00:00 Josh
We’re joined here now is Ivanka Delska, founder and CIO at Spear Invest and Dan Flax, Newburger Burman senior research analyst.
00:08 Josh
Welcome to you both. I’ll start with you. Um, the stock is out a quick roughly 5% in the after hours. What do you make of those results?
00:17 Ivanka Delevska
From what I heard, Josh, it’s basically all about expectations. I think expectations were high going into the quarter, and you really had to exceed by a lot this quarter in order for the stocks to work. So the fact that they came in line uh to slightly lower in some metrics plus the higher CAPEX, I think that’s probably driving the stock.
00:41 Ivanka Delevska
I think for us, search is an important data point, CAPEX is important as it relates to the AI trade. We don’t own Google, but we own a lot of the companies within the value chain. So I think the AI story is on track with those CAPEX numbers that you just read.
01:00 Josh
Dan, I want to bring you here as well. We’re kind of yo-yoing here in the after hours. Looks like we’re bouncing now down about 3%. Um,
01:09 Josh
Q4 revenue XTA, Dan, that looks like a a beat. I mean, 97.23 billion, consensus was more like 95 billion. Um but that 2026 CAPEX number, Dan, 175 to 185, when the street was closer to 119.5, perhaps explains some of the pressure here down about 2%. What do you make of it?
01:30 Dan Flax
I think the results were strong overall. Clearly there’s focus on the CAPEX numbers uh and of course the operating income, but I think the search business is healthy
01:40 Dan Flax
and really this company is continuing to reinvent itself, reinventing search with AI overviews, AI mode. Clearly there’s a lot of momentum behind Gemini. And so, I think the company is investing from a position of strength.
01:52 Dan Flax
We remain long-term uh owners of the stock as you know, Josh. And what I see here is a company that really sees the opportunity to play offense. They have the balance sheet and the free cash flow generation to support the aggressive CAPEX and so we continue to like the name here.
02:08 Josh
You know, it’s interesting and now the stock is down about 1%. Um,
02:12 Josh
it’s amazing, Dan, just the story how it’s shifted here, the narrative has shifted. You know, if you were talking 12 months ago, Dan, you remember that. It was like the fear around this name that Open AI was coming, they were going to crush Google search, which of course, listen, that’s the company’s bread and butter.
02:29 Josh
A remarkable turnaround, Dan. I mean, heading into this print, the stock was up about 80% in the past six months. What what do you make of that turnaround? What do you make of that narrative shift?
02:37 Dan Flax
I think it’s being driven by the innovation by the execution on the product cycles really taking search to a new place. They’re delivering value to to users on one side with longer and more complex queries and that creates value for the user and then on the other side, they’re creating value for the advertisers.
02:59 Dan Flax
And so, I think the technology risk, and of course, the market’s very worried about disintermediation and disruption across the space. Google is demonstrating that even with fierce competition, uh they can navigate and in fact, capitalize on the opportunities from generative AI.
03:15 Dan Flax
And so when I look out over the next several months, I think uh this push and pull will continue, but Google, in my view, is is able to and has the pieces from the Silicon, uh the data, the models, uh the products and of course, the users uh to to really seize this opportunity to drive strong growth.
