Alphabet Earnings Preview: AI-Powered Moves With Leveraged and Inverse ETFs

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Alphabet Inc.'s (GOOGL) Q4 2024 earnings report (February 4th after market close) comes amid an aggressive artificial intelligence (AI) expansion. Key areas of focus include AI integration across Search and Cloud platforms, YouTube's advertising momentum, and the recent Gemini model rollout. Investors will also watch for updates on cloud market share gains, Search monetization metrics, and the company's competitive position against Microsoft and Amazon in the AI race.

In addition to these core metrics, market participants are eyeing capital allocation strategies and the impact of AI investments on margins, particularly after last quarter's impressive 33.6% profit growth and continued market share gains in cloud services.

As a central player in the tech sector's AI transformation, GOOGL tends to see substantial volatility around earnings releases. For traders looking to position around these potential price swings, Direxion's Single Stock Daily Leveraged & Inverse ETFs offer specialized tools designed for short-term tactical trading.

What to Expect from Alphabet's Next Earnings Report

Analysts expect Alphabet to deliver earnings of $2.12 per share, representing a significant 29.3% increase from last year's $1.64. The company enters this report with strong momentum, having topped Wall Street's expectations in each of the past four quarters, including last quarter's 15.9% beat. Cloud revenue growth and AI adoption metrics remain key focus areas after the previous quarter's 15.1% total revenue growth to $88.3 billion.

October's Q3 results sparked a 2.8% stock gain as investors cheered the successful integration of AI features across core products and YouTube's milestone achievement of surpassing $50 billion in trailing twelve-month ad and subscription revenues.

Alphabet's Earnings Track Record

The tech giant has demonstrated consistent outperformance, with earnings surprises ranging from 2.50% to a remarkable 26.85% over the past four quarters. The stock's strong reaction to October's results highlighted investor confidence in Alphabet's AI execution, particularly the successful launch of new search features and cloud solutions. The company's 39.7% gain over the past 52 weeks has substantially outpaced both the S&P 500 and its sector peers.

Trading Tools for Alphabet's AI-Driven Momentum

Alphabet's leadership in the AI revolution creates compelling opportunities for short-term traders. Direxion's Single Stock Daily Leveraged & Inverse ETFs, introduced in September 2022, provide ways to attempt to capitalize on GOOGL's price movements without traditional margin requirements or short-selling restrictions.

These specialized trading vehicles use advanced portfolio techniques to deliver precise daily exposure, particularly valuable during high-impact events like earnings releases.

For the Bulls: GGLL

The Direxion Daily GOOGL Bull 2X Shares (GGLL) lets traders amplify their conviction on Alphabet's growth story. GGLL delivers twice the daily moves of GOOGL, before fees and expenses, through a carefully managed portfolio of derivatives and swaps. Since launch, it's become a key tool for earnings-focused traders.

• Targets 200% of GOOGL's daily performance, before fees and expenses
  • 1% gain in Google stock aims for 2% gain in GGLL (before fees)
  • 1% drop in Google stock aims for 2% drop in GGLL (before fees)
• Designed for traders anticipating positive earnings catalysts
• Concentrated activity during quarterly announcements
• Daily volume averaging 316,000 shares
• Most suitable for active position monitoring

For the Bears: GGLS

The Direxion Daily GOOGL Bear 1X Shares (GGLS) provides a straightforward way to participate in potential declines without short-selling. This makes GGLS especially valuable for retirement account traders who want to act on bearish views but face IRA and 401(k) restrictions on short selling.

• Moves opposite to GOOGL's daily performance, before fees and expenses
  • When Google falls 1%, GGLS aims for 1% gain (before fees)
  • When Google gains 1%, GGLS aims for 1% decline (before fees)
• Essential tool for retirement accounts seeking downside exposure
• Tactical positioning around earnings releases
• Steady liquidity with 56,000 shares traded daily
• Efficient way to hedge Google-specific risk

Both GGLL and GGLS offer sophisticated ways to trade Alphabet's earnings, with mechanics distinctly different from directly investing in GOOGL shares. These products reset daily and aren't designed for long-term holding, making them best suited for active traders who understand leverage dynamics and can monitor positions closely. 

*Short-selling is a trading strategy where investors borrow shares and sell them, hoping the stock price will fall.

Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stack rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock's performance over periods /anger than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will Jose money if the underlying stock's performance is flat, and it is possible that the Bull Fund will Jose money even if the underlying stock's performance increases. and the Bear Fund will lose money even if the underlying stock's performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in GOOGL.

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.

Leverage Risk – The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with GOOGL and may increase the volatility of the Bull Fund.

Daily Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with GOOGL and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to GOOGL is impacted by GOOGL’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to GOOGL at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to GOOGL increases on days when GOOGL is volatile near the close of the trading day.

Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with GOOGL and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to GOOGL is impacted by GOOGL’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to GOOGL at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to GOOGL increases on days when GOOGL is volatile near the close of the trading day.

Alphabet Inc. Class A Investing Risk — Alphabet Inc.’s Class A shares face risks associated with reliance on advertising revenue and the effect that loss of partners or new and existing technologies that block advertisements online may have on its business; intense competition for its products and services; investments in new businesses, products, services and technologies that may harm its operating results; slowdowns in its revenue growth rate; the ability to protect its intellectual property rights; the ability to maintain or enhance its brands and its impact on the ability to expand its user base, advertisers, customers, content providers and other partners; manufacturing and supply chain issues; interruptions to, or interferences with, its complex technology and communication systems; its international operations; failure to evolve with the advancement of technology and user preferences; data privacy and security concerns; problematic content posted by users; and regulatory, legal and litigation issues.

Technology Sector Risk — The market prices of technology-related securities tend to exhibit a greater degree of market risk and sharp price fluctuations than other types of securities. These securities may fall in and out of favor with investors rapidly, which may cause sudden selling and dramatically lower market prices.

Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Industry Concentration Risk, Market Risk, Indirect Investment Risk, and Cash Transaction Risk. Additionally, for the Direxion Daily GOOGL Bear 1X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.

Distributor: ALPS Distributors, Inc.

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