GOOGL
📈 Alphabet reported strong Q1 results, beating expectations with significant revenue growth (12% YoY, 14% constant currency) driven by Search, YouTube, and especially Google Cloud (28% growth).
☁️ Google Cloud’s operating income doubled year-over-year, showcasing substantial margin expansion and contributing significantly (50%) to the overall operating income growth.
🤔 Despite stellar results and a massive $70B share buyback authorization, the initial lack of forward-looking guidance during the earnings release created some uncertainty, though the stock reacted positively.
@bernardodegarcia:
“Let’s look at Google’s stock. This will be a very interesting quarterly result because Google’s shares are very depressed due to the Department of Justice issue, although I don’t think that’s the main reason as it still needs years. Google’s shares are also depressed, obviously, by market sentiment, and finally, they are depressed because the market thinks there will be a recession due to Donald Trump’s tariffs. We know that, in general, tariffs don’t affect Google too much, perhaps indirectly with dropshippers like Temu. Many of you tell me that Temu continues to advertise; you see Temu ads in my videos. That’s fantastic. That also speaks very well of Pinduoduo. Look how well Chinese stocks have been doing since we talked about them. Pinduoduo is still super interesting where it is. Alibaba hasn’t even risen half as much. We have JD.com falling even more; JD.com will be even more interesting now than Pinduoduo. Google results are out, and Google knocks it out of the park, shares rising 4%! Who gives more? Who gives less? Alphabet investors, we’re seeing 4.5%, reaching 5%. Google shares, I was totally wrong, and wrong I am. It seems the guidance is super positive. On the other hand, maybe my YouTube channel is having problems, not because I’m generating a lower return with the same views because Google is paying less, but because for whatever reason, they are paying me less. Fourth quarter? No, webcast earnings. Alphabet, give me the news, baby. Results, financial earnings. No, not in earnings, you don’t want to put it here yet. Updates, news probably. Ah no, we don’t have them yet. What do you think? Events? No. Covenants? No. Other additional information? If you put it there, I’ll slap you too. Earnings? Well, we don’t have them yet, ladies and gentlemen. We are waiting. We have the webcast, but the webcast is to listen and watch on YouTube, which obviously will start in about an hour. Alphabet announces its quarterly results. Revenue increases by 12%, mother of beautiful love, 12% or 14% in constant currency, $90.2 billion. Google Services up 10%. Google Cloud 28%. What is the operating income of Google Cloud? $2 billion. Fantastic! Notice that it has practically doubled. The growth here has also been quite substantial, from about 29 to 32, a jump of 10%. But beware, this has been a +100% jump. Sooner or later, Google Cloud, we don’t know how much or when, will unfortunately start to decelerate its operating income growth. Hopefully later rather than sooner. It could represent more and more operating income versus Google Services, but let’s not get ahead of ourselves. Total operating income rose 20%. Operating margins 2% to 30.2%. Net income 46%. Earnings per share, what madness is this? Wow! We really liked our first quarterly results, good growth momentum across all businesses. Amidst all this growth is our full AI stack. This quarter was super great because we launched Gemini 1.5 Pro. I’ve been testing it today; I like it much more than ChatGPT, much more. Our smartest AI model is achieving breakthroughs in performance and is an extraordinary foundation for our future innovation. Search also continues to grow quite strongly, driven by the engagement we are seeing with features like AI Overviews, which now has 1.5 billion users per month. Driven by YouTube and Google One, we have passed 270 million paid subscribers for services, and Cloud is growing rapidly with significant demand for our solutions. These are the highlights. Revenue knocked it out of the park, 12% growth. Operating income up 20%, partly due to Google Cloud. Okay, okay, now it makes sense. Operating income, there it is, this 20%. Operating margins, what craziness, I love it. Can we expect these operating margins to stay with us after all the spending we’ve had to put AI where it is, to put Gemini where it is? Well, earnings, as we are seeing, jump from 23 to 34 billion, crazy! And earnings per share from $1.89 to $2.81. Let’s put things in perspective. Let’s say Google brings us $2.81 every quarter. This will be $11.24 annually. Now let’s put $170 divided by the answer, which is $11.24. We are seeing that this company currently, if it maintains its earnings per share throughout the year, is trading at a multiple of 15 times forward earnings. I repeat, Google right now, if it maintains its earnings per share at $2.81, which is what we have right here, if it doesn’t grow, if it just stays here for the next four quarters or three quarters including the first quarter, this company would be trading at 15 times forward earnings. Considering that, as we said, it’s a company that has grown 14% in revenue and 20% in operating income, and we imagine it will continue to grow since Google Cloud’s operating income has been incredible, representing 50% of the operating income growth. Google Search & other grew 10%, YouTube Ads 10%, Google Network had a slight drop. Google subscriptions had a very good rise, a bit more than 10%. Total services had 10% growth. Google Cloud had 20%. Other Bets was more or less in line. The TAC increased 8-9%. The number of employees increased again. Dividends: we paid $1.2 billion to $2.4 billion in the 3 months. We declared another dividend of $0.21, representing a 5% increase from the previous quarter’s $0.20. So they pay us 1 cent more. The dividend will be payable on June 16 to shareholders of record on June 9. In April, the Board authorized the company to repurchase $70 billion worth of shares. Wow! Yesterday, the board allowed Google to buy $70 billion. I’m missing the guidance. I’m missing the guidance. We haven’t reached it, but notice that the shares aren’t going anywhere. 3% is fine, but… Net gain on equity securities was $11.2 billion, including $8 billion of unrealized gains in our private equity/private company investments. Okay, fantastic. Webcast, forward-looking statements. No guidance. No guidance. Watch out. Is there guidance? There must be guidance. How can there be no guidance? No guidance. Phew! Careful, careful, careful. No guidance. This means they will give the guidance on the call, if they give it. Maybe they’ll do a Tesla. I think they should do a Tesla. In these moments where uncertainty is so high, instead of giving guidance like United Airlines… I don’t know if you remember, but United Airlines gave two guidances: the good one and the bad one. The good one if Donald Trump stops fooling around and we don’t have a recession, and the bad one if Donald Trump continues fooling around and messes things up. Tesla, as you know, didn’t give guidance. I think Google should do the same. But well, I leave the guidance to your imagination. God knows. They don’t give guidance [in the release]. Okay, okay, I’m calmer now. I was nervous. The guidance is given on the call. Microsoft too. Apple too. It must be Tesla, the only one of the magnificent ones that gives guidance? Tesla, Nvidia does give guidance, and Meta I think too. Meta gives guidance, especially guidance on… I don’t remember what. Well, there we have it, ladies and gentlemen. We already have the quarterly results. Let’s see if there’s anything else interesting from quarterly results, but very good quarterly results for Google. Everything remains up in the air because, truthfully, we need the guidance. It’s useless without it.”
Watch the exact part of the video where @bernardodegarcia talks about Alphabet Inc. here:
Watch the video on YouTube
Read more articles analyzing Alphabet Inc. (GOOGL) at the provided link. GOOGL stock.
