Here's what every major analyst expects from Alphabet's earnings report after the bell

Published Mon, Oct 28 201911:49 AM EDT

Alphabet will pick up where it left off after July's stellar second quarter earnings report if Wall Street analysts are to be believed. The company reports its third-quarter earnings after the bell on Monday and analysts told clients this week they expect the momentum to continue. While regulation clouds may linger, analysts are looking to Google Cloud, Google Search, YouTube, and revenue growth to keep things going. Alphabet shares are up over 4% this month. Here's what every major analyst expects from Alphabet's earnings report: "Against a backdrop of recent positive mean reversion in the stock price, we see GOOG's upcoming earnings report as a continuation of last quarter and our industry conversations continue to point to positive momentum," UBS analyst Eric Sheridan said. "GOOG's key advertising products, mobile search & YouTube, are demonstrating innovative products and driving solid pricing dynamics in 2H'19. Second, Google's cloud computing division appears to be building momentum," he said. Even though the company may have some swirling headwinds, the company is still a great investment for shareholders according to Guggenheim. "Despite regulatory uncertainty, Alphabet continues to be viewed as a relatively safe, affordable way to invest in multi-year growth of technology and connectivity monetization by global businesses and consumers," the analyst said. "We continue to see significant opportunity for the company at the intersection of video and targeted advertising as Alphabet is the industry leader in serving consumers across screens and activities." At the end of the day, Google Cloud may be the key driver for the company going forward. "All in, we continue to view Alphabet as one of the best-positioned digital ad companies and see non-advertising revenue streams like Google Cloud becoming a more central part of the thesis over time," Goldman Sachs analysts said. Bank of America- Buy rating "Google had much improved 2Q results, but stock appreciation has been limited by ongoing concerns on the economy, margin pressure and regulatory risks. Catalysts for stock valuation include: 1) traction for Google's new ad formats that include shopping ads and ads in Discover, 2) more visibility on YouTube business which seems to have strong traction and could see OTT ad shift benefit, & 3) evidence of continued traction in the Cloud business (2020 could be Google's year of the cloud)." RBC- Outperform rating "Based on intra-quarter data points and our model sensitivity analysis, we believe Street estimates for Q3 are reasonable, with equal chance of downside vs. upside variance on the top line, but a greater chance of upside on the bottom line, given the H1 modest slowdown in headcount ads and in capex spend." J.P. Morgan - Overweight rating "We believe investor sentiment around GOOGL has improved notably over the past few months on the heels of better 2Q earnings—including accelerating growth, increased disclosure, & a bigger buyback—and shift from high growth to safer, more value oriented names. We project 19.6% Google Properties FXHN revenue growth in 3Q, but our conversations suggest investors likely expect acceleration from the 20.5% of 2Q." SunTrust- Buy rating "We're positive on GOOGL into 3Q earnings as conversations with marketers support robust Search and YouTube dynamics throughout the quarter, with strong positioning into the holidays. Our bottom line estimates reflect a flatish TAC but increased level of investments to support growth initiatives. We view the ~$9.2B in fines from the EU as the beginning rather than the end of what's coming regulatory-wise; that said, we don't anticipate a material impact on operations from regulation short-term." BMO- Market perform rating "We continue to expect deceleration in 4Q19, as we don't see new ad load (more Promoted Pins on Maps, Discovery feed, YouTube masthead on TV app, etc.) providing enough upside to offset law of large numbers. We also remain Market Perform as we believe Street margins remain too high (likely due to mix, rather than investments) and continued regulatory scrutiny, particularly in the U.S., which could continue to weigh on the multiple near-term." Guggenheim- Buy rating "Despite regulatory uncertainty, Alphabet continues to be viewed as a relatively safe, affordable way to invest in multi-year growth of technology and connectivity monetization by global businesses and consumers. Confidence in the company's advertising and cloud growth potential continue to underpin the bull case while regulatory uncertainty and maturing search growth (including competition from Amazon) are the primary concerns. We continue to see significant opportunity for the company at the intersection of video and targeted advertising as Alphabet is the industry leader in serving consumers across screens and activities." Credit Suisse - Outperform rating "After the product-driven changes and gyrations to 1H19 results, we are looking forward to more straightforward reports for 2H19. While we may be tempted to believe that some of the new products Google announced at Marketing Live recently will exert an influence on ad budgets, we continue to believe it is the ongoing release of products from years past that are driving the strong growth of search and YouTube today." UBS- Buy rating "Against a backdrop of recent positive mean reversion in the stock price, we see GOOG's upcoming earnings report as a continuation of last quarter and our industry conversations continue to point to +ve momentum. First, GOOG's key advertising products, mobile search (especially local/Maps) & YouTube, are demonstrating innovative products and driving solid pricing dynamics in 2H'19. Second, Google's cloud computing division appears to be building momentum as investments in management, sales talent, product innovation and pricing all seem to be driving a very solid operating dynamic." Goldman Sachs - Buy rating "Based on our investor conversations, we believe the market continues to expect steady growth rates on a constant currency basis in 3Q, with potential for modest acceleration in 4Q as the company benefits from some of the newly announced ad products like shoppable ad units and universal cart features. All in, we continue to view Alphabet as one of the best-positioned digital ad companies and see non-advertising revenue streams like Google Cloud becoming a more central part of the thesis over time." Susquehanna- Positive rating "We remain positive on the secular ad growth story driven by mobile search and YouTube combined with generally better expense management and a more shareholder-friendly capital allocation approach. Overall, our 3Q checks point to steady growth with the possibility of a slight acceleration in sites revenue growth. For search, most of the larger checks are seeing steady-to-slight acceleration in growth. For YouTube, our checks largely saw stable budget trends in 3Q and did not call out noticeable impacts from GOOGL's platform safety changes."

Google CEO Sundar Pichai speaks during signing ceremony committing Google to help expand information technology education at El Centro College in Dallas, Texas, October 3, 2019.

Brandon Wade | Reuters

While regulation clouds may linger, analysts are looking to Google Cloud, Google Search, YouTube, and revenue growth to keep things going.

Alphabet shares are up over 4% this month.

Here's what every major analyst expects from Alphabet's earnings report: