WEBVTT - Instant Reaction: Alphabet Slides After Cloud Sales Fall Short 

0:00:02.520 --> 0:00:08.960
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Fourth quarter earnings per

0:00:09.000 --> 0:00:12.319
<v Speaker 1>share coming in above estimates at two dollars and fifteen cents.

0:00:12.440 --> 0:00:16.000
<v Speaker 1>Estimates were for two dollars and thirteen cents. Revenue coming

0:00:16.040 --> 0:00:19.439
<v Speaker 1>in just shy of estimates, but ever so slightly, we

0:00:19.440 --> 0:00:21.560
<v Speaker 1>can go ahead and say that meets estimates at ninety

0:00:21.600 --> 0:00:23.720
<v Speaker 1>six point four to seven billion dollars. Estimates are for

0:00:23.800 --> 0:00:27.680
<v Speaker 1>ninety six point six two billion dollars. Google ad revenue,

0:00:27.680 --> 0:00:29.920
<v Speaker 1>the one that everybody is watching, came in above estimates

0:00:29.920 --> 0:00:32.239
<v Speaker 1>at seventy two point four to six billion. Estimates were

0:00:32.240 --> 0:00:35.320
<v Speaker 1>for seventy one point seven to three billion, and then,

0:00:35.360 --> 0:00:38.040
<v Speaker 1>of course the cloud revenue so important, that was a

0:00:38.080 --> 0:00:40.879
<v Speaker 1>slight miss at eleven point nine to six billion. Estimates

0:00:40.880 --> 0:00:43.040
<v Speaker 1>were for twelve point one nine billion dollars.

0:00:43.120 --> 0:00:43.320
<v Speaker 2>Yeah.

0:00:43.320 --> 0:00:46.440
<v Speaker 3>The company also talking about capital expenditures in twenty twenty five,

0:00:46.479 --> 0:00:49.720
<v Speaker 3>They say they expect to invest about seventy five billion dollars.

0:00:50.280 --> 0:00:50.560
<v Speaker 2>Here.

0:00:50.880 --> 0:00:54.680
<v Speaker 3>Fourth quarter revenue x TAC, traffic and acquisition costs at

0:00:54.680 --> 0:00:57.360
<v Speaker 3>eighty one point sixty two billion. That's a little light, folks,

0:00:57.600 --> 0:01:01.400
<v Speaker 3>eighty two point eighty two billion, And that is what

0:01:01.520 --> 0:01:03.959
<v Speaker 3>maybe is why the stock is down about five five

0:01:04.000 --> 0:01:06.600
<v Speaker 3>and a half percent here in the aftermarket. Keep in

0:01:06.640 --> 0:01:09.160
<v Speaker 3>mind that you know cloud search so important, they are

0:01:09.240 --> 0:01:14.640
<v Speaker 3>facing intensifying competition. Alphabet also saying AI powered Google Cloud

0:01:14.720 --> 0:01:18.920
<v Speaker 3>portfolio has stronger demand. Again one of the two key

0:01:19.160 --> 0:01:23.640
<v Speaker 3>points from earning so far fourth quarter Google cloud revenue. Again,

0:01:23.680 --> 0:01:26.560
<v Speaker 3>as Tim mentioned earlier, so important. This is something that

0:01:26.560 --> 0:01:29.440
<v Speaker 3>has been really helping the company outperform. That is a

0:01:29.520 --> 0:01:33.080
<v Speaker 3>miss eleven point nine to six billion fourth quarter Google

0:01:33.080 --> 0:01:35.280
<v Speaker 3>Cloud revenue. The estimate on the street was twelve point

0:01:35.319 --> 0:01:38.200
<v Speaker 3>nineteen billion. And again, as I mentioned, fourth quarter revenue

0:01:38.280 --> 0:01:40.520
<v Speaker 3>x tach eighty one point sixty two billion, and that

0:01:40.600 --> 0:01:43.200
<v Speaker 3>too is a little light, Tim eighty two point eighty

0:01:43.240 --> 0:01:45.640
<v Speaker 3>two billion. That place for the search business. Those are

0:01:45.680 --> 0:01:49.240
<v Speaker 3>the two important businesses for Alphabet. Down now about six

0:01:49.280 --> 0:01:51.360
<v Speaker 3>percent here in the aftermarket and looking.

0:01:51.120 --> 0:01:54.240
<v Speaker 1>For commentary from Sander Pitchai, the CEO of the company.

0:01:54.320 --> 0:01:56.960
<v Speaker 1>He says that quarter four was a strong quarter, driven

0:01:57.000 --> 0:01:59.880
<v Speaker 1>by our leadership in AI and momentum across the business.

0:02:00.360 --> 0:02:02.880
<v Speaker 1>He says, we are building, testing and launching products and

0:02:02.880 --> 0:02:06.840
<v Speaker 1>models faster than ever in making significant progress and compute

0:02:06.840 --> 0:02:10.320
<v Speaker 1>and driving efficiencies. He goes on to talk about advances

0:02:10.360 --> 0:02:13.920
<v Speaker 1>like AI overviews and circle to search, or increasing user engagement.

