April 24, 2025 • 17 mins
Google parent Alphabet reported first-quarter revenue and profit that exceeded analysts’ expectations, buoyed by continued strength in its search advertising business. First-quarter sales, excluding partner payouts, were $76.5 billion, the company said Thursday in a statement. Analysts had expected $75.4 billion on average, according to data compiled by Bloomberg. Net income was $2.81 per share, compared with Wall Street’s estimate of $2.01.The shares, which have declined 16% so far this year, rose more than 3.5% in extended trading following the report.
Alphabet needs to ensure momentum in its internet search advertising and cloud businesses in order to justify its heightened investment in the artificial intelligence race. Competition is prompting the company and its rivals to spend heavily on infrastructure, research and talent. While Google benefits from AI startups spending on its cloud and business tools, it’s also racing to present an answer to popular conversational AI chatbots, which consumers are beginning to think of as an alternative to using Google Search.
For instant reaction and analysis, hosts Carol Massar and Tim Stenovec speak with:
- Mark Douglas, MNTN President and CEO
- Bloomberg Intelligence Senior Tech Industry Analyst Mandeep Singh
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Transcript
Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is a breaking news update from Bloomberg, instant reaction
and analysis from our three thousand journalists and analysts around
the world.
Speaker 1 (00:19):
Alphabet the parent company of Google. The company reported first
quarter revenue and profit that exceeded analysts expectations. It was
bullied by continued strength in its search advertising business, and
that's exactly where we want to go. Now we've got
back with us Mark Douglass. He's president and CEO of Mountain,
the company of software that helps companies target advertising on
smart TVs. He understands the AdSpend market. He joins us
(00:41):
from Miami. Mark, good to talk with you again. Does
this surprise you given the trends that you're seeing when
it comes to advertising?
Speaker 3 (00:50):
Not given the trends I think the trends for I
want to talk more specifically about Google.
Speaker 4 (00:57):
Yeah.
Speaker 3 (00:57):
I think we started the you know, we started the year,
and I think everyone literally everyone was very optimistic about
the economy, you know, Q one and Google's reporting on
those results, I think they did very well. I think
there were concerns and continue to be concerns about whether
AI on their platform, meaning in your search results, is
(01:19):
going in some way negatively impact the search business. But
I think as an investment even there just provide some
comment on that. Look, I'd rather have Google competing with
themselves than allowing other people to compete with them, So
I think even that's a positive if in the future
it does have some negative impact.
Speaker 5 (01:36):
Well, you know, it's.
Speaker 6 (01:36):
Funny that you say that, you know, and I'm looking
at our right through by our daby Alba.
Speaker 5 (01:40):
But this whole idea that you know, alphabet.
Speaker 6 (01:44):
Google has to show right that it still has momentum
and search, advertising and cloud, but at the same time
show that it's as it makes incredible investments in the
AI build out, as the world kind of shifts in
that direction, that it's also there as well. It's really tricky,
and this is what our man Deep Singh said. You know,
(02:04):
this is a company that's got seven apps with over
I think two billion monthly active users. It's bread and butter.
Is still Google, right and it's search business. But as
people move to Chatchpt.
Speaker 4 (02:16):
Or Gemini, like, that's a tough transition.
Speaker 5 (02:19):
It's got to juggle a lot.
Speaker 3 (02:21):
Yeah, and then, like I said, I think if I'm
an investor in Google, the I always say to my company,
better we compete with ourselves than we allow someone else
to do it. So, if I'm an investor, what I'm
looking for is that the management team is awake, they're alert,
and they're ready to compete. And I think Google's showing
that in what they're doing with Gemini, and they're showing
(02:45):
that they can still navigate search. Also with a company
with that scale you mentioned, the tremendous scale they have, Honestly,
you can find you can always squeeze out more revenue
and as a result, more earnings. So I think it
also shows that they can manage the business in order
to find those extra dollars if they need to, while
they might be challenged in other areas.
Speaker 1 (03:06):
Is this the classic innovator's dilemma? Though Google's core search
business is so profitable and it's so entrenched, and it's
so ingrained in pretty much almost every country in the world,
you have to say almost that there is a concern
that it doesn't want to cannibalize that with investment in Gemini.
Speaker 3 (03:28):
Yeah, that's what you don't want to see, right, what
you want them to be like, like you almost wanted
to be two separate companies and they just go at
it and may the best you know part of Google win.
Speaker 5 (03:42):
The other things google wins.
Speaker 6 (03:45):
That's the point, right, Like you said you'd like to
be competing with yourself forgive me go ahead.
