Will Google Cloud Revenue Growth Dip Further? Analyst Sounds Alarm on Growth Trends
Portfolio Pulse from Anusuya Lahiri
Mizuho analyst James Lee maintains a Buy rating on Alphabet Inc (GOOGL) with a price target of $155, but warns of potential short-term declines in Google Cloud's revenue growth and operating margins. He compares Google Cloud's situation to AWS's past cost optimization cycle, predicting at least one or two more quarters of deceleration for Google Cloud. Lee also highlights potential headwinds from NFL Sunday Ticket licensing costs and legal expenses, which may not be fully accounted for in consensus estimates. He forecasts Q4 revenue and EPS below consensus at $84.06 billion and $1.46, respectively. GOOGL shares dropped by 2.32% to $128.80.
December 04, 2023 | 6:44 pm
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Analyst James Lee predicts a further decline in Google Cloud's revenue growth and potential negative earnings revisions due to NFL licensing costs and legal expenses. He sets Q4 revenue and EPS forecasts below consensus, which may lead to short-term stock pressure.
The analyst's comparison of Google Cloud to AWS's past deceleration and the specific mention of underestimated headwinds in consensus forecasts suggest a negative outlook for GOOGL's short-term performance. The recent 2.32% drop in share price following the report supports the likelihood of continued negative impact.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 100