0:02:14.280 --> 0:02:17.400
<v Speaker 1>He says that AI powered Google cloud portfolio is seeing

0:02:17.440 --> 0:02:20.560
<v Speaker 1>stronger customer demand, and YouTube continues to be the leader

0:02:20.560 --> 0:02:22.839
<v Speaker 1>in streaming watch time and podcasts.

0:02:22.840 --> 0:02:25.799
<v Speaker 3>All right, so interesting, and again we've got this stockdown

0:02:26.160 --> 0:02:29.679
<v Speaker 3>almost seven percent here in the aftermarket, so some disappointment

0:02:30.280 --> 0:02:33.800
<v Speaker 3>potentially about kind of those misses you are seeing. As

0:02:33.840 --> 0:02:36.520
<v Speaker 3>I mentioned, twenty twenty five capex about seventy five billion.

0:02:37.320 --> 0:02:39.440
<v Speaker 3>This is maybe a big reason why you're seeing some

0:02:39.480 --> 0:02:41.680
<v Speaker 3>of the selling here in the aftermarket. The estimate on

0:02:41.720 --> 0:02:44.480
<v Speaker 3>the street in terms of CAPEX for this year twenty

0:02:44.520 --> 0:02:48.760
<v Speaker 3>twenty five was fifty seven point nine billions. Again, Alphabet

0:02:48.800 --> 0:02:51.760
<v Speaker 3>coming out and saying it's these twenty twenty five capex

0:02:52.440 --> 0:02:55.560
<v Speaker 3>much higher than that seventy five billion dollars. So a

0:02:55.560 --> 0:02:59.840
<v Speaker 3>big spend there on AI, one would assume and others,

0:03:00.320 --> 0:03:02.440
<v Speaker 3>but really AI and that build out seems to continue

0:03:02.480 --> 0:03:03.680
<v Speaker 3>among these big tech companies.

0:03:03.760 --> 0:03:06.799
<v Speaker 1>We're seeing shares move lower, shares tumbling more than seven

0:03:06.880 --> 0:03:10.000
<v Speaker 1>percent after that fourth quarter revenue misses estimates. But I

0:03:10.040 --> 0:03:12.920
<v Speaker 1>got to tell you, Carol, that fourth quarter outlook or

0:03:12.919 --> 0:03:17.280
<v Speaker 1>that fourth quarter revenue excluding traffic acquisition costs only slightly

0:03:17.360 --> 0:03:19.960
<v Speaker 1>shy of estimates eighty one point six two billion dollars,

0:03:20.320 --> 0:03:23.000
<v Speaker 1>so just a little over a billion dollar shy estimates

0:03:23.000 --> 0:03:25.000
<v Speaker 1>were for eighty two point eight two billion dollars.

0:03:25.080 --> 0:03:26.360
<v Speaker 3>Yeah, I think some of it has to do that

0:03:26.400 --> 0:03:28.440
<v Speaker 3>those are two of their biggest businesses right and have

0:03:28.520 --> 0:03:33.000
<v Speaker 3>provided momentum for the company and help them to beat

0:03:33.080 --> 0:03:37.760
<v Speaker 3>analysts estimates last time around that they reported results. So

0:03:37.840 --> 0:03:40.200
<v Speaker 3>to see that maybe some disappointment that they came in

0:03:40.240 --> 0:03:43.960
<v Speaker 3>a little light on both cloud and on their search business.

0:03:44.040 --> 0:03:47.320
<v Speaker 3>And then to see also that Capex spend, you know

0:03:47.360 --> 0:03:50.520
<v Speaker 3>that there might be some concern. So again watching shares

0:03:50.560 --> 0:03:53.080
<v Speaker 3>of Alphabet, which are up about nine percent here in

0:03:53.120 --> 0:03:55.960
<v Speaker 3>twenty twenty five, but now in the aftermarket we're seeing

0:03:56.000 --> 0:03:58.760
<v Speaker 3>pressure and the stock continuing to be down about six

0:03:58.800 --> 0:04:02.400
<v Speaker 3>point seven percent. Running around in a big way is

0:04:02.400 --> 0:04:04.880
<v Speaker 3>our own Man Deep saying he follows Alphabet for us

0:04:05.120 --> 0:04:08.280
<v Speaker 3>Man Deep initial thoughts, it looks like some disappointment on

0:04:08.360 --> 0:04:11.360
<v Speaker 3>two of their biggest businesses. We're also looking at Capex

0:04:11.400 --> 0:04:13.160
<v Speaker 3>that seems to be coming in a higher than what

0:04:13.160 --> 0:04:15.960
<v Speaker 3>the street was expecting. Stock right now is down about

0:04:16.000 --> 0:04:17.600
<v Speaker 3>almost seven percent yeah.

