Alphabet's Q4 Earnings Loom: Buy or Sell GOOGL Stock Ahead of Results?

Alphabet GOOGL is set to report fourth-quarter 2024 results on Feb. 4.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.For fourth-quarter 2024, the Zacks Consensus Estimate for earnings is pegged at $2.12 per share, unchanged over the past 30 days and indicates 29.27% year-over-year growth.The consensus mark for fourth-quarter revenues is pegged at $81.38 billion, indicating growth of 12.52% from the year-ago quarter’s reported figure. Alphabet Inc. Price and EPS Surprise Alphabet Inc. price-eps-surprise | Alphabet Inc. Quote Alphabet has an impressive earnings surprise history. GOOGL’s earnings outpaced the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 11.84%.Let’s see how things have shaped up for the upcoming announcement:Proliferation of Gen AI to Boost Alphabet’s Q4 ResultsThe search giant’s to-be-reported quarterly results are expected to benefit from Android’s strength and solid momentum in search and cloud businesses. Expanding generative AI (Gen AI) capabilities are likely to have been a key catalyst. These factors are expected to have more than offset concerns related to increasing regulatory headwinds.Alphabet has been cashing in on the increasing demand for Large Language Models (LLMs) with its most powerful AI model called Gemini.Google’s Vertex AI, which enables developers to train, tune, augment and deploy applications using Gen AI models, is expected to have helped expand its clientele. Google’s launch of an enterprise-focused AI code completion and assistance tool called Gemini Code Assist is noteworthy.These tools are likely to have contributed well to top-line growth in the to-be-reported quarter.AI Integration Aids GOOGL’s Search Traffic GrowthGOOGL continues to invest in state-of-the-art infrastructure to support its AI efforts globally. It is leveraging AI to improve the coding process, and more than 25% of all new code at Google is currently generated by AI.The integration of Gen AI technology into the search engine is benefiting Google Search. LLMs, coupled with multi-search and visual exploration features, are continuously improving the search results.New AI-powered enhancements, such as AI Overview, Circle to Search and advanced features in Lens, are improving user experience. AI Overview currently reaches more than 1 billion users monthly, and engagement levels are quite strong. The integration of ads within AI Overviews bodes well for Alphabet’s monetization efforts.Circle to Search is now available on more than 150 million Android devices, with people using it to shop, translate text and learn more about the world around them. Lens has become the fastest-growing query type due to its ability to help in product discovery and shopping.Alphabet is leveraging AI and Gen AI to boost Pixel’s features. The devices run on Google Tensor G4 chips, which help bring the Gemini Nano with Multimodality, Google’s latest on-device AI model.Alphabet’s strength in the mobile search category on the back of mobile-friendly algorithms, robust product listings and flight search capabilities is a plus.Growing Cloud Business: A Key Catalyst for GOOGLAlphabet has been rapidly growing in the booming cloud computing market. Google Cloud has solidified its position as the third-largest provider in the highly competitive cloud infrastructure market against Amazon’s AMZN cloud arm, Amazon Web Services, and Microsoft’s MSFT Azure.The solid adoption of the Google Cloud Platform and Google Workspace is expected to have driven growth in the Google Cloud segment. Alphabet’s growing investments in infrastructure, security, data management, analytics and AI are expected to have been major positives.Alphabet is seeing strong demand due to an innovative AI infrastructure. GOOGL offers customers a range of AI accelerator options, including multiple classes of NVIDIA NVDA GPUs and custom-built TPUs.Enterprise AI platform Vertex is gaining rapid adoption. Enterprises are combining Alphabet’s AI platform with data platform BigQuery to make accurate real-time decisions. BigQuery machine learning operation saw 80% growth over the past six months, driven by this strong demand.Its strengthening Gen AI-backed cloud offerings are expected to have driven Google Cloud’s momentum among cloud customers in the to-be-reported quarter.GOOGL Shares Beat Sector, Industry Image Source: Zacks Investment Research Alphabet’s shares have appreciated 42.2% on a trailing 12-month basis, outperforming the Zacks Internet Services industry and the Zacks Computer & Technology sector. Over the same timeframe, the sector and industry have returned 27.4% and 35.2%, respectively.GOOGL Stock’s PerformanceGOOGL shares are overvalued, as suggested by Value Score C.Currently, GOOGL is trading at a premium, with a forward 12-month Price/Sales of 6.27X compared with the industry’s 5.88X.Price/Sales Ratio (F12M) Image Source: Zacks Investment Research GOOGL Stock: Buy, Sell or Hold Ahead of Q4?Alphabet’s growing GenAI capabilities present a potential catalyst for future growth. Its dominant position in the search engine market is a strong growth driver.A stretched valuation, increasing regulatory concerns and stiff competition in the cloud space make GOOGL shares risky for investors.Alphabet currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. 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(AMZN): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks