Google Earnings: Enough is Never Enough
Alex Moschina|July 24, 2024
What does a tech megacorp have to do to earn some love around here?
Shares of Tesla (TSLA) and Alphabet (GOOG) tumbled in the wake of concurrent earnings releases yesterday.
For the second quarter, Tesla reported a 40% drop in profits compared to a year ago. Income failed to meet analyst expectations.
To cap it all off, the company warned that its “vehicle volume growth rate [in 2024] may be notably lower than the growth rate achieved in 2023.”
Ouch.
It’s just more proof of what Shah has been saying since March… that when it comes to Tesla, investors ought to proceed with caution.
But what about Alphabet?
Despite yesterday’s post-earnings tumble, the stock is up almost 40% since Shah called it a “Buy” in November.
“You wanna own Google,” he said on November 8. “It’s a ‘buy’ here, it’s a ‘buy’ anywhere.”
With yesterday’s release, the company beat both top- and bottom-line expectations, delivering $84.7 billion in revenue for the second quarter.
Earnings per share grew more than 30% compared to Q2 2023.
And yet, this morning in pre-trading, the stock was down almost 5% from yesterday’s close.
Even though the stock bounced back, the initial response suggests enough is never enough.
While overall advertising revenue beat estimates, ad revenue from YouTube – specifically – underperformed.
And then there’s the company’s ongoing expansion into the realm of AI.
In the second quarter, Alphabet’s investment in AI doubled from what it spent during Q2 2023 – to more than $2 billion.
Unfortunately, the company can’t shake the perception that – despite that big increase in spending – it’s still behind the eight ball as far as its generative AI models go.
After all, it was just two months ago that news outlets reported Gemini – Google’s AI search feature – had been telling users to eat rocks (among other inedible things).
Even so, remember that we remain in the early stages of the AI story.
And, not for nothing, Gemini isn’t the only AI tool that’s delivering weird responses to its users.
As Popular Science reported back in February, OpenAI’s ChatGPT has had bouts of delivering “long strings of comically odd nonsensical gibberish devoid of any comprehensible meaning.”
The big difference is… Alphabet is a $2.2 trillion publicly traded company. Unlike OpenAI, we can track the market’s reaction to its every misstep, practically in real time.
And so, to the untrained eye, the immediate post-earnings performance would suggest that both Tesla and Alphabet delivered poor Q2 results.
But the reality is, Tesla is reeling as its grip on the EV space weakens…
While Alphabet continues to make the case that AI will revolutionize how folks interact with the web, and its core products.
They are not the same.
Note: As the AI race heats up, Shah has uncovered a small company that solves the biggest problem holding back AI. As demand for its unique AI solution skyrockets, sales could soar as high as 4,735% in the next year alone… Click here for details.
Alex Moschina
Alex Moschina is the associate publisher of Manward Press. A gifted writer, editor and financial researcher, Alex’s career in publishing began more than a decade ago when he worked at one of the world’s leading providers of academic research and reference materials. Alex first cut his teeth in the realm of investing when he joined the team at White Cap Research in 2010. There he was charged with covering emerging market trends and investment opportunities. A stint as senior managing editor and editorial director at the prestigious Oxford Club followed. A frequent speaker at conferences and events, Alex has led educational workshops across the U.S. and Canada.
