Google has had a great run since its last earnings report. Can it last?
That’s the big question ahead of the tech giant’s earnings report this afternoon. BI’s Hugh Langley, our resident Google expert, breaks down what you need to look out for in the numbers and on the call.
Google has been on a three-month tear since its last check-in, launching Gemini 3 to much fanfare and joining the $4 trillion market-cap club. The string of successes put it at the front of the highly competitive AI race.
(A quick aside on these arbitrary rankings. You could argue Nvidia’s the biggest winner of the AI race, but it’s really in its own bucket. I’m talking about companies with competing chatbots. No further questions at this time.)
But here’s the thing about the AI race. It’s highly volatile. One quarter, you’re the belle of the ball; the next, you can’t even get your texts returned. Just ask Meta and Microsoft.
Investors are expecting a big swing one way or another. Google’s implied one-day share move following earnings is 4.9%, according to Bloomberg data.
You don’t have to search too far to find the key to Google’s earnings.
Google Search (get it) and the ad business built around it are still the company’s crown jewel. It’s also an area many have speculated AI would upend. (Why “Google it” if you can “ChatGPT it”?)
Google has managed to incorporate AI features without cannibalizing its cash cow. But it’s a tricky balancing act, and Google is already blurring the line between Search and Gemini.
The real tipping point will be ads. Google executives have been adamant that there are no immediate plans to bring them to Gemini anytime soon. However, if Search’s massive traffic ultimately gets passed to the chatbots, advertising’s arrival feels inevitable.
It also might not have a choice.
OpenAI is preparing to roll out ads to some ChatGPT users despite Sam Altman previously calling them a “last resort.” In such a highly competitive race, and with so much money on the line, giving your rivals any type of headstart is a risk.
