Alphabet Q4 Earnings Preview: AI, YouTube, DOJ Case Key Items To Watch As Company Goes For 8 Consecutive Revenue, EPS Beats - Alphabet (NASDAQ:GOOGL)

Technology giant Alphabet Inc GOOGGOOGL could focus on cloud, AI and YouTube growth when the company reports fourth-quarter financial results after the market close Tuesday.

Earnings Estimates: Analysts expect the company to report fourth-quarter revenue of $96.6 billion, up from $86.3 billion in last year's fourth quarter, according to data from Benzinga Pro.

The company has beaten analyst estimates for revenue in seven straight quarters.

Analysts expect the company to report fourth-quarter earnings per share of $2.13, up from $1.64 in last year's fourth quarter. The company has beaten analyst estimates for earnings per share in seven straight quarters.

What Analysts Are Saying: Recent strength in advertising for Meta Platforms could foreshadow strong advertising strength for Alphabet, Bank of America analyst Justin Post recently said.

The analyst, who has a Buy rating and $225 price target, said Alphabet should show positive commentary on cloud demand in the fourth-quarter results and commentary.

Post said Alphabet will likely show strength in search thanks to AI usage helping with monetization and YouTube could also benefit from improved AI targeting.

Potential negatives for Alphabet would be talking about tougher first-quarter advertising comps, slowing YouTube growth or new hiring/Capex commentary.

"We remain constructive on Alphabet and believe Street is likely underestimating potential for AIOs to drive Search monetization strength in 2025," Post said.

Here are other analyst ratings for Alphabet and their price targets:

JMP Securities: Reiterated Market Perform rating, no price target
Needham: Maintained Buy rating, increased price target from $210 to $225
DA Davidson: Maintained Neutral rating, increased price target from $190 to $200
Cantor Fitzgerald: Maintained Neutral rating, lowered price target from $215 to $210

Key Items to Watch: Alphabet likely won't comment on pending legislation, but could be asked about its current case with the Department of Justice and what the new White House administration means.

Alphabet donated $1 million to Donald Trump's inauguration fund, an amount higher than the $285,000 donated to the 2016 and 2020 inaugurations. The company also live-streamed the inauguration on YouTube.

The donation comes as the company has been targeted by the Department of Justice for alleged monopolistic behavior and could be forced to break up and spin off assets such as the Chrome browser.

While there’s no certainty that a donation or a visit to Mar-a-Lago will sway the new administration or prevent such outcomes, changes to the DOJ's leadership could potentially shift the company's legal challenges.

Incoming Vice President J.D. Vance also previously said he wants to break up Alphabet, which could make the company a target of the new administration.

Senator Ted Cruz (R-Texas) recently told Politico that Republicans would target Alphabet’s Google and YouTube content moderation policies on the search engine.

As mentioned by Post, AI could also be one of the key themes.

"Our commitment to innovation, as well as our long-term focus and investment in AI, are paying off with consumers and partners benefiting from our AI tools," Alphabet CEO Sundar Pichai said after third-quarter results.

Pichai said at the time that Alphabet was winning larger deals and attracting new customers thanks to its AI solutions in the cloud. Investors and analysts would welcome an update on this and what the future holds for its cloud segment thanks to AI tools.

YouTube passed $50 billion in total ads and subscription revenues over the last four quarters for the first time, he said.

GOOGL Price Action: Alphabet stock closed Monday down 1.37% to $201.23 versus a 52-week trading range of $130.67 to $205.48. Alphabet stock is up 40% over the last year.

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