πππAll eyes will be Google CEO Sundar Pichai on Thursday as it reports its Q1 25 results. Wall Street Analysts are generally bullish on Google $Alphabet(GOOG)$
Citi Analysts said recently that they expect Google Search would be "among the last platforms to experience macro impacts and among the first to recover". This is due to its potential for growth from the adoption of AI tools like Google's AI Mode in Search as well as the latest version of Google's Gemini large language model.
Key Metrics and Revenue Expectations :
Analysts expect Total Revenue is to be around USD 89 billion for Q1 25. This represents a modest year over year increase of about 7 to 11%, driven by solid core search and advertising revenues.
Earnings Per Share (EPS) is forecasted to be around USD 2.00. This stability in profitability reflects Google's resilient operating model, even as certain segments such as ad tech face regulatory and competitive pressures.
Segment Focus :
Google Cloud and Advertising
Google Cloud remains under close scrutiny. Expectations are for Google Cloud revenue to come in at about USD 12.3 billion, up from around USD 11.9 billion in the previous quarter. Analysts are particularly interested in whether operating margins in this segment will expand further, with consensus figures trending towards an average of 15.4%. The ability of the Cloud Division to improve its margins is seen as key catalyst for long term growth.
Advertising Revenue
Advertising continues to be the backbone of Google's revenue even though there are indications suggesting a slight drop in brand spending. With ongoing legal and regulatory uncertainties such as Antitrust issues related to its ad tech practices, investors will be watching for any updated guidance that could clarify whether these challenges are temporary or indicative of a longer term trend.
Additional Considerations:
Guidance on Capital Expenditure (CapEx) and Future Growth
Beyond the key Q1 25 figures, there is significant interest in any forward looking comments on Capital Expenditure as Google continues to invest aggressively in AI, data centers and cloud infrastructure. Analysts believe that clear guidance on CapEx spending could offer important insights into how these strategic investments might drive longer term profitability.
Overall Sentiment :
While the key figures are expected to be stable, much of the market focus will be on the nuances revealed during the Earnings call, especially regarding the outlook for revenues and the operational performance of the Cloud segment. Forward guidance for Q2 25 with estimates around USD 93.6 billion in revenue and USD 2.14 in EPS, will also be key in determining investor sentiments.
In summary, while there is some caution regarding revenue numbers and macro factors, the prevailing view among analysts is bullish. This is due to Google 's strong fundamentals in advertising, its push into AI and overall market leadership. The consensus price targets around USD 185 to USD 195 further underscores this optimism for sustained growth.
I have invested in Google since 2023 and believe that even though its share price has taken a beating recently, it will prevail and grow stronger. Google Search is something that I use zillion times a day. Google holds a dominant position in the Global search engine market at around 90%, maintaining a significant lead over its competitors like Microsoft's Bing.
Google even pays dividends on a quarterly basis. The current dividend yield is 0.53%. At the last closing price of USD 147.67, Google is down 7.7% for the week and 22% year todate, representing a great opportunity for Bargain hunting.
As Warren Buffett likes to say When there is Fear in the markets it is time to be greedy.
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