Speaker 5 (03:49):
Yeah, no, exactly.
Speaker 3 (03:50):
The other thing to remember, you know, mobile was a
big threat to Google. Yeah, like like Google was all
desktop and you have your browser out. That's you know,
obviously a huge part of their business. And people were
very worried about whether, you know, people were going to
search on mobile and if they did, whether they were
going to respond to the ads. So, I mean, it's
not the first time Google has been challenged by new
(04:13):
technologies and they you know, the honestly kudos to them
because I expected Gemini to possibly cause some problems in
Q one and the you know, in terms of their revenue,
and obviously it hasn't.
Speaker 6 (04:28):
Hey one last question on the upcoming call with analysts,
what do you what would you be asking what do
you want to hear.
Speaker 3 (04:35):
The I would be all about Gemini and how AI
results at the top of the search page, which essentially
have replaced the paid you know, the click ads, the
paid ads at the top of the search page for
a lot of searches. I would want to ask every
possible question I can on data related to how that's
(04:58):
impacting this that there's to revenue as search results responses
to the searches, everything, and try, if I'm an analyst,
try to model that out.
Speaker 6 (05:06):
All right, we're talking, of course with Mark Douglas, president
and CEO of Mountain. We want to bring into the
conversation Man Deep seeing he is senior tech industry analyst
at Bloomberg Intelligence. Just coming in the studio. It's a
little crazy, so he hasn't heard everything that Mark had
to say. But Mark said, you know, he's curious about
Gemini something. He's going to be looking out on the call.
(05:28):
Man Deep, I have been cool.
Speaker 4 (05:29):
You told us, you told us what to do.
Speaker 6 (05:31):
Deep, you NonStop because you said it's all about search.
So walk us through what they got in and how
it's sees, how it looks for you because investors like it.
Speaker 2 (05:40):
Yeah, I mean the Google Services revenue was a slight beat,
but what was really impressive was the margin beat on
the Google Services.
Speaker 5 (05:48):
And a lot of it is.
Speaker 2 (05:49):
Because everyone thought, because they are adding AI overviews, that's
going to hurt the margins of search.
Speaker 3 (05:57):
Oh.
Speaker 5 (05:57):
It didn't happen.
Speaker 4 (05:58):
Why didn't Why didn't that happen?
Speaker 1 (06:00):
It's because you have to explain this from the perspective
of a Google user, like the experience, if we get
the if we get the answer, with the AI overview,
we're not looking at ads, we're not clicking on things.
Speaker 4 (06:08):
Yeah, why doesn't it hurt?
Speaker 2 (06:10):
Because they have so many different types of queries on
Google Search that some of those queries they are able
to monetize it just through ads on AI overviews. Remember,
Google never went away from ads, even though they integrated elements.
Speaker 5 (06:29):
Ads has always been.
Speaker 2 (06:30):
A core part of the Google dot Com offering, even
with the AI overviews, and they somehow weave the ads
in a way where they're able to charge for those ads.
Speaker 5 (06:40):
That's what makes them so special.
Speaker 1 (06:42):
I can't I never look at an ad on like
what is wrong? Right when I look at an AI
overview answers.
Speaker 2 (06:49):
On whether it's you know, an informational query versus an
e commerce query or a travel query or an auto query.
The pay change is so dynamic that they are able
to weave in the right ads with the right kind
of target.
Speaker 1 (07:03):
What about with the Gemini app and like the app
experience are they able to make money doing that yet?
Speaker 4 (07:08):
Does that matter?
Speaker 2 (07:09):
I mean you have to remember Google does five trillion
searches a year, five trillion, So you know, even if
they monetize twenty to twenty five percent, which is the case,
seventy five percent of the queries are not monetized. Imagine
how much power they have in terms of the targeting
they have with the ads as well as the number
of careeries, even if jagpt is taking some volume.
Speaker 5 (07:32):
Yeah, five trillion is a lot.
Speaker 4 (07:34):
Mark.
Speaker 6 (07:34):
I want to bring you back in as we've got
Man Deep sing brilliant part of our Bloomer Intelligence team,
Mark Douglass, President and Chief executive Officer Mountain, really great
perspective in terms of advertising within this world. But you
mentioned something about Gemini that you want to hear on
the call. Just lay it out again for Man Deep
so that we can kind of dig into that with him.
Speaker 4 (07:54):
Yeah.
