Google, AMD Earnings to Reveal DeepSeek Insights

Thanks to advances in China's AI development, the tech sector shake-up is still expected to be a headline-maker despite upcoming reports from the world's largest search engine and a leading AI chip manufacturer.

Google in the Cloud

Alphabet is expected to reflect growth, although it may face challenges due to strong comparables from the previous year. While search revenue is expected to grow by 10% year-over-year, there could be a slight slowdown from the 12% growth in the last quarter. However, cloud revenue is projected to be the outperformer, with a 35% year-over-year increase.

Analysts expect EPS to rise to $2.13 from $1.64, with sales growing by 12% to $96.7 billion. As Google aggressively pursues AI integration, investors will closely monitor the comments of CEO Sundar Pichai on the potential impact of DeepSeek and its influence on demand for storage and cloud computing, which could affect the company's star unit. Alphabet will issue its first guidance for 2025, with analysts projecting an EPS of $9.00 on revenues slightly over $360 billion.

AMD and Cheaper AI Training

As a leader in producing AI chips for tech firms like Meta and Microsoft, investors will keenly observe comments from AMD on the potential for cheaper AI training enabled by DeepSeek. Last quarter, AMD data centre revenue surged 122% year-over-year, offsetting losses from the gaming and embedded segments. However, a shift to lower-margin, older-generation chips could challenge the company's main growth engine.

Analysts expect EPS to increase to $1.09 from $0.77, driven by a 22% rise in total sales to $7.53 billion. The AMD stock has struggled to recover from last week's selloff amid the DeepSeek buzz, though it received an endorsement from CNBC's Jim Cramer ahead of earnings, albeit interpreted differently. While the company's GPU investments could hurt profit margins, they may help reverse sales declines in the embedded and gaming sectors. Investors will scrutinise guidance for 2025, particularly concerning any moderation in its data centre unit or recovery in the gaming sector.

Google Pennant Breakout

Google has left behind a rising pennant pattern at $187, pending a continuation towards the measured-move projection of $215 (measuring $200 to $185). If prices accelerate past the record high of $205, Google could face next resistance at $210. Conversely, a decline below the $200 handle and the $195 support (breakout point) would suggest further drops, with the next levels at $190 and $180.

Source: SpreadEx / Alphabet

Key Takeaways

Google and AMD are expected to reveal insights into the impact of cheap Chinese AI development on the tech sector. On the one hand, cloud revenue for the former is expected to be the outperformer, but the company's search revenue growth may slow. However, Google’s bottom line is still projected to receive a boost, with investors closely monitoring the potential effects of DeepSeek. On the other hand, leading AI chip manufacturer AMD could face challenges if a shift towards cheaper AI training transpires as it would impact its main growth engine. The upcoming reports will shed light on the shifts in tech due to AI advancements, but the focus will likely remain on how major US AI players plan to compete against rivals.