MW Alphabet's stock is on a winning streak. Can it stay hot after next week's earnings?
By Britney Nguyen
While there are lingering concerns about Google's search business in the long run, analysts see some positives ahead of upcoming second-quarter results
Shares of Alphabet Inc. were gaining on Friday, putting the company on pace for an eight-day winning streak - its longest in about 10 months. Will the positive momentum carry forward into next week, when the Google parent company is due to report earnings?
Analysts seem generally upbeat ahead of the results, despite the doubt that's swirled around Alphabet's $(GOOG.UK)$ (GOOGL) standing lately. While Wall Street has some longer-term concerns about matters like Google's position in a world where artificial intelligence dominates the search process, analysts are encouraged about various developments that could have benefited second-quarter numbers.
For example, analysts at Bank of America noted "stable spending growth" in the second quarter that seemed to get better as the period went on, according to a Friday note to clients. They also flagged improving macroeconomic conditions as well as the weakening U.S. dollar DXY, which helps multinational companies.
The BofA analysts are above the consensus view with their recently raised estimates, which call for $81 billion in net revenue - which excludes the traffic-acquisition costs paid for prime placement of its search engine - and $2.21 in earnings per share. Analysts tracked by FactSet expect $79.7 billion in net revenue and $2.18 in EPS.
For the search business, the analysts are looking for an 11% jump in revenue, while the Wall Street consensus calls for a 9% increase.
Although the BofA analysts see a risk from job data indicating the tech giant is growing headcount, the company's "voluntary employee-buyout program suggests cost management is ongoing," they noted. The Bank of America team raised their price target from to $210, from $200.
Investors will be looking for Alphabet to share details on advertisement spending and whether the company's integration of artificial intelligence into Google Search has helped monetization, the analysts said. Other focus areas for investors will be whether or not Google is seeing traction with its Gemini AI features and products, trends in the company's capital expenditures and Google's recently announced deal for AI-coding startup Windsurf.
See more: Alphabet's latest deal reveals the hottest area of AI right now
"We remain constructive on Google's ability to drive AI usage despite cautious sentiment, and see Gemini improvements, AI Mode integration in search and Workspace price increases as key [year-to-date] positives," BofA said.
Trading near $185, Alphabet's stock is up about 11% since the company held its developer conference in May, though it's down about 2% so far this year. With the outcome of the U.S. Department of Justice's case against Google's search business expected soon, the BofA analysts said investors "may have tempered enthusiasm postquarter until the judge rules on the case."
Analysts at Jefferies, meanwhile, wrote earlier this week that Alphabet has a "favorable setup" this quarter thanks in part to easier comparisons to the year-earlier period, "though concerns around AI disrupting traditional search persist."
Alphabet's stock was up 0.6% in late-afternoon trading Friday as it paced toward its longest winning streak since September, when it was also up for eight straight trading days, according to Dow Jones Market Data. Granted, many of the stock's recent gains have been fractional, so Alphabet shares are up roughly 6% across the current eight-session stretch.
-Britney Nguyen
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 18, 2025 15:11 ET (19:11 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
Comments