Alphabet’s Upcoming Earnings Report Amidst AI Challenges and Legal Struggles

WASHINGTON, D.C. — Alphabet Inc., the parent company of Google and YouTube, is set to report its first-quarter earnings after the bell on Thursday. Investors are closely watching the outcome amid rising concerns about artificial intelligence (AI) competition and ongoing regulatory challenges.

Alphabet finds itself in a pivotal moment as it competes with AI firms like OpenAI and Anthropic. Its position is threatened not just by market competition but also by potential regulatory impacts, including tariffs from the Trump administration, which could lead to reduced advertising spending.

So far in 2025, Alphabet’s shares have fallen over 17%, prompting analysts to expect a relatively modest 10% year-over-year revenue growth for the first quarter. This period coincided with several AI developments, including the release of Gemini 2.5, which represents Google’s latest advancements in AI technology. Google AI chief Demis Hassabis expressed confidence in their strategy at a recent all-hands meeting, stating, “We have all the ingredients to maintain our leadership into this year.”

In addition to its AI initiatives, Google has been actively expanding its cloud services. The company recently announced its largest acquisition to date, agreeing to purchase cybersecurity firm Wiz for $32 billion, significantly more than its previous offer from 2024. Analysts believe this acquisition aims to enhance Google Cloud’s security capabilities, an area where Google currently lags behind competitors.

However, Alphabet’s journey hasn’t been without hurdles. Last week, a federal judge ruled that Google maintains illegal monopolies in online advertising, marking a significant blow to the company as it faces multiple antitrust lawsuits. Despite these challenges, analysts, including those from TD Cowen and UBS, have maintained a “buy” rating on Alphabet’s stock, even while adjusting price targets downwards.

For its first-quarter earnings, analysts predict Alphabet will report revenue of approximately $89.2 billion, reflecting an 11% increase compared to last year, with earnings per share at $2.02. Some analysts, however, warn that investors may see lower-than-expected results, predicting a slight miss in growth metrics.

Key to this quarter’s report will be how well Google has integrated its AI offerings, especially following increased competition in the tech space. Investors are particularly interested in the performance of Google Cloud, which is projected to generate close to $12 billion in revenue for the quarter, up 25% year-over-year.

With the digital advertising market still recovering and facing scrutiny from regulators, this upcoming earnings call may serve as a crucial indicator of Google’s strategic direction amidst turbulent market conditions. The company’s ability to navigate these challenges while fostering growth in emerging areas like AI and cloud computing will be under close examination.