Shares of Google (GOOGL) were on an upswing in pre-market trading on Wednesday after its parent company Alphabet’s Q3 results topped Wall Street estimates. The tech giant’s growth in Q3 was led by its Search and Cloud units.
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Following the tech giant’s blockbuster earnings, there were some key takeaways from its earnings call. Let us take a look at some of these takeaways.
GOOGL’s New CFO Makes Her Debut on the Earnings Call
Anat Ashkenazi, Alphabet’s new CFO, made her earnings call debut on Tuesday, emphasizing a top priority of achieving “cost efficiencies” throughout the company. Ashkenazi stepped into the role in July, nearly a year after Ruth Porat transitioned to her new role as Alphabet’s president and chief investment officer.
GOOGL Faces Rising Competition in Search Advertising
The robust results aside, GOOGL faces rising competition in the AI-driven advertising landscape, where companies like OpenAI, Perplexity, and even TikTok are increasingly vying for market share. In order to navigate this changing landscape, Alphabet has made internal adjustments, including budget cuts and restructuring efforts.
Moreover, Ashkenazi indicated that she aims to streamline for “further efficiencies,” reallocating resources for new investments that will protect Alphabet’s competitive edge and sustain profit margins.
GOOGL Expects Its CapEx to Rise
Beyond cost cuts and restructuring efforts, GOOGL is investing heavily to strengthen its technical infrastructure. In the third quarter, GOOGL reported capital expenditures of $13 billion, primarily allocated to technical infrastructure, such as servers and data centers crucial for its cloud and AI capabilities.
Additionally, Ashkenazi hinted at a similar CapEx in the fourth quarter and warned of further increases in 2025, as the company invests aggressively in enhancing its search and cloud capabilities. These investments, she noted, are based on customer demand, so they “will translate to revenue in the fairly short term.”
Is GOOGL Stock a Buy?
Analysts remain bullish about Alphabet stock, with a Strong Buy consensus rating based on 22 Buys and six Holds. Over the past year, GOOGL has increased by more than 30%, and the average GOOGL price target of $201.54 implies an upside potential of 18.8% from current levels.