Speaker 3 (07:55):
I mean, I think it's similar comments, which is the
Google as a come And I think what's most important
to see is that they let the different parts of
the company compete. So Gemini competes with with with search results,
because if they don't compete with themselves, then open AI
and others are going to do the do the competition
(08:16):
for them, and so I think it's important that they
let them compete. It appears they are. And I also
agree with the other comment that he just had in
terms of scale of their business is like, you know
you can you can increase search results, you know, paid
search results one half of one percent and be they
have a lot of levers to pull and I think
(08:38):
they're doing a good job pulling them to be able
to navigate this lineup right now.
Speaker 2 (08:43):
And the point about Gemini not only does it like
there's a competitive aspect, but also you learn so much
more about the user. Imagine they are on Gmail Maps Search.
Now you have got one more app where you have
your user. You're learning about their type of queries. How
could they're at targeting become suddenly because they are facing
(09:05):
through Gemini now, so there's one more surface that you
are adding, and it complements their at targeting.
Speaker 6 (09:11):
Mark brings up this concept of great to compete with
yourself and so essentially that's kind of what Alphabet's doing
right with Google Search and then Gemini. But is it
a guarantee that everybody who's been using Google is just
going to easily just kind of segue into Gemini.
Speaker 5 (09:26):
Can we assume that that will happen?
Speaker 2 (09:28):
I mean, Google is still the verb, and I don't
think it's changing anytime soon. Yes, you can say chat
gpt for certain informational queries and for certain queries, chat
gpt does a great job. But if you're thinking about
the Google ecosystem, you know, the all the apps that
you are used to using on the consumer side on
(09:48):
a day to day basis, it's hard to take yourself
out completely from the Google ecosystem. You'll still be using
Gmail apps, YouTube, even if you use chat GPT. I
mean a lot of times chat gpe shows you a
search result and then you go to maps to search
for you know, the exact address that CHADGPT show.
Speaker 4 (10:07):
Right right, Hey, Mandy.
Speaker 1 (10:09):
Alphabet shares up four percent in the after hours, Meta
platforms up two point three percent. Amazon shares are hired
by one percent. All happening because of what we heard
from Alphabet. Is this just a huge sigh of relief
when it comes to megacap tech, I mean, is everything okay?
Speaker 4 (10:25):
A lot of the world.
Speaker 2 (10:26):
I'll wait for the call, because remember Liberation Day was
April tecond yeah, this is through March thirty.
Speaker 5 (10:32):
First, we don't even.
Speaker 2 (10:33):
Know the impact of tariffs was I mean, all that
happened at the beginning of two Q So we may
be I think too far fresh and thinking, you know,
we're out of the woods.
Speaker 5 (10:45):
But it's a good print. It's a good point.
Speaker 4 (10:47):
It's a good point.
Speaker 6 (10:47):
Mark, come on back. And I'm curious if you have
a question for man Deep saying, like, you know, you
follow this market, you follow this company. I'm just curious.
Speaker 3 (10:56):
Yeah, I actually want to take the conversation slightly to
another part of Google's business. One of the things, you know,
I'm still very much an active engineer, and one of
the things I'm saying is Google be very aggressive are
capturing market share in the Google Cloud business. And that's
not something I think many people are talking about today,
but that's potentially, you know, setting up from some really
(11:18):
good results in that part of the business in the future.
So I'm curious, Mandy, if you have any thoughts on
that part of Google.
Speaker 2 (11:26):
Yeah, I mean it goes to the point about you know,
them having this huge infrastructure that powers their family of apps,
also powers the cloud business, and thirty percent growth on
a fifty billion dollar runderate is very impressive. The problem
for Google is it doesn't generate the same kind of
profitability that search does, and that's why investors don't care
(11:47):
that much. But look, I think they could even grow
faster on the cloud side. They're probably somewhat supply constraint
that everyone is in terms of AI infrastructure, so that
cloud business could continue to compound twenty five thirty percent clip.
Speaker 6 (12:01):
For a while, we've been talking about how the stock
has really popped in the after hours. It's off some
of its highest levels in the aftermarket, Mandi, but still
up about four percent. But that point that you said,
this is through March thirty first, not before kind of
the stuff hit the fan right and has really kind
of changed the environment. Is that a very very important
(12:22):
caveat because these are the kind of companies right in
the next week or so, these big megacap tech companies
that were like, what do they have to say in
this environment? So I'm just curious if we have to
be kind of smart as we go through.
Speaker 2 (12:33):
It's not to take both sides. But on the top line,
I think search beat wasn't that impressive as it was
the last time around. It's more the margin expansion, because
everyone thought AI overviews would hurt margins. So clearly they
have executed very well on that. The buyback and the
dividend is good capital allocation. But in the end, you know,
(12:54):
search beat wasn't that impressive. You know, for a five
percent increase in the stock.
