Investment bank Baird: Alphabet (GOOGL.US) Q3 operating profit and EPS indicators are at risk due to increased capital expenditure

The Zhitong Finance App learned that Alphabet (GOOGL.US) will release the latest financial report later this month. Investment bank Baird believes that as capital expenditure increases, Alphabet's operating profit and earnings per share indicators may be at risk.

Analyst Colin Sebastian said, “Looking ahead to the increase in operating expenses associated with data center/infrastructure expansion, we still see some risk in operating profit and earnings per share expectations for the third quarter. Therefore, we believe there may be a moderate 'seller reset' after the third quarter earnings report is announced.” Wall Street analysts currently generally expect Alphabet's third-quarter revenue of US$86.23 billion and earnings per share of US$1.84.

Although the analyst said capital expenses could increase and cause GAAP operating margins to fall short of general expectations, he acknowledged that he “may not fully believe in the potential revenue benefits of AI products and services.” The analyst rated Alphabet “outperforming the market” with a target price of $200.