Google Earnings Preview: 5% Stock Price Move Expected
Google Earnings Preview: 5% Stock Price Move Expected
By:Mike Butler
The company says advertising is here to stay. It's just a matter of how AI changes it.
- Google is set to report Q4 ’23 earnings on Jan. 30 after the stock market closes at 4 p.m. EST/3 p.m. CST.
- The tech giant has exceeded earnings per share (EPS) and revenue expectations three quarters in a row.
- Google is expected to report an EPS of $1.60 on $85.22 billion in revenue.
- These expectations are significantly higher than the previous quarter's estimates ($1.45 EPS, $75.73 billion).
- The focal point for this earnings call will be the impact of AI efforts on ad revenue.
Google earnings preview
Alphabet (GOOGL) is off to a strong 2024, up over 7% from the opening print of $138.55 to a recent high of $149. The tech giant is participating in the recent artificial intelligence rally related to stocks like Advanced Micro Devices (AMD), Nvidia (NVDA) and more. Earnings are just around the corner for Google, and expectations are sky-high.
Google is set to report earnings on Tuesday, Jan. 30 at 3 p.m. CST. The company is expected to report an EPS of $1.60 on $85.22 billion in revenue, and both figures are higher than the previous quarter's expectation.
Google executives have said that advertising is here to stay. It's just a matter of how advertising efforts are presented in an ever-changing AI world. Google released Bard in 2023, which is a generative AI chatbot developed to compete with other AI tools like ChatGPT. It will be interesting to see how the AI landscape unfolds, but it's safe to assume Google has the firepower to compete on a high level, given the sheer size of the tech giant.
Google has a weekly expected stock price move of +-$7.37 based on current implied volatility, which is just under 5% of the current stock price. This is on the lower end of expected moves we've seen recently, considering Netflix (NFLX) had an expected move of just under 8% and blew through that after a strong earnings report.
Looking to the March and April options cycles, we can see an expected move of +-$9.69 and +-$12.29 respectively. Because the weekly expected move is so close to the expected move of a few months out, the market is placing a heavy weight on the insight we can gain from the upcoming earnings announcement.
Bullish on Google for earnings
Google has had an impressive run as of late, rallying over 50% in 2023 and increasing revenue and net income each quarter along the way:
Bullish traders for the Google earnings announcement likely believe this trend will continue, and the recent turbulence in the AI sector may be overcome with Google's speed to market.
Bearish on Google for earnings
Traders who are bearish on Google earnings may believe the recent strength may run out of steam. What's interesting about earnings reports is that in some cases the EPS or revenue figures don't matter. It’s how the market perceives and digests the information at hand that’s important. We see stocks miss estimates and rally, and we see stocks beat estimates and sell off. If there is a cooling in the bullish train that has been Google for the better part of a year, we may see the stock take a hit.
All eyes will be on Google stock on Jan. 30. Tune in to Options Trading Concepts Live at 11 a.m. CDT on Tuesday before the market closes for a deep dive into options trading strategies!
Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb
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