Alphabet Faces AI Competition as Q2 Earnings Approach

Alphabet will seek to reassure investors as AI rivals step up competition

July 22 (Reuters) - Alphabet (GOOGL.O), opens new tab, faced with unprecedented threats from AI rivals, will be keen to assure investors this week that the company's own spending on the technology is helping it dig a deeper moat around its search and advertising businesses. Rivals of the Google parent, including AI startups such as OpenAI and Perplexity, have attracted tens of millions of users to their platforms. They are looking to break Google Chrome's dominance with their own browsers, even as a U.S. court weighs breaking up the tech company with remedies that may include a forced Chrome sale. To maintain its grip, Alphabet has rolled out tools such as AI Overviews, which show AI-generated summaries on top of traditional links that have drawn 1.5 billion users per month, and made more Gemini models available to enterprise users. The integration of AI into Google search is key to its advertising appeal, as it offers advertisers the ability to run more effective campaigns and get bigger returns on their dollars. In March, Google added a to its search. Alphabet, scheduled to report second-quarter results on Wednesday, has also staged a coup, securing rival OpenAI as a customer for its cloud business. "AI targeting advantages and increasing ad loads in AI Overviews could drive ad performance above traditional search," BofA Global Research analysts said. THE CONTEXT Wall Street has been looking for returns from Big Tech's AI spending spree that is expected to total $320 billion this year. Google reassured investors in late April with better-than-expected first-quarter earnings that were powered by AI demand. But OpenAI and Perplexity's launch of their own browsers has intensified pressure on Google's search business, which was already under strain from AI chatbots pulling away queries. "As those (AI) companies deploy their browsers, that'll take more searches away from Google. But the bigger threat will be when those companies have enough of a user base that they start selling advertising," said D.A. Davidson analyst Gil Luria. "It's only when Google loses advertisers that the revenue is going to be impacted." Also, Alphabet's Waymo, the early U.S. leader in autonomous cabs and often overlooked during earnings, is likely to draw more attention as Elon Musk's Tesla rolls out a test fleet in Austin, Texas. THE FUNDAMENTALS ** Alphabet is expected to report a near 11% jump in total revenue for the second quarter, per LSEG data. ** Analysts expect a 7.5% rise in advertising revenue and a 26.2% jump in its cloud computing segment. ** Per-share earnings are expected to be around $2.18, excluding one-off items. WALL STREET SENTIMENT ** Alphabet shares are largely flat so far this year. ** Stock is among the laggards in the "Magnificent Seven" group of megacap stocks, with Nvidia (NVDA.O), opens new tab leading the range with a 28% jump and Tesla (TSLA.O), opens new tab at the bottom with a 19% decline. ** Alphabet is rated "buy" on average among 55 brokerages, with a median price target of $203.84. Reporting by Deborah Sophia and Zaheer Kachwala in Bengaluru Editing by Rod Nickel Our Standards: The Thomson Reuters Trust Principles., opens new tab

