Sundar Pichai, CEO, Alphabet Inc. , during the Google I/O developer conference in Mountain View, Calif., May 10, 2023.
David Paul Morris | bloomberg | Getty Images
Alphabet will report its second-quarter earnings after the close of regular trading on Tuesday.
Here’s what Wall Street expects:
- Earnings: $1.34 a share, adjusted, according to Refinitiv.
- he won: $72.82 billion, according to Refinitiv.
- Google Cloud: $7.87 billion, according to StreetAccount.
- YouTube Ads: $7.43 billion, according to Street Account.
- Traffic acquisition costs: $12.37 billion, according to StreetAccount.
For the fourth consecutive quarter, Google’s parent company is expected to report year-on-year revenue growth in the single digits as it expects a decline in digital ad spending reflecting concerns about the economy. Analysts don’t expect growth to reach double digits again until the fourth quarter.
The cost cutting that highlighted the start of the year across and across most of the technology sector Mass layoffs at Google through to the second quarter but in a less dramatic way.
The company has eliminated some functionality in the Waze navigation module as it continues to integrate its mapping products. Since December, it has been Google Strengthen Waze with its own tools. The company is also canceling some projects, including its Generation Z social chat show, as CNBC reported recently.
The main topic of the second quarter was artificial intelligence. At Google I/O, its annual developer conference, Google said it is introducing generative AI features to search with a new product called Search Generative Experience (SGE), which the company says will be able to aggregate search results from complex queries. Google has not yet specified when the service will be widely available to the public.
During the quarter, the Big Tech giant announced that it would merge Google Brain, part of its research division, and DeepMind as it races to compete in artificial intelligence. The company also said it will partner with Character AI, a startup founded by ex-Google employees that is focused on building advanced, customizable AI chatbots.
Google has launched updates for its competitor ChatGPT Bard, which it launched publicly in March. It has expanded to more than 40 languages in more countries, and will include features such as voice responses.
While the core advertising market continues to suffer, the cloud remains a catalyst for expansion. Google Cloud, which competes with infrastructure offerings from Amazon and Microsoft, is expected to register 25% growth. The unit posted its first operating profit in the first quarter. Analysts expect Microsoft to report a similar growth rate for Azure in its earnings release, which was also set out after the close on Tuesday.
Across the company, leadership is still trying to get employees to return to the office on a more regular basis. Google has cracked down on attendance, even asking employees who were approved to work remotely to reconsider — a move that caused some consternation among employees. Workers have also complained about CEO Sundar Pichai’s salary, which filings show ballooned to $226 million last year, primarily from stock awards.
Alphabet shares are up 38% this year, outpacing the S&P 500’s 19% rise.
The executives will discuss the quarterly results with analysts on a conference call beginning at 5 p.m. ET.
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