12:29 PM EDT, 07/22/2024 (MT Newswires) -- Alphabet (GOOG, GOOGL) is expected to deliver strong second-quarter results amid continuous strength in the company's Google ( GOOG ) search business, Wedbush Securities said in a Monday client note.

Wedbush's survey of 200 US-based advertisers reported "healthy" spending growth on Google ( GOOG ) search in the June quarter, with 39% indicating annual gains of at least 10%, while full-year expectations improved versus its last survey.

The brokerage now estimates the Google ( GOOG ) parent to log revenue growth of about 13% for the Search business in the second quarter, up from its previous forecast for a 12% increase. Wedbush's Google ( GOOG ) search revenue estimate of $48.1 billion is 1% above consensus. Consolidated revenue is pegged at 13.1%, ahead of consensus views of 12.8%, while adjusted EPS is seen rising 22% annually to $2.21, according to Wedbush.

The company is scheduled to release its latest financials after markets close on Tuesday.

"We think the setup remains positive heading into (second-quarter) results with our ad survey and agency commentary pointing to continued strength for Google Search," analysts led by Scott Devitt wrote in the note. "We expect a more modest sequential deceleration in Search growth and have increased conviction in spending intent for the full year."

The technology giant continues to exercise cost discipline to support its artificial intelligence investments, according to Wedbush. Cost control measures are projected to expand Alphabet's quarterly operating margin by 246 basis points to 31.7%, the brokerage said.

Google ( GOOG ) cloud growth accelerated 278 basis points last quarter and the segment continues to benefit from AI monetization, diminishing headwinds from cost optimization and easing comparisons, Wedbush wrote. "We think the business is well positioned in (the second quarter) and (the second half) as the bulk of cost optimization pressure appears to be behind the industry and AI monetization continues to drive incremental dollar growth," Devitt said.

Wedbush said that expectations for short-term capital expenditures have "caught up to reality" as full-year estimates has risen about 33% since the start of 2024. Chances for a negative surprise related to spending are "relatively low" in the second quarter, although it remains a risk for the company.

The brokerage reiterated its outperform rating on Alphabet's stock with a 12-month price target of $205.

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