Speaker 1 (12:58):
What a five percent boost to its dividend happen if
Alphabet were concerned about the environment in the current quarter
and for the remainder of the year. Mande, I mean clearly, like,
is that an indication that things are pretty good? If
we look at that as a potential sign of guidance.
Speaker 2 (13:15):
It's more the fact that they traded a much lower
multiple than their peers, you know, Microsoft and Amazons. So
from that perspective, you could say management feels their stock
is cheap. But look, they're making this acquisition of wiz
where they are paying thirty three billion dollars money. It's
going to close next year, so it's not going to
affect the free cash flow this year. But if they
spend seventy five to eighty billion dollars in data center
(13:37):
capex and then thirty three billion dollars in this acquisition,
then you know you're not able to fund all these
buybacks and dividend with your free cash flow anymore.
Speaker 6 (13:46):
I wonder if both of you, I'm looking at our
market's live blog and our macro strategist, one of them
writing that the headline is a beat, but it was
driven by advertising where revenue rows eight and a half
percent from a year earlier.
Speaker 5 (13:58):
That's not going to help the rest of them.
Speaker 6 (13:59):
Magnificent seven very much, Mark, you have any thoughts on that,
because we are getting ready to have all of these
names and numbers and results coming at us, and we
know investors love to.
Speaker 4 (14:09):
Know what the mag seven are doing.
Speaker 3 (14:11):
Well. I think it in the case that Q one
was a healthy environment for Google and likely for other companies,
especially in tech. I think the question on Q two
very valid question fall investors. But I think for Q one,
I think maybe people are mixing these quarters together in
their mind. Q one solid for Google, I'm guessing is
(14:32):
probably educated guess solid for these other big tech stocks also.
Speaker 6 (14:38):
All right, Mark, We're going to leave it there with you.
Thank you so much, so good to check in with
you once again. Mark Douglas, President and CEO of Mountain
joining us from Miami. Your thoughts on that man deep
in terms of what's to come. I mean there's Alphabet
and how they make money, and then there's the rest.
Is there any assumptions we can make or not? Really,
they're all kind of different.
Speaker 5 (14:57):
Yeah.
Speaker 2 (14:57):
I think after the call they will have a be
sense of how they are viewing the environment. I mean
the whole thing about Chinese advertisers pulling back, and Alphabet
in general has a broader swath of advertisers.
Speaker 5 (15:12):
On their platform.
Speaker 2 (15:12):
When you think about Meta, even though you know it's
duopoly and Meta probably is more skew towards I would
say retail, and it doesn't have as much autos exposure
as Alphabet has, so there is some nuance with regards
to their advertiser base. I would say Alphabet is more diversifying.
(15:33):
So if Chinese advertisers are pulling, that.
Speaker 5 (15:36):
Will hurt Meta more for sure.
Speaker 1 (15:38):
Alphabet doesn't give guidance. So what do investors look for
on the call to understand the current climate? Well, so
CFO commentary, I mean, is there anything there that could
move the needle?
Speaker 2 (15:49):
I think whatever they say around chat, GPT and LLLMS
and just overall color around competition. Because this is the
first time everyone cares about, you know, comments related to search.
I mean, up until two quarters back, it was like, oh, okay,
Google is a monopoly. Everyone knows that AT pricing may
(16:10):
go up and down depending on the cyclicality of the economy.
Speaker 5 (16:14):
But now the competitive threat is real.
Speaker 1 (16:16):
But the competitive threats the competitive threat with AI and lllms.
What about the just the idea that if it's an
economy where there's uncertainty, marketers pull back from advertising. That
would hit this company very hard.
Speaker 2 (16:29):
Yeah, but I think what they showed in the print
is AT pricing actually went up.
Speaker 4 (16:33):
For the first quarter. For the first quarter, This is
not the second fus.
Speaker 5 (16:37):
It's not gonna again.
Speaker 2 (16:38):
If you think about online ads, Google is the last
place where advertisers will pull back because it's the highest
ROI at spend.
Speaker 4 (16:46):
You get you actually you pay for what you get. Essentially, yeah,
you're not buying.
Speaker 2 (16:51):
It, you're looking for customers online. Google is still the
best place because it's the most effective. Remember they collect
data from eight apps you're interfacing with, and that's why
the ad is so targeted. Google Metal also has four apps,
but then Google probably has more data about you in
terms of targeting you.
Speaker 5 (17:10):
That's why they're so effective, right.
