To The Moon

$Alphabet(GOOGL)$ is set to report its third quarter earnings on 29 Oct (Tuesday) after the market close. Alphabet had beat the second-quarter earnings expectations on artificial intelligence (AI) momentum.

For the third quarter, GOOGL is expected to report revenues of around $86.4 billion, Google’s U.S. revenues are expected to be $40.6 billion, and its revenues from other regions are expected at $45 billion.

The earnings per share (EPS) is expected to come in at $1.84.

Election Season Should Help Ads Revenue Which Is In Focus For Investors

As competitors and legal challenges add resistance, investors would be focusing on the advertising revenue for this upcoming quarter earnings.

The contentious election season should help to propel Google’s bottom line because advertising dollars are strong going into the November balloting. A still-resilient U.S. economy may also help provide a tailwind for ad spending into the holiday season.

GOOGL also faced headwinds over the last several months, including the emergence of ChatGPT, as well as a proposed set of sanctions from the U.S. Department of Justice.

But if we looked at where advertising spend is going, GOOGL still have a high percentage of market share,and we should be seeing GOOGL ads revenue gaining in the third-quarter as well.

GOOGL Strength In Search and Momentum in Cloud From LLM

As mentioned by GOOGL CEO after the second-quarter earnings, their strong performance in second quarter highlights ongoing strength in Search and momentum in Cloud.

GOOGL is also innovating at every layer of the AI stack. Their longstanding infrastructure leadership and in-house research teams position GOOGL well as technology evolves.

This can be seen from the performance of the Search Engine, profits have been growing steadily.

In recent months, Google has reportedly made progress on software for AI models that resembles humanlike reasoning abilities. GOOGL has long focused on “reasoning” capabilities in large language models (LLMs), including with its work on chain-of-thought prompting.

With this technique, Google is using, LLMs can solve multistep problems using a “series of intermediate reasoning steps,” similar to the way a human would. OpenAI unveiled its “reasoning” model series, OpenAI o1, in September. Google is also working on improving its Gemini chatbot’s “reasoning” abilities. In July, Google made its fastest, most cost-efficient model, 1.5 Flash, available in the unpaid version of Gemini.

So I would be expecting the revenue contribution to increase from this area, where Cloud AI offerings sales should increase.

Technical Analysis - MACD and Multi-timeframe (MTF)

GOOGL is trading near the short-term MA, and in a sideway direction, so what I can deduce is investors are waiting for news and any updates before earnings before we see MACD waiting to form a bullish MACD crossover.

We need GOOGL to show a more confirmed trade above the short-term MA, before we see a positive MTF uptrend. Then we might expect a gap up or surge after its earnings on 29 Oct after market close.

Summary

GOOGL might be challenged by the fallout from an antitrust lawsuit from the DOJ—one that could potentially threaten the company’s near-monopoly over web-based searches. The DOJ has made several proposals following a ruling in August that found Alphabet acted unlawfully to keep its monopoly, including putting an end to deals it makes with large companies like $Apple(AAPL)$ . Google has until December to offer its own remedies.

This might have some impact on GOOGL stock price, but I have confidence that GOOGL can remedies it. I

I am holding my position in GOOGL.

Appreciate if you could share your thoughts in the comment section whether you think GOOGL would win investors confidence and sentiment back with an earnings surprise.

@TigerStars @Daily_Discussion @Tiger_Earnings @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.