0:04:17.640 --> 0:04:20.520
<v Speaker 2>I mean, look, they did set up a high bar

0:04:20.760 --> 0:04:24.480
<v Speaker 2>for the cloud segment. So the fact that we saw

0:04:24.480 --> 0:04:26.719
<v Speaker 2>a miss there and the other big miss seems to

0:04:26.760 --> 0:04:30.760
<v Speaker 2>be around the YouTube subscription line, even though it's lumped

0:04:30.800 --> 0:04:35.320
<v Speaker 2>into that other segment. But even though they beat on

0:04:35.560 --> 0:04:40.640
<v Speaker 2>YouTube ads, the subscription line seems to have decelerated. But overall,

0:04:40.680 --> 0:04:43.760
<v Speaker 2>I mean, look, the search was very resilient. You can

0:04:43.920 --> 0:04:47.800
<v Speaker 2>see that number was strong, which is why when you

0:04:47.839 --> 0:04:50.760
<v Speaker 2>look at the overall operating income, I mean it was

0:04:51.080 --> 0:04:55.440
<v Speaker 2>in line. So given how much weight we put on

0:04:55.480 --> 0:04:58.760
<v Speaker 2>the cloud and the YouTube segments, the fact that those

0:04:58.800 --> 0:05:01.279
<v Speaker 2>two disappointed is why you are seeing that knee jerk

0:05:01.320 --> 0:05:03.360
<v Speaker 2>reaction cloud YouTube.

0:05:03.400 --> 0:05:07.400
<v Speaker 1>What about Capex the estimates for fifty eight billion dollars roughly.

0:05:07.440 --> 0:05:10.680
<v Speaker 1>Alphabet comes out in this press release and says, seeing

0:05:10.760 --> 0:05:13.640
<v Speaker 1>Capex this year about seventy five billion dollars, is the

0:05:13.640 --> 0:05:14.640
<v Speaker 1>company being punished for that?

0:05:15.960 --> 0:05:20.839
<v Speaker 2>I don't think so, because we know Meta Jeta wasn't there. Yeah. Yeah, look,

0:05:21.200 --> 0:05:25.000
<v Speaker 2>Meta raised their Capex guide by fifty percent for twenty

0:05:25.040 --> 0:05:27.960
<v Speaker 2>twenty five, So to me, this number is in line

0:05:28.000 --> 0:05:29.919
<v Speaker 2>with what Meta is doing. In fact, a lot of

0:05:29.960 --> 0:05:34.520
<v Speaker 2>people expected that the Google will raise and so I

0:05:34.560 --> 0:05:37.440
<v Speaker 2>would be surprised if the stock is down because they

0:05:37.520 --> 0:05:38.760
<v Speaker 2>raised the Capex guide.

0:05:39.480 --> 0:05:42.799
<v Speaker 1>Is this you know, I know, you don't give price targets,

0:05:42.800 --> 0:05:45.200
<v Speaker 1>but seeing a you know, close to seven percent decline

0:05:45.200 --> 0:05:48.159
<v Speaker 1>six and a half percent right now, given that the

0:05:48.240 --> 0:05:51.839
<v Speaker 1>company barely missed on fourth quarter revenue, it seems like

0:05:51.880 --> 0:05:54.960
<v Speaker 1>a big reaction for not that big of a mess.

0:05:55.240 --> 0:05:57.960
<v Speaker 2>Look, the way we look at Alphabet right now is

0:05:58.279 --> 0:06:02.000
<v Speaker 2>everyone feels the you know, the YouTube and the cloud

0:06:02.120 --> 0:06:04.679
<v Speaker 2>businesses are the growth drivers. So they are one hundred

0:06:04.720 --> 0:06:07.840
<v Speaker 2>billion dollar undred almost one third of the overall revenue.

0:06:08.160 --> 0:06:11.000
<v Speaker 2>But that's supposed to be the you know, twenty five

0:06:11.040 --> 0:06:14.440
<v Speaker 2>to thirty percent grower. This search business is supposed to

0:06:14.480 --> 0:06:18.960
<v Speaker 2>decelerate just because they have more competition. And look, I

0:06:18.960 --> 0:06:22.240
<v Speaker 2>think search is a much higher revenue base. So in

0:06:22.279 --> 0:06:25.240
<v Speaker 2>this case, the fact that search continues to be resilient

0:06:25.480 --> 0:06:29.200
<v Speaker 2>and the growth businesses are decelerating, that is why you're

0:06:29.240 --> 0:06:32.640
<v Speaker 2>seeing this sort of reaction. But overall, I would say,

0:06:32.760 --> 0:06:35.560
<v Speaker 2>you know, in the case of a company like Alphabet,

0:06:35.760 --> 0:06:39.680
<v Speaker 2>everything is so interconnected, Like they have six apps with

0:06:39.760 --> 0:06:44.000
<v Speaker 2>over two billion monthly active users. Now YouTube is one

0:06:44.040 --> 0:06:46.719
<v Speaker 2>of those, but then they also have maps and you

0:06:46.760 --> 0:06:51.159
<v Speaker 2>know the course search business and that's where it's powered

0:06:51.200 --> 0:06:55.160
<v Speaker 2>by a common digital ads platform. So it's not worthwhile

0:06:55.240 --> 0:06:59.320
<v Speaker 2>to look at, you know, individual businesses and judge them

0:06:59.360 --> 0:07:03.400
<v Speaker 2>on their performance in a quarter. Overall business continues to

0:07:03.440 --> 0:07:06.719
<v Speaker 2>go very robustly. And you know, you can have a

0:07:06.800 --> 0:07:10.720
<v Speaker 2>quarter where cloud has a slight miss and YouTube has

0:07:10.720 --> 0:07:13.440
<v Speaker 2>a slightness, But I think overall, when you look at

0:07:13.520 --> 0:07:15.520
<v Speaker 2>Alphabet's growth, that's still very strong.

