Key Drivers Ahead: How Upcoming Earnings, Google Cloud Next, and Google I/O Events Could Boost GOOGL Stock

Analysts Notebook wrote a column · Apr 1, 2024 20:59

As generative AI emerges, $Alphabet-A (GOOGL.US)$ remains a tech leader, facing both opportunities and risks for its stock with this technology. A key concern is how AI chatbot integration into search will affect Google's ad revenue. Google stock has risen about 8% in 2024, with a positive shift in technical ratings and investor sentiment. The upcoming Google Cloud Next event from April 9-11 is anticipated to bring AI announcements, like the AI-powered Security Command Center Enterprise.

Morgan Stanley listed 5 potential GOOGL catalysts over the next 3 months:

Source: Morgan Stanley Research

• Google Cloud Next

Google Cloud Next is an annual event where Google showcases its latest advancements in AI, Cloud, and Collaboration technologies. Google will conduct its annual enterprise event Google Cloud Next from April 9 to April 11. An example of its AI advancements is the newly introduced Security Command Center Enterprise, which incorporates AI automation.

• 1Q24 Earnings

GOOGL earnings are due in late April. Despite a sell-off following its 4Q23 earnings report, Alphabet exceeded overall earnings and revenue expectations, although advertising revenue fell short of projections. Wall Street analysts have raised their 2024 capital spending forecasts for Google due to the company's increased investment in AI. Additionally, Alphabet is maintaining its focus on cost reduction.

• Google I/O & Marketing Live

Google is set to hold Google I/O on May 14 and Google Marketing Live on May 21. Both May events are anticipated to feature announcements related to artificial intelligence.

The upcoming Google I/O event is expected to heavily feature AI developments, particularly following the release of Google's advanced AI model, Gemini, and its smaller counterpart, Gemma. However, Google will need to address controversies such as the inappropriate outcomes from Gemini's image generator and the misinformation issue from its Bard launch, as it contends with rivals like $Microsoft (MSFT.US)$ and OpenAI. In addition, attendees can anticipate announcements about Android 15's new features, enhancements to services like Gmail and Google Photos, and potentially the debut of the new Pixel 8A smartphone, which may inherit AI features from the premium Pixel 8 at a more affordable price point.

• Apple WWDC

At the WWDC scheduled from June 10th to June 14th, Apple is set to address its position in AI, an area where it's currently seen as lagging behind. While the conference will typically cover upcoming software updates and new hardware, there's significant speculation on Apple's strategy regarding generative AI. The company has been investing heavily in training its AI models and exploring content partnerships for training data. There are also rumors that Apple might either collaborate with firms like Google, OpenAI, or Anthropic for cloud-based AI services or maintain its generative AI features in-house on devices.

Additionally, there's speculation from Bloomberg that Apple may open its ecosystem for deeper AI integration by third-party developers. With the growing importance of generative AI, Apple is expected to promote its capabilities in this domain, building on its history of emphasizing on-device machine learning. This major event in the tech industry could potentially boost the performance of U.S. tech stocks.

We're so excited to connect with developers from around the world for an extraordinary week of technology and community at WWDC24. WWDC is all about sharing new ideas and providing our amazing developers with innovative tools and resources to help them make something even more wonderful," said Susan Prescott, Apple's vice president of Worldwide Developer Relations.

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Source: Investor's Business Daily, Mio, The Verge, Apple, Alphabet, Morgan Stanley

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