Earnings Season Is Here—And For Google, Numbers Really Do Move the Market
When earnings season rolls around, markets hold their breath.
At the center of attention once again is Google (Alphabet), which is scheduled to report Q1 2025 earnings on April 25 (KST). As the largest market cap stock in the S&P 500 Communication Services sector, Google’s earnings are more than just numbers—they are a test of trust.
Few companies combine consistent earnings growth with high investor confidence like Google. In such cases, earnings announcements carry significant weight. If expectations are met or exceeded, the stock tends to react swiftly and with momentum. Conversely, a disappointing report can trigger risk aversion and lead to both short-term drops and long-term weakness.
Google’s earnings history can be classified into five categories compared to consensus estimates:
When Google has beaten consensus estimates by more than 30%, the average returns 1 week, 2 weeks, 1 month, and 3 months post-earnings have shown a clear upward trend. These periods highlight strengthened investor confidence and sustained upward momentum. In particular, there have been notable instances where market returns 1 month and 3 months post-earnings were both 100% positive.
In cases of moderate positive surprises (0–30%), the average return across all timeframes was still positive. Though the gains were smaller, they showed that even modest outperformance can support bullish sentiment. However, volatility tended to increase over time, especially in the 0–10% range where post-earnings momentum was more limited.
In contrast, when Google’s earnings missed expectations, short-term returns were mostly negative, and the longer-term trend was also weak. Especially when results fell short by more than 10%, the subsequent stock drop was more pronounced. Earnings disappointments can sharply erode investor confidence and extend market weakness.
Ultimately, earnings drive markets.
While macroeconomic indicators and policy moves matter, it is concrete metrics like earnings that shape real investor behavior. For companies with solid earnings history like Google, a single earnings call can either reinforce or undermine investor trust.
A strong earnings surprise often triggers not just a short-term rally but sustained gains over 1 to 3 months. Conversely, an earnings miss exceeding 10% can lead to both a steep decline and broader market pessimism.
In short, when a company performs well, ride the wave. If not, it’s best to step aside. The simplicity of this principle is powerfully backed by performance data. Earnings season is the perfect time to revisit it.
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