Google (Alphabet) Q3 2021 Earnings Preview: Revenue Growth & Cloud Segment Insights

Stay tuned for Google (GOOGL) Q3 2021 earnings, releasing after market close on October 26. The spotlight is on Google Cloud's revenue growth and overall company performance.

Highlights to Watch

• Analysts predict earnings per share (EPS) of $23.12, up from $16.40 in Q3 2020.
• Year-over-year (YOY) growth in Google Cloud revenue is anticipated.
• Overall revenue growth expected to continue but at a slower rate compared to the previous quarter's surge.

Alphabet Inc., Google's parent company, has experienced remarkable profit and revenue increases recently. However, the company faces significant antitrust lawsuits in the U.S., targeting its dominance in online advertising, search engine operations, and the Android ecosystem, which could impact future growth.

Investors are eager to see if Alphabet can sustain its rapid earnings and revenue momentum in the Q3 2021 report. While growth is expected, the pace may moderate compared to earlier quarters.

A key focus area is Google Cloud, a vital segment offering scalable cloud platforms and collaboration tools such as Gmail, Docs, Drive, Calendar, and Meet. Analysts forecast continued robust growth in this segment, though slightly slower than previous quarters.

Alphabet's stock has outperformed the broader market over the past year, delivering a 71.3% total return compared to the S&P 500's 31.6%. However, recent months have seen some pullback in gains.

Alphabet's Earnings Track Record

In Q2 2021, Alphabet surpassed expectations with EPS growth of 169.1% YOY—the fastest since Q2 2019—and revenue growth of 61.6%, marking the strongest performance in at least four years. This surge was driven by increased consumer online activity and strong advertiser spending.

Q1 2021 also showed impressive results, with EPS rising 166.2% YOY and revenue up 34.4%, continuing an upward trend fueled by growing ad revenues and consumer engagement.

For Q3 2021, analysts anticipate continued earnings and revenue growth but at a tempered pace: EPS growth of 41.0% YOY and revenue growth of 37.2%. Full-year 2021 forecasts remain optimistic, with EPS expected to grow 73.3% and revenue by 37.8%, the fastest rates in several years.

Source: Visible Alpha

Focus on Google Cloud Revenue

Google Cloud remains a critical growth engine for Alphabet. It offers developers a reliable, scalable platform for app development and a suite of collaboration tools used worldwide. By Q2 2021, Google Cloud held approximately 8% of the global cloud market, ranking third behind Microsoft Azure and Amazon Web Services.

Google Cloud revenue has surged from $4.1 billion in FY 2017 to $13.1 billion in FY 2020. Although growth slowed briefly in mid-2020, it rebounded strongly with a 53.9% YOY increase in Q2 2021—the fastest since Q3 2019. Analysts predict a slight deceleration to 47.9% YOY growth in Q3 2021, with full-year 2021 growth maintaining this strong trajectory.

For investors and market watchers, Google Cloud's performance will be a key indicator of Alphabet's sustained growth potential amid regulatory pressures.

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