0:07:15.720 --> 0:07:18.160
<v Speaker 3>Mandy, what do you want to know about that cloud miss? Again,

0:07:18.200 --> 0:07:20.160
<v Speaker 3>slight miss and it could be just an off quarter.

0:07:20.200 --> 0:07:22.360
<v Speaker 3>It happens to companies, but it does it say something

0:07:22.400 --> 0:07:24.360
<v Speaker 3>about the AI spend in terms of companies.

0:07:25.080 --> 0:07:27.960
<v Speaker 2>Look, they are raising their capex. We know they will

0:07:27.960 --> 0:07:31.080
<v Speaker 2>be spending seventy five billion dollars, right, how does that

0:07:31.120 --> 0:07:34.920
<v Speaker 2>translate into cloud growth? That's the number one question because

0:07:34.960 --> 0:07:38.520
<v Speaker 2>if it's decelerating and they're increasing their capex, that's not

0:07:39.240 --> 0:07:43.080
<v Speaker 2>a good sign. But my feeling is, you know, this

0:07:43.160 --> 0:07:47.320
<v Speaker 2>is more about compute capacity being available to be deployed

0:07:47.320 --> 0:07:51.560
<v Speaker 2>to the customers. Everyone was compute constrained. We know that

0:07:51.600 --> 0:07:55.200
<v Speaker 2>in twenty twenty four, So is this capex really to

0:07:55.280 --> 0:07:58.080
<v Speaker 2>alleviate that compute constraints, My guess is yes.

0:07:58.160 --> 0:07:59.520
<v Speaker 3>Well, you know, it's so interesting that you say that

0:07:59.560 --> 0:08:02.560
<v Speaker 3>I was having conversation with people about kind of power

0:08:02.720 --> 0:08:04.520
<v Speaker 3>nuclear and so on and so forth, and the demand

0:08:04.520 --> 0:08:07.280
<v Speaker 3>by AI. And you know how we've seen from some

0:08:07.320 --> 0:08:10.680
<v Speaker 3>of these tech companies that their power isn't necessarily there

0:08:10.720 --> 0:08:13.360
<v Speaker 3>to power everything that needs to be done in terms

0:08:13.400 --> 0:08:16.360
<v Speaker 3>of the AI world and all the computing. So does

0:08:16.400 --> 0:08:19.040
<v Speaker 3>that continue to be a drag on some of these numbers,

0:08:19.080 --> 0:08:21.480
<v Speaker 3>and so we have to kind of brush all these

0:08:21.520 --> 0:08:22.240
<v Speaker 3>results with that.

0:08:22.560 --> 0:08:25.720
<v Speaker 2>Well, the one other factor with Alphabet specifically is.

0:08:25.840 --> 0:08:26.880
<v Speaker 3>The RE world isn't there.

0:08:27.320 --> 0:08:32.160
<v Speaker 2>Everyone expects Alphabet to be more kind of compute efficient

0:08:32.320 --> 0:08:36.960
<v Speaker 2>because they have their own TPUs like equivalent of Nvidia GPUs.

0:08:37.320 --> 0:08:40.960
<v Speaker 2>So the fact that they're raising their CAPEX despite having

0:08:41.000 --> 0:08:44.640
<v Speaker 2>their own chips is also somewhat of a negative sign.

0:08:44.679 --> 0:08:46.920
<v Speaker 2>Although I won't put too much into it. I'd wait

0:08:46.960 --> 0:08:50.200
<v Speaker 2>for the call, yeah, for them to explain why, you know,

0:08:50.240 --> 0:08:53.880
<v Speaker 2>they're raising their CAPEX by fifty percent. But essentially the

0:08:54.040 --> 0:08:57.640
<v Speaker 2>logic here is they should be able to give out

0:08:57.720 --> 0:09:01.679
<v Speaker 2>more of their Nvidia GPUs for external consumption and use

0:09:01.760 --> 0:09:05.800
<v Speaker 2>their TPUs for their own consumption, whereas everyone else has

0:09:05.840 --> 0:09:08.600
<v Speaker 2>to use in Vidio GPUs for their own apps. But

0:09:08.679 --> 0:09:12.840
<v Speaker 2>then for Microsoft the remainder goes out for customers. So

0:09:13.480 --> 0:09:17.640
<v Speaker 2>by then logic Google's cloud growth accelerating made a ton

0:09:17.679 --> 0:09:20.520
<v Speaker 2>of sense. The fact that this quarter did turn out

0:09:20.559 --> 0:09:22.760
<v Speaker 2>to be that way, Yeah, it kind of puts that

0:09:22.880 --> 0:09:27.040
<v Speaker 2>into question. Why did the cloud growth decelerator or disappoint?

0:09:27.080 --> 0:09:29.120
<v Speaker 3>We should point out to that shares of Alphabet still

0:09:29.120 --> 0:09:31.520
<v Speaker 3>down about six point six percent in the aftermarket. Kind

0:09:31.520 --> 0:09:34.280
<v Speaker 3>of our red headline is saying Apple Alphabet shares are

0:09:34.280 --> 0:09:37.880
<v Speaker 3>tumbling after fourth quarter revenue missus estimate. But we're talking

0:09:37.880 --> 0:09:40.200
<v Speaker 3>with our man Deep seeing for kind of more clarity

0:09:40.240 --> 0:09:41.640
<v Speaker 3>in terms of what the quarter looked like.

