Alphabet Inc. (NASDAQ: GOOGL) will report Q3 2023 results on Tuesday, October 24, 2023, after the market close. Here are the key numbers that we’re watching.
Figure 1: Alphabet – consensus expectations for Q3, past earnings surprises, consensus revisions, and CAGR
Source: Visible Alpha consensus (October 19, 2023). “Previous Surprises” indicate the direction that specific line items beat or missed. “Consensus Revisions” show the trajectory of line items from a given date.
Alphabet Q3 2023 Earnings Preview
According to Visible Alpha consensus, total revenues expected for Q3 have come up slightly from July, from $75.7 billion to $76.0 billion, driven by resilience in its ad business. In addition, the Q3 consensus expectations for operating income and EPS have increased from the beginning of the year, but show a slight dip to the projections from the end of Q2 to current levels.
We are closely monitoring the trend of the Cloud business, given its new AI products and improved profitability. The operating profit margin, which turned positive in Q1 and showed further improvement in Q2, is projected to remain at 5% in Q3, but increase to 6% in Q4.
Alphabet stock has traded up 12.9% since last quarter’s July release and up 56.4% since the beginning of the year, outperforming the S&P 500. The stock has remained resilient, driven by expected ad growth and the projected outlook for profitability in the Cloud business. Could the Q3 release provide a new catalyst for the stock?
Figure 2: Alphabet – consensus revenues, operating income, EPS, and stock performance
Source: Visible Alpha consensus (October 19, 2023). Stock price data courtesy of FactSet. Alphabet stock price is as of the market close on October 18, 2023.