TLDR
- Google stock has seen an 8.94% rally year-to-date, signaling strong momentum heading into the February 4 earnings report.
- Alphabet has shown growth across various divisions, including the Gemini AI platform and its core Search business.
- Wall Street expects Google’s earnings per share to rise to $2.58 for Q4 2026, a 14.2% increase from the previous quarter.
- Google needs to surpass high expectations, including a potential EPS of at least $3.28, to sustain its recent rally.
- Risks are emerging in the AI sector, with OpenAI’s financial challenges and Nvidia’s reduced investment potentially impacting Google’s growth.
Google stock (GOOGL) has been performing well as the company heads into its upcoming earnings report on February 4. With a year-to-date rally of 8.94%, shares are showing solid momentum. Despite the overall market’s slip, Alphabet’s positive business performance in various divisions strengthens the outlook for Google stock.
Strong Performance in Key Areas
Alphabet has seen consistent growth in several sectors, including its artificial intelligence (AI) platform, Gemini. Despite a slow start, Gemini now captures about 20% of the web traffic that ChatGPT once dominated. Google’s core business of Search also appears to have stabilized, recovering from performance dissatisfaction earlier in 2024 and 2025.
Alphabet has also made strides in its legal battles, particularly resolving its long-running antitrust case with Epic, the company behind Fortnite. The $800 million settlement for Unreal Engine also suggests that Google has made progress in handling its legal risks. In addition, the company’s autonomous car division, Waymo, recently raised $16 billion, showing continued investor confidence.
With earnings per share (EPS) expectations of $2.58 for Q4 2026, analysts are optimistic about Google stock. This estimate reflects a 14.2% increase over the prior quarter’s expected $2.26. However, the expectations set a high bar, as the company will need to surpass these estimates to maintain upward momentum.
Google stock faces the challenge of surpassing a strong Q3 performance, where EPS exceeded expectations by 27%. Analysts expect the company to report a figure above $3.28 to sustain its rally. Although Google has historically outperformed earnings expectations, these elevated projections leave little room for error.
Risks to Consider Before Buying Google Stock
Despite the positive news, risks are emerging in the broader tech sector. AI, a critical growth area for Google, has seen signs of strain. OpenAI, a major competitor in AI, has faced difficulties, including reports of needing more funding after considering introducing ads into its chatbot. Such developments could pose challenges to Google’s growth prospects.
The pressure in the AI sector comes as Nvidia recently pulled back on its intended $100 billion investment in OpenAI. The shift in focus could affect Google’s future AI-related growth. In addition, concerns over production constraints and energy bottlenecks in data centers may impact Google’s cloud ambitions.
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