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TMTB Morning Wrap
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TMTB Morning Wrap

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TMT Breakout
Jul 24, 2024
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TMTB Morning Wrap
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GOOGL: #s looked fine with better search at 13.8% vs high end of expects at 13%; OI beat; Cloud beat/accel but Youtube weaker and forward commentary on the call hit the stock

Stock was up 1-2% until CFO Ruth started her commentary on forward outlook calling out tough ad revs comps in the 2H from lapping China cross-border spend in 2023, tough YT TV comps from price hike, Q3 devices revs from pull fwd pixel launch. She also talked up increase in a3 headcount, said higher levels of D&A from infra build out and increasing COGS from pixel pull-fwd will be headwind to margins.

Given all this the $9-10 in EPS buyside had for 2025 feels a bit harder to come by although buyside #s not really moving much this morning. The search print reinforces GOOGL doing well in AI environment but headwinds to margins / tougher comps / YT miss changes the narrative a bit for the worse a bit. Bears will point to all the things Ruth pointed out while bulls will point to the better search/gcp/OI numbers. ISI re…

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