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Alphabet (GOOGL) to Post Q4 Earnings: What's in the Offing?

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Alphabet GOOGL is scheduled to report fourth-quarter 2021 results on Feb 1.

For the quarter under review, the Zacks Consensus Estimate for revenues is pegged at $59.3 billion, indicating an improvement of 27.8% from the year-ago reported number.

Further, the consensus mark for earnings is pegged at $26.69, indicating a 19.7% rise from the previous year’s reported figure. Notably, the figure has moved 0.6% downward over the past seven days.

The company surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an earnings surprise of 41.53%, on average.

Alphabet Inc. Price and EPS Surprise

Alphabet Inc. Price and EPS Surprise
Alphabet Inc. Price and EPS Surprise

Alphabet Inc. price-eps-surprise | Alphabet Inc. Quote

Search, Ad & Cloud Momentum to Aid Growth

Alphabet’s expanding ad services portfolio, robust search engine and improving search results are likely to have benefited the fourth-quarter performance.

The company’s continued efforts toward innovation of its search segment, which accounts for the major portion of the total revenues, is expected to have continued driving traffic on its platform in the to-be-reported quarter. The growing momentum across its mobile search is anticipated to have been another positive.

The introduction of AI-backed Multitask Unified Models technology is likely to have continued enhancing the search results to the unique queries of users.

Continued efforts to bolster the news ecosystem for the company’s Search and Discovery feed, and offering access to quality journalism are expected to have been positives.

Technical advancements in Google Assistant and Google Maps are expected to have driven the momentum across search further, which, in turn, is expected to have contributed well to the fourth-quarter performance of Google Services.

In addition to this, Google has been gaining traction with the Local Services ads. This is expected to get reflected in its fourth-quarter advertisement revenues. Moreover, solid momentum across retail, media & entertainment, finance, and travel categories is likely to have aided growth in its advertising business.

Coming to cloud prospects, Google has been significantly gaining momentum in the highly competitive cloud market on the back of its expanding cloud services portfolio and an increasing number of data centers. The impacts of this are expected to have driven the company’s cloud revenues in the quarter under review.

The solid adoption of Google Workspace is likely to have contributed well to the performance of the Google Cloud segment.

Android, Meet, Waymo & Google TV Efforts to Consider

Google’s strength across Android, digital payment, autonomous driving and healthcare is anticipated to have aided its fourth-quarter performance.

The growing momentum across Android 12 is likely to have benefited the company’s performance in the to-be-reported quarter. New widgets designed for personalizing phones, new dashboards and indicators for privacy management, and more gesture features, which aid in communication and controlling phones, are expected to have continued bolstering the adoption rate of Android 12.

In addition to this, Google’s persistent efforts to infuse its video conferencing software, Google Meet, with advanced features are likely to have bolstered its user base in the quarter to be reported. The company made advancements in Google Meet, with the help of which the software will notify users when there will be echo on video calls.

Further, growing prospects around Alphabet’s self-driving unit, Waymo, are expected to have been a major tailwind. In the fourth quarter, Waymo expanded its partnership with UPS to initiate autonomous freight movement with Waymo Via Class 8 trucks, which are powered by the fifth-generation Waymo Driver.

The impacts of the strengthening momentum across the company’s Early Rider program, which is currently available in San Francisco, CA, and Phoenix, AZ, are expected to get reflected in the upcoming results of the company.

Apart from this, the company’s strong Google TV efforts are expected to have driven its momentum in the streaming market in the quarter under review. Google introduced its first Chromecast streaming dongle for Google TV. Further, Mecool has launched its first Google TV streaming stick named Mecool KD3, which supports the over-the-top streaming service of Netflix.

Also, Realme introduced Realme 4K Smart Google TV streaming stick in India, which, in turn, is expected to have expanded the reach of Google TV in the country.

What Our Model Says

Our proven model conclusively predicts an earnings beat for Alphabet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Alphabet has an Earnings ESP of +7.33% and a Zacks Rank #3 at present.

Other Stocks to Consider

Here are some other stocks that you may consider, as our model shows that these too have the right combination of elements to beat on earnings this season.

Endava DAVA has an Earnings ESP of +1.70% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Endava is scheduled to release second-quarter fiscal 2022 results on Feb 16. The Zacks Consensus Estimate for DAVA’s earnings is pegged at 59 cents per share, suggesting an increase of 55.26% from the prior-year reported figure.

Monolithic Power Systems MPWR has an Earnings ESP of +2.83% and a Zacks Rank #2 at present.

Monolithic Power Systems is set to report the fourth-quarter 2021 results on Feb 10. The Zacks Consensus Estimate for MPWR’s earnings is pegged at $1.87 per share, which suggests an increase of 42.75% from the prior-year reported figure.

AMETEK AME has an Earnings ESP of +0.38% and a Zacks Rank #2 at present.

AMETEK is set to report the fourth-quarter 2021 results on Feb 3. The Zacks Consensus Estimate for AME’s earnings is pegged at $1.31 per share, which suggests an increase of 21.3% from the prior-year reported figure.


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