Alphabet (GOOGL) Q4 Earnings to Benefit From Google Cloud
Alphabet’s GOOGL fourth-quarter 2022 results, scheduled to be released on Feb 2, are likely to reflect gains from its strengthening cloud service offerings.
The company’s cloud services arm — Google Cloud — has become the key catalyst behind its business growth.
Alphabet’s cloud offerings include Google Cloud Platform and Google Workspace, which have been continuously gaining momentum in the booming cloud computing market. Google’s growing investments in infrastructure, security, data management, analytics and AI have been major positives.
The Google Cloud segment, which derives revenues from fees collected for Google Cloud Platform services and Google Workspace collaboration tools, has constantly been driving substantial revenue growth for Alphabet.
Revenues from the segment were $6.9 billion in third-quarter 2022. The figure accounted for 9.9% of total revenues and exhibited year-over-year growth of 37.6%.
For fourth-quarter 2022, the Zacks Consensus Estimate for Google Cloud’s revenues is pegged at $7.25 billion, suggesting growth of 30.8% from the prior-year quarter’s reported figure.
Click here to know how the company’s overall fourth-quarter performance is likely to have been.
Alphabet Inc. Price and Consensus
Alphabet Inc. price-consensus-chart | Alphabet Inc. Quote
Factors to Consider
Google Cloud is expected to have continued gaining from the growing trend of hybrid work culture.
Google’s strengthening efforts toward expanding its cloud services portfolio, data centers, availability zones and regions are likely to have helped it gain share in the highly competitive cloud market.
The company’s growing efforts to increase the number of cloud regions and data centers in the Asia-Pacific region are anticipated to have continued to aid its performance in this particular region.
Its robust real-time data, analytics and AI, along with its open and scalable cloud infrastructure, is expected to have helped win customers in the fourth quarter.
Strengthening cybersecurity solution offerings by Google Cloud is likely to have bolstered its clientele in the quarter under review.
In this regard, the company’s Mandiant buyout is expected to have contributed well on the back of its end-to-end security operations suite.
GOOGL’s efforts in integrating data lakes, data warehouses, data governance and advanced machine learning into a single platform are expected to have bolstered its prospects in the data cloud market in the to-be-reported quarter.
All these endeavors are likely to have contributed well to the fourth-quarter performance of Google Cloud.
Zacks Rank & Stocks to Consider
Currently, Alphabet has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer & Technology sector are Agilent Technologies A, Arista Networks ANET and Asure Software ASUR. All three companies carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Agilent has gained 7.6% in the past year. A’s long-term earnings growth rate is projected at 10%.
Arista Networks has lost 0.4% in the past year. The long-term earnings growth rate for ANET is projected at 17.5%.
Asure Software has gained 45% in the past year. The long-term earnings growth rate for ASUR is projected at 23%.
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