00:00 Rohit
was a solid beat uh across the board. No matter which way you cut it. as the previous speaker said, uh, upside to search revenues, upside, clear upside to the high bar that we had for cloud revenues. YouTube came above our expectations and margins are held holding steady. So in isolation, I think this was a fantastic quarter fundamentally speaking. Uh, CAPEX came in line to slightly above. I think the commentary uh around what the CAPEX looks like for next year is the most important thing that would change the trajectory for the stock. I think that’s where we are in the holding pattern here after hours. What does the CAPEX look like for 2027? Any hints that management can give us, that’s going to drive the stock from here on out, um, because we are in for the first time in many, many quarters, Google is burning cash here.
01:21 Rohit
Cloud revenue is the single most linear uh ROI uh indicator that you have. This company had cloud revenues growing in the 30s, 40s, maybe in the 50s a few quarters back. Now we are stepping up and has accelerated over the last three or four quarters to more than 80% year on your growth. That’s uh growth at scale, growth at profitability that we didn’t dream of 9 to 12 months back. So that’s clearly direct, direct ROI on AI’s CAPEX that they have done during 24 during 25, what they’re doing in 26 will show up next year. Uh when we kind of fine tune look at what search is doing, search also has stepped up. Uh search was growing low teens. Now we are clearly in mid to high teens. So that that step up couple 100 basis points on a $200 billion revenue run rate. That’s pretty meaningful in my opinion to point towards, okay, this is uh the point where they’re actually making new, new dollars flow through the system because of AR.
02:26 Speaker B
You know, Rohit, you mentioned search, still this company’s bread and butter, right? There was a slight miss on search revenue, and it was slight, you know, uh, Google Search another revenue, 63.27 billion, Rohit. Your your colleagues on the street had pencilled in more like 63.28 billion. What do you make of that? And how healthy, how strong, how resilient do you think that search franchise looks like in the quarters ahead?
02:59 Rohit
I think, uh, I think, uh this debate of whether search is going to be disrupted by the new uh ways of consumer interacting with information on internet. I think we are still not passed it. It depends on the uh on the day of the week, time of the day, uh when investors focus on whether existential issues on search are alive and well or whether Google has already demonstrated enough that, okay, uh we should be fine over the next 12 months. I think today’s result, um, if the narrative becomes that search growth rate has peaked and now we are in this declining growth rate, I think the stock is going to be uh going to find it very hard to recover in the next week or so.
