Alphabet earnings preview: what to look for?

on Feb 1, 2022
  • Analyst reveals two things investors should focus on in Alphabet's earnings.
  • He expects 2022 to be a strong year for the stock, despite upcoming rate hikes.
  • Shares of tech giant are down about 10% from their recent high in November.

Shares of Alphabet Inc (NASDAQ: GOOGL) are down nearly 10% from their high of about $3,000 in mid-November, but Wedbush Securities’ Dan Ives is convinced 2022 will be a strong year for the stock, despite talks of as many as seven rate hikes this year.

Ives’ remarks on CNBC’s ‘Worldwide Exchange’

According to Ives, investors will focus most on digital advertising and cloud this evening as Alphabet reports its quarterly results. On CNBC’s “Worldwide Exchange”, he said:

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The key will be digital advertising. You need to see a one-to-two-hundred bit beat over the Street. There’s some nervousness around is there a pull forward in this environment. Last week, you got pillars of strength from Apple and Microsoft. You need to hear the same from Google in advertising.

Alphabet is expected to report $27.14 in per-share earnings for the fourth quarter. Revenue is likely to increase YoY, but at its slowest pace in four quarters on higher traffic acquisition costs.

Google is the third-largest cloud player

On the cloud front, Google is significantly smaller than AWS and Azure, but cloud is still a rapidly growing segment for the tech giant and will remain in focus on Tuesday. Ives added:

The big thing is going to be Cloud. Google is fast becoming the number three cloud player that could start to re-rate the stock. We’re talking about $2.0 trillion that’ll be spent in Cloud over the next five to six years. You need to see that on a run-rate toward $20 billion as we go into 2022.

The stock trades at a PE multiple of 26.44. In early December, ISWM’s Paul Meeks said the only FAANG stock worth buying was Alphabet Inc.

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