Speaker 6 (17:11):
Really specific data, right of exactly what you are doing,
to instent of it on any given That's.
Speaker 1 (17:17):
Why I don't understand where he's showing me car searches. Well,
I don't know why they keep showing me cars. I'm
not buying cars.
Speaker 6 (17:22):
No, it's really fascinating, Men, Deep, thank you as always
always Men Deep Singh of course, senior tech industry analysts
with our Bloomberg Intelligence team. Shares of alphabet Folks up
about three point nine percent in the aftermarket, definitely off
its best levels of the day. Sales beat estimates on
Google search advertising
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:09):
This is a breaking news update from Bloomberg, instant reaction
and analysis from our three thousand journalists and analysts around
the world.
Speaker 1 (00:19):
Alphabet the parent company of Google. The company reported first
quarter revenue and profit that exceeded analysts expectations. It was
bullied by continued strength in its search advertising business, and
that's exactly where we want to go. Now we've got
back with us Mark Douglass. He's president and CEO of Mountain,
the company of software that helps companies target advertising on
smart TVs. He understands the AdSpend market. He joins us
(00:41):
from Miami. Mark, good to talk with you again. Does
this surprise you given the trends that you're seeing when
it comes to advertising?
Speaker 3 (00:50):
Not given the trends I think the trends for I
want to talk more specifically about Google.
Speaker 4 (00:57):
Yeah.
Speaker 3 (00:57):
I think we started the you know, we started the year,
and I think everyone literally everyone was very optimistic about
the economy, you know, Q one and Google's reporting on
those results, I think they did very well. I think
there were concerns and continue to be concerns about whether
AI on their platform, meaning in your search results, is
(01:19):
going in some way negatively impact the search business. But
I think as an investment even there just provide some
comment on that. Look, I'd rather have Google competing with
themselves than allowing other people to compete with them, So
I think even that's a positive if in the future
it does have some negative impact.
Speaker 5 (01:36):
Well, you know, it's.
Speaker 6 (01:36):
Funny that you say that, you know, and I'm looking
at our right through by our daby Alba.
Speaker 5 (01:40):
But this whole idea that you know, alphabet.
Speaker 6 (01:44):
Google has to show right that it still has momentum
and search, advertising and cloud, but at the same time
show that it's as it makes incredible investments in the
AI build out, as the world kind of shifts in
that direction, that it's also there as well. It's really tricky,
and this is what our man Deep Singh said. You know,
(02:04):
this is a company that's got seven apps with over
I think two billion monthly active users. It's bread and butter.
Is still Google, right and it's search business. But as
people move to Chatchpt.
Speaker 4 (02:16):
Or Gemini, like, that's a tough transition.
Speaker 5 (02:19):
It's got to juggle a lot.
Speaker 3 (02:21):
Yeah, and then, like I said, I think if I'm
an investor in Google, the I always say to my company,
better we compete with ourselves than we allow someone else
to do it. So, if I'm an investor, what I'm
looking for is that the management team is awake, they're alert,
and they're ready to compete. And I think Google's showing
that in what they're doing with Gemini, and they're showing
(02:45):
that they can still navigate search. Also with a company
with that scale you mentioned, the tremendous scale they have, Honestly,
you can find you can always squeeze out more revenue
and as a result, more earnings. So I think it
also shows that they can manage the business in order
to find those extra dollars if they need to, while
they might be challenged in other areas.
Speaker 1 (03:06):
Is this the classic innovator's dilemma? Though Google's core search
business is so profitable and it's so entrenched, and it's
so ingrained in pretty much almost every country in the world,
you have to say almost that there is a concern
that it doesn't want to cannibalize that with investment in Gemini.
Speaker 3 (03:28):
Yeah, that's what you don't want to see, right, what
you want them to be like, like you almost wanted
to be two separate companies and they just go at
it and may the best you know part of Google win.
Speaker 5 (03:42):
The other things google wins.
Speaker 6 (03:45):
That's the point, right, Like you said you'd like to
be competing with yourself forgive me go ahead.
Speaker 5 (03:49):
Yeah, no, exactly.
Speaker 3 (03:50):
The other thing to remember, you know, mobile was a
big threat to Google. Yeah, like like Google was all
desktop and you have your browser out. That's you know,
obviously a huge part of their business. And people were
very worried about whether, you know, people were going to
search on mobile and if they did, whether they were
going to respond to the ads. So, I mean, it's
not the first time Google has been challenged by new
(04:13):
technologies and they you know, the honestly kudos to them
because I expected Gemini to possibly cause some problems in
Q one and the you know, in terms of their revenue,
and obviously it hasn't.
