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Google is expected to report earnings following the bell on Wednesday after closing out a quarter of AI-related momentum that has given investors reasons to be optimistic. Wall Street is expecting the search giant to report $2.18 in earnings per share (EPS) on $94bn in revenue.
All eyes will be on how the company’s various AI efforts and investments are faring as Google closes a quarter of considerable growth in the crowded space. Most recently, OpenAI announced it would add Google Cloud to its suite of cloud storage providers for ChatGPT. Analysts are also expecting a favorable outlook on general growing demand for Google’s cloud services.
“The cloud business continues to benefit from robust enterprise demand, and the recent decision by OpenAI to run ChatGPT on Google Cloud – after relying primarily on Microsoft – is both symbolic and strategic,” Scott Acheychek, COO of Rex Financial, said in a statement. “It speaks to scale. It speaks to speed. And it underscores how Alphabet’s in-house AI stack is quietly turning into a competitive asset, winning business from names like Apple and Anthropic.”
While analysts still expect the company to report positive results for the second quarter of the year, some are concerned about its recent series of antitrust losses. A judge in April found that the firm acted illegally to build a monopoly of some of its advertising technology. That follows an August ruling that found Google engaged in anticompetitive behavior to protect its search monopoly. They’re also looking for updates on recent analyses and remarks that indicate Google searches have declined for the first time in 22 years. During Google’s recent antitrust trial, for instance, the Apple senior vice-president of services, Eddy Cue, said Google searches in Safari had fallen for the first time in 22 years. He attributed that to the rise in the use of AI chatbots such as ChatGPT, Perplexity, Gemini and Microsoft Copilot for searches.
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“Search remains the dominant cash engine – and a tension point,” Acheychek said. “While OpenAI’s ChatGPT is arguably a threat to Google’s search business, it’s also a customer. That duality sums up the moment. This isn’t necessarily a winner-take-all race; it’s a scramble to serve the exploding demand for generative tools, wherever they may live.”
Google is also expected to give updates on its planned $75bn investment in building out its datacenter capacity to support its AI features such as its expansion of AI search results.
“It seems this is a necessary investment as the only factor limiting Google’s growth is the constraints on computing that AI and cloud solutions need to run on,” said Brian Mulberry, senior portfolio manager at Zacks Investment Management.
