Google Cloud Strength to Aid Alphabet's (GOOGL) Q4 Earnings

Alphabet’s GOOGL fourth-quarter 2021 results, which are scheduled to be released on Feb 1, are likely to reflect gains from its strengthening cloud service offerings.

The company’s cloud arm — Google Cloud — has turned out to be the key catalyst behind its business growth.

Notably, Alphabet’s cloud offerings include Google Cloud Platform and Google Workspace, which have been continuously gaining momentum in the booming cloud computing market. Google’s growing investments in infrastructure, security, data management, analytics and AI remain major positives.

The Google Cloud segment, which derives revenues from fees collected for Google Cloud Platform services and Google Workspace collaboration tools, is constantly driving substantial revenue growth for Alphabet.

Revenues from the segment were $4.9 billion in third-quarter 2021. The figure accounted for 7.7% of total revenues and exhibited year-over-year growth of 44.9%.

For fourth-quarter 2021, the Zacks Consensus Estimate for Google Cloud revenues is pegged at $5.4 billion, suggesting growth of 41% from the prior-year quarter’s reported figure.

Click here to know how the company’s overall fourth-quarter results are likely to be.

Alphabet Inc. Revenue (TTM)


Alphabet Inc. Revenue (TTM)

Alphabet Inc. revenue-ttm | Alphabet Inc. Quote

Factors to Consider

Google’s strengthening efforts toward expanding its cloud services portfolio, data centers, availability zones and regions are likely to have helped it gain share in the highly competitive cloud market.

The company’s robust strength in real-time data, analytics and AI, along with its open and scalable cloud infrastructure, is expected to have helped win customers.

In the quarter under review, Google Cloud witnessed an extension of its partnership with Roche. Notably, Roche selected Google Workspace as its foundational digital collaboration partner and expanded the adoption of Google Meet, Slides, Sheets and Google Cloud Search. This is expected to have contributed well to the Google Cloud revenues in the fourth quarter.

The underlined segment is expected to have continued benefiting from the growing adoption of the hybrid work model worldwide.

Apart from these, Google’s strategic partnerships are anticipated to have been beneficial.

Its collaboration with Workday to enable businesses to run Workday enterprise applications for finance, HR, and planning in a public cloud environment is likely to have continued contributing well.

The unveiling of end-to-end edge solutions, including on-premise multi-access edge compute solutions in collaboration with AT&T, is expected to have continued driving its momentum among businesses and enterprises in the to-be-reported quarter.

Zacks Rank & Stocks to Consider

Currently, Alphabet has a Zacks Rank #3 (Hold).

Some top-ranked stocks in the broader technology sector are AMETEK AME, Advanced Micro Devices AMD and Mimecast MIME, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMETEK is scheduled to release fourth-quarter 2021 results on Feb 3. AME has gained 16.2% over a year. The long-term earnings growth rate for the company is currently projected at 10.4%.

Advanced Micro Devices is slated to report fourth-quarter 2021 results on Feb 1. It has gained 26.5% over a year. The long-term earnings growth rate for AMD is currently projected at 46.2%.

Mimecast is slated to report third-quarter fiscal 2022 results on Feb 3. It has gained 83.4% over a year. The long-term earnings growth rate for MIME is currently projected at 35%.

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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.

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