Alphabet Inc.
CEO : Mr. Sundar Pichai
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2024 Q3 | 15.1% YoY | 33.6% | 36.3% | 2024-10-29 |
Sundar Pichai says,
AI and Infrastructure Advancements
– **AI Infrastructure Investments**: Google is heavily investing in AI infrastructure across multiple regions, including the U.S., Thailand, and Uruguay.
– **Clean Energy Initiatives**: They’ve signed a groundbreaking corporate agreement to purchase nuclear energy from small modular reactors, enabling up to 500 megawatts of carbon-free power.
– **Cost Efficiency in AI Operations**: Since testing AI Overviews, machine cost per query reduced by over 90% while doubling the size of the Gemini model.
Research and Development Highlights
– **Noble Prize Achievements**: Recognition of Google DeepMind for winning Noble Prizes in Chemistry and Physics, indicating strong leadership in AI research.
– **Gemini Model Growth**: Usage of Gemini models is growing dramatically across consumer and business segments, with significant improvements and new capabilities in development.
Search and Cloud Business Performance
- **Search Innovations**: AI Overviews, Circle to Search, and Lens are transforming search experiences, leading to increased user engagement and satisfaction.
- **Cloud Revenue Surge**: Google Cloud achieved Q3 revenues of $11.4 billion, a 35% year-over-year increase, with a 17% operating margin.
- **AI and Big Data Integration**: BigQuery ML operations grew by 80% over six months, highlighting the integration of AI in data analytics for real-time decision-making.
YouTube and Platform Advancements
- **YouTube Revenue Milestone**: Combined ad and subscription revenue topped $50 billion over the past four quarters.
- **New Features and Collaborations**: Introduction of new features like VO for YouTube Shorts and deeper collaborations with Samsung on Android devices.
- **Pixel 9 Series Success**: Strong demand and multiple awards for the new Pixel 9 series, featuring advanced AI models.
Waymo and Other Bets
– **Autonomous Vehicle Leadership**: Waymo is noted as a technical leader, driving over 1 million fully autonomous miles weekly and conducting 150,000 paid rides.
– **Strategic Partnerships**: Expanding partnerships with Uber, Hyundai, and others to broaden autonomous driving capabilities and reach.
| Metric | Value |
|---|---|
| Google Cloud Q3 Revenues | $11.4 Billion |
| Cloud Revenue Growth | 35% YoY |
| Operating Margin | 17% |
| YouTube Revenue (Last Four Quarters) | $50 Billion |
In conclusion, Google’s strategic investments and advancements in AI, infrastructure, and product innovation continue to drive growth and position the company as a leader in multiple industries.
Anat Ashkenazi says,
Overview of Alphabet’s Q3 2024 Performance
– **Consolidated revenue** increased by *15% or 16% in constant currency*. This growth was primarily driven by Search and a notable *35% growth in Cloud*.
– **Total cost of revenue** was *$36.5 billion*, witnessing a *10% increase*. Key contributors were content acquisition costs for YouTube, increased depreciation linked to technical infrastructure, and hardware costs due to the premature launch of “Made by Google” products.
– **Operating income** surged by *34% to $28.5 billion*, with an operating margin now at *32%*. Net income mirrored this growth trend, also increasing by *34%*.
Segment-Specific Insights
| Segment | Revenue (Q3 2024) | Year-over-Year Growth |
|---|---|---|
| Google Services | $76.5 billion | 13% |
| Google Cloud | $11.4 billion | 35% |
| Other Bets | $388 million | N/A |
– The **Google Cloud** segment saw a robust 35% revenue increase, boosted by AI infrastructure and core GCP products.
– **Google Services revenue** was up 13%, driven by a 12% increase in advertising revenue and a significant rise in YouTube advertising.
Investment and Expense Management
– **R&D investments** increased by *11%*, mainly due to compensation and depreciation expenses.
– **Operating expenses** rose by *5%* to *$23.3 billion*, with significant contributions from facilities-related charges and depreciation.
– **Capital Expenditure (CapEx)** for Q3 was reported at *$13 billion*, emphasizing investments in servers and data centers, with future CapEx expected to remain stable.
Shareholder Returns and Financial Position
– Alphabet returned *$15.3 billion* to shareholders through share repurchases and *$2.5 billion* through dividends in Q3.
– The company ended the quarter with *$93 billion* in cash and marketable securities, indicating strong financial health.
– **Free cash flow** for the trailing 12 months was *$55.8 billion*, although impacted by a *$3 billion cash payment* related to the 2017 EC shopping fine.
Outlook and Strategic Focus
– **AI and innovation** are core to future growth, with significant capital allocated to AI R&D.
– **Operational efficiencies** are being pursued to optimize costs, including headcount and physical footprint management.
– Alphabet expects ongoing growth in advertising and subscription services, despite potential headwinds from strong year-over-year comparisons in advertising revenue.
Q & A sessions,
Search Innovation and User Engagement
– **Google’s Circle to Search Lens with video search now processes over 20 billion queries a month, indicating significant growth in user engagement.**
– AI Overviews have been rolled out to over 1 billion users, with further innovation expected through 2025.
– The expansion in search capabilities is anticipated to continue, focusing on quality, trust, and user experience.
– **Gemini is being integrated across multiple touchpoints, with strong momentum in user growth and API volume increasing 14x in the past 6 months.**
Legal Trials and Company Position
– Google is actively defending itself in ongoing legal trials, emphasizing its history of innovation as a foundation of its success.
– The company plans to engage vigorously in response to proposals from entities like the DOJ.
– **Google is committed to ensuring its products remain accessible and user-friendly across all platforms.**
Investment in AI and Technical Infrastructure
– **Google invested $13 billion in Q3 2024 CapEx, with a focus on technical infrastructure, including servers, data centers, and networking equipment.**
– Approximately 60% of technical infrastructure investment went to servers, and 40% to data centers and networking equipment.
– Similar investment levels are expected in Q4, with potential increases in 2025.
| Quarter | Total CapEx Investment | Technical Infrastructure | Servers | Data Centers & Networking |
|---|---|---|---|---|
| Q3 2024 | $13 billion | 60% | 40% |
Cloud Margin Expansion and Efficiency
– Cloud margin expanded to 17%, driven by business scaling and operational efficiencies.
– **Investments in servers and infrastructure are aligned with customer demand and expected to translate into revenue soon.**
– Focus remains on driving further efficiencies in headcount, facilities, and processes across the organization.
Future Outlook and Strategic Focus
– Google’s strategy involves restructuring to better adapt to AI and technological advancements, with plans to continue scaling AI models.
– **The company aims to integrate AI within its processes to achieve operational efficiencies.**
– There’s an aggressive roadmap for 2025, especially within the seven products that have over 2 billion users each, leveraging the Gemini model.
No bad stock 