Alphabet Q1 Earnings Preview: Room For Disappointment, But AI Guidance Will Be Key

Alphabet, Inc. GOOG GOOGL will release its first-quarter financial results on Tuesday, April 25, after the market close. 

Five Things To Know Ahead of Alphabet's Q1 Earnings Report

• The Wall Street analysts' consensus predicts earnings per share of $1.08 and revenue of $68.87 billion for the quarter. 
• The projected drop in earnings would be 9% from Q4 2022 and 17% from Q1 2022.
• Estimates for sales point to a 10% drop from Q4 2022 and flat performance from Q1 2022. 
• In the past four quarters, the company has fallen short of earnings and revenue projections. In Q4 of 2022, Alphabet missed earnings projections by 11%. 
• Alphabet shares dropped 2.75% in the session following the Q4 2022 earnings miss, and fell 9.1% in the session following the Q3 2022 earnings miss.

Read also: This Bullish Google Analyst Does Not Expect Immediate Upside From AI Chatbot, Unlike Microsoft

Bank of America's Take On Alphabet's Earnings

BofA analysts forecast in-line revenues for Google search and cloud, but YouTube will be under pressure. 

Overall, BofA expects EPS at $1.07, slightly below the Street projection of $1.09. Experts believe that the first quarter could show cost improvements for Alphabet. 

The major challenge for the company is AI integration into search, both in terms of time and impact, and therefore a post-results discussion on future plans and outlook may constitute the most important stock driver. Alphabet, according to BofA, will be a more defensive, self-help stock in the Internet group in 2023, with higher relative earnings stability due to expenditure flexibility, great margins, and the possibility to support shares through buybacks.

Alphabet's Stock Performance And Valuations

• Alphabet's stock price is trading at $105 per share, up 20% year-to-date as of this writing. 
• Shares are nearly 30% lower than their all-time highs of $151 set in February 2022. 
• In Q1 2023, shares rose 17.5% posting their strongest quarterly performance since Q2 2021. 
• The stock trades at a forward price-to-earnings ratio of 19.45, according to Benzinga pro data. 

Now Read: Making Big Bucks At Google: A Look At How Much Alphabet Analysts, Managers And Engineers Get Paid