Alphabet (Google's parent company) is set to report its first quarter earnings, which will provide insights into trends in online advertising and cloud computing amidst economic anxiety. Significant focus will be on the impact of AI Overviews on search advertising revenue. Analysts expect search ad growth to slow, reflecting lowered estimates. The competition in AI, particularly with OpenAI, is highlighted, with expectations regarding the monetization of AI Overviews and Googleâs performance under increasing competition from AI-powered platforms.
AI search competition also remains front and center given the rapidly growing scale of OpenAI's ChatGPT and Google's more measured pace in disrupting its own search ecosystem.
At Thursday's earnings, we hope to get increased clarity on the monetization of AI Overviews and early feedback on AI mode.
We believe buy-side is expecting a (2% to 3%) miss, respectively, relative to sell-side estimates of 9% search growth and 8% overall ad growth in Q1.
The AI Overviews system uses Google's in-house Gemini AI model, which is expected to influence the trends in internet search advertising revenue.
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