Google Q2 earnings: Wall Street looks for AI answers

Google parent Alphabet is set to post its second-quarter earnings Wednesday after the market closes, and Wall Street is gearing up for what it hopes could be another surprisingly lucrative quarter. Last quarter, Google's parent company significantly surpassed Wall Street's expectations, highlighting momentum across its search, cloud, and AI businesses -- sectors that will likely show similar success this quarter. Zacks Investment Research projected on Friday that Alphabet will report an earnings per share of $2.14, which would be up 13.2% year-over-year, and sales of $79.25 billion, up 11.1% year-over-year. Alphabet's reported earnings have outpaced Zacks' projections for the last four quarters. Charley Blaine at the Street said Monday that Alphabet is expected to post an earnings per share of $2.16, showing an increase of 14.3% from last year, plus revenue of $87.9 billion, up 3.8%. Blaine adds that Alphabet's shares are down 2.2% this year and "analysts will surely want to know how much -- and when -- all the investments will start to flow to the bottom line." Morningstar said on Monday it will be looking for updates on the company's "generative artificial intelligence search, its monetization rates, and the health of the overall search business." Analysts added that they expect a "pickup in the back half of 2025" for Google Cloud, and say that although Google has "arguably the best model out there" with Gemini 2.5 Pro, it still has to prove it can "translate that technical leadership into commercial success." In its first-quarter earnings, Alphabet posted a net income of $34.5 billion on $90.2 billion in revenue -- a 12% year-over-year increase that beat Wall Street's estimate of $89.2 billion. The company also reported earnings per share of $2.81; analysts were expecting that number to be $2.01. Net income increased 46%. The company also announced a $70 billion stock-buyback program and said it will increase its quarterly cash dividend by 5% to $0.21. Google's search engine has seen a lot of competition to its service from AI challengers lately. ChatGPT and other AI-native tools are starting to pull traffic and attention away from traditional search engines by answering questions directly. According to a recent report from Mary Meeker, ChatGPT hit a billion searches a day in less than two years; Google needed 11 years to reach that mark. Perplexity AI, the startup backed by Nvidia, Jeff Bezos, and SoftBank, is taking direct aim at Google Chrome with its latest launch: an AI-powered web browser called Comet. Google has been rapidly kicking up its AI investment to try to keep up. The company added "AI Mode" and "AI Overviews" features to its search pages. It also recently announced a new $3 billion investment in hydropower for its AI data centers, part of Google's larger $25 billion investment in data centers. Plus, the tech company has been offering employee buyouts so it can move funds over to AI. Regardless of AI's ups-and-downs, Google Search still remains the largest revenue driver for the company. Last quarter, Google Search revenue grew almost 10% year-over-year to $50.7 billion. Google's ad revenue was $66.8 billion in the quarter. Google's AI chatbot Gemini AI has been fairly successful, even as it trails behind ChatGPT. Google announced a partnership with Volvo in May to put its AI chatbot in vehicles later this year. The tech company also has expanded its footprint in cloud computing with Google Cloud. It holds the third-largest market share in the global cloud infrastructure space, behind Amazon Web Services and Microsoft Azure. Google Cloud's revenue reached $12.3 billion last quarter. Meanwhile, the tech giant has been battling two antitrust lawsuits, one for allegedly monopolizing online search and another to dismantle the company's ad tech empire. It's also dealt with a cease and desist order in Japan and a $4.7 billion antitrust charge in the European Union. Alphabet's self-driving unit Waymo is doing pretty well, especially compared to competitors like Tesla. It has been operating commercial, driverless rides in cities including Phoenix and San Francisco since 2023 -- and in Austin since March. Waymo is methodically planting flags in city after city, with a recent addition in Atlanta via Uber. Yet even with its success, Waymo isn't a big revenue driver quite yet. -- Shannon Carroll, Kevin Ryan, Jackie Snow, and Emily Price contributed to this article.

