It's earnings season again. As companies line up to report their latest quarterly results, one company investors should watch this time around is Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG). As one of the biggest publicly traded companies in the world, the parent company of Google isn't the hot stock it was in recent years. Alphabet shares have gained just 10% over the past 12 months, significantly underperforming peers like Apple and Microsoft that have seen their stocks rise about 40% over the same time frame.

Can Alphabet reinvigorate investor interest in its stock when the company reports its third-quarter results later this month? Ahead of that earnings release on Oct. 25, here's an overview of some of the items investors will want to watch.

The new Google Pixel Slate

The new Google Pixel Slate. Image source: Alphabet.

Revenue and earnings per share

Though Alphabet has underperformed tech-giant peers over the past year, the stock still trades with a fairly steep valuation. Indeed, the company trades at 23 times earnings estimates for next year. To live up to a valuation like this, Alphabet is going to need to deliver some strong growth in the coming years. This means investors should keep an eye on Alphabet's top- and bottom-line growth in Q3.

In Alphabet's most recent quarter, revenue rose 26% year over year, or 23% in constant currency. Earnings per share, when adjusted to exclude European Commission fines, rose 32% year over year. For Alphabet's third quarter, the consensus analyst estimate for the company's revenue is $34.04 billion, representing 23% year-over-year growth. The consensus forecast for Alphabet's earnings per share is $10.45, up 9% from the year-ago quarter.

To live up to its valuation, investors should look for Alphabet to meet or exceed these expectations.

Google other

Though the bulk of Alphabet's revenue comes from its advertising business, a growing portion is coming from what the company calls its "Google other" revenue. This revenue came in at $4.4 billion in Q2 and accounted for 13.5% of revenue, up from 12.5% of revenue in the year-ago quarter.

Representing revenue from cloud, hardware, and the Android app store, Alphabet's Google other segment encapsulates some of the company's most promising growth opportunities. Highlighting the segment's momentum, Google other's impressive 37% year-over-year revenue growth in Q2 marked an acceleration from the segment's 36% growth in Q1.

Can Alphabet keep up this higher growth rate in Q3?


One element of Alphabet's Google other segment worth paying particularly close attention to is the company's cloud business. Not only is Alphabet's cloud-computing business a key contributor to the sharp growth Alphabet is seeing in its Google other segment, but the company is investing heavily in the cloud. Management said in its most recent earnings call that its biggest headcount additions were in its cloud business.

Google CEO Sundar Pichai noted there seems to be a secular inflection point in terms of cloud adoption. In fact, the secular growth is so strong that "it feels far from a zero-sum game," Pichai said in Alphabet's second-quarter earnings call.

Look for more optimistic commentary from management on Alphabet's fast-growing cloud business during Alphabet's third-quarter earnings call.

Alphabet reports its third-quarter results after market close on Thursday, Oct. 25.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.