Google parent Alphabet Inc (NASDAQ:GOOG) is riding high in anticipation of next week’s annual earnings call.
So high, in fact, that the search giant’s stock price is at an all-time high, thanks to what Bank of America analysts dubbed an “AI wake-up call” in 2023.
Investors are now keen to hear how America’s third-largest corporation has managed to integrate, commercialise and monetise its suite of large-language and generative AI models.
Though Alphabet’s core advertising lines in Google Search and YouTube are unlikely to disappoint, its cloud offering has emerged as a sore spot for the conglomerate.
Google Cloud remains a third wheel in a sector dominated by Microsoft and Amazon, and management has provided little guidance as to the service’s forward prospects.
Firm-wide, Alphabet is “maintaining a slower pace of headcount growth”, per the group’s diplomatic wording in the previous investor call, “reflecting product prioritization and reallocation of talent to support our most important growth opportunities”.
Shareholders are likely to question whether this translates to further layoffs, given Magnificent Seven colleague Microsoft Corporation (NASDAQ:MSFT)’s recent spate of firings.
Alphabet warned that the cost of sales in the fourth quarter will reflect both higher hardware costs incurred from the latest Pixel smartphone launches, as well as increased customer acquisition costs at YouTube.
Sales and marketing expenses are also expected to be higher, reflecting new product launches and the holiday advertising drive.
The Street predicts yearly revenues of £306.12 billion and earnings per share of $5.73; whether or not the search giant delivers an AI-powered upside surprise will be determined on Tuesday, 30 January.