Alphabet (GOOG) and Meta (META) Earnings: AI Investments and Digital Ad Performance in Focus

Earnings Release

Alphabet (GOOG, GOOGL) will release its fourth-quarter results on Tuesday after the market close, marking the start of another week of earnings from US tech giants. Investors are eager to see how Alphabet will respond to the challenge posed by DeepSeek's AI models and the broader performance of the digital ad market.

AI Investments and Revenue Streams

Alphabet is expected to provide updates on its AI investments, including efforts to monetize these advancements. It faces competition from Meta, which beat Wall Street expectations in its recent earnings report but declined to give full-year guidance. Both companies are investing heavily in AI for improved ad sales and user engagement.

DeepSeek's Impact

The success of DeepSeek's AI models, developed at a lower cost than Google's Gemini and OpenAI's ChatGPT, has raised questions about overinvestment in AI hardware in Silicon Valley. Alphabet is expected to shed light on this issue in its earnings call.

Financial Performance

Analysts estimate Alphabet to report earnings per share of $2.13 on revenue of $96.6 billion, an increase from the same period last year. Advertising revenue is projected to reach $71.7 billion, while Google Cloud revenue is expected to hit $12.1 billion. Cloud growth is crucial for Alphabet as it competes with Amazon (AMZN) and Microsoft (MSFT).

Regulatory Risks and Trump's Influence

Google continues to face regulatory risks, including an antitrust lawsuit and the potential breakup of the company. The market has dismissed immediate concerns, but investors will monitor Trump's policies and their impact on Google's court challenges.

Stock Performance

Alphabet shares have outperformed Amazon and Microsoft in recent months, reflecting investors' confidence in its growth prospects. The company's earnings report will provide further insight into the sustainability of this momentum.