Alphabet Will Seek to Reassure Investors as AI Rivals Step up Competition

By Deborah Mary Sophia and Zaheer Kachwala (Reuters) -Alphabet, faced with unprecedented threats from AI rivals, will be keen to assure investors this week that the company's own spending on the technology is helping it dig a deeper moat around its search and advertising businesses. Rivals of the Google parent, including AI startups such as OpenAI and Perplexity, have attracted tens of millions of users to their platforms. They are looking to break Google Chrome's dominance with their own browsers, even as a U.S. court weighs breaking up the tech company with remedies that may include a forced Chrome sale. To maintain its grip, Alphabet has rolled out tools such as AI Overviews, which show AI-generated summaries on top of traditional links that have drawn 1.5 billion users per month, and made more Gemini models available to enterprise users. The integration of AI into Google search is key to its advertising appeal, as it offers advertisers the ability to run more effective campaigns and get bigger returns on their dollars. In March, Google added a new AI-only mode to its search. Alphabet, scheduled to report second-quarter results on Wednesday, has also staged a coup, securing rival OpenAI as a customer for its cloud business. "AI targeting advantages and increasing ad loads in AI Overviews could drive ad performance above traditional search," BofA Global Research analysts said. THE CONTEXT Wall Street has been looking for returns from Big Tech's AI spending spree that is expected to total $320 billion this year. Google reassured investors in late April with better-than-expected first-quarter earnings that were powered by AI demand. But OpenAI and Perplexity's launch of their own browsers has intensified pressure on Google's search business, which was already under strain from AI chatbots pulling away queries. "As those (AI) companies deploy their browsers, that'll take more searches away from Google. But the bigger threat will be when those companies have enough of a user base that they start selling advertising," said D.A. Davidson analyst Gil Luria. "It's only when Google loses advertisers that the revenue is going to be impacted." Also, Alphabet's Waymo, the early U.S. leader in autonomous cabs and often overlooked during earnings, is likely to draw more attention as Elon Musk's Tesla rolls out a test fleet in Austin, Texas. THE FUNDAMENTALS ** Alphabet is expected to report a near 11% jump in total revenue for the second quarter, per LSEG data. ** Analysts expect a 7.5% rise in advertising revenue and a 26.2% jump in its cloud computing segment. ** Per-share earnings are expected to be around $2.18, excluding one-off items. WALL STREET SENTIMENT ** Alphabet shares are largely flat so far this year. ** Stock is among the laggards in the "Magnificent Seven" group of megacap stocks, with Nvidia leading the range with a 28% jump and Tesla at the bottom with a 19% decline. ** Alphabet is rated "buy" on average among 55 brokerages, with a median price target of $203.84. (Reporting by Deborah Sophia and Zaheer Kachwala in BengaluruEditing by Rod Nickel)

Alphabet will seek to reassure investors as AI rivals step up competition - The Economic Times

Alphabet is working to strengthen its search and advertising businesses amid competition from AI startups. Rivals like OpenAI and Perplexity are challenging Google's dominance. Alphabet is integrating AI into Google Search and securing deals like having OpenAI as a cloud customer. Wall Street anticipates returns from Big Tech's AI investments.Alphabet, faced with unprecedented threats from AI rivals, will be keen to assure investors this week that the company's own spending on the technology is helping it dig a deeper moat around its search and advertising businesses. Rivals of the Google parent, including AI startups such as OpenAI and Perplexity, have attracted tens of millions of users to their platforms. They are looking to break Google Chrome's dominance with their own browsers, even as a U.S. court weighs breaking up the tech company with remedies that may include a forced Chrome sale. To maintain its grip, Alphabet has rolled out tools such as AI Overviews, which show AI-generated summaries on top of traditional links that have drawn 1.5 billion users per month, and made more Gemini models available to enterprise users. The integration of AI into Google search is key to its advertising appeal, as it offers advertisers the ability to run more effective campaigns and get bigger returns on their dollars. In March, Google added a new AI-only mode to its search. Alphabet, scheduled to report second-quarter results on Wednesday, has also staged a coup, securing rival OpenAI as a customer for its cloud business. "AI targeting advantages and increasing ad loads in AI Overviews could drive ad performance above traditional search," BofA Global Research analysts said. The context Wall Street has been looking for returns from Big Tech's AI spending spree that is expected to total $320 billion this year. Google reassured investors in late April with better-than-expected first-quarter earnings that were powered by AI demand. But OpenAI and Perplexity's launch of their own browsers has intensified pressure on Google's search business, which was already under strain from AI chatbots pulling away queries. "As those (AI) companies deploy their browsers, that'll take more searches away from Google. But the bigger threat will be when those companies have enough of a user base that they start selling advertising," said D.A. Davidson analyst Gil Luria. "It's only when Google loses advertisers that the revenue is going to be impacted." Also, Alphabet's Waymo, the early U.S. leader in autonomous cabs and often overlooked during earnings, is likely to draw more attention as Elon Musk's Tesla rolls out a test fleet in Austin, Texas. The fundamentals Wall Street sentiment

Alphabet Set For Solid Q2 Earnings -- But Analysts Warn Of A Growing Threat To Its Core Business - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL)

