Google Earnings: What you Need to Know This Week

Alphabet, the parent of Google, is slated to report quarterly earnings on April 25 after the market closes

• The tech giant exceeded EPS and revenue estimates each of the past four quarters.
• Analysts expect Alphabet to report an EPS of $1.50 on $78.70 billion in revenue. Both figures have been reduced from the previous quarter's results.
• Focal points for this earnings call may include Gemini and future AI efforts, amidst restructuring efforts to make room for the AI boom.

April has led to some not-so-surprising turbulence in the market, with such a strong start to 2024 for many sectors. While the market sells off from all-time highs, Alphabet (GOOGL), Google's parent company, is moving to the upside.

Just off the record high of $160.22 reached in early April, GOOGL currently trades at $158. The stock reached a 2024 low of $130.66 in March and has rallied back since, while chip-maker stocks like Nvidia (NVDA) and Advanced Micro Devices (AMD) have taken a break from their strong rallies.

Experts expect Alphabet to report earnings per share (EPS) of $1.50 on $78.70 billion in revenue on Thursday, April 25, after the stock market closes at 3 p.m. Central Time.

In the last earnings call Ruth Porat, president, CFO, and CIO, had positive remarks to round out 2023.

Positivity at end of 2023

"We ended 2023 with very strong fourth quarter financial results, with Q4 consolidated revenues of $86 billion, up 13% year over year. We remain committed to our work to durably re-engineer our cost base as we invest to support our growth opportunities," Porat said.

CEO Sundar Pichai echoed similar positivity: "We are pleased with the ongoing strength in Search and the growing contribution from YouTube and Cloud. Each of these is already benefiting from our AI investments and innovation. As we enter the Gemini era, the best is yet to come."

It's interesting to see the rally from the recent bottom in GOOGL stock as many other tech stocks in the Nasdaq have sold off, all while Alphabet reduced earnings expectations for the quarter.

There have been recent rumblings of relocations and layoffs for Google's finance teams ahead of the shift towards a more AI focused landscape. We should expect to hear more on this during the earnings conference call at 3:30 p.m. CDT.

News aside, we can check out the options market to put context around expected stock price moves for different timeframes based on current implied volatility. In the image above, we can see that the expected stock price move for this week is +-$7.70. Relative to the current stock price of $158, this is a pretty low expected stock price move of 4.8% compared to other companies like Meta Platforms (META) that have close to a 10% stock price move expectation for earnings.

Looking further through time, we can see a +-$14.80 expected stock price move for the June options cycle, and a +-$29.28 expected move through the December cycle of this year. This tells me that the market isn't putting too much weight on this particular earnings call, as the expected move through the rest of the year is a much larger figure than the expected move for this week.

Bullish on GOOGL earnings

GOOGL has shown relative strength when compared to the Nasdaq this month, and that could continue if the company blows earnings expectations out of the water with strong guidance for the rest of the year.

Earnings expectations have been lowered relative to last quarter, so that could set the stage for a strong performance, which is what bulls would want to see if the stock price is going to rally. Company restructuring and layoffs are usually a bad sign, but doing so to make way for an AI push seems to be seen as a bullish more in the market at least so far this year—wild times we live in!

Bearish on GOOGL earnings

Bears may think the recent rally is built on hype, and lowered expectations may mean lower realized performance.

If Alphabet misses on EPS or revenue estimates that have already been lowered, that may create a stir in the stock price. All things considered, the company is still working through internal restructuring which isn't always a walk in the park, especially with internal protests that have taken place as well.

Tune in to Options Trading Concepts Live on Thursday at 11 a.m. CDT, ahead of the earnings call for some in-depth options trading strategy analysis.

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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