Stephanie Batchelor: Milford Asset Management expert unpacks Google's financial results

Alphabet, the parent company of Google, has reported its latest financial earnings - and the investors aren't thrilled.

Shares reportedly dropped 7 percent after the company posted a slight miss in expected revenue.

Milford Asset Management's Stephanie Batchelor unpacked the market factors behind this drop.

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
So we've got US companies reporting their results. Last week,
we've got covered Microsoft, we covered Mesa. Since then, we've
had both Apple and Google. Stephanie Bachelor from Meal find
asset managements with me. Hey, Stephanie Hi, Ryan Steff. Starting
with Google, China has started an anti trust investigation. Tell
us what is that about? What's going on?

Speaker 2 (00:19):
Yeah, so last night China retaliated to Trump's tariffs by
saying that they would put levies on some US goods,
but they also announced that they would investigate Google for
alleged anti trust violations. Now, Google doesn't operate any search
services in China they pulled out back in twenty ten,
but Chinese companies like Timu and Shean, for example, they

(00:41):
do advertise on Google to access international consumers, and Google
also provides its Android operating system to Chinese smartphone makers.
So there hasn't actually been any detail on what exactly
they're going to investigate. So at this stage, it's still
a little bit of a wait and see.

Speaker 1 (00:57):
Okay. At the same time, we've had the Google's results
reported and we've seen a sell off what seven percent down?

Speaker 2 (01:03):
Yeah, lots lots going on, so shares, that's right, they're
down about seven percent post the result, and it was
due to a couple of things. The advertising revenue actually
came in better than expected, so there was a very
strong retail holiday season, but the cloud revenue was slower,
grew slower than the market expected, and that's a little
bit of a concern because at the same time, they're

(01:25):
continuing to invest more and more in building out that
cloud infrastructure. So the market was thinking that they might
spend somewhere in the realm of sixty billion dollars next
year on this cloud capex, and the company said it
would be more like seventy five billion, So investors are
a little bit worried as to whether they'll actually be
able to generate a decent return on that investment.

Speaker 1 (01:47):
Interesting, what about Apple. They've come back with results, right.

Speaker 2 (01:51):
Yeah, So they reported ends last week, and the expectations
for Apple had actually fallen going into the results, so
it actually met that low, lowered bar, but it was
a little bit underwhelming and shares were down kind of
half a percent. So iPhone sales were sluggish. China sales
was still very weak, but the CEO talked up a
lot its new AI system called Apple Intelligence, which they

(02:15):
think has a lot of potential going forward, but I
think that the market is still a little bit skeptical
on that one.

Speaker 1 (02:22):
How's Apple faring? You know? Given Trump's tariffs on China,
how's that affecting Apple? Because a lot of their stuff
that they put in their phones comes from China.

Speaker 2 (02:32):
Right, Yeah, that's right. So about ninety percent of iPhones
are assembled in China, So any phones going from China
into the US would then be subject to the new
ten percent tariffs. And so when that news on the
tariff came out, shares fell three and a half percent.
But interestingly, the last time Trump put tariffs on China,

(02:54):
he actually gave Apple an exemption because he didn't want
to risk moving market share away from US Apple to Samsung,
which is a South Korean company, And in exchange for that,
Apple committed to manufacturing the Mac Pro domestically in the US.
So it'll be interesting to see if something similar happens
this time. But still early days on that one.

Speaker 1 (03:16):
All right, stephanih wait and see, thank you very much
for that. Twenty eight minutes after six, that's Stephanie Bachelor
from Melford. For more from Heather Duplessy, Allen Drive listen
live to news talks it'd be from four pm weekdays,
or follow the podcast on iHeartRadio