Alphabet Inc. (NASDAQ:GOOGL) is gearing up to unveil its third-quarter 2023 financial results on October 24. As we approach the earnings report, here’s a closer look at what investors can anticipate.
Revenue and Earnings Expectations
For the third quarter, the Zacks Consensus Estimate for Alphabet’s revenues stands at $63.13 billion, reflecting a robust 10.2% improvement compared to the prior year. Additionally, earnings per share are estimated at $1.45, signifying an impressive 36.8% growth from the previous year’s figures. Notably, this earnings estimate has remained stable over the past month.
It’s worth noting that Alphabet has missed the Zacks Consensus Estimate in two of the last four quarters, delivering a slight negative earnings surprise averaging 0.9%.
Search, YouTube, and Advertising Prospects
Alphabet’s continuous drive for innovation in artificial intelligence (AI) techniques to enhance its search business is expected to contribute to the company’s search revenues in the third quarter. The introduction of the “Search Generative Experience,” which employs generative AI technology to refine search results, is likely to have a positive impact. This technology has powered Google’s search results, making them more natural and intuitive.
The combination of large language models, multi-search features, and visual exploration tools is expected to further enhance search results. Improvements in Google Lens and Google Maps are anticipated to have a positive effect on search traffic.
The Zacks Consensus Estimate for Google Search & Other revenues for Q3 is set at $43.04 billion, marking an 8.9% increase from the previous year.
Alphabet’s advertising revenues are anticipated to benefit from its advertisement offerings infused with generative AI technology. The stabilization in advertisers’ spending is also expected to have a positive influence. The consensus estimate for Google advertising in the third quarter stands at $58.94 billion, representing an 8.2% growth from the prior-year figures.
Turning to non-advertisement revenues from YouTube, the growth in user momentum, particularly in YouTube Shorts, is expected to drive revenue. Alphabet’s efforts to build stronger relationships with content creators are likely to be a positive factor. Progress in YouTubeTV and YouTube Primetime Channels, along with significant updates in YouTube Premium, may further bolster growth.
The consensus estimate for Google’s Other revenues, encompassing YouTube and more, is at $7.96 billion, showcasing a 15.5% increase from the previous year.
The momentum across Android 13 and Pixel devices is likely to contribute to Alphabet’s overall performance in the third quarter. All of these factors are expected to benefit the Services segment, with the Zacks Consensus Estimate for Google Services revenues at $66.74 billion, reflecting an 8.7% growth from the prior year.
Strength in Cloud and Other Ventures
Alphabet’s presence in the competitive cloud market has been gaining momentum due to its expanding cloud service portfolio and growing data centers. Strong adoption of Google Cloud Platform and Google Workspace is likely to drive performance in the Google Cloud segment for the quarter. The Zacks Consensus Estimate for Google Cloud revenues is set at $8.54 billion, indicating an impressive 24.3% growth.
Alphabet’s commitment to enhancing its healthcare technology portfolio is expected to drive growth in the Other Bets segment. The Zacks Consensus Estimate for Other Bets revenues is $284 million, reflecting a substantial 35.9% growth from the prior year.
As Alphabet gears up to announce its Q3 results, the company seems poised for another strong showing, thanks to its diversified offerings and innovation-driven approach. Investors will be closely watching to see how these various segments contribute to the company’s continued success.
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