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Alphabet earnings: What to expect from the Google parent company

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When Google parent Alphabet Inc. reports its fourth-quarter results Tuesday, analysts and investors expect a bountiful haul in advertising revenue.

Here what analysts are looking for ahead of Alphabet’s
GOOG,
-0.71%

GOOGL,
-0.77%

report, which is due out after the closing bell.

What to expect

Earnings: Analysts tracked by FactSet on average expect Alphabet to report earnings of $1.59 a share, compared with $1.05 a share a year ago.

Revenue: Analysts on average expect Alphabet to report $85.3 billion in total fourth-quarter revenue and $71.2 billion after removing traffic-acquisition costs, compared with $62.6 billion ex-TAC a year ago.

Stock movement: Alphabet’s stock has surged 57% over the last 12 months, while the S&P 500 index 
SPX
 has climbed 22%.

Of the 59 analysts covering Alphabet’s stock on FactSet, 43 rate it as a buy, and 10 as hold, with an average price target of $158.45.

What analysts are saying

Google’s dominance in search — which continues to cause it headaches with regulators and lawmakers as it amasses advertising sales — remains the revenue engine.

Jefferies analyst Brent Thill is forecasting stronger-than-usual fourth-quarter ad spending on healthy holiday e-commerce performance for Google and rival Meta Platforms Inc.
META,
+0.42%

as they transition to AI-driven ad formats.

“On a less positive side, Meta’s momentum was notably better than Google, and staff cuts in ’23 are making it harder for agencies to get support,” Thill said in raising his price target on Alphabet shares to $170 from $165.

Wells Fargo’s Ken Gawrelski expects the company’s commentary around the first quarter to hint at a “stable search environment,” though he said he’s cautious on the year “due to regulatory risks and emerging AI developments.”

Meanwhile, Mark Mahaney of Evercore ISI will be focused on operating margins.

“Our sense is that this is still a debated point among investors into the print,” he wrote recently. “We expect, based on [Alphabet’s] typical seasonality in Q4 with a step-up in marketing spend, greater hardware sales, and the incremental content license costs and marketing spend around the NFL Sunday Ticket, a much greater sequential step down in [operating margin versus the 40 basis points] that the Street has baked in.”



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