Alphabet Earnings Cheat Sheet: What Role Will Hardware Play In Future Growth Plans?

Google's parent company Alphabet Inc GOOG GOOGL is scheduled to report its fourth quarter results after Thursday's close and there is certainly a lot to look out for in the report.

According to Recode, it will be interesting to see how Google's line of hardware products fits in to the company's growth profile at a time when search and YouTube are driving the majority of revenue growth.

Recode noted that Alphabet is expected to report $25.2 billion in revenue; this implies an 18 percent year-over-year growth, but the majority of this growth will come from the core business segments.

Google is expected to include hardware sales in its "Google other revenues" segment. In the prior quarter, the revenue line read $2.4 billion, up 39 percent from the prior year and represented around 11 percent of Google's total sales.

Google released several new items for the Holiday shopping season, including a smartphone called Pixel and a rival to the Amazon Echo called Home. As such, investors will start to see the hardware business make a contribution to the overall business although the contribution in Thursday's print isn't expected to be notable.

Recode suggested that even if Google sold 1.5 million Pixel phones at an average cost of $650, it accounts for $1 billion. Granted, this is an impressive figure for a company of Alphabet's size investors shouldn't celebrate just yet as it's not known how much revenue would be offset by the cost of investing in the new hardware.

"This hardware business could be a meaningful revenue driver, although the potential impact to profitability is much less clear," Recode quoted Jefferies analyst Brian Fitzgerald as saying in a recent note.