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Key Takeaways
- Google parent Alphabet is set to report earnings for the first quarter of 2024 Thursday after the closing bell.
- Analysts expect Alphabet’s revenue and profit figures to show growth from the year-ago period but to have fallen from the previous quarter.
- The tech giant will report Google Cloud revenue, with investors watching to sustained growth.
- Google is expected to provide updates about its artificial intelligence (AI) initiatives after the company announced its in-house custom AI chip.
Google parent Alphabet (GOOGL) is set to report first-quarter 2024 earnings Thursday after the closing bell, with analysts watching for sustained cloud growth and any updates on artificial intelligence (AI) initiatives.
Analysts project Alphabet’s revenue to be $78.79 billion for the first quarter of 2024, down from the previous quarter but up from $69.79 billion in the same period in 2023, according to estimates compiled by Visible Alpha.
Net income is expected to be $18.89 billion, a decline from the fourth quarter but an increase from $15.05 billion in the first quarter of 2023. Earnings per share (EPS) are projected at $1.51, compared with $1.17 in the same period a year earlier.
| Analyst Estimates for Q1 2024 | Q4 2023 | Q1 2023 | |
| Revenue | $78.79 billion | $86.31 billion | $69.79 billion |
| Diluted Earnings Per Share | $1.51 | $1.64 | $1.17 |
| Net Income | $18.89 billion | $20.69 billion | $15.05 billion |
Key Metrics: Cloud Growth Momentum
Investors are watching for sustained Google Cloud growth after the segment’s revenue jumped in the final quarter of 2023 after a period of minimal gains.
Google Cloud revenue grew more than 25.5% year-over-year to $9.2 billion in the fourth quarter of 2023, easing investor concerns about stagnation in the segment.
CFRA analysts said that after Google’s cloud growth recovered to a growth pace of 25% in the fourth quarter, they “think cloud revenue will grow at least 25% and foresee that level being sustained for all of 2024.” They added that “margins will also be key as GOOGL has failed to cut costs as aggressively as other Big Tech names.”
Bank of America analysts project cloud revenue for the first quarter to sit at $9.34 billion and wrote that strength in the segment with higher quarter-over-quarter margins could be positive for Alphabet.
Alphabet neared a $2 trillion market capitalization earlier this month during its Cloud Next conference, where it announced several projects and updates.
Business Spotlight: AI Updates
Google also could provide investors with updates about its AI initiatives as big tech companies work to stake their claims amid the AI boom.
Alphabet has doubled down on its AI commitment, announcing the Google Axion Processor, a custom Arm-based (ARM) chip designed for data centers.
Hyperscalers leading big tech in the AI era have introduced in-house custom chips that could help them manage costs while potentially reducing reliance on Nvidia (NVDA). Microsoft (MSFT), Amazon.com (AMZN), and Meta Platforms (META) also have announced custom in-house AI chips.
CFRA analysts “see incremental opportunities tied to AI monetization” for the company through cloud, search, YouTube, and Google’s other businesses.
Bank of America analysts said that AI is a tailwind for Google as “AI use does pose long-term competitive risks for Google, but in 2024 Google (and peers) are likely to see AI monetization improvements.”
Alphabet shares have gained a little over 10% thus far in 2024 through Friday’s afternoon level of $155.54.