Alphabet Q2 earnings look-ahead: All eyes on new AI development
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When Alphabet Inc (NASDAQ:GOOG) reports its second-quarter results on Tuesday, investors will majorly focus on the tech giantâs commentary regarding its artificial intelligence (AI) push as it focuses to raise its game in the arena after facing huge competition from companies including Microsoft Corp (MSFT) and Meta Platforms (META).
Wall Street analysts expect Alphabet to post earnings per share of $1.34, representing a more than 10% jump, while revenue is expected to rise 4.4% to $72.75 billion.
Googleâs foray into Generative AI space comes after Microsoft-backed OpenAIâs launch of ChatGPT in November. Since then, Google has released its own chatbot called Bard and has put AI reinvention at the center of its I/O developer conference in May.
However, intensifying competition and new AI offerings has left the tech behemoth with no choice but to respond to recent developments that could threaten its market dominance, especially when it comes to its nearly $150 billion per year Search business. 
According to reports, Google co-founder Sergey Brin has upped his visits to headquarters in Mountain View, California, and is working alongside researchers to develop the next large artificial intelligence system that hopes to challenge GPT-4.
The company has suffered from a slowdown in the advertisement market last year as customers pulled their budget amid an uncertain economy. Even though, Google ad revenue is expected to rise slightly, analysts are seeing signs of rebound in the digital ad space.
Google Cloud is expected to be a significant gainer, with revenue climbing by 24.7% to $7.8 billion.
"A stabilization of advertising revenues combined with continual double-digit top line growth in the Cloud business could translate into a better than expected earnings report for Google," said Seeking Alpha analyst The Asian Investor.
Over the last 2 years, Alphabet has beaten EPS estimates 50% of the time and has beaten revenue estimates 75% of the time.
While Seeking Alpha analysts and Wall Street rated the stock as "buy", Seeking Alphaâs Quant Ratings is considering it a "Strong Buy" with a rating of 4.92. The stock has risen nearly 36% so far this year.
Over the last 3 months, Earnings Per Share estimates have been revised upward 23 times, compared to four downward revisions, while revenue estimates have seen 23 upward revisions versus six downward moves.

Shares of Alphabet are currently valued at a price-to-earnings ratio of 20X and a price-to-revenue ratio of 4.7X, making it the cheapest FAANG stock based off of earnings and the second-cheapest based on revenues.