Speaker 6 (04:28):
Hey one last question on the upcoming call with analysts,
what do you what would you be asking what do
you want to hear.
Speaker 3 (04:35):
The I would be all about Gemini and how AI
results at the top of the search page, which essentially
have replaced the paid you know, the click ads, the
paid ads at the top of the search page for
a lot of searches. I would want to ask every
possible question I can on data related to how that's
(04:58):
impacting this that there's to revenue as search results responses
to the searches, everything, and try, if I'm an analyst,
try to model that out.
Speaker 6 (05:06):
All right, we're talking, of course with Mark Douglas, president
and CEO of Mountain. We want to bring into the
conversation Man Deep seeing he is senior tech industry analyst
at Bloomberg Intelligence. Just coming in the studio. It's a
little crazy, so he hasn't heard everything that Mark had
to say. But Mark said, you know, he's curious about
Gemini something. He's going to be looking out on the call.
(05:28):
Man Deep, I have been cool.
Speaker 4 (05:29):
You told us, you told us what to do.
Speaker 6 (05:31):
Deep, you NonStop because you said it's all about search.
So walk us through what they got in and how
it's sees, how it looks for you because investors like it.
Speaker 2 (05:40):
Yeah, I mean the Google Services revenue was a slight beat,
but what was really impressive was the margin beat on
the Google Services.
Speaker 5 (05:48):
And a lot of it is.
Speaker 2 (05:49):
Because everyone thought, because they are adding AI overviews, that's
going to hurt the margins of search.
Speaker 3 (05:57):
Oh.
Speaker 5 (05:57):
It didn't happen.
Speaker 4 (05:58):
Why didn't Why didn't that happen?
Speaker 1 (06:00):
It's because you have to explain this from the perspective
of a Google user, like the experience, if we get
the if we get the answer, with the AI overview,
we're not looking at ads, we're not clicking on things.
Speaker 4 (06:08):
Yeah, why doesn't it hurt?
Speaker 2 (06:10):
Because they have so many different types of queries on
Google Search that some of those queries they are able
to monetize it just through ads on AI overviews. Remember,
Google never went away from ads, even though they integrated elements.
Speaker 5 (06:29):
Ads has always been.
Speaker 2 (06:30):
A core part of the Google dot Com offering, even
with the AI overviews, and they somehow weave the ads
in a way where they're able to charge for those ads.
Speaker 5 (06:40):
That's what makes them so special.
Speaker 1 (06:42):
I can't I never look at an ad on like
what is wrong? Right when I look at an AI
overview answers.
Speaker 2 (06:49):
On whether it's you know, an informational query versus an
e commerce query or a travel query or an auto query.
The pay change is so dynamic that they are able
to weave in the right ads with the right kind
of target.
Speaker 1 (07:03):
What about with the Gemini app and like the app
experience are they able to make money doing that yet?
Speaker 4 (07:08):
Does that matter?
Speaker 2 (07:09):
I mean you have to remember Google does five trillion
searches a year, five trillion, So you know, even if
they monetize twenty to twenty five percent, which is the case,
seventy five percent of the queries are not monetized. Imagine
how much power they have in terms of the targeting
they have with the ads as well as the number
of careeries, even if jagpt is taking some volume.
Speaker 5 (07:32):
Yeah, five trillion is a lot.
Speaker 4 (07:34):
Mark.
Speaker 6 (07:34):
I want to bring you back in as we've got
Man Deep sing brilliant part of our Bloomer Intelligence team,
Mark Douglass, President and Chief executive Officer Mountain, really great
perspective in terms of advertising within this world. But you
mentioned something about Gemini that you want to hear on
the call. Just lay it out again for Man Deep
so that we can kind of dig into that with him.
Speaker 4 (07:54):
Yeah.
Speaker 3 (07:55):
I mean, I think it's similar comments, which is the
Google as a come And I think what's most important
to see is that they let the different parts of
the company compete. So Gemini competes with with with search results,
because if they don't compete with themselves, then open AI
and others are going to do the do the competition
(08:16):
for them, and so I think it's important that they
let them compete. It appears they are. And I also
agree with the other comment that he just had in
terms of scale of their business is like, you know
you can you can increase search results, you know, paid
search results one half of one percent and be they
have a lot of levers to pull and I think
(08:38):
they're doing a good job pulling them to be able
to navigate this lineup right now.
Speaker 2 (08:43):
And the point about Gemini not only does it like
there's a competitive aspect, but also you learn so much
more about the user. Imagine they are on Gmail Maps Search.
