00:00 Speaker A
I want your take on Alphabet as well. Now that that’s a different story. Alphabet, well in the green here. We are up 6% in the after hours. Um, impressive, Aaron, because this stock had already soared. It was up about 40% year to date heading into this print. Now you’re tacking on another 6%. Give me your thoughts on on this report.
00:26 Aaron
Yeah, so it’s really a combination of good advertising growth, um, as well as good uh growth for their cloud business. So I think Google for a while was perceived as a cloud loser or a AI loser and now they’re being seen as a kind of a clear AI winner both on their advertising business as well as for GCP. And I think GCP’s been doing a nice job. Looks like they grew kind of mid 30% range for GCP another very strong quarter there. And so that’s starting to get a pretty healthy multiple as well. We think you can give uh Google Cloud platform kind of a high single digit revenue multiple on the business and uh we were at a $310 price target for Google, but continuing to see good ad growth. Um we’re not too worried about competition on the ad side at this point, continue to monitor that. The combination of good ad growth plus good GCP growth, um investors are willing to pay a higher multiple for Google today versus a few months ago, plus the regulatory side looks to be off the table for the most part.
01:30 Speaker A
A big question around search, Aaron, right? Looking ahead. How much of a risk does open AI pose long-term in your opinion to that core search business.
01:44 Aaron
Yeah, it is a risk. I mean clearly close to a billion people are using kind of open AI or Chat GPT on a monthly basis. Um so and it’s for a lot of younger users they’re using it pretty frequently. At the same time, um Google has said over the last couple of quarters, users continue to use uh Google AI or Google and AI overviews a driver of increased search activity as well. So, at this point we think chat GBT has been more used for informational search versus commercial searches. If you think about commercial searches, whether it’s e-commerce, uh travel searches, we think those are still largely being done on at Google. Um, I got to imagine Chat, GBT, perplexity, others have um ambitions to get more aggressive on that side longer term. Um so something definitely to watch for, but at this point, we don’t think Google’s been losing share or at least uh um continue to grow search at a pretty healthy rate.
