Why is Google Powerful alone?
Alphabet, the parent company of $Alphabet(GOOG)$ , saw its stock rise by over 3% in early trading on Wednesday, and despite a general market downturn at closing, it still ended up with a 1.24% increase. This was mainly due to a leak from Information, indicating that the company is planning to restructure its advertising sales department to make more efficient use of automation technology.
Google's advertising business has increasingly relied on machine learning this year, allowing customers to purchase ads on its search engine, YouTube, and other platforms.
Why is this move worth noting? Because in the 2023 layoffs, Google only cut 6% of its staff. In contrast, $Meta Platforms, Inc.(META)$ and $Amazon.com(AMZN)$ may have cut over 30% of their staff throughout the year. Therefore, a strong advertising department may give GOOGL the opportunity to further increase efficiency in 2024.
Investment Highlights
- Google Cloud business achieved a strong 22% year-on-year growth, still performing well, but compared to Microsoft (MSFT), it appears relatively inferior, and investors' expectations remain high. Diluted EPS increased by 46% year-on-year to $1.55, but this includes non-cash gains and losses from the balance sheet.
- The current macro environment has significantly complicated the situation, and investors often choose stronger stocks based on quarterly performance.
- At the end of Q3, Google had $119.9 billion in cash, $30.9 billion in non-current securities, and $13.8 billion in debt. In terms of shareholder returns, the company continued to repurchase $15.8 billion in stock, and the current free cash flow is $22.6 billion.
- The three main growth engines currently are: 1. Google Cloud; 2. Short video platform Shorts (with over 70 billion daily views on average); 3. Gemini. Although Microsoft has integrated ChatGPT into its products, Google's advertising remains one of the easiest ways to monetize, and the market may underestimate the competitiveness of GOOGL and $Amazon.com(AMZN)$ based solely on one or two quarters of performance.
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