Google, Microsoft among tech companies to report earnings this week

Yahoo Finance reporter Emily McCormick previews this week's earnings results, with many coming from tech names like Google and Microsoft.

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DAVE BRIGGS: Welcome back, everybody. Microsoft, Meta, Alphabet, Amazon, Intel, Twitter just a few of the tech titans reporting earnings in a crucial week for the markets. Emily McCormick here with a look at what's to come. Hey there, Emily.

EMILY MCCORMICK: Hey, guys. It's great to be with you. And we have two big tech earnings results to look forward to tomorrow afternoon. Those are Google's parent company, Alphabet, and Microsoft. Now some other names across other industries will also be reporting as well, including UPS, GE, Chipotle, and Visa. But let's focus on those tech names, and for that, I'll start off with Alphabet.

Now, that stock has fallen about 11.6% since its last earnings report on February 1, so the bar is fairly low here. But compared to some of the other social media tech giants reporting this week, Alphabet is expected to post really an only mild sales deceleration this quarter. Now, sales excluding traffic acquisition costs are expected to rise 24% to reach $56.7 billion. This time last year, revenue ex tech grew 35% for the company.

Now, overall, there are really three things to watch here for Google. The first is, as usual, on Google's biggest business, which is search and search advertising. This segment had benefited from the reopening and resumption of travel since travel advertising and search clicks are a big part of this business. So we'll see if that does continue this quarter.

Now the second thing to watch is going to be on YouTube advertising revenue. Growth here is expected to slow to a 23% increase and reach about $7.4 billion. And that deceleration may come due to tougher comparisons from the peak of pandemic fueled streaming last year and as a result of heightened competition from newer platforms like TikTok. And then finally, Google's newer cloud segment will also be a key focus.

It's much smaller than competitors like Microsoft Azure and Amazon Web Services, but it's still growing quickly while still being unprofitable. Sales there are expected to grow 38%. And speaking of the cloud, that's also going to be the major focus for the other big tech company reporting results, and that's Microsoft. Now Microsoft's Azure performance will be the big number to watch tomorrow. And according to Wedbush analyst Dan Ives, the cloud story is not slowing down here for Microsoft.

Now, Ives said he expects cloud deals are going to be up by more than 50% this year for this company, and that share gains from Amazon are in the cards. But Azure aside, some other units at Microsoft may be a little bit softer for this fiscal third quarter. Microsoft's hardware sales in its more personal computing segment likely slowed a bit, at least, in part, to some supply chain challenges.

But all told, there is still going to be some trepidation about Microsoft or the other big tech stocks heading into this earnings season, as we do see those shares down about 17% for the year to date and lagging the broader market, guys.

BRAD SMITH: All right, Emily McCormick here in studio with us. We appreciate the update. Got a lot of things to look forward to this week. Appreciate it.