Alphabet set to report Q3 results as Wall Street weighs AI cloud deals, Google Search competition from OpenAI

Google parent company Alphabet (GOOG, GOOGL) is set to report its third quarter financial results after the bell Wednesday as investors scrutinize how the AI boom is helping — and potentially hurting — the tech giant.

Alphabet is expected to report quarterly revenue of $99.85 billion, according to consensus estimates from Wall Street analysts tracked by Bloomberg, up 13% from $88.3 billion in the same period last year.

Analysts forecast the company will report adjusted earnings per share of $2.26 for the third quarter, a 7% increase from the company's $2.12 adjusted EPS in the year-ago period. That would represent its lowest earnings growth in more than two years, in part due to a recent antitrust fine from the European Commission.

Alphabet has increasingly shown that it's a beneficiary of the AI boom, as its Gemini AI models have gained popularity and big-name AI developers have signed up to use its cloud services. At the same time, AI chatbots led by OpenAI's (OPAI.PVT) ChatGPT pose risks to its core Search business.

"[W]e are confident that Google will create tremendous value from AI," Loop Capital analyst Rob Sanderson wrote in an Oct. 23 note to investors. But, he added, "Whether Google can maintain its dominant position in search is a meaningful structural uncertainty."

OpenAI's release of its ChatGPT Atlas Web browser last week pushed the AI developer into even closer competition with Google, briefly sending Alphabet stock tumbling.

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Still, Wall Street analysts were broadly optimistic on Alphabet stock ahead of the company's earnings, given a recent slewofAI deals involving Google Cloud, the upcoming release of its Gemini 3 model, and a favorable ruling for the company in its landmark antitrust case against the US Department of Justice. Those positive factors are offsetting concerns about how OpenAI could disrupt its Search business for now.

Alphabet stock is up more than 40% to trade around $268 since the company's last quarterly earnings — which surpassed Wall Street's projections — and the stock has broadly outperformed its "Magnificent Seven" Big Tech peers in that time frame. The company's market capitalization topped $3 trillion in September.

Analysts from JPMorgan, Bank of America, Morgan Stanley, Morningstar, and Loop Capital have raised their price targets on Alphabet shares as high as $300 in the past month.

"The favorable outcome in the DOJ Search Commercial Agreement trial certainly removed a major overhang, but Google is also delivering strong financial performance and innovating at the leading edge of AI," JPMorgan analyst Doug Anmuth wrote in a note to clients.

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Multiple big AI players, including Google's own competitors, have recently signed up to use its cloud services. OpenAI added Google to its list of cloud infrastructure providers in July. Meta (META) reportedly signed a $10 billion deal with Google Cloud to use its services as the Facebook parent rushes to secure AI computing capacity, multiplemediaoutlets reported in late August. Shortly after Alphabet's third quarter ended, OpenAI rival Anthropic announced an agreement with Google Cloud to use up to 1 million of its custom AI chips called TPUs — a deal that could generate as much as $10 billion in annual revenue for Alphabet, according to Bank of America estimates.Google CEO Sundar Pichai addresses the crowd during Google's annual I/O developers conference in California in May 2025. (Camille Cohen/AFP via Getty Images)·CAMILLE COHEN via Getty Images

The deals are set to boost Google Cloud's backlog, or the revenue it expects to see in the future from its contracts with customers, Morningstar analyst Malik Ahmed Khan explained. Already, the segment is set to be the biggest growth driver for Alphabet in the third quarter, with analysts projecting revenue to have risen 30% to $14.8 billion, per Bloomberg data.

"We expect the earnings report to further showcase Alphabet's ability to not only benefit from continued AI monetization in Google Cloud but also retain double-digit growth in its core search business," Khan wrote in an Oct. 24 note.

Google's Search business is set to see revenue grow 11% to roughly $55 billion during the September quarter, according to Bloomberg consensus estimates.

Khan told Yahoo Finance that investors will also be scrutinizing how well Alphabet is monetizing its investments in AI, just as Wall Street more broadly watches Big Tech firms' AI spending figures amid fears of a market bubble. Alphabet is expected to record $22.4 billion in capital expenditures, representing a 71% increase from the previous year.

"That ROI [return on investment] question is still by far the largest question mark on this overall AI ecosystem," he said.StockStory aims to help individual investors beat the market.

Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at [email protected].

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