According to Zhitong Finance APP, Google (GOOGL.US) will announce its third-quarter results on October 29. Bank of America released a research report, reiterating its &#34;Buy&#34; rating on Google and raising the target price from $252 to $280.
Bank of America expects significant revenue growth, although one-time expenses may impact earnings per share. Advertising spending in the third quarter is expected to exceed expectations, thanks to improvements in the macro economy, increased data usage, and higher advertising spending to offset the decline in organic search traffic. Bank of America has raised its earnings expectations above market expectations, accounting for $390 million in legal expenses; it anticipates third-quarter revenue and earnings per share of $86 billion and $2.17, respectively, compared to market expectations of $85 billion and $2.29. The market expects a year-on-year growth rate of 11% for search, while Bank of America expects 12%. Bank of America estimates third-quarter operating expenses at $29.6 billion, with the operating profit margin declining year-on-year by 259 basis points to 35.7% (but improving year-on-year when excluding one-time legal expenses).
The outlook for the fourth quarter and the third-quarter results, along with key data from Meta/Microsoft, are crucial for stock performance. Given that third-quarter performance expectations exceed expectations, comparisons with Meta/Microsoft (reporting on the same day) and comments on the fourth quarter may drive recent stock performance. For the third quarter, Bank of America expects an advertising growth rate of 11% (compared to 23% for Meta) and a cloud business growth rate of 32% (Azure at 38%). For the fourth quarter, Bank of America expects revenue and earnings per share of $93.8 billion and $2.59, respectively, higher than market expectations of $92.7 billion and $2.55, and believes that if third-quarter performance exceeds expectations, fourth-quarter market expectations may be adjusted upward. For the fourth quarter, Bank of America's estimates assume a search growth rate of 12%, with YouTube's growth rate declining by 1 percentage point to 12%, and the year-on-year comparison for the fourth quarter will be slightly more challenging.
Potential positives and risks from the third-quarter conference call include: 1) an upward revision of advertising growth expectations (good macroeconomic environment, artificial intelligence technology + data usage), 2) a relatively stable trend for GCP compared to Azure (new customers increasing backlog), 3) strong search metrics indicating robust execution performance achieved through artificial intelligence transformation, and 4) efficiency improvements driven by artificial intelligence leading to an increase in core profit margins. Risks include: 1) search business performance meeting or falling below expectations, 2) a slowdown in paid click growth, 3) advertising growth rates lagging behind Meta, 4) comments indicating uncertainty or higher capital expenditures and future financial costs for the fourth quarter, and 5) the impact of one-time expenses.
Bank of America expects positive trends in artificial intelligence execution and cloud demand. Bank of America anticipates that Google will achieve another quarter of strong search results (along with stable paid click growth), while macroeconomic factors may further mitigate risks posed by artificial intelligence and contribute to the expansion of multiple businesses. Additionally, management is expected to emphasize the strong momentum of recent Gemini usage
In terms of cloud business, recent transactions may help boost the growth of backlogged orders, and Bank of America remains optimistic about the increasing value contribution in this area. Given the expansion of the overall market, Bank of America has raised its target price to $280

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Bank of America is optimistic about Google's third-quarter performance outlook, reiterating a "Buy" rating and raising the target price to $280. It expects significant revenue growth, with advertising spending exceeding expectations, despite one-time legal costs impacting earnings per share. Bank of America anticipates third-quarter revenue of $86 billion and earnings per share of $2.17, both above market expectations. The outlook for the fourth quarter is also optimistic, with expected revenue of $93.8 billion and earnings per share of $2.59

- Google (GOOGL.US) is set to announce its Q3 earnings on October 29, with Bank of America maintaining a "buy" rating and raising the target price from $252 to $280.  
- The bank anticipates significant revenue growth, driven by increased advertising spending, despite a decline in organic search traffic, and expects Q3 earnings of $86 billion and $2.17 per share, slightly below market expectations.  
- Key risks include potential underperformance in search business and slower paid click growth, while positive factors may stem from strong AI execution and cloud demand.

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Bank of America forecasts Google's Q3 performance: Search business may exceed expectations, AI business momentum is positive, target price raised to $280