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Alphabet Inc. (GOOGL) Q4 Earnings Preview: Pixel & Home Could Fuel Growth

As per usual, all eyes will be on the company formerly known as Google, Alphabet Inc. GOOGL , as the tech giant prepares to release its fourth-quarter earnings report on Thursday. The company rolled out its new Google Pixel phone and ushered in a new era of hardware-software interaction during the quarter, making this week's announcement even more important than usual.

In fact, the Google Pixel will most likely be the most compelling aspect of Alphabet's latest report, and investors will be clamoring to know how the device sold. It will also be interesting to see what the company says about its Google Home Controller, which also launched in the U.S. this quarter.

The Google Pixel is important because it is Alphabet's first high-end smartphone entirely produced in-house and represents a significant challenge to Apple's AAPL iPhone line. The Google Home tells another story of competition; the "Internet of Things" in-home hub is one of the only competitors to Amazon's AMZN Echo speaker.

More importantly, both of these products underscore Alphabet's efforts to usher in its intelligent personal assistant software, Google Assistant. With similar functions to Apple's Siri and Microsoft's MSFT Cortana, Google Assistant is the backbone of the Pixel and Home devices and promises to be the foundation for all of Google's original products heading forward.

Also, investors should not forget about the other products that Google launched in the quarter, all of which were officially unveiled at the same event in October. The company debuted its stylish headset for the Daydream VR platform, the "Daydream View," as well as its first router, "Google Wifi," and a Chromecast update, "Chromecast Ultra."

All of these products are important pieces of Google's effort to create a complete line of products that work together and with the new Google Assistant software. This is just the first quarter of sales, but it is also the holiday quarter and should give us a good idea of whether or not these products are resonating with shoppers.

Heading into the report, Alphabet Inc. has seen one positive estimate revision over the past week. Our current consensus estimates indicate EPS growth of 8.40% and sales growth of 18.75%, and this has helped earn the company an "A" grade for growth. This is especially noteworthy given the relative size and status of Alphabet already. Overall, the stock has a Zacks Rank #2 (Buy), and that's always a good sign heading into an earnings announcement.

Nevertheless, Alphabet currently has an Earnings ESP of -0.26%, which makes surprise prediction a bit more difficult.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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