Proactive Investors - Alphabet (NASDAQ:GOOGL) Inc (NASDAQ:GOOG) is expected to surpass Street expectations when it reports its earnings after market on April 25.
The tech giant should outperform revenue estimates, particularly in the search and YouTube segments, according to Bank of America (NYSE:BAC).
Analysts expect search revenue to benefit from stability in the sector and anticipate strength in YouTube revenue.
The combination of a Leap Year and early Easter holiday likely provided Alphabet with additional revenue opportunities in the first quarter, contributing to the anticipated outperformance in revenue, particularly in the search and YouTube segments.
YouTube revenue could exceed the Street's estimate, projecting it to reach $7.8 billion, analysts noted.
Cloud and network revenues are expected to remain in line with expectations.
However, the report notes the complexities of expense management, citing past severance costs and potential legal charges. Analysts estimate a slight decline in core margins and anticipate limited job postings indicating ongoing cost control measures.
Despite positive expectations, risks include potential deceleration in search growth and cautious commentary on upcoming challenges such as FX pressure and tougher comps in the second quarter.
Bank of America remains optimistic about Alphabet's prospects, highlighting the potential for recovery in AI sentiment post-March lows, especially with solid search results anticipated. They acknowledge long-term competitive risks from AI usage but anticipate monetization improvements in 2024.
Bank of America have maintained a ‘Buy’ rating on Alphabet stock and a price objective of $173.