Alphabet (NASDAQ:GOOG) announces its third-quarter 2018 earnings this afternoon after the markets close. Investors are hopeful that a strong quarter will reverse the recent slide that has wiped out the year-to-date gains for GOOG stock holders. What, specifically, does Alphabet need to report earnings that will turn the tide for GOOG and GOOGL shares? Here are a few items to keep in mind when reading Alphabet’s 10-Q:

Google’s Ad Revenue

There have been rumblings that both Alphabet and Facebook (NASDAQ:FB) are losing market share in the ad business to Amazon (NASDAQ:AMZN). I’m not suggesting the company’s ad business is faltering, but it will be nice to hear that it’s maintaining market share and growing this essential part of its business.

The Zacks consensus estimate for the third quarter is ad revenue of $29.1 billion with Google properties and third parties accounting for 84% and 16%, respectively. The overall total is up $1 billion from Q2 2018.

Google’s not sitting still when it comes to its ad business. In fact, it has introduced some new features on its search engine that will drive ad revenue through better search results. Also, it’s developed an ad tool with Shopify (NYSE:SHOP) that e-commerce businesses will love. Any feedback on these initiatives in the conference call with analysts would be very welcome.

However, like my InvestorPlace colleague Luke Lango said recently, “Google’s ad revenues were nearly $100 billion last year.” It’s not going anywhere, which is good news if you own GOOG stock. 

Cloud Business

Google’s cloud business is about as much a threat to Amazon as Amazon’s ad revenues are to Alphabet. Nonetheless, I do think it’s worth keeping an eye on the company’s “other revenues” buried within today’s report.

In Q2 2018, Google’s other revenues, which includes hardware, app sales, the Google Play store, and the cloud business, were $4.4 billion, 37% higher year-over-year. If it achieves growth of 30% or more, you can check this box. Just because other revenues grow by more than 30%, however, doesn’t mean you shouldn’t sniff around for specific clues related to the cloud.

While Alphabet dropped out of the $10 billion contract to get the Pentagon on a single cloud platform, Google Cloud is attracting corporate customers and gaining market share. Any visibility provided by Alphabet on this front would be a big plus for investors.

Waymo

Waymo is part of Alphabet’s “Other Bets,” not to be confused with its other revenues. In the second quarter Alphabet’s other bets lost $732 million on $145 million in revenue, which means its expenses were almost $900 million.

Waymo is supposed to launch a commercial car service in Phoenix by the end of the year. This will begin the long and arduous process of bringing self-driving cars to the average person. Currently working with several auto manufacturers, it would be nice to get further details about Waymo’s plans in 2019 and beyond.

“As painful as it is for investors to see Alphabet pour good money after bad into its Other Bets, GOOGL stock depends on it,” I wrote in 2016. “Because its legacy business likely won’t be this profitable 10 years from now.”

Nothing’s changed on this front. Waymo and the others like Nest are the future for GOOG stock.

Top and Bottom Line

Now, we get to the heart of the matter, which are the earnings themselves. Analysts expect revenues of $34.05 billion in Q3 2018, 22.6% higher than a year earlier. On the bottom line, they expect adjusted earnings per share of $10.40, 8.7% higher than a year earlier. Analysts are concerned that Alphabet will merely meet, not exceed these expectations — the kiss of death in the technology sector.

“In line is never good enough in this sector, companies need to beat, as expectations are always high,” wrote Barclays analyst Ross Sandler. “[Alphabet] should actually be ‘OK’ in 3Q, but we are worried about a return to steep operating margin compression.”

Where Alphabet could benefit — not in this past quarter mind you, but in the future — is by getting some of the $5 billion back from the charge it took in Q2 2018 from its EU fine.

Any savings on this front would be a welcome surprise. Another surprise would be Alphabet delivering a double-digit increase in earnings per share. That would perk up GOOG stock. I guess we’ll see shortly.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.