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Alphabet Q3 results: Cloud sales to help weather AI tailwinds

By Kyle Rodda

15:14, 24 October 2023

Alphabet (GOOGL) will deliver its Q3 earnings after the closing bell on Tuesday. We preview what the markets are expecting heading into the results.

What are analysts forecasting for Alphabet’s Q3 results?

 Revenue (ex-TAC)EPSAd. Revenue4Q EPS Guidance
Estimate$63.04B$1.44 (36.6%)$58.9B (16.15%)$1.64 (55.79%)

Revenue (ex-TAC) EPS Ad. revenue 4Q EPS Guidance Estimate $63.04B (10.1%) $1.44 (36.6%) $58.9B (8.1%) $1.64 (55.79%) (Source: Bloomberg)

According to data from Bloomberg, broker analysts expect a solid financial performance from Alphabet in Q3, driven by a continued recovery in ad revenues. 2022 saw a historic drop in sales generated from advertising for Alphabet, with the company’s growth this quarter likely to be bolstered by favourable base effects. According to the Bloomberg data, revenue (excluding traffic acquisition costs) is tipped to rise 10.1% to $63.04B; ad revenues are expected to lift 8.1% to $58.9B. The tech giant’s top-line recovery is projected to underpin a 36.6% rebound in earnings per share to $1.44.

The revival in advertising revenue comes despite crosswinds from the emergence of artificial intelligence. On the one hand, Alphabet is moving to integrate AI technology into its products and stands to benefit from its AI trading service. However, the emergence of ChatGPT and other competitor products threatens to disrupt Alphabet’s market dominance achieved through Google.

Data compiled by Bloomberg suggest analysts expect continued earnings recovery in the short term: the consensus estimate for Q4 EPS guidance is $1.64, which represents a 55.8% rise.

COIN

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Short position overnight fee 0.0041%
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Spread 0.51

AMD

151.35 Price
-3.270% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
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NVDA

118.03 Price
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Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 0.11

GME

25.06 Price
-4.370% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 21:00 (UTC)
Spread 0.14

Broker recommendations and consensus price target

BuyHoldSellConsensus Price Target
5480$154.11

According to surveys conducted by Bloomberg, the broker community remains very bullish toward Alphabet’s stock. Of 62 analysts, 54 favour buying the stock, with the remaining suggesting a hold. The consensus price target is at a meaningful premium of $153.11.

Alphabet share price: technical analysis
Alphabet’s share price has trended higher this year, supported by the multiple expansion inflated by the hype surrounding artificial intelligence. More recently, upside momentum has slowed, in significant part due to the recent rise in bond yields that have hurt tech stocks. 

(Past performance is not a reliable indicator of future results)

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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