Google parent company Alphabet (GOOG, GOOGL) is set to report its third quarter financial results after the bell Wednesday as investors scrutinize how the AI boom is helping — and potentially hurting — the tech giant.
Alphabet is expected to report quarterly revenue of $99.85 billion, according to consensus estimates from Wall Street analysts tracked by Bloomberg, up 13% from $88.3 billion in the same period last year.
Analysts forecast the company will report adjusted earnings per share of $2.26 for the third quarter, a 7% increase from the company’s $2.12 adjusted EPS in the year-ago period. That would represent its lowest earnings growth in more than two years, in part due to a recent antitrust fine from the European Commission.
Alphabet has increasingly shown that it’s a beneficiary of the AI boom, as its Gemini AI models have gained popularity and big-name AI developers have signed up to use its cloud services. At the same time, AI chatbots led by OpenAI’s (OPAI.PVT) ChatGPT pose risks to its core Search business.
“[W]e are confident that Google will create tremendous value from AI,” Loop Capital analyst Rob Sanderson wrote in an Oct. 23 note to investors. But, he added, “Whether Google can maintain its dominant position in search is a meaningful structural uncertainty.”
OpenAI’s release of its ChatGPT Atlas Web browser last week pushed the AI developer into even closer competition with Google, briefly sending Alphabet stock tumbling.
Read more: Live coverage of corporate earnings
Still, Wall Street analysts were broadly optimistic on Alphabet stock ahead of the company’s earnings, given a recent slew of AI deals involving Google Cloud, the upcoming release of its Gemini 3 model, and a favorable ruling for the company in its landmark antitrust case against the US Department of Justice. Those positive factors are offsetting concerns about how OpenAI could disrupt its Search business for now.
Alphabet stock is up more than 40% to trade around $268 since the company’s last quarterly earnings — which surpassed Wall Street’s projections — and the stock has broadly outperformed its “Magnificent Seven” Big Tech peers in that time frame. The company’s market capitalization topped $3 trillion in September.
Analysts from JPMorgan, Bank of America, Morgan Stanley, Morningstar, and Loop Capital have raised their price targets on Alphabet shares as high as $300 in the past month.
“The favorable outcome in the DOJ Search Commercial Agreement trial certainly removed a major overhang, but Google is also delivering strong financial performance and innovating at the leading edge of AI,” JPMorgan analyst Doug Anmuth wrote in a note to clients.
