USA technology giants' financial reports take turns to appear, $Alphabet-A (GOOGL.US)$ / $Alphabet-C (GOOG.US)$ Taking on the "second leg".

After the US stock market closes on Tuesday, Alphabet will disclose its third-quarter financial report, and the company is expected to showcase significant progress and new revenue streams in the field of artificial intelligence (AI).

Analysts expect key financial indicators for Alphabet in the third quarter to show significant growth:

Revenue: Expected $86.44 billion, a year-on-year increase of 12.7% (Q3 2023 was $76.69 billion).

Adjusted earnings per share: Expected $1.83, a year-on-year increase of 18.1% (Q3 2023 was $1.55).

Cloud revenue: Expected $10.79 billion, a year-on-year increase of 28.3% (Q3 2023 was $8.41 billion).

Advertising revenue: Expected $65.5 billion, a year-on-year increase of 9.8% (Q3 2023 was $59.65 billion).

On the capital expenditure front, analysts suggest exploring the company's progress in AI integration to better understand the costs of developing complex artificial intelligence technologies, with capital expenditures expected to exceed $12 billion this quarter.

Accelerating AI layout, cloud computing service is expected to grow by 28% year-on-year.

Last year, Google has been seen as a 'follower of Microsoft', one of the companies benefiting early in the technology industry's rush from consumer to AI chatbots.

In the following quarters, Google has been striving to enhance its leadership position. Earlier this month, Sundar Pichai, CEO of Alphabet, stated in an open letter that there will be an internal restructuring to prioritize AI development, including merging the Gemini app team into Google DeepMind.

A previous article from Wall Street News stated that Google is developing an AI that can control computers, take over users' browsers to help consumers with tasks like research, purchasing products, or booking flights. It is expected to preview this new AI product as early as December.

The cloud computing service sector will continue to grow at a high speed. Analysts believe that considering Google's cloud computing service applications in AI development, this business area is increasingly important for investors. Google's cloud business is expected to further expand, with Google Cloud revenue projected to reach nearly $11 billion, an increase of approximately 28% compared to the same period last year.

Stock analyst Angelo Zino of Cfra Research is also bullish on Google:

"We believe Google has the best cloud infrastructure for the AI era, so it should be able to manage its cost structure better than other cloud service providers, while also benefiting from a large number of new revenue opportunities."

Despite external turmoil, analysts remain bullish.

However, it is worth noting that at the time of Alphabet's third-quarter financial report release, the company is going through a turbulent period. Earlier this month, the US Department of Justice stated in a court filing that it might recommend splitting up the company to enhance competition in the search engine market. The Department of Justice is expected to provide more detailed documents outlining their proposed remedies before November 20.

In addition, the presidential battle between Trump and Harris has intensified, causing a decline in the returns of large-cap stocks, further increasing uncertainty.

Currently, Alphabet's stock price ranks lower among the 'Big Seven.' It has risen by around 20% year-to-date, much lower than the astonishing gains of Meta and Nvidia but higher than Tesla's 14% and Microsoft's 10% increase. However, some analysts optimistic about the stock believe that its relatively affordable price is also an attractive feature.

Wedbush analysts state:

"While we do not believe that the upcoming quarterly report will act as a catalyst for Alphabet, we do think that Google's stock is attractive given its current price-to-earnings ratio. As investors grow more confident about regulatory risks and the impact of generative AI on Google search, we believe Alphabet is poised for P/E expansion in the coming quarters and years."

Editor/Somer