Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) prepares to deliver its Q4 earnings next week after missing on both earnings per share and revenue last time around. With layoffs and legal issues also clouding the situation, should investors consider stepping into the Google parent ahead of its quarterly results?

Layoffs and Legal Issues

Google heads into its earnings report after it recently announced a plan to cut 12,000 jobs across the company. This marked the firm’s largest-ever round of layoffs, which equated to roughly 6% of its staff.

Meanwhile, the firm is also facing renewed antitrust pressure. The U.S. Justice Department and a group of eight states recently sued Google, accusing the tech firm of antitrust violations in its advertising technology business.

Amid these headlines, Alphabet has found itself rebounding from a poor 2022 performance. After dropping more than 30% last year, shares have rallied more than 6% to start the 2023 trading year.

GOOGL’s 2023 performance has lagged behind some of the other megacaps. For instance, Apple (AAPL) and Amazon (AMZN) have both posted double-digit performance gains so far this year, as has Meta Platforms (META). Still, GOOGL has outperformed Microsoft (MSFT), which is basically flat for 2023, after showing a mild decline Wednesday in the wake of its quarterly results.

Is Alphabet a Buy?

Alphabet (GOOG) (GOOGL) is scheduled to release its quarterly results on Feb. 2. Analysts expect the company to earn $1.21 per share on revenue of $76.7B.

The company has missed analyst expectations in each of the last three quarters. Meanwhile, analysts have cut their earnings and revenue forecasts 38 times over the past three months.

Even with these moderated earnings forecasts, Wall Street exhibits a relatively bullish outlook towards the tech giant. Of the 51 analysts surveyed by Seeking Alpha, 35 have issued Strong Buy rating. Another 12 labeled the company as a Buy, meaning that more than 90% of the Wall Street community has issued a bullish stance. Among the more cautious voices, 4 analysts have classified the company as a Hold.

In Wednesday’s midday trading, Alphabet was trading near the $96 a share marker. Meanwhile, analysts have an average price target of $123.79 a share, with some placing a target as high as $160.

Elsewhere, Seeking Alpha’s Quant Ratings are a little more conservative about Alphabet (GOOG) (GOOGL), tagging the stock as a Hold. Per the quant ratings, GOOG received an A+ for profitability, a C for momentum and growth and a D+ when looking at valuation.

While Wall Street in general has a favorable view on Alphabet, there are some dissenting voices. For instance, Seeking Alpha contributor Güner Soysal views the tech firm as a Sell.

“While it could be tempting to buy considering the share price decline, my two fair value calculations indicate at most a fair valuation without a margin of safety,” Soysal wrote. “Additionally, both from a technical and a macroeconomic point of view, further downward pressure seems highly likely.”

On the bullish side, fellow SA contributor Acutel defended the stock, issuing a Strong Buy rating. “Down 25% in the past one year, GOOG’s valuation is now compelling with both its P/E and EV/EBITDA looking attractive,” Acutel argued.

For investors on the fence with Alphabet, there are ways to gain exposure to the Google parent while still maintaining some diversification. At the moment, GOOG and GOOGL are held by 270 and 352 different exchange traded funds, respectively. The three with the most significant weighting towards the stock are listed below:

• Cumulatively, GOOG and GOOGL represent 23.15% of the Communication Services Select Sector SPDR Fund (XLC)
• Fidelity MSCI Communication Services Index ETF (FCOM) holds a 21.24% weighting
• Vanguard Communication Services ETF (VOX) has a 20.91% weighting towards both GOOG and GOOGL

In related Alphabet news, Google will see a limited financial hit from the DOJ antitrust suit, analysts say.