A weekly thread to discuss financial matters - from personal all the way up to global.
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Notes -
Sundar is imperfect, but there's much more to Google's AI strategy than "Gemini Gemini Gemini!" Cloud is up not because GCS is suddenly surging in popularity, but because ANT and increasingly OAI are giving GCP ungodly piles of money; ripping TPUs away from Core to Cloud was one of Thomas Kurian's masterstrokes. (TK will be Sundar's successor, whenever that happens.)
Who will end up making money from AI is an open question: frontier model developers? The hardware owners? Platforms and enterprise integrations? Google is currently straddling all three, giving it incoherence but also optionality. This means less compute and privileging of GDM, but at least in some worlds that's fine (though I think Google has realized it was under investing for the frontier model dominance scenario).
Three other notes:
I interpret the market response as less to the earnings miss itself and more to lackluster Search. We're finally starting to see the cannibalization of search revenue by AI.
As for layoffs: I've heard through the grapevine a big one is coming in Q1.
The market this week has been really stupid, and within a month or three Google will have a substantial recovery. (I console myself over a solidly six figure loss in a single day.)
Yes, and Anthopic's S1 revealed they have like $120 billion in cash with presumably another $100 billion or so raised during the IPO. So there is a clear path forward for more Google Cloud growth.
I take your point about Google maintaining optionality. And clearly their TPU initiative has been a roaring success. But I also think they are dropping the ball on their frontier product big time. Given all their advantages, Google should have been where Anthropic and OpenAI are now.
Incredibly, search revenue was actually up 12% year over year with queries up 17% even as more sophisticated users barely use it anymore.
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