0:09:41.720 --> 0:09:43.360
<v Speaker 1>Yeah, I just want to get man Deep's thoughts on

0:09:43.480 --> 0:09:46.640
<v Speaker 1>Snap because shares of Snap are surging in the after

0:09:46.720 --> 0:09:49.800
<v Speaker 1>hours of about fourteen percent as we speak. The company

0:09:49.840 --> 0:09:53.000
<v Speaker 1>sees first quarter adjusted ebit of from forty to seventy

0:09:53.240 --> 0:09:55.920
<v Speaker 1>five million dollars. Estimate was for seventy nine point nine

0:09:55.960 --> 0:09:58.960
<v Speaker 1>million dollars. Perhaps the reason it's hire is because fourth

0:09:59.000 --> 0:10:01.400
<v Speaker 1>quarter revenue came in at one point five six billion

0:10:01.440 --> 0:10:05.200
<v Speaker 1>dollars billion dollars, beating estimates ever so slightly, and then

0:10:05.240 --> 0:10:08.520
<v Speaker 1>first quarter revenue coming in ces first quarter revenue rather

0:10:08.840 --> 0:10:11.080
<v Speaker 1>from at one point three three billion to one point

0:10:11.120 --> 0:10:13.360
<v Speaker 1>three six billion, the estimate was for one point three

0:10:13.440 --> 0:10:15.800
<v Speaker 1>three billion. This is a company where I feel like

0:10:15.840 --> 0:10:18.280
<v Speaker 1>every quarter the stock moves double digits one way or

0:10:18.320 --> 0:10:21.800
<v Speaker 1>another after earnings. What are your immediate thoughts?

0:10:22.360 --> 0:10:25.960
<v Speaker 2>I mean, look, when you look at Alphabet, they are

0:10:26.160 --> 0:10:29.440
<v Speaker 2>adding you know, almost four or five billion dollars in

0:10:29.800 --> 0:10:34.680
<v Speaker 2>AD revenue search AD revenue every quarter. Look at a

0:10:34.720 --> 0:10:38.520
<v Speaker 2>snap it's a one point five billion dollar quarter. And

0:10:39.000 --> 0:10:42.400
<v Speaker 2>so when you compare it that way, the absolute numbers,

0:10:42.720 --> 0:10:45.440
<v Speaker 2>I mean, their growth is nothing to talk about. Yes,

0:10:45.480 --> 0:10:48.200
<v Speaker 2>the bar was really low and they you know, beat

0:10:48.240 --> 0:10:53.319
<v Speaker 2>the consensus numbers, but in terms of the actual AD dollars,

0:10:53.880 --> 0:10:57.280
<v Speaker 2>this just shows that Alphabet, when you compare you know,

0:10:57.480 --> 0:11:00.360
<v Speaker 2>search and YouTube, they are still getting a lot of

0:11:00.360 --> 0:11:02.200
<v Speaker 2>the incremental and dollars.

0:11:02.280 --> 0:11:05.199
<v Speaker 3>How do you compare Google Cloud versus We're going to

0:11:05.240 --> 0:11:08.439
<v Speaker 3>hear from Amazon obviously, and then we've heard from Microsoft,

0:11:08.559 --> 0:11:11.640
<v Speaker 3>so you know, put that against them and what we're

0:11:11.679 --> 0:11:14.880
<v Speaker 3>hearing from from Alpha better Google, Like, how do you.

0:11:15.080 --> 0:11:18.920
<v Speaker 2>Yeah, I mean, when you look at Microsoft, Azure Clearly

0:11:19.000 --> 0:11:22.120
<v Speaker 2>it's a seventy billion dollar business growing at thirty percent.

0:11:23.320 --> 0:11:26.559
<v Speaker 2>Google Cloud is more fifty billion dollar rund rate close

0:11:26.600 --> 0:11:30.360
<v Speaker 2>to that, growing at mid thirty five percent, but that

0:11:30.440 --> 0:11:32.719
<v Speaker 2>growth seems to have come down, and when you look

0:11:32.760 --> 0:11:35.760
<v Speaker 2>at Amazon Cloud, it's north of one hundred billion dollars

0:11:35.960 --> 0:11:40.040
<v Speaker 2>growing at high teens. So clearly everyone had their kind

0:11:40.080 --> 0:11:44.000
<v Speaker 2>of swim lanes in terms of the expectations and what

0:11:44.280 --> 0:11:48.560
<v Speaker 2>kind of growth number they're supposed to show. But in

0:11:48.600 --> 0:11:51.040
<v Speaker 2>this case, the fact that there was a slight miss

0:11:51.360 --> 0:11:54.720
<v Speaker 2>kind of puts that logic into question. I still think,

0:11:55.000 --> 0:11:57.520
<v Speaker 2>you know, it comes down to the compute availability and

0:11:57.960 --> 0:12:01.880
<v Speaker 2>video GPUs not being available. That and the fact that

0:12:01.920 --> 0:12:04.720
<v Speaker 2>they're raising the capex is a sign that they believe

0:12:05.080 --> 0:12:07.000
<v Speaker 2>the cloud business will continue to grow.

