Google sales

Alphabet Q1 Earnings Preview: Ad Sales Strong Despite Economic Headwinds

  • Publication of the results for the first quarter of 2022 on Tuesday April 26, after market close
  • Revenue forecast: $68.07 billion
  • EPS expectation: $25.70

When Google’s parent company Alphabet (NASDAQ:) releases its latest quarterly results tomorrow after the close, investors will be watching for signs of a slowdown in corporate advertising spend, as the economy enters an uncertain phase, hurt by four decades high.

When the Mountain View, Calif.-based search engine giant released its own in February, the tech mega-cap was in full swing, even in the face of economic upheaval.

Alphabet continued to benefit from the major shift that emerged during the pandemic, as people increasingly turned to online shopping and businesses dramatically increased their digital marketing budgets.

Over the past two years, the company’s flagship search business has flourished, while its cloud computing unit and YouTube segment have brought additional depth to its revenue. Also, unlike Meta Platforms (NASDAQ:) and Snap (NYSE:), Google’s ad sales were barely affected by the most recent privacy changes to Apple (NASDAQ:) iOS, primarily because the company relies on its own Android operating system.

Despite a variety of headwinds accelerating on the macro front, many analysts still expect robust sales growth for Alphabet and continue to recommend the stock as a buy.

Multi-year value creation

In a recent note, Credit Suisse reiterated that Alphabet shares were outperforming, saying it saw “continued signs of [a] multi-year value creation cycle based on AI. The note adds:

“We maintain our outperform rating based on: 1) continued monetization improvements in search via product/AI-driven updates; 2) revenue contribution above expectations from non-businesses research; and 3) creating optional/shareholder value from new monetization initiatives such as Maps, the Discover tab, as well as the possible commercialization of Other Bets.

Canaccord analysts, in their own note, also rated Alphabet a buy, saying they expect healthy digital advertising demand despite near-term macro uncertainty. Their note said:

“GOOGL’s momentum looks set to continue as search is a critical channel for e-commerce advertising and integrations within search improve the user experience.”

“This momentum, coupled with continued momentum in verticals such as retail, media & entertainment, and travel, should drive another quarter of strong search results, and Google is also looking at investments in AI to improve the user experience.”

In an Investing.com survey of 50 analysts, Google stock, down 17% this year, received 48 buy ratings, earning it an “outperform” rating.

GOOGL analyst price target
GOOGL analyst price target

According to their consensus price target, the stock has more than 42% upside potential over 12 months from its closing price of $2,392.71 on Friday.

Conclusion

Google is one of the best mega cap stocks currently available. GOOGL shares are well positioned to perform well even in a potential economic downturn due to the company’s broad reach in the digital advertising market and strong growth momentum in other areas of the economy. digital. Tomorrow’s earnings report will likely reflect this optimism.