Alphabet expected to benefit from resilient ad spending

Alphabet (GOOGL) reports its Q4 results after Wall Street’s closing bell on 30 January, 2024. We preview what to expect from the results and analyse the stock’s technicals.

Ad spending expected to offset slow cloud-product growth

Alphabet is expected to benefit from robust ad spending, as demand is supported by resilient households and continued strong consumption growth. Adjustments to the company’s product offering, particularly the execution of a subscription model for YouTube, are forecast to bolster revenues.

According to Bloomberg data, analysts estimate EPS will rise 64% from the corresponding period last year to $1.72 per share. The jump in earnings is forecast to come from a 12% lift in revenues to $71.05 billion and an improvement in operating margins over the year.

(Source: NASDAQ) Past performance is not a reliable indicator of future results.

The strength of Alphabet’s YouTube and advertising revenue streams is expected to offset disappointing growth in the company’s cloud offering. Alphabet lags behind its peers in marketing its cloud product and optimising it for AI, driving underperformance compared to the other tech giants.

The broker community remains bullish on Alphabet’s stock, boasting a consensus buy rating. 55 out of 65 recommend a “buy”, while the remaining 10 suggest a “hold”. According to data compiled by Bloomberg, the consensus target price is at a premium to the market value of $157.64.

(Source: Bloomberg) Past performance is not a reliable indicator of future results.

Alphabet shares reach resistance at all-time highs

Alphabet stock is in an uptrend and, heading into quarterly results, is testing fresh all-time highs. A solid result could push the company through resistance at just below $153 per share, with the next level potentially upward-sloping trend-channel resistance from there. A disappointing result could spark a sell-off in the stock, with previous resistance just above $140.

Past performance is not a reliable indicator of future results.