Google’s parent company Alphabet (GOOG, GOOGL) will release its fourth-quarter results after the bell on Wednesday, as investors and analysts look for signs that the broader digital advertising market has bottomed out.
Here’s what Wall Street expects of the company, as compiled by Bloomberg, compared to the company’s performance during the same period last year.
Alphabet completed a 20-to-1 stock split in July 2022.
The company, like Meta (META) and Snap (SNAP), is struggling to ride out a downturn in the digital advertising market. In the third quarter, the company fell short of analysts’ expectations for both revenue and earnings per share as advertisers cut budgets amid rising inflation and interest rates.
In an investor note, BofA Global Research analyst Justin Post said he expects YouTube ad revenue and Google Cloud growth to decline quarter over quarter. According to Post, BofA’s channel audits show advertiser spending in the fourth quarter was “soft” and the first quarter of 2023 will be “slow.”
Alphabet’s results are the first since it laid off some 12,000 employees in January. CEO Sundar Pichai blamed the layoffs on Alphabet’s decision to recruit staff to meet the company’s demand during the pandemic. As people began to venture into the real world and rely less on virtual options, Alphabet had to downsize its staff.
It’s also the first time Alphabet will report earnings since the Department of Justice (DOJ) filed an antitrust lawsuit against the tech giant over its advertising business. In its complaint, the DOJ says it wants to dismantle the advertising business of the company, which it accuses of operating at the expense of competitors and smaller advertisers.
In a research note, Needham analyst Laura Martin wrote that she expects it will take 7-10 years to resolve the case, and that every business decision Alphabet makes in the interval should be subject to internal legal review.
“It involves value destruction, in addition to legal costs, regardless of the outcome,” she wrote.
The DOJ isn’t Alphabet’s only existential threat, however. In January, Microsoft (MSFT) announced it was making a multi-billion dollar, multi-year investment in developer ChatGPT OpenAI. Microsoft is already talking about adding the company’s artificial intelligence capabilities to its various cloud products, and if it can attach natural language responses to its Bing search engine, it could reduce Google Search’s market share. .
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