Valued at $2 trillion by market cap, Mountain View, California-based Alphabet Inc. (GOOGL) is a global technology leader. The company has diversified its offerings beyond its original search engine services to include cloud computing, advertising, autonomous vehicles, and healthcare solutions. The company is expected to unveil its fiscal Q3 earnings results on Tuesday, Oct. 22.
Ahead of the event, analysts forecast the internet search leader parent to post a profit of $1.83 per share, reflecting a growth of 18.1% from $1.55 per share in the same quarter last year. However, the company has consistently surpassed Wall Street's bottom-line projections in the past four quarters. In the last reported quarter, GOOGL surpassed the consensus EPS estimate by a margin of 2.2%.
For fiscal 2024, analysts expect GOOGL to report EPS of $7.63, a significant growth of 31.6% from $5.80 in fiscal 2023. Looking ahead to fiscal 2025, EPS is expected to grow 13.2% year-over-year to $8.64.
Over the past 52 weeks, GOOGL has returned 24.9%, underperforming the broader S&P 500 Index's ($SPX) 34.6% rise and the Communication Services Select Sector SPDR ETF Fund's (XLC) 37.7% gain over the same period.
Despite reporting stronger-than-expected Q2 earnings of $1.89 per share and revenue of $84.7 billion, Alphabet's stock sank on Jul. 24 due to cautious forward guidance from management. Concerns about pressured Q3 operating margins stemming from increased depreciation and expenses related to investments in artificial intelligence contributed to the bearish sentiment. As a result, investors sold off shares, leading to a 5% decline in the stock price.
In addition, Alphabet's stock dropped 3.7% on Sep. 3 after Morgan Stanley's analysis of its antitrust case suggested potential negative outcomes, including restrictions on exclusivity clauses and distribution agreements. These scenarios raised concerns about increased competition, threatening Google's dominance in the search market.
Analysts' consensus rating on GOOGL stock is bullish, with a "Strong Buy" rating overall. Out of 46 analysts covering the stock, opinions include 35 "Strong Buys," three "Moderate Buys," and eight "Holds." This configuration is more bullish than three months ago, with 33 analysts suggesting a "Strong Buy." The average analyst price target for GOOGL is $202.09, suggesting a modest potential upside of 22.3% from current levels.
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