Facing ad slowdown, Alphabet looks to surpass revenue bar yet again in Q2 report
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In a big earnings week for the FAANG stocks, Alphabet (NASDAQ:GOOG) (GOOG) - reporting after Tuesday's closing bell - is looking to keep up a streak that predates the pandemic.
The tech giant has beaten revenue expectations for nine quarters in a row, and topped profit expectations in seven of those.
Fellow FAANG Netflix posted its earnings last week, and has risen more than 7% since, having reported subscriber losses that weren't as bad as feared. Other members of the tech investing group (Meta Platforms, Apple and Amazon.com) are set to report figures on Wednesday and Thursday.
Alphabet stock (GOOG) (NASDAQ:GOOGL) fell the day after its first-quarter report, a mixed outcome that saw broad revenue growth but a miss on profitability - hurt by some added expenses but also some loss reporting on equity securities.
This time around, the stock may be the beneficiary of some sharply lower expectations for advertising-exposed online stocks. The past few months have seen 24 downward revisions to expectations for earnings per share against only six upward; it's also seen 27 downward revisions in revenue forecasts vs. only two raised forecasts there.
Though it's somewhat more insulated from companies with more direct exposure to Internet ads, Alphabet also suffered in the wake of more downbeat news from Snap last week.
And Wall Street analysts have for a few months been ratcheting back expectations on online ads; recently it was Morgan Stanley's turn to cut back in the sector, and the firm reduced its 2023 EBITDA expectations for Alphabet by 4%.
In Tuesday's report, Alphabet watchers will keep their eyes on core search ads and how they're affected by that market slowdown (search is considered more insulated than social-media advertising). But they'll also be putting a close eye on YouTube, the weak spot in the first quarter, as well as any progress toward profit at the company's rapidly improving cloud business. (Google Cloud revenues jumped 44% year-over-year in the first quarter, to $5.82B.)
Consensus expectations are for earnings per share (normalized) of $1.29, on revenues of $69.9B (which would mark 12.9% year-over-year growth).