Alphabet has a high bar to clear when it reports earnings Wednesday.

The company’s stock price soared 38% in the third quarter, its best quarterly performance in two decades. It’s continued to rally, climbing 11% so far in October, closing at a record on Monday.

With revenue growth stuck in the low teens of late, and expected to come in at 12% next year, investors have recalibrated their expectations after witnessing speedier growth in the years before the 2022 slowdown. Much of the recent optimism centers around Google’s improved position in the artificial intelligence race. 

However, the biggest catalyst for the stock in the third quarter had more to do with Google’s relative weakness in AI, compared with its standing in online ads. 

Alphabet shares soared in early September, when Google avoided the worst-case scenario in its search antitrust case. Following the government’s victory in its case against the company last year, U.S. District Judge Amit Mehta ruled in the remedies decision last month that Google would not be forced to sell off its Chrome browser, but must share data with competitors. 

Mehta said that the rise in AI services from companies like OpenAI has created plenty of new competition in search. Backing up his point, OpenAI last week unveiled ChatGPT Atlas, an AI-powered browser that could directly challenge Chrome.

While investors immediately cheered Mehta’s ruling, Google now has to show that it’s a force in AI, which is serving as the growth engine for the tech sector. Google’s cloud unit benefits from the AI boom as companies count on the technology for running large language models and expanding workloads. And Google is heavily investing in Gemini, its family of AI models, products and services. 

Over the weekend, analysts at KeyBanc Capital Markets raised their price target on Alphabet to $300 from $265, expecting that third-quarter results will “show that faster product velocity is driving momentum in Search, Cloud and Waymo,” its autonomous vehicle business.

The stock pop, the analysts wrote, is due to “a combination of the DOJ Search remedies trial being more favorable than expected and more signs of progress in AI across business units.”

Alphabet is scheduled to report results after the bell on Wednesday, alongside rivals Microsoft and Meta. Apple and Amazon report the following day. 

Wall Street is expecting to see revenue growth of 13% to $99.89 billion and earnings per share of $2.26, according to LSEG. 

Mehta dedicated roughly 30 pages of the 226-page filing to explaining generative AI and the market as it exists today. He described the space as “highly competitive” and wrote that there have been “numerous new market entrants” with access to “a lot of capital.”

ChatGPT accounts for about 81% of the global AI chatbot market, according to September data from StatCounter. Perplexity is second at 11%, followed by Microsoft Copilot at 4.1% and Gemini at 2.8%, the firm said. 

But Google is aggressively pushing Gemini as far more than just a ChatGPT competitor, and is taking advantage of its strength in various markets for distribution. 

Earlier this month, the company launched Gemini Enterprise, targeting corporate clients with agents that perform specific work tasks. In September, Google announced it was rolling out Gemini in Chrome to Mac and Windows users in the U.S. as well as to mobile devices, allowing users to ask Gemini for help understanding the contents of a particular web page, work across tabs, or do more within a single tab, such as schedule a meeting or search for a YouTube video.

Google CEO Sundar Pichai said this month at Salesforce’s Dreamforce conference that Gemini 3, the latest version of the company’s AI model, will be released this year. 

Analysts at Mizuho said in a report about the internet market last week that “competitive risks from OpenAI across the internet landscape, particularly at Google, have been topic #1” in more than 100 recent conversations with investors. 

Still, they said that they see “competitive fears likely to recede as we refocus on fundamentals with earnings.” For Google, the “imminent roll-out of Gemini 3 could further tilt the sentiment for Alphabet shares toward AI-winner, at least near term,” they wrote. 

Even as the remedies resolution was generally welcomed by investors, the company will have to make some concessions, according to the judge’s ruling. Most notably, Google has to make available certain search data and user data to its “qualified competitors.”

Determining which companies fall into that category will be the job of a technical oversight committee at a date that hasn’t yet been announced. 

Services like DuckDuckGo and Microsoft Bing may be among the beneficiaries, potentially receiving improved access to some of Google’s search index data under specific licensing arrangements. 

Mehta wrote that the data-sharing remedies “can help to close the sizeable advantage Google has in answering long-tail queries, thereby improving product quality and attractiveness to new users.”

Baird analysts wrote that they expect a “modest” impact to Google, because the company doesn’t have to share its data with generative AI competitors like Perplexity and OpenAI. That would have been “more problematic,” the Baird analysts wrote.  

Google, which plans to appeal the ruling, declined to comment, but pointed to an earlier blog post on the judge’s decision. 

“We have concerns about how these requirements will impact our users and their privacy, and we’re reviewing the decision closely,” the company wrote. 

Abiel Garcia, a former deputy attorney general for the California Department of Justice, working in antitrust, said he doesn’t see the ruling having an impact on the way Google operates.

“Maybe some of the data will help competitors’ products at the periphery, but I don’t think this is going to really shift anything,” Garcia, who’s now a partner at Kesselman, Brantly & Stockinge, told CNBC. “It almost encourages Google’s roll-the-dice behavior.”

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