Alphabet Inc. GOOGL GOOG is set to release its second-quarter earnings on Tuesday. Analysts anticipate robust results, despite concerns over the impact of AI on the company's core search business. What Happened: Alphabet, along with other Big Tech companies, continues to invest billions in AI development and infrastructure. However, the rise of AI-backed chatbot alternatives poses a significant threat to Alphabet's core search business, according to a report by MarketWatch. Check out the current price of GOOG stock here. Truist analyst Youssef Squali pointed out that despite the concerns, search demand likely remained strong in the second quarter, supported by solid results from YouTube and the company's cloud division. "Concerns over AI evolution in Search (and regulatory pressures to a lesser degree) have weighed on [Alphabet]," stated Squali. However, he added: "we believe that current valuation reflects much of those concerns, and that AI Search remains Google's war to lose." Despite these positive predictions, there are concerns about the long-term impact of AI on Alphabet's search business. More bearish investors, as noted by BofA analysts, suggest that AI-powered chatbots like OpenAI's ChatGPT and Anthropic's Claude provide alternatives to traditional search engines, which "could show up in near-term click results." They also raise questions about Alphabet's future, particularly after losing some antitrust cases and its ability to monetize AI overviews appearing in search results. SEE ALSO: Trump Says He Doesn't Need Scott Bessent's Advice To Fire Jerome Powell: 'I Know Better Than Anybody What's Good For The Market' Trending Investment Opportunities Advertisement Why It Matters: Earlier this month, Alphabet made a strategic move to bolster its AI capabilities. The company finalized a $2.4 billion deal with AI coding startup Windsurf, which included licensing technology and hiring Windsurf's CEO and key employees. This move was seen as a significant step in Alphabet's AI development strategy. Alphabet's investment in AI is also reflected in its efforts to attract top AI talent. The company revamped its pay structure to offer substantial salaries to software engineers, a move aimed at retaining and attracting top-tier AI professionals. Despite several challenges, optimists believe that Google's deep relationships with publishers, its vast first-party data, and the underappreciated businesses outside of search, such as its cloud segment, YouTube, and Waymo, give it an edge over AI platforms. Alphabet offers strong Growth and Quality, with average scores on the Value and Quality metrics as per Benzinga's Proprietary Edge Rankings. Image via Shutterstock Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. GOOGAlphabet Inc $187.420.80% Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock Rankings Edge Rankings Momentum 41.00 Growth 86.99 Quality 86.69 Value 52.18 Price Trend Short Medium Long Overview GOOGLAlphabet Inc $186.510.78% Market News and Data brought to you by Benzinga APIs

Alphabet will seek to reassure investors as AI rivals step up competition

Alphabet, faced with unprecedented threats from AI rivals, will be keen to assure investors this week that the company's own spending on the technology is helping it dig a deeper moat around its search and advertising businesses. Rivals of the Google parent, including AI startups such as OpenAI and Perplexity, have attracted tens of millions of users to their platforms. They are looking to break Google Chrome's dominance with their own browsers, even as a U.S. court weighs breaking up the tech company with remedies that may include a forced Chrome sale. To maintain its grip, Alphabet has rolled out tools such as AI Overviews, which show AI-generated summaries on top of traditional links that have drawn 1.5 billion users per month, and made more Gemini models available to enterprise users. The integration of AI into Google search is key to its advertising appeal, as it offers advertisers the ability to run more effective campaigns and get bigger returns on their dollars. In March, Google added a new AI-only mode to its search. Alphabet, scheduled to report second-quarter results on Wednesday, has also staged a coup, securing rival OpenAI as a customer for its cloud business. "AI targeting advantages and increasing ad loads in AI Overviews could drive ad performance above traditional search," BofA Global Research analysts said. The context Wall Street has been looking for returns from Big Tech's AI spending spree that is expected to total US$320 billion this year. Google reassured investors in late April with better-than-expected first-quarter earnings that were powered by AI demand. But OpenAI and Perplexity's launch of their own browsers has intensified pressure on Google's search business, which was already under strain from AI chatbots pulling away queries. "As those (AI) companies deploy their browsers, that'll take more searches away from Google. But the bigger threat will be when those companies have enough of a user base that they start selling advertising," said D.A. Davidson analyst Gil Luria. "It's only when Google loses advertisers that the revenue is going to be impacted." Also, Alphabet's Waymo, the early U.S. leader in autonomous cabs and often overlooked during earnings, is likely to draw more attention as Elon Musk's Tesla rolls out a test fleet in Austin, Texas. The fundamentals Alphabet is expected to report a near 11 per cent jump in total revenue for the second quarter, per LSEG data. Analysts expect a 7.5 per cent rise in advertising revenue and a 26.2 per cent jump in its cloud computing segment. Per-share earnings are expected to be around US$2.18, excluding one-off items. Wall Street sentiment Alphabet shares are largely flat so far this year. The Stock is among the laggards in the "Magnificent Seven" group of megacap stocks, with Nvidia leading the range with a 28 per cent jump and Tesla at the bottom with a 19% decline. Alphabet is rated "buy" on average among 55 brokerages, with a median price target of $203.84. (Reporting by Deborah Sophia and Zaheer Kachwala in BengaluruEditing by Rod Nickel)