0:12:07.080 --> 0:12:08.840
<v Speaker 3>So if you've seen a retrenchment in capex, you would

0:12:08.880 --> 0:12:11.760
<v Speaker 3>have said, wait a minute, there's something happened potentially.

0:12:11.480 --> 0:12:13.520
<v Speaker 2>And they don't want to miss out on that because

0:12:13.600 --> 0:12:18.240
<v Speaker 2>this is the market where cloud businesses will really accelerate.

0:12:18.360 --> 0:12:21.120
<v Speaker 2>Even with the deep seak efficiency and everything that has

0:12:21.160 --> 0:12:24.840
<v Speaker 2>been talked about, Google should be the best position. Like

0:12:24.880 --> 0:12:27.400
<v Speaker 2>I said, they have their own TPUs, they should be

0:12:27.520 --> 0:12:30.840
<v Speaker 2>able to benefit from the efficiency and so that should

0:12:30.880 --> 0:12:33.559
<v Speaker 2>translate into faster cloud growth. If that's not the case,

0:12:34.280 --> 0:12:37.040
<v Speaker 2>I expect this sort of reaction and maybe that will

0:12:37.040 --> 0:12:37.880
<v Speaker 2>be the case tomorrow.

0:12:38.000 --> 0:12:40.120
<v Speaker 3>Great stuff. Listen, We're going to be following all of

0:12:40.120 --> 0:12:43.880
<v Speaker 3>your reporting and research throughout the evening. So Man Deep,

0:12:43.880 --> 0:12:46.120
<v Speaker 3>thank you so much, Man Deep saying, senior tech industry

0:12:46.120 --> 0:12:48.840
<v Speaker 3>analyst here at Bloomberg Intelligence. We are not done with alphabet.

0:12:49.000 --> 0:12:51.400
<v Speaker 1>Let's bring in Caroline High, the co host of Bloomberg

0:12:51.400 --> 0:12:54.640
<v Speaker 1>Technology on a Bloomberg TV just to recap everybody. Google's

0:12:54.679 --> 0:12:57.600
<v Speaker 1>revenue and its search, advertising and YouTube business. Was it

0:12:57.640 --> 0:13:00.520
<v Speaker 1>better than forecasts? But it looks like traders are focused

0:13:00.559 --> 0:13:02.640
<v Speaker 1>on In that Google Cloud revenue number, it was one

0:13:02.640 --> 0:13:06.360
<v Speaker 1>point nine percent below the consensus forecast. Google Cloud operating

0:13:06.360 --> 0:13:08.760
<v Speaker 1>income was a two point seven percent beat at two

0:13:08.800 --> 0:13:10.960
<v Speaker 1>point one billion dollars, up from eight hundred and sixty

0:13:10.960 --> 0:13:15.640
<v Speaker 1>four million dollars a year earlier. Caroline, why the stockslide? Mean?

0:13:15.679 --> 0:13:19.320
<v Speaker 1>Deep made the point of YouTube in YouTube specifically subscriptions.

0:13:19.679 --> 0:13:20.520
<v Speaker 1>What are you looking at?

0:13:20.640 --> 0:13:23.640
<v Speaker 4>I think it is to your point cloud, the capex

0:13:23.679 --> 0:13:25.920
<v Speaker 4>that's being spent on cloud. But ultimately, remember this is

0:13:25.920 --> 0:13:30.080
<v Speaker 4>exactly what happened to Microsoft. Microsoft beat on its fiscal quarter,

0:13:30.520 --> 0:13:33.079
<v Speaker 4>but the fact that we saw a one percentage point

0:13:33.160 --> 0:13:35.520
<v Speaker 4>drop quarter on quarter in terms of revenue growth from

0:13:35.520 --> 0:13:37.920
<v Speaker 4>the cloud as your business was enough to wipe out

0:13:37.920 --> 0:13:40.400
<v Speaker 4>all of those gains from actually the beat across the

0:13:40.400 --> 0:13:43.240
<v Speaker 4>revenue and overall profitability. So I think again, it's why

0:13:43.280 --> 0:13:45.680
<v Speaker 4>are you not delivering on the growth area? Why are

0:13:45.679 --> 0:13:50.160
<v Speaker 4>you seeing thirty percent increase in Google Cloud revenues rather

0:13:50.240 --> 0:13:53.400
<v Speaker 4>than the higher anticipation? And I wonder if, to Mandy's point,

0:13:53.440 --> 0:13:55.960
<v Speaker 4>it will be because they were limited in scale. The

0:13:56.000 --> 0:13:58.160
<v Speaker 4>supply side is the issue here, not the demand side.

0:13:58.200 --> 0:14:01.439
<v Speaker 3>Well, and they did say AI powered Google Cloud portfolio portfolio.

0:14:01.440 --> 0:14:03.640
<v Speaker 3>Excuse me, how stronger demands. So they're kind of putting

0:14:03.640 --> 0:14:05.000
<v Speaker 3>it out and it almost feels like you want some

0:14:05.040 --> 0:14:07.320
<v Speaker 3>clarification about okay, so give us a little bit more

0:14:07.320 --> 0:14:08.560
<v Speaker 3>color about what's going on here.

