Alphabet (NASDAQ:GOOGL) is gearing up to reveal its third-quarter 2023 results on October 24.

For this quarter, the Consensus Estimate for revenues stands at $63.13 billion, indicating a notable 10.2% improvement compared to the figure reported in the same period last year.

The consensus estimate for earnings is set at $1.45, demonstrating a substantial 36.8% growth over the previous year’s reported earnings. This estimate has remained consistent over the past month.

In the past four quarters, the company missed the Consensus Estimate twice, resulting in an average negative earnings surprise of 0.9%

Search, YouTube & Ad Efforts to Consider

Alphabet’s ongoing commitment to innovating AI techniques for the advancement of its search business is expected to continue bolstering its search revenues in the third quarter.

The introduction of the Search Generative Experience, which harnesses generative AI technology to provide more natural and intuitive search results, is likely to have made a significant contribution. With the utilization of large language model-powered enhanced search results, Google is anticipated to have maintained its search momentum during the reviewed quarter.

Large language models, in combination with multi-search and visual exploration features, are expected to have further enhanced the quality of search results.

Enhancements in Google Lens and Google Maps features are also likely to have positively impacted search traffic.

The Consensus Estimate for Google Search & Other revenues is projected at $43.04 billion, reflecting an increase of 8.9% from the figure reported in the same quarter of the previous year.

Furthermore, Google’s expanding advertising offerings, infused with generative AI technology, are expected to have significantly contributed to Google’s advertising revenues during the third quarter.

A stabilization in advertisers’ spending is likely to have been a boon for the advertising business.

The consensus estimate for Google advertising stands at $58.94 billion, representing an 8.2% growth compared to the prior-year quarter.

As for non-advertisement revenues from YouTube, the growing user momentum in YouTube Shorts may have acted as a tailwind. Google’s ongoing efforts to strengthen relationships with content creators are also expected to have had a positive influence.

Robust growth across YouTubeTV and YouTube Primetime Channels, as well as major updates in YouTube Premium, may have further driven growth in Google’s Other revenues. The consensus estimate for this segment is $7.96 billion, indicating a substantial 15.5% increase from the previous year’s reported figure.

The growing momentum surrounding Android 13 and Pixel devices is likely to have positively impacted Alphabet’s performance in the quarter under review.

All of the aforementioned factors are expected to have contributed to the performance of Google’s Services segment in the third quarter. The Consensus Estimate for Google Services revenues is $66.74 billion, reflecting a substantial 8.7% growth compared to the previous year’s reported figure.

Strength in Cloud & Other Bets to Benefit

Alphabet has been steadily gaining ground in the fiercely competitive cloud market, thanks to its expanding cloud service portfolio and a growing number of data centers.

The strong adoption of Google Cloud Platform and Google Workspace is expected to have significantly boosted the performance of the Google Cloud segment in the quarter under review.

The growing popularity of Google’s generative AI-backed cloud offerings is anticipated to have enhanced Google’s presence among cloud customers.

The Consensus Estimate for Google Cloud revenues is $8.54 billion, signifying a solid growth of 24.3% compared to the reported figure in the same quarter of the prior year.

In addition, Alphabet’s continued efforts to bolster its healthcare technology portfolio are expected to drive growth in its Other Bets segment during the third quarter. The Consensus Estimate for Other Bets revenues is $284 million, showing a substantial growth of 35.9% compared to the figure reported in the same quarter of the previous year.

 

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