### Alphabet Q3 Earnings Preview: Potential Breakup and AI Investments Key Focus

Alphabet Inc., the tech behemoth behind Google, is set to release its third-quarter financial results on Tuesday, October 29. As investors brace for the report, several pivotal factors are drawing attention, including a potential breakup due to antitrust concerns, the impact of AI investments, and the broader implications for the tech sector.

Analysts project Alphabet's third-quarter revenue to reach $86.34 billion, a notable increase from the $76.69 billion reported in the same quarter last year, according to Benzinga Pro data. Alphabet has consistently outpaced revenue expectations for seven consecutive quarters. Additionally, the company's earnings per share (EPS) are anticipated to rise to $1.85, up from $1.55 in the previous year, with Alphabet beating EPS projections for six straight quarters.

A primary topic of interest is the potential restructuring or breakup of Alphabet, as the U.S. Department of Justice (DOJ) looks into Google's dominance in the search market. Although such a move could generate negative headlines, several analysts believe that a breakup could ultimately benefit shareholders. Jefferies analyst Brent Thill argues that the "sum of the parts is greater than the whole," suggesting that even a complete breakup would be advantageous for investors.

Needham analyst Laura Martin echoes this sentiment, stating that Alphabet might garner a significantly higher valuation if broken into separate entities. In Europe, regulatory actions could mandate the spin-off of Alphabet's third-party network ad business. Martin estimates that YouTube alone could be valued between $455 billion and $643 billion if traded independently. She also notes that investors might favor "pure-play assets," and that a breakup could enhance transparency and employee engagement.

Wedbush analyst Scott Devitt maintains an Outperform rating and a $205 price target on Alphabet stock, labeling it an "above average company" currently valued at a "below average multiple." Despite potential regulatory hurdles and pressures from generative AI competition, Devitt highlights robust advertising growth and high user engagement with Alphabet's AI-driven search functionalities as positive indicators for future monetization opportunities.

As Alphabet prepares to reveal its Q3 performance, other key areas to watch include the company's search and YouTube segments. In the second quarter, Google Search and YouTube advertising generated revenues of $48.51 billion and $8.66 billion, respectively. Investors are also eager for updates on Alphabet's AI advancements and strategic positioning in a competitive landscape.

Alphabet's upcoming report could create significant volatility in tech and advertising-related stocks, making it a critical event for market observers.