Now you have got one more app where you have
your user. You're learning about their type of queries. How
could they're at targeting become suddenly because they are facing
(09:05):
through Gemini now, so there's one more surface that you
are adding, and it complements their at targeting.
Speaker 6 (09:11):
Mark brings up this concept of great to compete with
yourself and so essentially that's kind of what Alphabet's doing
right with Google Search and then Gemini. But is it
a guarantee that everybody who's been using Google is just
going to easily just kind of segue into Gemini.
Speaker 5 (09:26):
Can we assume that that will happen?
Speaker 2 (09:28):
I mean, Google is still the verb, and I don't
think it's changing anytime soon. Yes, you can say chat
gpt for certain informational queries and for certain queries, chat
gpt does a great job. But if you're thinking about
the Google ecosystem, you know, the all the apps that
you are used to using on the consumer side on
(09:48):
a day to day basis, it's hard to take yourself
out completely from the Google ecosystem. You'll still be using
Gmail apps, YouTube, even if you use chat GPT. I
mean a lot of times chat gpe shows you a
search result and then you go to maps to search
for you know, the exact address that CHADGPT show.
Speaker 4 (10:07):
Right right, Hey, Mandy.
Speaker 1 (10:09):
Alphabet shares up four percent in the after hours, Meta
platforms up two point three percent. Amazon shares are hired
by one percent. All happening because of what we heard
from Alphabet. Is this just a huge sigh of relief
when it comes to megacap tech, I mean, is everything okay?
Speaker 4 (10:25):
A lot of the world.
Speaker 2 (10:26):
I'll wait for the call, because remember Liberation Day was
April tecond yeah, this is through March thirty.
Speaker 5 (10:32):
First, we don't even.
Speaker 2 (10:33):
Know the impact of tariffs was I mean, all that
happened at the beginning of two Q So we may
be I think too far fresh and thinking, you know,
we're out of the woods.
Speaker 5 (10:45):
But it's a good print. It's a good point.
Speaker 4 (10:47):
It's a good point.
Speaker 6 (10:47):
Mark, come on back. And I'm curious if you have
a question for man Deep saying, like, you know, you
follow this market, you follow this company. I'm just curious.
Speaker 3 (10:56):
Yeah, I actually want to take the conversation slightly to
another part of Google's business. One of the things, you know,
I'm still very much an active engineer, and one of
the things I'm saying is Google be very aggressive are
capturing market share in the Google Cloud business. And that's
not something I think many people are talking about today,
but that's potentially, you know, setting up from some really
(11:18):
good results in that part of the business in the future.
So I'm curious, Mandy, if you have any thoughts on
that part of Google.
Speaker 2 (11:26):
Yeah, I mean it goes to the point about you know,
them having this huge infrastructure that powers their family of apps,
also powers the cloud business, and thirty percent growth on
a fifty billion dollar runderate is very impressive. The problem
for Google is it doesn't generate the same kind of
profitability that search does, and that's why investors don't care
(11:47):
that much. But look, I think they could even grow
faster on the cloud side. They're probably somewhat supply constraint
that everyone is in terms of AI infrastructure, so that
cloud business could continue to compound twenty five thirty percent clip.
Speaker 6 (12:01):
For a while, we've been talking about how the stock
has really popped in the after hours. It's off some
of its highest levels in the aftermarket, Mandi, but still
up about four percent. But that point that you said,
this is through March thirty first, not before kind of
the stuff hit the fan right and has really kind
of changed the environment. Is that a very very important
(12:22):
caveat because these are the kind of companies right in
the next week or so, these big megacap tech companies
that were like, what do they have to say in
this environment? So I'm just curious if we have to
be kind of smart as we go through.
Speaker 2 (12:33):
It's not to take both sides. But on the top line,
I think search beat wasn't that impressive as it was
the last time around. It's more the margin expansion, because
everyone thought AI overviews would hurt margins. So clearly they
have executed very well on that. The buyback and the
dividend is good capital allocation. But in the end, you know,
(12:54):
search beat wasn't that impressive. You know, for a five
percent increase in the stock.
Speaker 1 (12:58):
What a five percent boost to its dividend happen if
Alphabet were concerned about the environment in the current quarter
and for the remainder of the year. Mande, I mean clearly, like,
is that an indication that things are pretty good? If
we look at that as a potential sign of guidance.