Alphabet will seek to reassure investors as AI rivals step up competition

(Reuters) -Alphabet, faced with unprecedented threats from AI rivals, will be keen to assure investors this week that the company's own spending on the technology is helping it dig a deeper moat around its search and advertising businesses. Rivals of the Google parent, including AI startups such as OpenAI and Perplexity, have attracted tens of millions of users to their platforms. They are looking to break Google Chrome's dominance with their own browsers, even as a U.S. court weighs breaking up the tech company with remedies that may include a forced Chrome sale. To maintain its grip, Alphabet has rolled out tools such as AI Overviews, which show AI-generated summaries on top of traditional links that have drawn 1.5 billion users per month, and made more Gemini models available to enterprise users. The integration of AI into Google search is key to its advertising appeal, as it offers advertisers the ability to run more effective campaigns and get bigger returns on their dollars. In March, Google added a new AI-only mode to its search. Alphabet, scheduled to report second-quarter results on Wednesday, has also staged a coup, securing rival OpenAI as a customer for its cloud business. "AI targeting advantages and increasing ad loads in AI Overviews could drive ad performance above traditional search," BofA Global Research analysts said. THE CONTEXT Wall Street has been looking for returns from Big Tech's AI spending spree that is expected to total $320 billion this year. Google reassured investors in late April with better-than-expected first-quarter earnings that were powered by AI demand. But OpenAI and Perplexity's launch of their own browsers has intensified pressure on Google's search business, which was already under strain from AI chatbots pulling away queries. "As those (AI) companies deploy their browsers, that'll take more searches away from Google. But the bigger threat will be when those companies have enough of a user base that they start selling advertising," said D.A. Davidson analyst Gil Luria. "It's only when Google loses advertisers that the revenue is going to be impacted." Also, Alphabet's Waymo, the early U.S. leader in autonomous cabs and often overlooked during earnings, is likely to draw more attention as Elon Musk's Tesla rolls out a test fleet in Austin, Texas. THE FUNDAMENTALS ** Alphabet is expected to report a near 11% jump in total revenue for the second quarter, per LSEG data. ** Analysts expect a 7.5% rise in advertising revenue and a 26.2% jump in its cloud computing segment. ** Per-share earnings are expected to be around $2.18, excluding one-off items. WALL STREET SENTIMENT ** Alphabet shares are largely flat so far this year. ** Stock is among the laggards in the "Magnificent Seven" group of megacap stocks, with Nvidia leading the range with a 28% jump and Tesla at the bottom with a 19% decline. ** Alphabet is rated "buy" on average among 55 brokerages, with a median price target of $203.84. (Reporting by Deborah Sophia and Zaheer Kachwala in BengaluruEditing by Rod Nickel) By Deborah Mary Sophia and Zaheer Kachwala