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Google (GOOG) is expected to deliver a strong third quarter earnings report as it enjoyed a strong September and grabbed a bigger chunk of search advertising budgets.

Optimism abounds among analysts, who are generally raising targets.

The search giant is expected to report earnings of $6.69 a share on revenue of $5.27 billion.

Jordan Rohan, an analyst at Stifel Nicolaus sums up the consensus view.

Checks indicate a better September than we had originally anticipated, with Google gaining share of total search budgets. Other positive factors include foreign exchange and affiliate deal resets with News Corp. (MySpace) and AOL, which will both improve profitability and accentuate growth in net revenues, all else being equal.

A weak dollar is also expected to help Google’s results overseas. That buffer should insulate Google from increased expenses. “Even if expenses are modestly higher than expected (Android updates, Google Instant and Google TV launches), we still expect earnings to exceed consensus estimates,” said Oppenheimer analyst Jason Helfstein.

Among the key themes to watch during Google’s quarter:

  • What does Google’s display ad business look like? Susquehanna Financial Group analyst Marianne Wolk said that the display business at Google—essentially DoubleClick and YouTube—may be approaching 10 percent of gross revenue. Wolk argues that things like pay-per-click video and in-app advertising, which is on deck, can propel Google to the same display ad scale enjoyed by Yahoo and AOL. If that prediction plays out, Wolk said that folks who argue Google is a one-trick search pony will have to stand down. In any case, Google execs always talk YouTube on conference calls.
  • The impact of Google Instant. Barclays Capital analyst Douglas Anmuth said that Google Instant has helped the company gain market share in September relative to Bing and Yahoo.
  • Data center investment and hiring plans. Every quarter, Google spooks Wall Street with plans to hire more people and build out capacity. This quarter will be no different.
  • Color on various Google ventures that don’t make it into the profit and loss statements. Analysts will be looking for any nuggets of data on Google Apps, Android and other key ventures. Social integration may also be a discussion topic.

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Source: Google's Q3 Preview: Strong September Fuels Optimism