Alphabet announced its earnings after hours, setting the tone for the tech giant's earnings season

According to Zhitong Finance APP, Google (GOOGL.US) will release its financial report after the close of U.S. stock markets on Thursday, and Wall Street is holding its breath to see how this tech giant will navigate the current predicament. Although the company's price-to-earnings ratio has fallen to 16.4 times (below the industry average), and tariffs have a relatively limited impact on its business, the loss in antitrust lawsuits, the cash-burning competition in the AI field, and the shadow of economic recession still leave investors on edge.

Recently, a federal court ruled that Google illegally monopolized parts of the online advertising technology market, marking one of Washington's tough antitrust measures against tech giants. More troubling is that the Department of Justice is pushing for a plan to break up Google, and the company will appear in court again this week to debate the DOJ's breakup plan. Such legal disputes come at a sensitive time when the company urgently needs to consolidate its dominance in the search market.

Bernstein analyst Mark Shmulik bluntly stated: "Investing in U.S. tech stocks is already challenging, and betting on Google is even more difficult"—his list of potential risks includes: the dual impact of tariffs and economic recession on the advertising market, the bubble controversy triggered by the AI investment cycle, the risk of disruption to the search business, and the possibility of multinational regulatory backlash.

Although the market expects Google's net profit in the first quarter to increase by 6.2% year-on-year (with revenue up 12%), analysts have lowered their full-year net profit expectations by 1.6% over the past month. Notably, against the backdrop of collective pressure on tech stocks, Google's stock price has plummeted 18% this year, underperforming the market. However, Greg Hart, head of research at Carnegie Investment Counsel, believes that the current price-to-earnings ratio of 16.4 times is close to "golden pit" levels, and there is limited room for further significant declines.

Some analysts expect revenue to grow by 12% this year, with annual growth rates reaching double digits over the next two years. This year's net profit is expected to grow by nearly 10%, and will accelerate each year over the next two years.

The market is highly concerned about Google's cash-burning pace in the AI field. The company announced that capital expenditures will reach $75 billion by 2025, far exceeding previous expectations. While Microsoft (MSFT.US) has paused data center expansions and Amazon (AMZN.US) has suspended some cloud business leases, Google is increasing its investment in AI infrastructure against the trend.

Eric Clark, portfolio manager at Accuvest Global Advisors, warned: "The core search business may be melting away, while the regulatory sword of Damocles always hangs high. Even if the price-to-earnings ratio is low, one must be wary of it being a 'value trap'—after all, huge expenditures and competitive risks may turn low-cost valuations into an illusory safety margin."

This quarter's financial report is seen as a barometer for the overall performance of the tech industry. Previously, Tesla (TSLA.US) saw a sharp drop in deliveries, while Netflix (NFLX.US) recorded record profits, highlighting the current market's high fragmentation. Jim Avad, senior managing director at Clearstead Advisors, stated: "In the face of triple uncertainties from tariffs, regulation, and game rules, forecasts must remain extremely cautious. However, giants like Google have been beaten down to historical lows by the market, and long-term rebound potential may be brewing As generative AI sparks an industrial revolution and the traditional advertising market faces the test of decline, can this tech giant Google navigate through the regulatory storm and competitive red sea? This quarter's financial report may provide key clues