Google-parent Alphabet (GOOGL) is expected to report a nearly 14% rise in quarterly revenue, marking its fourth consecutive quarter of double-digit growth, fueled by strong demand for its AI-powered cloud computing services and an uptick in the advertising market. The second-quarter report, scheduled for Tuesday, could provide more details on the adoption of AI services and the associated rising costs. At a developer conference in May, Google introduced AI-powered summaries in Search and enhanced its Gemini AI model to better compete with OpenAI and Microsoft (MSFT).
Investors will be looking for signs of continued success in Search, driven by AI, and growth in Google Cloud without losing market share. Alphabet's AI investments, which saw a 91% increase in capital expenditure to $12 billion in the January-March period, will be under scrutiny. Operating expenses for the second quarter likely rose over 32% to $27.57 billion. There are also reports that Alphabet is in talks to acquire cybersecurity startup Wiz for approximately $23 billion.
Market Overview:- Alphabet's quarterly revenue expected to rise nearly 14%.
- Strong demand for AI-powered cloud computing services.
- Ad market showing signs of improvement.
- Investors focused on AI-driven growth in Search and Cloud.
- Alphabet's AI investments saw a significant increase in capital expenditure.
- Reports suggest potential $23 billion acquisition of cybersecurity startup Wiz.
- Alphabet's second-quarter cloud computing sales and advertising revenue expected to grow 26.4% and 10.8%, respectively.
- Investors watching for Alphabet's ability to maintain competitiveness in AI.
- Upcoming results from ad-dependent peer Meta Platforms (META).
Alphabet's core businesses are likely to report healthy growth as an improving macro-economic climate gives customers the confidence to invest in cloud computing and spend on advertising. Media investment firm GroupM raised its 2024 global advertising growth forecast to 7.8% in June, from 5.3% in December, primarily due to better-than-expected spending in China and the United States.
Analysts also expect strong performance at YouTube, thanks in part to expanded monetization features in its TikTok-styled video offering, Shorts. Alphabet's second-quarter cloud computing sales and advertising revenue are expected to grow 26.4% and 10.8%, respectively, according to LSEG data, largely similar to the preceding two quarters. Ad-dependent peer Meta Platforms will report its results next week on Wednesday, July 31.
