All Eyes On Google Cloud: Alphabet Faces Its Azure Moment As Investors Brace For Q4 Earnings

• Alphabet is expected to report a 15.6% growth in overall revenue and a 23% growth in adjusted profit.
• Microsoft Azure's growth in the last quarter dropped slightly, triggering a selloff in MSFT shares.
• Alphabet's results are expected to be boosted by healthy advertising sales and gains from its recently released Gemini 3 AI model.

Alphabet investors will be closely scrutinizing the performance of its cloud business on Wednesday, after a somewhat lackluster showing from Azure dragged on Microsoft shares last week, even as the search and AI heavyweight is expected to post broadly solid results.

Cloud Numbers In Focus

Microsoft reported a 39% growth at its cloud unit for the December quarter. Although higher than estimates, it came in below the 40% rate in the just preceding quarter and triggered a 6% fall in shares.

Revenue at Google Cloud, the third largest in terms of size and trailing Amazon Web Services and Azure, in that order, is expected to grow 35%, according to LSEG/Reuters. That compares to a 33.5% growth in Q3 and 31% growth in Q4 2024.

Not only growth, but investors would also scrutinize cloud margins, as Alphabet commits significant investment to AI development and infrastructure, similar to its peers. 

Operating Income Growth Declines<Source: Company results

Analysts' View

Analysts broadly believe Alphabet will ride a wider upswing in advertising spending, as seen in Meta's quarterly report last week, while also gaining from rising use of its Gemini AI tools.

Bank of America believes growth across Google's web products accelerated after the Gemini 3 model and expects search growth to be between 15% and 16% and YouTube growth between 14% and 15%.

Google launched Gemini 3 to wide praise in November. Since then, Apple has selected Google to power forthcoming AI features in its products, and Samsung has said it will roll out Gemini on twice as many smartphones.

That momentum has helped Alphabet shares climb sharply, comfortably outperforming rival stocks. For a six-month comparison, see the chart below. 

Results Expectations

Wall Street expects Alphabet's fourth-quarter revenue to rise 15.6% to $111.48 billion – similar to the pace in the just preceding Q3 – and adjusted profit to rise 23% to $2.64 per share, per estimates from Koyfin.

Analysts are overwhelmingly bullish on Alphabet, although some have reduced their rating to 'Hold' following sharp recent gains in shares. Currently, 59 of 67 analysts recommend 'Buy' or higher, and the remaining eight recommend 'Hold,' per Koyfin. Their average price target of $346.32 is just $5 above the stock's last close.

On Wednesday, Stocktwits sentiment for GOOGL shifted to 'bullish' from 'neutral' the previous day.

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