The online advertising market is dominated by two companies -- Alphabet (GOOGL) and Facebook (FB) . With Alphabet increasingly cutting back on its moonshot projects, investors will begin to place more emphasis on how profitable the advertising business is and whether it's gaining market share, particularly in mobile advertising.
"Mobile search and YouTube are the two primary drivers of this [website revenue growth], and we believe this dynamic has not run its course just yet," Canaccord Genuity analyst Michael Graham wrote in a note to clients. "Additionally, other parts of the non-core business (including Play, Cloud, and programmatic) should provide growth tailwinds beyond 2017."
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Emboldened by its Android operating system and YouTube, Alphabet's Google unit has become an advertising behemoth. That trend is likely to continue, as research firm eMarketer suggests digital ad spend will surpass television ad spending in 2017 for the first time. In 2017, total digital ad spend will equal $77.37 billion, compared to $72.01 billion for TV ad spending, according to eMarketer.
Those factors are likely to help keep Alphabet's revenue growth from its Google unit (which houses its advertising business among others) strong, Canaccord's Graham noted.
Investors will also be looking to hear how the company's burgeoning hardware business is going, when it reports fourth-quarter results after the close of trading on January 26.
