To The Moon

$Alphabet(GOOGL)$ will be releasing their earnings report on 07/25/2023 after market close.

This week, investors will focus on the Federal Reserve meeting and earnings from tech giants -- Microsoft, Meta Platforms and Alphabet.

Let us look at how Alphabet First Quarter 2023 Earnings goes. Alphabet’s first-quarter 2023 earnings of $1.17 per share beat the consensus estimate by 10.4%.

Share price fell by -0.13% one day after the Q1 earnings release.

Though this figure declined by 4.9% year over year, but revenues of $69.8 billion increased 3% year over year (6% at constant currency).

Top-line growth was driven by the solid momentum in GOOGL’s cloud business and improvements in the Search performance.

Alphabet witnessed sluggishness in YouTube ads and Google Network ads due to a slowdown in digital advertisement spending. This remained a major concern. Also, softness in the Other Bets segment was a negative.

Alphabet’s growing investments in AI, strong efforts to boost Search business and expanding cloud services portfolio, which is expected to yield huge returns in the days ahead, remain major positives.

In Q1 earnings report, Alphabet has announced a massive $70 billion share repurchase plan. I would take this as a positive and how this should shape the Q2 earnings report.

I would focus on looking more on the returns on their growing investments in AI because Ai has entered a new mature phase. How much market shares have Alphabet manage to gain since they embark on the investment into AI.

Alphabet (GOOGL) Earnings Data

At the start of 2023, Google Cloud began 2023 with a Cloud provider market share of 11%, growing 1% in Q4 2022 but Google Cloud’s market share decreased to 10% after Q1 2023.

With the aggressive services roll out from Microsoft I would expect Microsoft Azure to have their market share increased and hence, Google Cloud’s market share would be less than 10% by Q2 2023.

This would mean their EPS might either meet 1.34 or be slightly lower.

Alphabet (GOOGL) Earnings History

As we can see that the Q1 EPS is better than forecast as Alphabet has led in many towers of services, but by Q2 2023, Alphabet might have lose market share to the other 2 major players, Amazon and Microsoft.

I would think the EPS might be lower than 1.34.

Alphabet (GOOGL) Year-To-Date Earnings

Alphabet has a very good YTD growth of more than 30% but with stiff competition from the other major providers.

I would be looking for Alphabet plan on how they are planning to widen their product offerings. I do understand that they have roll out Bard the AI service.

But I believe the integration of this service in other products have not been growing well.

Alphabet (GOOGL) Financial Overview

As we can see that the revenue and profit actually drop from Dec 22 to Mar 23 even when Alphabet has a higher market share than now.

I would expect their revenue growth to be close to $69 billion as the competition for the market share for A.I. related services have been growing.

If we look at the number of cloud services and servers being created, Alphabet does not seem to be leading.

Sentiment Analysis

Even though investors are still increasing their portfolios, less than 0.1% (last 7 days) and 0.1% (last 30 days), the investors sentiment for Alphabet share is neutral.

I believe investors might be looking out for what plans do Alphabet have for A.I. market increase in 2023.

Technical Analysis – Simple Moving Averages (SMA)

Though Alphabet might be in a bull trend, but it is showing signs of weakening. I would not take out the possibility of Alphabet going into a bear trend.

So I would look out more on the operating expenses in Alphabet Q2 earnings, there might be some redundancy that Alphabet might need to shed.

Technical Analysis – Relative Strength Index (RSI)

RSI show that Alphabet current price is in good momentum and it is moving towards the oversold. I would like to stay cautious to monitor the trading on 24 Jul and 25 Jul before the earnings.

This is so because I would think there might be some buying to push the price higher.

Technical Analysis – Average Directional Index (ADX)

ADX is below 20 indicate that Alphabet is in a weak trend and we can see that-DI is slightly above +Di, this could suggest that Alphabet share price might be moving downwards before its earnings.

I would monitor its price and volume movement and see how it will be trading before its earnings release.

Technical Analysis – Parabolic SAR (SAR)

Just as we have seen in ADX, SAR show that Alphabet actually have a bearish reversal, hence, this give me some suggestion that Alphabet might be trending on the downside.

I will hold back to take a position on Alphabet.

Summary

From what the fundamentals have shown us, Alphabet might not have a good market share in the A.I. demand, hence, I believe this should affect their Q2 earnings.

Technical Analysis have suggested that Alphabet is actually in a weak trend and bearish reversal suggest that it could be heading to a bearish downtrend.

I would monitor how Alphabet would be trading on 24 Jul and 25 Jul before its earnings report before deciding whether to take a position.

Appreciate if you could share your thoughts in the comment section whether you think Alphabet would post a slightly better or worse earnings?

@TigerStars @Daily_Discussion @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.