Speaker 2 (13:15):
It's more the fact that they traded a much lower
multiple than their peers, you know, Microsoft and Amazons. So
from that perspective, you could say management feels their stock
is cheap. But look, they're making this acquisition of wiz
where they are paying thirty three billion dollars money. It's
going to close next year, so it's not going to
affect the free cash flow this year. But if they
spend seventy five to eighty billion dollars in data center
(13:37):
capex and then thirty three billion dollars in this acquisition,
then you know you're not able to fund all these
buybacks and dividend with your free cash flow anymore.
Speaker 6 (13:46):
I wonder if both of you, I'm looking at our
market's live blog and our macro strategist, one of them
writing that the headline is a beat, but it was
driven by advertising where revenue rows eight and a half
percent from a year earlier.
Speaker 5 (13:58):
That's not going to help the rest of them.
Speaker 6 (13:59):
Magnificent seven very much, Mark, you have any thoughts on that,
because we are getting ready to have all of these
names and numbers and results coming at us, and we
know investors love to.
Speaker 4 (14:09):
Know what the mag seven are doing.
Speaker 3 (14:11):
Well. I think it in the case that Q one
was a healthy environment for Google and likely for other companies,
especially in tech. I think the question on Q two
very valid question fall investors. But I think for Q one,
I think maybe people are mixing these quarters together in
their mind. Q one solid for Google, I'm guessing is
(14:32):
probably educated guess solid for these other big tech stocks also.
Speaker 6 (14:38):
All right, Mark, We're going to leave it there with you.
Thank you so much, so good to check in with
you once again. Mark Douglas, President and CEO of Mountain
joining us from Miami. Your thoughts on that man deep
in terms of what's to come. I mean there's Alphabet
and how they make money, and then there's the rest.
Is there any assumptions we can make or not? Really,
they're all kind of different.
Speaker 5 (14:57):
Yeah.
Speaker 2 (14:57):
I think after the call they will have a be
sense of how they are viewing the environment. I mean
the whole thing about Chinese advertisers pulling back, and Alphabet
in general has a broader swath of advertisers.
Speaker 5 (15:12):
On their platform.
Speaker 2 (15:12):
When you think about Meta, even though you know it's
duopoly and Meta probably is more skew towards I would
say retail, and it doesn't have as much autos exposure
as Alphabet has, so there is some nuance with regards
to their advertiser base. I would say Alphabet is more diversifying.
(15:33):
So if Chinese advertisers are pulling, that.
Speaker 5 (15:36):
Will hurt Meta more for sure.
Speaker 1 (15:38):
Alphabet doesn't give guidance. So what do investors look for
on the call to understand the current climate? Well, so
CFO commentary, I mean, is there anything there that could
move the needle?
Speaker 2 (15:49):
I think whatever they say around chat, GPT and LLLMS
and just overall color around competition. Because this is the
first time everyone cares about, you know, comments related to search.
I mean, up until two quarters back, it was like, oh, okay,
Google is a monopoly. Everyone knows that AT pricing may
(16:10):
go up and down depending on the cyclicality of the economy.
Speaker 5 (16:14):
But now the competitive threat is real.
Speaker 1 (16:16):
But the competitive threats the competitive threat with AI and lllms.
What about the just the idea that if it's an
economy where there's uncertainty, marketers pull back from advertising. That
would hit this company very hard.
Speaker 2 (16:29):
Yeah, but I think what they showed in the print
is AT pricing actually went up.
Speaker 4 (16:33):
For the first quarter. For the first quarter, This is
not the second fus.
Speaker 5 (16:37):
It's not gonna again.
Speaker 2 (16:38):
If you think about online ads, Google is the last
place where advertisers will pull back because it's the highest
ROI at spend.
Speaker 4 (16:46):
You get you actually you pay for what you get. Essentially, yeah,
you're not buying.
Speaker 2 (16:51):
It, you're looking for customers online. Google is still the
best place because it's the most effective. Remember they collect
data from eight apps you're interfacing with, and that's why
the ad is so targeted. Google Metal also has four apps,
but then Google probably has more data about you in
terms of targeting you.
Speaker 5 (17:10):
That's why they're so effective, right.
Speaker 6 (17:11):
Really specific data, right of exactly what you are doing,
to instent of it on any given That's.
Speaker 1 (17:17):
Why I don't understand where he's showing me car searches. Well,
I don't know why they keep showing me cars. I'm
not buying cars.
Speaker 6 (17:22):
No, it's really fascinating, Men, Deep, thank you as always
always Men Deep Singh of course, senior tech industry analysts
with our Bloomberg Intelligence team. Shares of alphabet Folks up
about three point nine percent in the aftermarket, definitely off
its best levels of the day. Sales beat estimates on
Google search advertising
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Tim Stenovec
Carol Massar
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