Google parent company Alphabet Inc (NASDAQ:GOOGL) is expected to post strong third-quarter (Q3) revenue growth, even as one-time legal charges weigh on profits.
The tech giant is saddled with $3.9 billion in legal charges—including a $3.5 billion EU fine and roughly $400 million in other legal expenses.
Still, Bank of America Securities analyst Justin Post maintains a Buy rating with a price forecast of $280, up from $252.
Also Read: Alphabet’s New Search Updates Could Boost Revenue By Enhancing Ad Visibility And User Experience
Post credits Alphabet’s Q3 revenue growth to robust digital ad spending. The analyst’s checks indicate that advertising demand outpaced expectations. An improving macro environment, increased data usage, and shifting spend to offset lower organic search traffic helped, he added.
Post raised his Q3 revenue estimate above Street consensus to $86 billion, compared to $85 billion, while adjusting EPS down to $2.17 from a Street forecast of $2.29.
Post projects operating expenses of $29.6 billion and a 35.7% operating margin. That’s down 259 basis points year-over-year but improving when excluding one-time charges.
For Q4, the analyst forecasts revenue of $93.8 billion and EPS of $2.59, both slightly ahead of consensus. Positive estimate revisions are possible if Alphabet beats in Q3.
For Alphabet, Post estimates for this quarter:
- 11% ad growth
- Search revenue rising 12% year-over-year and
- Cloud growing 32% (outpacing Street expectations)
Google Search
Post noted that Alphabet’s Search business continues to benefit from AI-driven traffic shifts, as advertisers increasingly spend to compensate for reduced organic reach.
Paid clicks remain stable with improved engagement quality, aided by AI tools that refine consumer decisions before conversion, the analyst noted. He expects 4%–5% growth in paid clicks, supported by resilient e-commerce activity.
YouTube’s AI-powered creative tools and interactive ad formats—like QR codes and clickable in-stream ads—as catalysts driving adoption and improved ad performance. Its integration with Google Ads’ broader data ecosystem continues to strengthen targeting and return on ad spend, helping the platform evolve into a performance-driven advertising channel, as per the analyst.
On the Cloud side, he said Alphabet is maintaining solid momentum, with recent customer wins adding to backlog.
Post anticipates the company will emphasize Gemini AI adoption, new ad monetization formats, and cost discipline during its October 29 earnings call. Despite higher depreciation and legal costs, disciplined hiring and stable margins should help offset expense pressure, the analyst noted.
He believes another strong quarter, combined with regulatory clarity following the DOJ (Department of Justice) ruling, could ease concerns about AI disruption to Search and support multiple expansion. Post remains constructive on Alphabet’s ability to leverage AI innovation across Search, YouTube, and Cloud to sustain long-term growth.
Price Action: GOOGL stock is up 1.11% at $256.12 at last check on Monday.
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