Alphabet Inc (GOOG, GOOGL) Will Keep Marching Toward $1,000

Alphabet Inc (ticker: GOOGL, GOOG) has been on a relentless march ever since coming public in 2004, posting outstanding fundamental growth that has translated into explosive returns for investors. Over the past five years, GOOGL stock has more than doubled the Standard & Poor's 500 index with 165 percent gains.

Since its initial public offering, Alphabet has grown 14-fold versus "just" a doubler for the broader market.

But now, Alphabet is at something of an inflection point. GOOGL actually trails the S&P 500 over the past year, and shares have essentially gone nowhere since September 2016.

[See: The 25 Best Blue-Chip Stocks to Buy for 2017.]

Thus, Wall Street's eyes will be fixed on Alphabet when it posts fourth-quarter earnings after markets close on Thursday.

So, what does the analyst community expect out of Alphabet?

Well, Wall Street isn't letting up after a third quarter in which GOOGL obliterated expectations on the top and bottom lines and announced just its second buyback program ever -- a $7 billion allotment for repurchases. For the fourth quarter, revenue estimates call for 18 percent growth to $25.2 billion, and analysts see earnings improving 11 percent to $9.64 per share, which would be a record quarterly profit for the search titan.

If Alphabet is to beat expectations, it'll need help on a few fronts.

For one, GOOGL must continue leaning hard on the click teeter-totter. In the third quarter, for instance, Alphabet's cost-per-click -- how much GOOGL is paid by an advertiser for each click -- declined by 11 percent from the previous year. Part of that decline in cost per click, however, reflects the growing popularity of YouTube, which boasts 1 billion monthly users. Most of YouTube's ads come from sources that don't monetize as well as when users click on ads in Google Search.

More importantly, Alphabet made up for the decline in CPC and then some with a 33 percent surge in aggregate paid clicks for the quarter. That has come on an increased focus on its programmatic ad businesses, which include DoubleClick Bid Manager and AdMob.

If that dynamic continues, Alphabet will be in good shape.

GOOGL also will need to continue seeing improvements on the mobile front, where the company is innovating to better serve up ads on this relatively younger frontier. For instance, in 2016, Alphabet unleashed Google Assistant, which is the company's answer to digital assistants such as Apple's ( AAPL) Siri and Amazon.com's ( AMZN) Alexa, and which should be able to tackle advanced search queries with the full power of Google's search technology.

Assistant also will duel with other AI to become the center of the world's smart homes, and it will do so via the Google Home, which is Alphabet's answer to the Amazon Echo streaming speaker.

Also on the mobile front, Alphabet also launched the Pixel smartphone, which should not only help bring Assistant into the forefront, but is a legitimate threat to the likes of the Apple iPhone 7 and Samsung Galaxy S7. Among other things, the Pixel features a Qualcomm ( QCOM) Snapdragon 821 and a best-in-class camera.

Investors will want to keep an eye on "Other Bets" -- Alphabet's pet projects, including businesses such as Nest and Fiber. The division made up just $197 million of the company's $22.25 billion in revenues last quarter, but if Alphabet is going to have a "next big thing," this is where it will come from. Just know that any improvements here won't make much of a dent in quarterly results.

Alphabet hasn't given Wall Street much of a reason to doubt it. The question is, will a beat even be enough to convince investors to bid GOOGL stock -- which sits just a couple percent off all-time highs -- to new heights?

It's not a bad bet.

[See: 7 of the Best Tech Stocks to Buy in 2017.]

While most of the conversation around Alphabet shares has to do with its growth potential, one could actually make a strong valuation argument for GOOGL right now, too. Alphabet's trading at about 20 times future profit estimates on expected earnings growth of 19 percent next year and a little more than 18 percent long-term.

Moreover, GOOGL's price-earnings ratios, while not exactly cheap, are on the lower end of their ranges from the past couple of years.

And while the acquisition will have absolutely no bearing on Alphabet's upcoming earnings report, GOOGL bought itself a little bullish sentiment by picking up Fabric -- Twitter's ( TWTR) app development platform. Alphabet will slip Fabric into Firebase, which was expanded in 2016 "to help developers build high-quality apps, grow their user base, and earn more money across iOS, Android and the Web."

In short, Alphabet has a lot going for it as it heads into fourth-quarter earnings. It shouldn't need a miracle to get its stock climbing once more -- just a solid beat.

More Earnings in Focus

Microsoft Corp. (MSFT). Analysts are expecting revenues of $25.3 billion (-1.6 percent) and earnings of 78 cents per share (flat) when the company reports its fiscal second-quarter results after Thursday's bell. The big growth engine at Microsoft right now is the Azure cloud computing platform and services, which grew 116 percent last quarter. However, expect more drag out of the personal computing division, which includes Surface devices and Xbox consoles. Also, expect Wall Street to punish Microsoft shares -- which are near all-time highs and very frothy compared to its historical valuations -- on any signs of weakness.

Starbucks Corp. (SBUX). Starbucks also reports after Thursday's bell, and it needs something to get shares out of a funk that dates back to late 2015. Analysts are expecting revenues of $5.85 billion (8.8 percent growth) to fuel earnings of 52 cents per share (13 percent growth). Oppenheimer, which has an "outperform" rating on SBUX stock, recently provided a little reason for optimism at the flatlining coffee company, tweaking its 2017 earnings estimates higher from $2.13 per share to $2.14.

[See: 20 Awesome Dividend Stocks for Guaranteed Income.]

This Week's Earnings Calendar

Monday. McDonald's Corp. ( MCD); Yahoo ( YHOO).

Tuesday. Alibaba Group Holding ( BABA); Johnson & Johnson ( JNJ); Verizon Communications ( VZ); Alcoa ( AA).

Wednesday. Boeing Co. ( BA); United Technologies Corp. ( UTX); AT&T ( T); eBay ( EBAY); Qualcomm ( QCOM).

Thursday. Biogen ( BIIB); Caterpillar ( CAT); Comcast Corp. ( CMCSA); Fiat Chrysler ( FCAU); Ford Motor Co. ( F); Intel Corp. ( INTC); PayPal Holdings ( PYPL).

Friday. American Airlines Group ( AAL); Chevron Corp. ( CVX)

Kyle Woodley is managing editor of InvestorPlace.com. He specializes in (and prefers investing in) exchange-traded funds. In addition to InvestorPlace and U.S. News & World Report, his work has appeared on MSN, Nasdaq and Yahoo Finance. Investing is his second love, with Ohio sports teams as his first. Naturally, this has warped his general perception of love, sparking (among other things) an unnatural affection for the Haddaway hit, "What Is Love?" Follow him on Twitter.