Google earnings are coming tomorrow. Here's what to watch

Google (GOOGL+1.23%) will report first-quarter 2025 earnings Thursday after the bell in what could be a key test for the Nasdaq, given the company’s heavyweight status on the index.

The company’s stock has fallen over 17% year-to-date, so investors will be tuning in to Thursday’s earnings call to gauge how exactly how confident Google’s leadership is about the company’s future, particularly in the key areas of AI and cloud computing, and amid a host of legal concerns related to antitrust cases.

Google is expected to report Q1 revenue growth of $89.2 billion (an 11% year-over-year increase) and earnings per share of $2.02 (7% ). Despite the company’s dip in stock price over the past year, Wall Street analysts largely remain optimistic about Google’s future. The consensus? Its core business fundamentals are strong.

Still, lingering uncertainties have led some big firms to lower price targets ahead of Thursday’s call.

​Top analysts, such as those at TD Cowen (TD+2.73%), UBS (UBS+1.35%), and Scotiabank (BNS+1.58%), have adjusted their 12-month price targets for Alphabet. TD Cowen reduced its target from $210 to $195, while UBS lowered its from $209 to $173, and Scotiabank dropped its from $232 to $200. But despite these more cautious outlooks, all three firms maintain a “buy” rating on the stock.

RBC Capital (RY+1.52%) analyst Brad Erickson said in a report that institutional investors have lowered their expectations: “We believe buy side is expecting a (2%-3%) miss, respectively, relative to sell-side estimates of 9% search growth and 8% overall ad growth in Q1.”

Google is dealing with a host of swirling questions that analysts are taking into consideration: rising legal risks, trade war and tariff uncertainty, and increasing competition in AI and cloud computing.

For investors, the first-quarter earnings report could be a moment of truth: a chance to reset expectations and refocus on the long-term potential of a $1.9 trillion Silicon Valley giant navigating turbulent waters.

Legal risks remain a big concern

Google has gotten plenty of headlines lately as it wades its way through a variety of antitrust lawsuits.

The search engine giant was back in court this week, related to a ruling that found the company has an illegal monopoly in online search — in part by paying web browsers and smartphone manufacturers to feature its search engine. And the DOJ told the judge it had an eyebrow-raising solution: forcing the company to sell its popular Chrome browser.

Google faces other mounting issues that have put the company in an especially vulnerable position.

In a separate antitrust case, a federal judge ruled that the company had illegally maintained a monopoly in some of its online advertising technology, which could result in regulatory fines or structural changes to how Google’s ad business operates — and maybe even a break-up. And Japan’s FTC recently sent the company a cease-and-desist order after it said Google’s search practices were monopolistic.

On Thursday, analysts will watch closely for any mention of these legal challenges and for what the company’s strategy is for dealing with them beyond what the company has already said — that they’ll appeal.

Potential for Cloud and AI growth — but when?

One key feature of Google’s earnings report will likely be how the company has integrated and improved its AI offerings, especially among increased competition in the realm. Investors will look at how the company’s Gemini AI model has been integrated across Google Search, YouTube, and Google Cloud — and at how the AI will start generating substantial revenue.

Jeffries analysts said that Google Cloud is “well positioned to benefit from Gemini AI advances” as the cloud computing suite remains a bit of a highlight for the company. Analysts expect Q1 Google Cloud revenue of almost $12 billion, up 25% year-over-year and slightly below both the Street’s expectation ($12.3 billion) and Q4’s growth rate (30%).

However, Google Cloud is still playing catch-up to rivals such as Amazon Web Services (AMZN-1.08%) and Microsoft Azure (MSFT+0.24%).

Google has positioned Google Cloud as an AI-first platform, so as more businesses adopt AI technologies, Google hopes to position its software as the go-to provider. If this quarter’s earnings show significant cloud growth, it could signal a breakthrough moment. Analysts will be closely watching for any signs that this strategy has begun to pay off.

And analysts will be looking at AI search competition, too, which JPMorgan Chase (JPM-0.63%) analyst Doug Anmuth said in a report “remains front and center given the rapidly growing scale of OpenAI’s ChatGPT and Google’s more measured pace in disrupting its own search ecosystem.”

How long can advertising remain the backbone?

Google’s advertising business remains the biggest component of the company’s revenue, so investors will look at those numbers to shed light on the current state of the digital advertising market.

YouTube and Google Search, the pillars of the company’s ad revenue, are expected to show growth. Analysts predict YouTube’s ad revenue will rise nearly 11% to almost $8 billion. But the company has big hopes for expansion in YouTube Shorts monetization. If it becomes a significant revenue stream, it could help offset any potential slowdown in traditional ad revenue.

Analysts remain cautious. Legal challenges, including the recent ruling in federal court that found Google guilty of illegally dominating the market in ad servers and exchanges, could have big implications.