Google (GOOG, GOOGL) will report its third-quarter results after the bell on Wednesday, as Wall Street prepares for a deluge of news about the health of the AI business.
Investors are oscillating between worry and exuberance about the future of AI and whether hyperscalers’ vast investments in the technology will pay off.
Those fears were on display last week, as traders dumped shares of CoreWeave over questions about its massive debt load, sending large swaths of the market lower.
For the third quarter, analysts expect Google to report earnings per share of $3.01 on revenue of $127.8 billion. Revenue excluding traffic acquisition costs is expected to be $111.2 billion.
Google’s advertising segment is expected to make $83.5 billion in revenue, while its cloud unit could see revenue rise 91% to $28.9 billion.
The company could also earn significant revenue from the sale of its custom Tensor Processing Units (TPUs) to third-party data centers. On Tuesday, Oracle announced that it would be the first company to purchase Google’s AI processors for use in its own data centers.
“In the near term, we believe rising TPU sales, competitive agent offerings and a broader launch of Gemini 4 could be catalysts,” BofA Global Research analyst Justin Post wrote in a note to investors.
According to John Blackledge, an analyst at TD Cowen, Google is expected to generate $9.4 billion in TPU sales in the second half of 2026. This amount, he writes, could reach $62.5 billion in 2027 and $138 billion in 2028.
But Google also faces growing competition from Meta thanks to its new Muse AI agent. According to Meta CEO Mark Zuckerberg, 10 million people have created Muse, with the majority of users accessing the app for shopping.
If Muse continues to expand its user base and gain traction in online sales, it could prove to be a long-term threat to Google.
“Search usage (and) growth is back in focus given the launch of Muse and the challenges Google may face migrating users to Agent while maintaining strong monetization,” Post wrote.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on @DanielHowley.
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