Results: Alphabet Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

It's been a good week for Alphabet Inc. (NASDAQ:GOOGL) shareholders, because the company has just released its latest quarterly results, and the shares gained 9.7% to US$162. Revenues were US$90b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$2.81, an impressive 40% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

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After the latest results, the 54 analysts covering Alphabet are now predicting revenues of US$386.3b in 2025. If met, this would reflect a satisfactory 7.4% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 3.5% to US$9.46. In the lead-up to this report, the analysts had been modelling revenues of US$388.0b and earnings per share (EPS) of US$8.88 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

Check out our latest analysis for Alphabet

There's been no major changes to the consensus price target of US$203, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Alphabet at US$240 per share, while the most bearish prices it at US$160. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Alphabet's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 10.0% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 10.0% annually. Factoring in the forecast slowdown in growth, it looks like Alphabet is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Alphabet following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$203, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Alphabet going out to 2027, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.