What this analyst expects from Gemini

00:00 Speaker A

Microsoft, Meta and and Apple put forth a mixed bag of results for investors, but Wall Street sending a strong message to tech giants that pressure is on to prove spending can power growth. Next up in the hot seat, we got Google, we got Amazon. Join me now to discuss all of it. City senior analyst, Ron Josie. Ron, it is good to see you. So, uh you cover Amazon and Alphabet, Ron. You also cover meta. They reported investors like what they had to say. Are there read throughs in that meta report on

00:41 Speaker A

to Alphabet?

00:43 Ron

You know, ye yes and no. Um, from an advertising perspective and a consumer and engagement perspective, I think the answer is absolutely yes. So, advertising was a big surprise, overall revenue growth was a big surprise for for meta, maybe not for 4Q. I think people were looking for that 24% growth, but the acceleration that the company reported for 1Q or expected to report for 1Q in their guidance up to 33 plus percent growth. I think that was a big surprise and

01:21 Ron

underlying that, yes, Meta is doing some pretty fantastic things with their AI ranking recommendation models that is specific to Amazon, but underlying that is a broader overall what we call healthy online advertising market and I think Meta or Google, Amazon, others participate in that as well. So there are some rether’s that rether’s there and and we’re we’re incrementally positive on Google and Amazon and Reddit, uh uh post meta numbers.

01:54 Speaker A

Uh just sticking with Google, Ron, interesting to get your thoughts and all things Gemini. Just what what the adoption curve and trends look like there, Ron? And also just how you kind of think about long-term the relationship and impact with search.

02:14 Ron

I mean, Gemini is something that’s impacting the entire organization and that’s what’s making Google so attractive or at least so interesting from our perspective. Google is amongst our top picks there and Gemini is powering Google search and we’re seeing overall query growth accelerate, at least we did in 2Q and 3Q, we expect that to continue. In addition to that, you know, we would say that both, uh, AI overview, AI mode and Gemini all merge together into one that it’s just going to be one Google search here over time. Maybe that happens this year.

02:51 Ron

All of that is being powered and the innovation around search is because of Gemini. And then you have to look at Google Cloud, right? Google Cloud, of course, Google has the the the Silicon with its TPUs, but Gemini is the do is basically what’s opening the door for the Google Cloud business to basically grow their accelerate their revenue growth. And so Gemini is impacting the entire organization. Consumers are adopting it. Uh, enterprises are adopting it. And then you’re seeing it being infused in so many of Amazon of Google’s products, whether it be Gmail or Maps, and the list goes on and on.

03:34 Ron

So it all sort of starts and ends with where Gemini is going.

03:38 Speaker A

You know, you look at Alphabet just the chart Ron. heading into this print, the stock has been it’s a monster. It’s up about 70% over the last 12 months. I know you have a buy on the name. Are you are you a a pound the table buy though, Ron at these levels?

04:02 Ron

Yeah, you know, we we are. There’s some concern around the multiple and that historically, you know, Google sort of hits the top of the multiple at these levels. call it mid 20% mid 20 time range on on GAAP EPS. But our view here is that search continues to be very strong and the minute we see potentially search, uh, you know, at least stable if not accelerate revenue growth, Allah, what meta did. I think that could be powerful. You you have Google Cloud. We just talked about the demand because of not just the Silicon, but also on the software side and and all powered by Gemini.

04:47 Ron

So we we think there’s a lot of of tail winds that are happening in Google’s core business that can continue and if that’s the case, then I think the stock can rate even higher.