Alphabet (NASDAQ:GOOGL) is slated to report fourth-quarter results after the close of trading tomorrow, and Monness Crespi Hardt analyst Brian White believes the company will show it is still benefiting from the digital ad trend, the cloud and could talk about the metaverse.
White, who has a buy rating and a $3,660 price target, noted that Alphabet should report at least $71.93 billion in revenue, aided by $66.16 billion in Google Services revenue and Google Cloud revenue at $5.49 billion, up 43% year-over-year. Earnings should come in at $28.07, compared to Wall Street estimates of $27.31 per share.
"We look for Alphabet to offer a glimpse into digital ad spending trends ahead of quarterly reports from Meta (NASDAQ:FB), Snap (NYSE:SNAP), and Twitter (NYSE:TWTR)," White wrote in a note to clients.
"That said, Alphabet was the least impacted in 3Q:21 by Apple’s (NASDAQ:AAPL) App Tracking Transparency that rolled out with iOS 14.5, experiencing only a modest headwind to its YouTube Ads business. Moreover, we expect an update on the company’s shopping-related initiatives, including commerce on YouTube, and trends at Google Cloud."
A consensus of Wall Street analysts expect the company to generate $71.87 billion in revenue and earn $27.19 per share.
Within Google Services, White said that advertising revenue should grow 26% year-over-year to $58.26 billion, aided by Google Search & Other, followed by YouTube. The analyst also added that the Sundar Pichai-led company could provide an update on its shopping initiatives, including commerce on YouTube and trends for Google Cloud.
However, there are some concerns that the stock could be hit as U.S. regulators look to "reign in big tech," citing the Senate Judiciary Committee voting in favor of The American Innovation and Choice Online Act.