Alphabet Inc (NASDAQ:GOOG) kicks off the first-quarter earnings season for big tech companies on April 25 and the market is already factoring in a pick-up in revenue but a dip in earnings.
The parent company of internet search leader Google is expected to post a 14% year-over-year decline in 1Q earnings per share to $1.06 on revenue of $57 billion, up 1.7% from 1Q 2022, according to Zacks Equity Research.
Alphabet missed estimates in both profit and revenue in the fourth quarter of fiscal 2022 as YouTube ad spending slowed.
For the three months to end December 31, 2022, the technology company delivered $76 billion in revenue versus the $76.6 billion expected by analysts. Earnings per share of $1.05 for the quarter missed average expectations of around $1.19.
The bottom line was hurt by YouTube ad spending, which reached $7.96 billion compared to estimates of around $8.3 billion.
Investors will also have their eye on the management discussions accompanying the results — including how it is facing up to competition from rivals like Microsoft following reports that Samsung Electronics (KRX:005930) is considering using Bing as the default search engine on its devices.
The news resulted in “panic” at Google, which earns an estimated $3 billion in annual revenues from the Samsung contract, the New York Times reported.
After its shares tanked in early February when Google’s Bard AI made a factual error in its first foray, wiping more than US$100 billion from the company’s market value, Zacks noted that Google is making concerted efforts toward bolstering features of the recently-launched chatbot.
Like its tech rivals, the company has also been cutting costs, including reducing its workforce. In January, around 12,000 people from offices around the world were laid off, which amounts to around 6% of its workforce.
Contact the author at stephen.gunnion@proactiveinvestors.com
