Shares in Google-parentAlphabet(GOOGL) have been on a roll since it reported December-quarter earnings. But it may be hard for Google stock to deliver an encore performance with first-quarter results.
"We think Google faces a higher bar this quarter than the past few as expectations for a strong search and brand advertising recovery are anticipated," BMO Capital Markets analyst Daniel Salmon said in a report to clients.
Google stock rose 0.4% to close at 2,309.93 on thestock market today.
Google stock has advanced nearly 20% since it reported fourth-quarter earnings on Feb. 2. Google earnings for the first quarter are due after the market close on Tuesday.
For the March quarter, analysts estimate adjusted profit of $15.66 per share, up 58% from $9.87 per share a year earlier. Google gross revenue, excluding traffic acquisition costs, will grow 25% to $51.53 billion, analysts estimate.
Net revenue will come in at $42.36 billion, according to views. In the Google earnings report, analysts estimate EBITDA — earnings before interest, taxes, depreciation and amortization — of $18.84 billion.
Google Stock: Rising Cloud Computing Investments
At Bank of America, analyst Justin Post said in his note to clients that Google's outlook on profit margins will be key amid rising investments in cloud computing and other areas. In the December quarter, operating margins for the Google cloud computing business came in much lower than analyst estimates.
"Alphabet warned on increasing investments and accelerating pace of hiring on the last call, which took some of the luster away from revenue/margin beat," Post said. "We expect quarter-over-quarter expense growth to be in focus."
Amid coronavirus pandemic lockdowns, the drop-off in global travel impacted Google's advertising revenue. Google's core internet search business is expected to continue rebounding if economies reopen.
Goggle Earnings: Digital Ad Business Rebounding
Given this year's run-up in Google stock, investors need to see upside from other parts of its business, Credit Suisse analyst Stephen Ju said in a note.
"That the ad sector is in an across-all-verticals full recovery at this point is well understood," he wrote. "We find ourselves asking what's next for Google as we look beyond what we anticipate will be better-than-expected advertiser spend across all of its properties. Our focus returns to YouTube."
According to IBD MarketSmithanalysis, GOOGL stock forged a flat base with an entry point of 2,145.24. A5% buy zoneextends to 2,250. Google stock trades just above the buy zone.
Heading into the Google earnings report, itsRelative Strength Rating is 78 out of a best possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter@reinhardtk_techfor updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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