Alphabet to report Q1 earnings after the bell Tuesday

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Alphabet CEO Sundar Pichai gestures while speaking during a discussion on artificial intelligence at the Bruegel European economic think tank in Brussels, Belgium, on Jan. 20, 2020.
Geert Vanden Wijngaert | Bloomberg | Getty Images

Google parent Alphabet will report first-quarter earnings after the bell Tuesday.

Here’s what Wall Street analysts expect:

  • Earnings per share (EPS): $25.91 expected, according to Refinitiv
  • Revenue: $68.11 billion expected, according to Refinitiv
  • YouTube advertising revenue: $7.51 billion expected, according to StreetAccount
  • Google Cloud revenue: $5.76 billion expected, according to StreetAccount
  • Traffic acquisition costs (TAC): $11.69 billion expected, according to StreetAccount

Alphabet is contending with slowing revenue growth coming out of the pandemic, when spending rebounded as the economy reopened. Sales growth is expected to come in at 23% for the quarter, decelerating from 34% in the same period a year earlier.

Also during the first quarter, Google pulled many of its services out of Russia after the invasion of Ukraine, due in part to federal sanctions, an action that’s likely to hurt European revenue. The company blocked certain state-back media networks from appearing in search results and YouTube, and then halted ads services and recommendations in Ukraine and Russia.

Cloud infrastructure continues to grow faster than the ads business as Google battles with Amazon and Microsoft to capture revenue from companies that are moving workflows out of their own data centers. Analysts expect the company to report 42% growth in cloud.

In March, Google announced the acquisition of cybersecurity company Mandiant for $5.4 billion, subject to closing approval in the coming months. The business would work alongside Google Cloud.

Starting this month, Google began bringing employees back to physical offices three days a week despite facing some pushback from staffers. Employees also said in an annual survey that they are becoming increasingly unhappy with pay, promotions and execution, CNBC reported.

While Google says it’s committed to hybrid work, the company is spending heavily on new locations. Alphabet said during the quarter that it would be investing nearly $10 billion in real estate projects around the U.S. in 2022. CEO Sundar Pichai said the expansion would create roughly 12,000 new jobs.

Alphabet also faced fresh labor challenges during the quarter, which comes as the job market tightens and more workers in the industry organize. A Google Fiber location in Kansas City, Missouri, voted to unionize under Alphabet’s Workers Union, after votes were counted and approved by the U.S. Labor Board. The milestone vote represents the first location to unionize with bargaining rights under Alphabet’s nascent worker’s union, which formed a year ago.

After outperforming all other Big Tech stocks last year, Alphabet is more inline with its peers so far in 2022. The stock is down 17% for the year, while the Nasdaq has dropped 20%.

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