Google parent Alphabet Inc (NASDAQ:GOOG) should be able to deliver pretty good fourth-quarter results when it turns them in this afternoon.
Analysts at Jefferies said they see "solid" Q4 results as likely on the basis that estimated look "appropriately conservative" versus past seasonality and given slightly tougher comparative results from 2023.
Shares in the search giant, which also owns YouTube, Gmail, Waymo, Fitbit and Waze, among other businesses, are expected to "grind higher" despite their 18% gain since Q3 earning outdoing peers Microsoft and Meta.
This is because "fundamentals appear to be improving with solid ad spend", the analysts said, noting a recent call with an industry expert who reported a shifting from Meta to Google and YouTube and "would not be shocked to see GOOGL post a 'bananas' Q4, partly thanks to election spend".
On top of this, there is a stable macroeconomic background, potential pro-growth Trump policies, and increasing Cloud spend intentions from US businesses.
Fourth-quarter ad spend benefited from an earlier start to holiday promotions, a boost from the US election and continued improvements driven by AI.
Cloud industry checks show Google Cloud Platform "gaining incrementally" from a much smaller base than Amazon's AWS or Microsoft's Azure, "by leveraging its strength in data analytics and aggressive pro service incentives".
The Jefferies analysts said they "believe AI is an emerging contributor", though material revenues are "more likely later in '25 and into '26".
Costs are also on the way down, they noted, with the CEO having been reported to have internally announced plans to cut 10% of certain middle management layers.
Shares of Alphabet were trading 2.1% higher on Tuesday morning.