Alphabet (GOOGL) Q3 2023 Earnings Preview

Alphabet GOOGL Q3 2023 Earnings Preview

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

Alphabet Earnings Preview

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

Alphabet Consensus Estimates

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.


About Melissa Otto, CFA

Melissa is Head of TMT Research at Visible Alpha. She spent 20+ years as an equity analyst and portfolio manager. At TIAA/Nuveen, Melissa specialized in covering global technology and consumer stocks and the Pan-Asia region. She also managed one of Fidelity's equity research teams as a director of research. In addition to her equity investing career, Melissa worked directly with software engineering teams at Bloomberg, Microsoft, and MSCI building cloud-based solutions to centralize and aggregate critical investment data for investors. Melissa studied Japanese at Harvard University, received her MA in economics from Brandeis University and MS degree from the University of Pennsylvania, and is a CFA charterholder. She is certified in Azure Fundamentals and Agile Project Management.