be at $172. This level represents a 10% decline from its recent peak of $191. Additionally, the weekly chart (see below) shows this as a key juncture, where the April peak and the previous resistance-turned-support trendline converge, offering double layers of support. If this support level breaks, the price could slide towards $158-$162, the gap marked following previous earnings date.
In respect to near-term resistance, we expect pressure around the 50-day moving average at $178, which also aligns with the May peak. Above that, the 20-day moving average at $184 will be the next level to watch.
Alphabet IG sentiment and rating
Based on IG sentiment, 93% of IG clients hold long positions in Alphabet. However, there is also a rising wave of selling, with 69% of transactions this month attributed to sales.
For the stock rating, TipRanks reports that over the past three months, nine Wall Street analysts have given Alphabet a "Buy" rating, with an average price target of $203.81.
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