Earnings Preview: Alphabet and AMD Gear Up for Key Financial Updates

Alphabet (GOOGL) Awaits Earnings Announcement Amidst AI Focus

Alphabet, the parent company of Google, is preparing to reveal its latest earnings after the market closes, with a conference call scheduled for 4:30 p.m. The tech behemoth experienced a mixed bag last quarter, as a shortfall in cloud revenue somewhat overshadowed its otherwise better-than-expected results.

This quarter, expectations are set high with forecasts of a substantial year-over-year earnings increase. Investors and market observers are keenly eyeing how Alphabet will sustain its momentum, particularly in the AI arena. This focus has intensified following Alphabet’s recent parting ways with Appen, the firm instrumental in training its Bard chatbot.

Alphabet’s shares have been performing robustly, showing a nearly 9% increase at the start of 2024 after a remarkable 58% surge in 2023. Historical trends indicate that Alphabet’s stock usually sees a 1.45% gain after earnings reports, as per Bespoke data. However, the stock has experienced a downturn in four of the last five earnings days, with two instances of declines exceeding 9%.

AMD: Anticipated Earnings Growth Amidst AI Chip Success

Following the closing bell, AMD is also set to announce its earnings, with a leadership call scheduled for 5 p.m. Last quarter, AMD offered conservative fourth-quarter guidance but expressed optimism about selling $2 billion in AI chips in 2024.

This quarter, analysts expect AMD to report over a 10% jump in earnings year-over-year, with revenue projected to rise by high single digits. The chipmaker continues to capitalize on the AI trend, a key driver of its impressive 127% stock increase in the previous year. Already, the stock is up 20% year-to-date in 2024.

However, some analysts, like Northland Capital’s Gus Richard, caution that expectations for AMD, particularly in the AI sector, might be reaching a peak of “irrational exuberance.” He recently downgraded AMD’s rating due to valuation concerns.

In terms of historical performance, AMD has a track record of beating earnings estimates 63% of the time, according to Bespoke. Despite this, the company’s shares typically see a 1.39% decline post-earnings announcement.