Alphabet (GOOGL, Financial) is preparing to release its latest earnings report later this month. Investment firm Baird has raised concerns that increased capital expenditures could pose risks to the company's operating profit and earnings per share (EPS).
Analyst Colin Sebastian highlighted the potential rise in operational spending related to data center and infrastructure expansion, suggesting that there might be some risk to third-quarter operating profit and EPS expectations. He anticipates a possible moderate "sell-side reset" following the earnings release.
Wall Street analysts currently estimate Alphabet's third-quarter revenue to be $86.23 billion, with EPS at $1.84. Although increased capital spending could result in a GAAP operating margin below consensus expectations, Sebastian remains cautious about fully believing in the potential revenue benefits from artificial intelligence products and services.
The analyst maintains an "outperform" rating on Alphabet, setting a target price of $200.
