Alphabet will report their third-quarter results on Thursday 26th October. 

Analysts are expecting earnings per shares (EPS) of $8.33 and revenue of $27.19, and these projections would represent annual growth of -8% and 21.1% respectively. Traffic acquisition cost is expected to come in at $5.26 billion, and that would be an increase of 25.9% on a yearly basis. Traders might get worried if the traffic acquisition cost growth rate keeps exceeding that of revenue.

Alphabet saw profits fall by 28% in the last quarter, but that included a record-breaking antitrust fine from the EU – the earnings figure still narrowly topped analysts’ estimates.  Stripping out the fine, profits would actually have increased by 28%. Revenue rose by 28% to $21 billion.

Google continue to excel in the field of advertising, and revenue from Google Properties and advertising jumped by 20%, but the traffic acquisition costs rose by 28%.The cost per click metric, which is a good barometer of their business, declined by 23%. This tells us that more work is required to ensure it keeps bringing in revenue.

The tech giant brings in income from other businesses like the Play Store, its cloud operation and the pixel smartphone, and collectively revenue from these businesses jumped by 42%. The services are clearly in demand, and Alphabet is making headway into the competitive cloud computing business – and it faces competition from Microsoft and Amazon. Cloud services has the potential to be a huge industry, and investors will want to see growth from Alphabet.

The company’s ‘Other bet’s division saw its loss drop by nearly 10%. The life sciences business Verily, the driverless cars division and the Nest smart home services all fall under this banner. Dealers appreciate that new ventures take time to get off the ground, and as long as lessons are being learnt and losses are narrowing, the market will cut the company some slack.

Alphabet Class A

The stock has pulled back from its record high earlier this month and the sentiment is still bullish. Rallies could target $1016, and a move lower may find support at $915.  

 

Alphabet Class C

After hitting an all-time high earlier this month, the stock has retreated, but the wider upward trend is still in place. A rally could target the record high of $997, and $895 may act as support should the stock fall. 

 

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