Google Earnings Preview: Will AI & Ad Woes Weigh on GOOGL?
Alphabet reports earnings Thursday after the bell. Will AI spending and regulatory risks overshadow ad strength? Here’s what traders need to watch.
🔍 Alphabet (GOOG, GOOGL) Set to Report Q1 Earnings Thursday
Alphabet (GOOG, GOOGL) is slated to report first-quarter earnings after the bell on Thursday, and the release could have major implications for the stock’s direction as we head deeper into earnings season.
This is the company’s first earnings report since President Trump implemented sweeping new tariffs and amid rising concern over ad market shifts, AI infrastructure spending, and antitrust rulings.
Analyst Expectations
According to Bloomberg consensus:
- Earnings Per Share (EPS): $2.01
- Revenue: $89.1B
- Revenue ex-TAC: $75.4B
- Advertising Revenue: $66.4B
- YouTube Ads: $8.9B
- Google Cloud Platform (GCP): $12.3B
For context, Alphabet reported:
- EPS of $1.89 and Revenue of $80.5B in Q1 last year
- GCP revenue: $9.5B in Q1 2024
Despite revenue growth projections, GOOGL shares are down 19% YTD and 3% over the last 12 months, as investors weigh the long-term impact of structural and macroeconomic headwinds.
Key Risks & Themes
🇺🇸 Tariffs & Global Ad Spend Pressure
Although tariffs aren’t expected to impact Q1 results, investors are bracing for potential downward guidance:
“We’ve seen some transaction velocity in e-commerce drop off, and would expect digital ads to weaken in Q2,” – Barclays’ Ross Sandler
Additionally, Musk’s DOGE cost-cutting policies are reportedly forcing some enterprise clients to scale back GCP spending.
AI Infrastructure Buildout
Google is set to spend $75 billion in 2025 to scale its AI infrastructure and data centers, competing with Amazon and Microsoft.
However, the CFO admitted during Q4 that resource constraints are limiting growth: Google simply can’t meet demand fast enough until more servers are online.
This means short-term cloud growth could lag, even as long-term opportunity remains massive.
Antitrust Fallout
- Google recently lost a federal ad monopoly case in the U.S.
- Judges may now force a restructure or divestiture of Google’s advertising unit
- This comes after 2024’s search and ads antitrust ruling
Investors will be keen to hear whether Alphabet plans defensive restructurings, or if legal appeals are the strategy going forward.
Implied Move & Trader Setup
Options markets are currently implying a ~6.5% move for GOOGL in either direction post-earnings — fairly tame compared to high-volatility names like NFLX or TSLA, but still meaningful.
A beat on cloud and ad revenue, paired with calm antitrust commentary, could spark a rally. Misses on GCP or bearish guidance may trigger further downside.
Final Take
Between AI buildouts, cloud demand, and mounting regulatory challenges, Alphabet’s earnings could deliver clarity — or spark further uncertainty.
Thursday’s report will be key to understanding how Google plans to defend its dominance in an AI-driven, regulation-heavy, and tariff-challenged world.
