Google Earnings Will Be Biggest Q1 Report Yet As Investors Search For Tariff And Recession Impacts

Forbes

24-04-2025

Google parent Alphabet will report first-quarter earnings Thursday afternoon, becoming the first of the trillion-dollar U.S. technology behemoths to report earnings from the first quarter, a period marred by elevated economic uncertainty that could weigh on the advertising-heavy Google.
"Underwriting Google might be the closest thing to impossible" with significant macroeconomic and ... More regulatory uncertainty, shrugged one Wall Street analyst.
In the report due shortly after 4 p.m. EDT, consensus analyst estimates call for Alphabet to report revenue of $89.2 billion and adjusted earnings per share of $2.01 ($24.8 billion net income), according to FactSet.
That equates to 11% top line expansion from Q1 2024 and 6% bottom line growth year-over-year.
Alphabet's bread-and-butter Google search unit is expected to generate $50.5 billion in sales, rising 9% annually, and its artificial intelligence heavy Google cloud is forecast to bring in $12.3 billion, growing 28%.
Shares of Google rose Thursday ahead of the release, gaining 1%, but have declined 16% year-to-date, slightly worse than the tech-heavy Nasdaq's 13% decline as fears of an economic slowdown tied to President Donald Trump's trade war broadly ate into investor confidence.
Investors would 'likely' view even an 'in-line' first quarter as a positive given 'business sentiment has deteriorated' globally, predicted Bank of America analyst Justin Post in a Monday note to clients. But an earnings miss, even if a product of the shaky macroeconomic situation rather than unique to Google, 'could fuel already elevated competitive and regulatory concerns,' the Bank of America analyst continued. Google does not historically provide any specific financial guidance for future periods, but investors will certainly keep a keen eye on any hints for how management expects the complicated macro picture to impact its business.
Google is grappling with a 'negative tariff ad spend impact,' according to Post, specifically noting declining spending from Chinese discount retailers Temu and Shein as Trump's more than 100% tariffs on Chinese imports stifle the flow of goods from the country to U.S. consumers. Still, Google has 'relatively less' pressure from the choppy operating environment, according to Post. About 4% to 5% of Google's revenues come from Chinese companies spending on U.S. advertising, according to Bernstein analyst Mark Shmulik, much less than the 7% to 8% exposure from Google's top digital advertising rival, Facebook parent Meta.
'If investing in US tech stocks was difficult right now, underwriting Google might be the closest thing to impossible,' Shmulik wrote Wednesday. Among the massive unknowns swirling around Google are recession concerns, tariff exposure, potential for generative AI to disrupt online search, a 'library of regulatory overhangs' and a 'potential lightning rod for international retaliation' against American entities, explained Shmulik.
Among the 'library' of regulatory hurdles facing Google include high-profile monopoly probes from U.S. prosecutors. A federal judge ruled last week Google maintains an illegal monopoly in advertising technology, and the Justice Department argued in an ongoing antitrust case the company should be forced to sell its Chrome web browser.
Google is one of the six West Coast tech companies with market values of at least $1 trillion, joined by Apple, Microsoft, Nvidia, Amazon and Meta (those companies are often lumped together with Elon Musk's Tesla to form the 'magnificent seven'). Google was a key part of the massive tech stock rally as generative AI's popularity spiked, as its share price more than doubled from the end of 2022 to 2024. But big tech has stalled on Wall Street as recession fears escalated, as Bloomberg's magnificent seven index has declined about 20% in 2025.
Next week, Amazon, Apple, Meta and Microsoft will all report earnings from 2025's first three months. Tesla, the least valuable member of the magnificent seven, shared its Q1 report Tuesday, missing on both profit and revenue forecasts.