Alphabet (GOOG, Financial) (GOOGL, Financial) reports second-quarter results after the market close on July 23. Analysts expect earnings per share of $2.18 on revenue of $79.8 billion, marking a 12% YoY increase in the top line. Investors are skeptical about potential search-revenue erosion, and that concern has been weighing on the share price. Shares are flat YTD and up only 4% over the past 12 months. Despite this, the stock trades just 10% below its all-time high.
Investors will closely monitor Search and YouTube ad revenue after solid Q1 ad growth of 11% YoY. Cloud revenue is another focal point. They will also gauge whether Alphabet's Search can withstand pressure from generative-AI tools such as ChatGPT. The unit grew 28% YoY last quarter, but margin volatility and Microsoft's Azure gains have kept pressure on expectations. Updates on Google DeepMind and Gemini's enterprise traction could shift sentiment. Analysts are looking for clearer guidance on traffic-acquisition costs (TAC) and capital spending. Finally, commentary on EU regulation and U.S. antitrust overhangs could shape medium-term volatility.
Given Alphabet's scale and strategic AI bets, its guidance could set the tone for the broader tech sector. With the stock near record highs, any disappointment on Cloud margins or ad trends could spark profit-taking.
