Google stock (NASDAQ: GOOG) snapped its six-day upward trend after dipping 0.51% on Thursday’s closing bell. The search giant went from $273 to $335 in two weeks, displaying a remarkable rebound by rising 23%. GOOG surged nearly 23% in two weeks, making it the most sought-after asset in the US market. Google’s upcoming earnings call is scheduled for April 29, which can dictate the next direction of the stock.

On the heels of the earnings call, 2 major concerns have arisen on Wall Street surrounding Google stock. This mostly has to do with AI, as the tech is yet to fully materialize. Until traders see a clear path and positive returns from the next-gen tech, doubts about its prospects will always keep cropping up. In this article, we will explain the concerns of Wall Street ahead of the revenue call.

Also Read: New Price Target For Google’s Alphabet Stock is $405, 23% Profit

2 Problems Plague Google Stock Before Earnings Call

1. The New AI-Based ‘Search Generative Experience’ Squeeze Margins

Wall Street is worried that Google’s AI could self-sabotage its stock prospects if the earnings call shows more capex for summaries. Search for something online, and Google summarizes what you’re looking for in its AI-based Search Generative Experience. While this has received mixed reactions from users, the cost to run the new tech is much higher than the previous blue link search results.

Every time a user asks the AI a question, it costs Google more in computing power. This includes running electricity and putting chips to work, rather than the traditional search results. Wall Street is worried that the operating costs will eat up Google’s ad revenues, as the cost-to-serve is more expensive. Google will report the capex vs returns in the earnings call, and the numbers will decide which direction the stock will move.

2. The Overspending Problem Facing the Search Giant

Investors are worried that Alphabet is spending too much money on AI data centers and custom chips without seeing immediate returns. The tech giant’s capital expenditure to build its AI infrastructure stands at $175 billion to $185 billion. If the free cash flow (FCF) numbers dip in the earnings call, Google stock could face a drubbing. Analysts could begin downgrading GOOG due to the decrease in cash flow.