alphabet The company is scheduled to release third-quarter results after the bell on Wednesday.
According to the consensus forecast compiled by LSEG, analysts expect the following:
Earnings per share: $3.02 Revenue: $128.2 billion
Sales are expected to increase 25% year over year, which is expected to be the highest growth rate for any period since 2021.
Still, the report comes at a sensitive time on Wall Street, with investors increasingly concerned about the costs associated with building artificial intelligence.
Shares of parent company Google have fallen in five of the past six sessions through Tuesday, and were down about 7% in October. In July, the company raised its full-year capital spending outlook to $195 billion to $205 billion, up from its previous forecast of about $190 billion. At the same time, the company reported negative free cash flow for the first time.
Analysts expect Alphabet’s capital spending to rise 130% from a year ago to $55.2 billion, according to FactSet. Annual capital investment exceeds $200 billion and is expected to exceed $300 billion by 2027.
Meanwhile, analysts expect free cash flow to be negative $2.27 billion in the third quarter, and expect the difference to widen in each of the next four quarters.
Google continues to free up capital to fuel its expansion, and the reward is an increase in revenue for its cloud division, home to its AI products. The company is expected to grow 90% in the cloud to $28.7 billion as Google continues to steal market share from larger rivals. Amazon Web services and microsoft Azure. Microsoft also announced its earnings on Wednesday, followed by Amazon on Thursday.
Google is actively adding Gemini models and services to its enterprise offerings, and is also ramping up sales of custom tensor processing units (TPUs). Nvidia’s Graphics processing unit (GPU). At the same time, Google’s core business is under pressure from: OpenAI and human So is the large number of new agents entering the market.
“Google remains well-positioned in AI,” analysts at Citizens, which recommends buying the stock, wrote in a note last week. “Having said that, we are becoming increasingly cautious in our searches as execution risks exist, competition from agents has increased and we believe a new pivot is needed.”
Company executives are scheduled to hold a conference call with analysts at 4:30 p.m. ET.
WATCH: Wall Street expects cloud growth to exceed 90% as search slows down
