Search revenue miss, apparently. Not sure whether this has happened before. But I wonder if this could be the long-predicted beginning of the downfall of search as a "money printer".
Down $13+ (about 4%) after hours, and the drop was apparently after they mentioned the search revenue miss on the earnings call because it was flat when I looked an hour ago. So not entirely priced in.
IIRC there was a search revenue miss last quarter too. Likely because of AI cannibalization of search results. Classic search is very heavily monetized, and a monopoly ad market. AI mode is currently lightly monetized, and a much more segmented market, and one that is harder to target ads for. Plus there are easily half a dozen LLM vendors now, while Search was a clear monopoly.
This is something investors should be very concerned about. It's not at all clear that whatever comes post-Gemini will be nearly as profitable as Search has been for the last 20 years.
Noteworthy:
- Negative free cash flow for the quarter
- $98B in unrealized gains on equity securities
- Cloud revenue are up 82% to $24.8B
Short version as far as I can see:
30% up year-over-year, driven by growth in both Google services and Google cloud.
$190B of capex is mind-boggling. That's roughly equivalent to building 34 One World Trade Centers.
There's a joke about usefulness of 34 trade centers (or just 1 really) somewhere.
Overview blog post: https://blog.google/company-news/inside-google/message-ceo/a...
Search revenue miss, apparently. Not sure whether this has happened before. But I wonder if this could be the long-predicted beginning of the downfall of search as a "money printer".
priced in
Down $13+ (about 4%) after hours, and the drop was apparently after they mentioned the search revenue miss on the earnings call because it was flat when I looked an hour ago. So not entirely priced in.
IIRC there was a search revenue miss last quarter too. Likely because of AI cannibalization of search results. Classic search is very heavily monetized, and a monopoly ad market. AI mode is currently lightly monetized, and a much more segmented market, and one that is harder to target ads for. Plus there are easily half a dozen LLM vendors now, while Search was a clear monopoly.
This is something investors should be very concerned about. It's not at all clear that whatever comes post-Gemini will be nearly as profitable as Search has been for the last 20 years.