0:14:08.600 --> 0:14:10.480
<v Speaker 4>And this is why the calls have been so important.

0:14:10.520 --> 0:14:13.160
<v Speaker 4>Remember we sat here and Apple's numbers came out, stop dropped.

0:14:13.200 --> 0:14:16.520
<v Speaker 4>Then suddenly Tim Cook comes on all buoyant, Meta does

0:14:16.520 --> 0:14:19.400
<v Speaker 4>the same. They were incredibly late. Then numbers did miss

0:14:19.400 --> 0:14:21.720
<v Speaker 4>on a forward looking forecast, but again they came on

0:14:22.000 --> 0:14:24.920
<v Speaker 4>and talked so optimistically about the opportunity if stand up

0:14:24.920 --> 0:14:27.040
<v Speaker 4>pitch I gets it right and says, look, we're still

0:14:27.040 --> 0:14:30.160
<v Speaker 4>just ultimately limited on our capacity thus far, but bear

0:14:30.200 --> 0:14:32.800
<v Speaker 4>with us. We're investing big time. We have got the

0:14:32.840 --> 0:14:35.920
<v Speaker 4>one stop shop for vertically integrated generative AI. We are

0:14:35.920 --> 0:14:39.080
<v Speaker 4>making the Lange larger language model, We're making our chips,

0:14:39.120 --> 0:14:41.440
<v Speaker 4>we're providing it, and it's making our search products still

0:14:41.480 --> 0:14:44.240
<v Speaker 4>so fabulous. He has an ability to navigate some of

0:14:44.240 --> 0:14:47.840
<v Speaker 4>the thornier questions around antitrust, around China and geopolitics.

0:14:47.920 --> 0:14:51.360
<v Speaker 1>Hey, look, Amazon shares reached a new record today, but

0:14:51.600 --> 0:14:54.520
<v Speaker 1>after hours they're down about one point four percent, kind

0:14:54.560 --> 0:14:56.760
<v Speaker 1>of a knee jerk reaction in sympathy with what we

0:14:56.800 --> 0:15:00.320
<v Speaker 1>heard from Alphabet. Does today's report tell us anything about

0:15:00.360 --> 0:15:02.800
<v Speaker 1>what we'll hear from Amazon on Thursday when it comes.

0:15:02.600 --> 0:15:03.080
<v Speaker 3>To the cloud?

0:15:03.160 --> 0:15:04.920
<v Speaker 4>I mean, who knows whether some of the slow down

0:15:04.960 --> 0:15:07.560
<v Speaker 4>and Google is an opportunity for Amazon who had bigger

0:15:07.640 --> 0:15:10.120
<v Speaker 4>scale in data centers. But again, we've heard from Matt

0:15:10.160 --> 0:15:13.080
<v Speaker 4>Garman over at AWS before talking of this need to

0:15:13.120 --> 0:15:16.760
<v Speaker 4>get the Nvidia chips and perhaps that these delays that

0:15:16.800 --> 0:15:18.920
<v Speaker 4>you've had to blackwell for example, and the role at

0:15:19.000 --> 0:15:21.600
<v Speaker 4>has been a supply side thorn in the side for

0:15:21.600 --> 0:15:23.360
<v Speaker 4>a lot of these businesses, and that's why they're turning

0:15:23.440 --> 0:15:25.760
<v Speaker 4>to their own chip designs and why Broadcom is on

0:15:25.800 --> 0:15:29.640
<v Speaker 4>the upside because maybe with bigger capex from Alphabet, it's

0:15:29.680 --> 0:15:31.960
<v Speaker 4>going to again be winning out in terms of business

0:15:32.000 --> 0:15:35.000
<v Speaker 4>as companies like cloud or providers want to depend on

0:15:35.040 --> 0:15:36.200
<v Speaker 4>their own supply side too.

0:15:36.440 --> 0:15:36.680
<v Speaker 1>I do.

0:15:36.960 --> 0:15:38.640
<v Speaker 4>I think there's going to be a knee jeck reaction,

0:15:38.720 --> 0:15:41.400
<v Speaker 4>as you say, but Amazon's got very different business model

0:15:41.400 --> 0:15:41.800
<v Speaker 4>in terms of.

0:15:41.800 --> 0:15:43.800
<v Speaker 3>Advertising as well, Caroline, I have to roll some other

0:15:43.840 --> 0:15:45.840
<v Speaker 3>things in. First of all, let's remind everybody that shares

0:15:45.840 --> 0:15:47.600
<v Speaker 3>of Alphabet or down about six and a quarter percent

0:15:47.600 --> 0:15:49.520
<v Speaker 3>here in the aftermarket, so they've kind of settled at

0:15:49.520 --> 0:15:51.920
<v Speaker 3>this level. And assume as soon as the car comes

0:15:52.040 --> 0:15:54.000
<v Speaker 3>we could see some movement in the stack once again.

