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Alphabet earnings preview: Google gains from stay-at-home restrictions

Alphabet, Google’s parent company is scheduled to release its earnings for the first quarter of 2020 and the stock is already performing positively ahead of it, as analysts expect steady revenue and earnings growth from higher internet traffic boosted by stay at home restrictions caused by the coronavirus pandemic.

Estimates from various sources, including Zacks.com and Koyfin, expect revenues at Alphabet, led by chief executive Sundar Pichai (pictured), to end the quarter in a range of $40bn and $42bn, which would result in a 10% increase compared to last year’s results.

Meanwhile, analysts are forecasting earnings per share between $10.6 and $11.2, which would result in a 10% growth in earnings compared to the same quarter last year.

Jason Bazineto from Citigroup said: “We expect Google to have a greater near-term disadvantage but also have a faster recovery”. He added: “We believe Alphabet will be more resilient vs. Facebook in weathering the advertising decline due to its lower exposure to the [small business] advertiser base”.

Alphabet (NASDAQ: GOOG) shares have seen a 5% gain since Tuesday, with the stock closing yesterday’s session at $1,276.31, in line with the overall performance of the market and other tech companies that will also report their quarterly results next week. The stock has lost nearly 4.5% so far this year.

goog stock chart

The company that owns the most popular search engine in the world is among the small group of businesses benefitting from the recent coronavirus health emergency, as stay-at-home policies have resulted in a spike in internet traffic, something that Google is well-positioned to benefit from, as the search engine accounts for more than 80% of the global search volume.

Even though analysts are anticipating a mild drop in advertising revenues, Google’s primary source of income, as a result of the global economic slowdown triggered by the virus, they also expect that other revenue sources such as its cloud computing business may offset or even overturn the drop, as businesses are relying more on IT platforms to conduct their operations.

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Alejandro Arrieche

Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and have also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.