Google is expected to post a strong fourth quarter as analysts say online holiday spending likely drove an acceleration in digital advertising purchases from the search giant.
The internet titan’s fourth-quarter earnings due Tuesday afternoon should reflect a continuing recovery in global ad spending that took a hit in early 2020 when people paused travel plans and other purchases in response to the coronavirus pandemic.
Analysts forecast Google parent Alphabet Inc. GOOG 3.57% to post a record $42.33 billion in advertising revenue, according to FactSet, up from $31.9 billion a year ago. Overall, analysts forecast Alphabet to post $52.67 billion in revenue, also a record, compared with $46.08 billion a year ago.
Alphabet’s profit is projected to rise to $11.87 billion, up from $9.3 billion a year ago.
Google is also expected to reveal more information about the costs and profitability of its cloud business when it reports its results. Last year, Google said it would break out Google Cloud as a separate reporting segment in the fourth quarter, which means investors will be able to better compare the results of Google’s cloud business with those of Amazon.com Inc. and Microsoft Corp. Previously, Google reported just the revenue for its cloud unit.
Analysts polled by FactSet expect $3.83 billion in cloud revenue, compared with $2.61 billion a year ago. While analysts expect Google’s cloud business has increased its share of the overall cloud-services market, its costs could eat into the unit’s profit.
Meanwhile, Google has managed to sign up big-name clients for its cloud business. On Monday, Ford Motor Co. said it had decided to use Google for cloud services to help develop in-car features and manage the reams of data streaming from its vehicles.
Shares of Alphabet have gained about 17% over the past three months, compared with a roughly 22% gain in the Nasdaq Composite Index.
Still, Google is facing growing challenges. A set of antitrust lawsuits allege various abuses of its power over online commerce and digital information. They say Google muscles out competitors and sells out the users it claims to protect.
A small number of employees of Google have also formed a union. They have said their efforts reflect a need for employees to be able to speak out about the company without facing career repercussions.
On Monday, the Labor Department said Google had agreed to pay more than $3.8 million to resolve a case of hiring and pay discrimination at several locations in California and Washington state.
Write to Georgia Wells at [email protected]
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