0:15:54.320 --> 0:15:58.200
<v Speaker 3>But it's coming in a day where US China teariffs

0:15:58.240 --> 0:16:02.920
<v Speaker 3>against one another. China's return valiatory actions included an antro

0:16:03.400 --> 0:16:06.520
<v Speaker 3>launching an anti trust investigation to Google extraordinary, and then

0:16:06.920 --> 0:16:10.480
<v Speaker 3>just earlier we had Alphabet come out and say Google's

0:16:10.480 --> 0:16:13.400
<v Speaker 3>removed a passage from its AI principles the pledged to

0:16:13.400 --> 0:16:16.800
<v Speaker 3>avoid using the tech technology and potentially harmful applications such

0:16:16.800 --> 0:16:19.000
<v Speaker 3>as weapons. There's just so much here to unpack. The

0:16:19.080 --> 0:16:22.600
<v Speaker 3>regular first of all, the retaliatory actions by China and

0:16:22.840 --> 0:16:24.160
<v Speaker 3>how are you kind of rolling?

0:16:24.200 --> 0:16:24.360
<v Speaker 2>Then?

0:16:24.480 --> 0:16:27.320
<v Speaker 4>Is a just I mean, the stop ended up the

0:16:27.360 --> 0:16:30.000
<v Speaker 4>day at a record high, so people really felt that, yes,

0:16:30.040 --> 0:16:32.920
<v Speaker 4>this is an Android issue most largely, but this is

0:16:32.920 --> 0:16:34.480
<v Speaker 4>the game of tit for tat and ultimately it's not

0:16:34.520 --> 0:16:36.160
<v Speaker 4>going to affect their business model too much in the

0:16:36.240 --> 0:16:38.240
<v Speaker 4>longer term. So I think you're right though, to fold it.

0:16:38.320 --> 0:16:40.840
<v Speaker 4>Maybe the pan andeer element of all of this that

0:16:40.880 --> 0:16:43.800
<v Speaker 4>has been the software bet for generative AI over the

0:16:43.880 --> 0:16:47.040
<v Speaker 4>last year, and they are all around defense, around the

0:16:47.080 --> 0:16:49.000
<v Speaker 4>focus on general to AI and what it can do

0:16:49.080 --> 0:16:51.680
<v Speaker 4>for government, and it has been a limitation in the

0:16:51.720 --> 0:16:55.040
<v Speaker 4>past for Alphabet and Google, but people like upstarts, the

0:16:55.120 --> 0:16:57.440
<v Speaker 4>andriills coming in here being like, you need to be

0:16:57.520 --> 0:17:00.400
<v Speaker 4>okay with making this sort of generative AI in innovation

0:17:00.880 --> 0:17:01.320
<v Speaker 4>before we.

0:17:01.320 --> 0:17:03.800
<v Speaker 1>Let you go. AMD is out with results. Shares in

0:17:03.800 --> 0:17:06.080
<v Speaker 1>the after hours are high about about three point four percent.

0:17:06.119 --> 0:17:08.800
<v Speaker 1>The company c's first quarter revenue coming in at six

0:17:08.880 --> 0:17:12.000
<v Speaker 1>point eight billion to seven point four billion shares climbing

0:17:12.000 --> 0:17:15.359
<v Speaker 1>as first quarter salesfe tops estimates at midpoint. Your knee

0:17:15.400 --> 0:17:17.480
<v Speaker 1>jerk reaction to you AMD relief.

0:17:17.720 --> 0:17:20.520
<v Speaker 4>They needed to assure their investor base, Lisa, who has

0:17:20.520 --> 0:17:23.040
<v Speaker 4>been under a lot of duress because data center serve

0:17:23.119 --> 0:17:26.320
<v Speaker 4>a provision. Ultimately, AI accelerators have not been able to

0:17:26.400 --> 0:17:29.160
<v Speaker 4>match the prowess of Nvidia, everyone feeling, in fact, they've

0:17:29.160 --> 0:17:32.160
<v Speaker 4>been analyst after analysts downgrading the stock, worrying that they

0:17:32.200 --> 0:17:35.119
<v Speaker 4>just aren't there when it comes to a real competitor.

0:17:35.280 --> 0:17:37.240
<v Speaker 4>But the fact that she's able to deliver in margins,

0:17:37.280 --> 0:17:39.720
<v Speaker 4>the fact that she's still saying, like I'm competitor. I'm

0:17:39.760 --> 0:17:42.159
<v Speaker 4>focused on R and D and expenses coming in perhaps

0:17:42.200 --> 0:17:44.639
<v Speaker 4>a little bit higher there. But they need R and D,

0:17:44.800 --> 0:17:47.040
<v Speaker 4>they need to focus on the AI accelerator because they've

0:17:47.080 --> 0:17:49.919
<v Speaker 4>begin really tough competition in the world of PC and

0:17:49.960 --> 0:17:52.359
<v Speaker 4>other And remember you and I are buying PCs as

0:17:52.400 --> 0:17:53.119
<v Speaker 4>much as we used to do.

0:17:53.320 --> 0:17:56.160
<v Speaker 3>All right, grid stuff, I mean, God moving around, Caroline,

0:17:56.160 --> 0:17:59.120
<v Speaker 3>Thank you so much, Caroline High of course, go host

0:17:59.160 --> 0:18:02.120
<v Speaker 3>to Bloomberg technolog Ian Bloomberg TV Catcher at eleven am

0:18:02.280 --> 0:18:04.520
<v Speaker 3>Wall Street time on Bloomberg Television