GOOGL
📈 Despite economic headwinds, Google reported strong Q1 results, with constant currency revenue growth of 14% and expanding operating margins from 32% to 34%.
☁️ Google Cloud was a standout performer, growing 28% and significantly increasing profitability, indicating market share gains against competitors like AWS.
💰 Trading at approximately 15-16 times forward earnings (ex-cash), the valuation appears attractive compared to historical levels and growth prospects, reminiscent of its 2015-2016 valuation before significant appreciation.
@Artedeinvertir:
“Google has been the first of the Magnificent Seven to report results, and no particular slowdown is noticeable, at least in the business. In fact, it has gone quite well. On a constant currency basis, it grew by 14%; last year it had grown by 16%. It’s true that it has slowed down a bit, perhaps the economy had some effect, but the good thing is that the profit margin has grown, which has drastically increased the operating profit and also the earnings per share. The adjusted earnings are $2.10; annualized, it would be almost $8 or $9 expected for this year, and next year $10 or so. So, based on next year, it’s trading at only 16 times earnings; excluding cash, it could be 15. These are interesting multiples. People also said that Google Search, the search engine part of Google’s business, was a bit doubtful with the ChatGPT issue. Personally, I do use ChatGPT more and more, but the business continues to exist there; it billed 46 billion and has now passed to billing 50 billion. YouTube has continued to grow well, about another 10%. The Google Cloud theme has been very good, with growth of almost 28%; it has been one of the best cloud companies, which means it is gaining market share from Amazon Web Services. In terms of profitability, you see that whip effect in Google Cloud, especially because the comparable previous quarter earned 900 million, and now profitability has passed to 2.1 billion. That operational leverage effect, where fixed costs don’t increase as much as variable costs and revenue does, I expect will bring sources of joy for Google in the future regarding profit margins. That’s why margins expanded from 32% to 34% this quarter. Then there’s the Other Bets theme, where they have experiments like Waymo for autonomous cars, which is performing very well with very potent growth; it hasn’t had as many losses, and I think Waymo at some point would also be quite profitable for the company. However, the company was over $200 and has now dropped to $150-$160, roughly in that range, a 30% drop. It’s curious that the company drops 30% in the stock market, and the profit increases by 20%, or about 10% adjusted.”
Watch the exact part of the video where @Artedeinvertir talks about Alphabet here:
Watch the video on YouTube
Read more articles analyzing Alphabet (GOOGL) at the following link. GOOGL stock.
