As the US East Coast time of October 29 approaches, the market is also anxiously awaiting the arrival of Google's Q3 performance.

Obviously, the antitrust lawsuit concerns have cast doubts on Google's long-term growth, and the third-quarter stock performance precisely confirms this, with Google's Q3 falling nearly 9%, compared to the S&P's over 5% increase.

Investor confidence reignition will depend on Google's future antitrust risk control, third-quarter performance in cloud computing, advertising business, and YouTube. Currently, the market generally expects Google to achieve revenue of $86.23 billion in Q3, a year-on-year increase of 12.44%; and earnings per share are expected to be $1.84, a year-on-year increase of 18.97%.

Focusing on the preview of Google's financial report this quarter, the market is particularly concerned about its antitrust risk control, cloud computing, advertising business, and YouTube's market performance.

• Antitrust Risk Control

Due to Google's significant influence in the internet search field, holding over 90% of the search query market in multiple countries, it has faced antitrust lawsuits in recent years.

On August 5, after a lengthy four-year antitrust litigation, the US District Court for the District of Columbia made a landmark ruling confirming Google's monopoly position in the general search services and general search text advertising markets.

Since the tech antitrust regulation wave swept through Silicon Valley in 2019, companies like Google, Apple, Meta, Amazon have faced multiple lawsuits. This judgment against Google is not only a glimpse of the challenges faced by global tech giants under antitrust regulatory pressure but also widely seen as a significant milestone in US tech antitrust actions.

On October 9, the US Department of Justice submitted a proposal indicating that they are considering requiring Google to sell part of its business to weaken the harm caused by monopolizing the online search market. The Department of Justice also stated that they are considering how to prevent Google from using its dominant position in search to gain unfair advantages in the competition of ai products.

Whether Google's core business model will be substantially impacted and how the future antitrust litigation will develop into a prolonged battle still remains to be seen.

The good news is that regarding the court's previous ruling that Google needed to open the Play Store for third-party app stores to join by November 1, the judge has supported a temporary administrative extension, meaning Google may not need to open its Play Store for several years.

• Google Cloud Computing

According to Bloomberg's unanimous expectations, Google Cloud Computing revenue in the third quarter reached $10.792 billion, a 28.31% year-on-year increase.

In the field of cloud computing, Google's market share ranks third globally, following closely behind Amazon and Microsoft. At the same time, to seize the new opportunities in Generative AI (GenAI), Google has been increasing capital expenditures in its cloud computing division throughout this year. Additionally, this quarter, the acquisition of cybersecurity company Mandiant by Google in 2022 is expected to yield positive returns.

It is worth noting that Google Cloud recently announced the deployment of servers running on Nvidia's Blackwell series chips, showcasing the company's strong commitment to cutting-edge artificial intelligence technology, and actively and continuously building its future computing infrastructure.

Market research firms predict that both the cloud computing and artificial intelligence markets will continue to experience strong growth in the coming years. As artificial intelligence technology advances, some growth may spill over into the cloud computing industry. Therefore, investors should closely monitor Google Cloud's growth, especially its revenue growth rate in the third quarter, as it may continue to surpass its online advertising revenue.

Furthermore, according to IOT Analytics research, Google Cloud takes a leading position in AI customer share, especially popular among small companies. In the competition in the cloud AI field, Google demonstrates unique advantages. Analyzing new case studies of various suppliers shows that Google has the highest percentage of cloud AI case studies, accounting for 36% of its overall new case studies. This data indicates that AI significantly drives Google Cloud, far surpassing other hyperscale enterprises.

• Advertising Business

UBS Group analysts expect Google's advertising revenue in the third quarter to reach $66 to $67 billion, up from $64.6 billion in the second quarter. Bloomberg's consensus forecast is at $65.5 billion, a year-on-year increase of 9.8%.

On the other hand, as about 78% of Google's revenue comes from advertising, the performance of the advertising market is crucial to Google's performance contribution.

According to UBS' research, there is a certain acceleration in the overall macroeconomic advertising budget growth in the global and USA markets in the third quarter of 2024, mainly driven by political factors, brand advertising recovery, and improved consumer confidence. It can be seen that most industries performed strongly in the third quarter of 2024, with autos and Consumer Packaged Goods (CPG) industries standing out.

At the same time, this will also be Google's response to the market's concern about the impact of its search business after the rise of GenAI technology. Over approximately two years since the launch of ChatGPT, Google has been continuously consolidating and defending its leading position in the search field.

• YouTube

According to Bloomberg's consensus forecast, YouTube's advertising revenue in the third quarter is expected to reach $8.895 billion.

Finally, according to the report released by UBS Group, in the third quarter, YouTube's daily active users (DAU) showed extremely strong growth momentum. Particularly noteworthy is that its DAU month-on-month growth rate exceeded that of major competitors in the industry such as Facebook, Instagram, and TikTok.

Specifically, during the period from July to September, YouTube's DAU month-on-month growth rates were stable at 0% (no change between July and August) and 1% (August to September), while in comparison, the DAU of the three major platforms mentioned above all experienced negative growth.

In addition, Google is intending to curb TikTok's expansion pace through its short video platform YouTube Shorts. Industry analysts point out that whether Google can achieve growth through YouTube Shorts in 2024 will also become a major focus of attention. Currently, according to analyst data, YouTube Shorts has a daily viewing volume of approximately 70 billion times.

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