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Will Google Cloud Strength Aid Alphabet's (GOOGL) Q1 Earnings?

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Alphabet’s (GOOGL - Free Report) first-quarter 2024 results, scheduled to be released on Apr 25, are likely to reflect strength in its cloud arm, Google Cloud.

Google Cloud has turned out to be the key catalyst for Alphabet’s growth on the back of its strengthening cloud-service offerings.

GOOGL’s cloud offerings include Google Cloud Platform and Google Workspace, which are continuously gaining momentum in the booming cloud computing market. Google’s growing investments in infrastructure, security, data management, analytics and AI remain major positives.

Alphabet has been consistently witnessing strong revenue growth, generated by the underlined segment, which derives revenues from fees collected for Google Cloud Platform services and Google Workspace collaboration tools.

Revenues from the segment were $9.19 billion in fourth-quarter 2023. The figure accounted for 10.6% of the total revenues and exhibited year-over-year growth of 25.7%.

For first-quarter 2024, the Zacks Consensus Estimate for Google Cloud revenues is pegged at $9.25 billion, suggesting growth of 24.1% from the prior-year quarter’s reported figure.

Click here to know how Alphabet’s overall first-quarter performance is likely to have been.

Alphabet Inc. Price and Consensus


Alphabet Inc. Price and Consensus

Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote

Factors to Consider

Google’s strengthening efforts toward expanding its cloud services portfolio, data centers, availability zones and regions are likely to have helped it gain strong customer momentum in the highly competitive cloud market.

The company’s deepening focus on generative AI is likely to have been a major plus. The growing momentum of its most advanced and powerful large language model namely Gemini, is likely to have contributed well.

The solid adoption of generative AI-powered Workspace tools is likely to have been another positive.

Strength in Google’s Kubernetes offerings is anticipated to have continued driving its customer momentum.

GOOGL’s efforts in integrating data lakes, data warehouses, data governance and advanced machine learning into a single platform are expected to have bolstered its prospects in the data cloud market in the to-be-reported quarter.

The company’s amplifying focus on providing a secure cloud infrastructure, owing to its growing cybersecurity efforts, is expected to have contributed well.

All these endeavors are likely to have contributed well to the first-quarter performance of Google Cloud.

Zacks Rank & Stocks to Consider

Currently, Alphabet has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Arista Networks (ANET - Free Report) , Dell Technologies (DELL - Free Report) and Badger Meter (BMI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Arista Networks have gained 4.2% in the year-to-date period. The long-term earnings growth rate for ANET is 17.48%.

Shares of Dell Technologies have gained 52.3% in the year-to-date period. The long-term earnings growth rate for DELL is currently projected at 12%.

Shares of Badger Meter have gained 17.5% in the year-to-date period. The long-term earnings growth rate for BMI is 15.57%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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