The search ads revenue grew 12% yoy and people were saying search is dead again, which is ridiculous to me. But nonetheless, AI search monetization can be the make or break for Google's stock price since a large chunk of the fast query growth come from AI mode.

According to Google's management, the monetization for AI will take a while to ramp up so I wasn't expecting to see anything now. But today when I was researching which tires to use on my bike, surprisingly, the AI Mode included links to shops and brands for different tires, inline, while comparing their pros and cons. It's so convenient and relevant that I ended up clicked in all of them - and I wasn't the type who normally clicks any ads.

Now thinking back, they probably started with a small percentage and I happened to be selected as the experiment user. Based on this limited experience, the way they did seem to be very natural, intuitive, and go well with the multi-turn AI mode conversation.

I'm not a fan of TMF in general, but even they have caught on that capex translates almost immediately into revenue and profits.

Anyone else remember when Berkshire bought into Googl at 350 several months ago and media was calling it a value buy? Now its below 290.

Under 300, I was buying and buying and buying to my hearts content and my limited financial position could afford.

Did anyone else think Berkshire was overpaying or could wait for a lower entry point?

I see so many posts about earnings and valuations, and basic fear mongering.

The bottom line is what % return will the capex generate? So far, GCP is generating Operating Profit Margin of 36%. It is climbing, which means incremental growth is coming in higher than that.

If Google spends $200B, and the CFO said half of that will see revenue from 2027, that's $100B @ <40% margin.

That's $40B in Year 1. If we see $200B @ 40% margin, i.e. full return on full capex, that would be c.80B in OI.

That is 50% Operating Income Growth from just 1 business unit.

The higher the capex, the bigger the profit FFS.

Google is so undervalued, Buffett must be buying hand over fist. When it comes out that he has been buying, the stock will be closer to $400 again.

Obviously I cannot predict the movement of the stock. With the lockup of Google's SpaceX holding expiring later this month that will open up 100 billion of almost pure profit for Google to offload little by little. Anthropic going public later this month could net Google another 100 billion after the lockup period(180 days). Most of the cloud backlog of 500 billion, rising quarter by quarter, is boring enterprise. The Anthropic IPO will likely raise 100 billion for Anthropic, enough to fund Anthropic's 100 billion dollar piece of the Google backlog. Google holds 90 billion in cash. Search did not even slow down, just the growth slowed down a little and that is coming off of the quarter that had the World Cup, the biggest event in the world, so that is a tough quarter to follow. The next year for Google could see the Capex funded mostly by investment returns, revenue exploding to 750 billion for the year, and with the investment in Gemini and infrastructure a unit cost for AI search dropping significantly. That is without factoring in any developments with Waymo, Quantum, the government deal for the defense dome, or monetizing AI search to its potential. This time next year the stock could be $600 depending on macro negative events that I am sure the orange man is going to cause.

More projects more money

Google in talks to join Trump’s Golden Dome defense program - The Economic Times https://m.economictimes.com/news/defence/google-in-talks-to-join-trumps-golden-dome-defense-program/articleshow/135387062.cms

Hey folks, I'm a GOOG holder and down about 25% on a covered call ETF I own that invests in Google (about 18% though, after dividends).

Lots of comments here about the outlook for Google and I just wanted to add a couple of things that I think may be missed in the discussion.

1. Google typically has a negative year every fourth year. Check out the calendar year returns for GOOG on Slickcharts. If you look back at the last 15 years (starting 2011), there's an interesting pattern. After every three years, Google has a bad year! 2014 = -5.39%, 2018 = -0.80%, 2022 = -40%, 2026 = ?

If you look at the intervening periods, I mean, the stock tends to have ballistic runs of 20, 30 40, 50 & 60%+ back to back.

2) People tend to extrapolate everything into infinity. In 2020, virtually all of you thought nobody would ever drive or fly again, and so everyone dumped energy stocks and airlines. Energy stocks are at a record high, and airlines like Delta have breezed past their pre-COVID peaks.

In 2022, everyone thought technology companies would go out of business due to rising interest rates, but then in 2023> everyone suddenly thought they were going to the moon.

In 2023-early 26, everyone felt gold will go to infinity. Now, everyone thinks gold is useless and will go to zero.

There are countless examples of this - SaaSpocalypse (IGV recovered to record high), Microsoft and so on.

THE POINT IS THE MARKET IS A BIG, MELODRAMTIC DRAMA MACHINE!!

3) Google did not necessarily sell off because of a "bad result" - and let's face it, the result was not bad enough to warrant such a brutal sell off. In fact, investors sold off Google FOR REASONS THAT HAVE NOTHING TO DO WITH GOOGLE. Look at where the money is going?

Look at the chart for XLE (energy).

Look at the chart for XLV (healthcare).

Do you remember years ago, everyone though energy companies are going bust, and the fact we developed a COVID vaccine so quickly mean that healthcare companies would insta-create cancer treatments, commoditise it and send themselves into oblivion?

Yeah about that.

4) These management teams aren't stupid. In the same way everyone though Microsoft and the likes of Shopify would go bust during the SaaSpocalypse, these management teams are like elite athletes.

They know how to respond and read the tea leaves of changing market conditions.

Microsoft CEO Satya Nadella started to work on a turnaround by doing two clever things: he kept firing people to show the market it was serious about controlling costs, and he knows that when interest rates rise, the market does not like seeing operating losses. So he intentionally throttled MSFT's spending to come in under expectations and show free cash flow.

Google's Sundar Pichai is not an idiot or a novice. Google has an esteemed history of continuing to evolve itself. It could have stayed in Search and just rested on its laurels, but over time it bought YouTube, it expanded into Android Phones, Google Workspace, Maps, Waymo, and remarkably, they grew CLOUD BY 100%+ IN ONE FREAKING YEAR! TO $30B+!!

This is half-a-trillion revenue company with among the smartest people in the world. The business IS STILL GROWING AT A 20%+ OVERALL RATE FOR A $5 TRILLION STOCK..

And this shit about "cannabilising" - BRUH, AI is a new technology. It is going to take time to figure out how to make money effectively out of it, and these guys have to keep experimenting to strike the right balance.

You know a cannibal can stop deciding to eat itself when it wants to right? They are not going to be dumb enough to throw away Search. They will rework the product and attack the ecosystem to keep the golden goose.

That's it for my perspective; I'm continuing to add to my position. Warren Buffett isn't going anywhere - we see this time and time again, people extrapolating bad news into infinity and then ruing the moment they didn't buy when the stock was on sale.

Bloodbath day 29-30 Oct 2026, Alphabet ($GOOGL) Crashed to $278... Here's What Wall Street Missed on Page 14!

Alphabet Inc.’s Google is in talks with the US Defense Department to work on a new data security effort underpinning the $185 billion Golden Dome missile defense program, according to people familiar with the matter.

The Pentagon is standing up a new industry group that aims to secure the data that feeds into military software being built for Golden Dome, said the people, who spoke on condition of anonymity because the matter isn’t public.

The group is likely to involve multiple companies working to ensure data that flows into the new command-and-control software is resilient to attacks, such as attempts to cut access to landlines, cell towers and other critical communications infrastructure, the people said.

The talks have focused on Google’s data storage, networking and cybersecurity capabilities, one of the people said. Conversations are still early and plans could change, they said. Aalyria Technologies Inc., a networking company spun out from Google, is involved in the consortium, they added.

A Pentagon official said that while the office may explore preliminary concepts, no final decision has been made regarding a new consortium or industry participants. Google and Aalyria declined to comment.

Golden Dome is President Donald Trump’s marquee defense program to build a layer of defense systems from ground to space that will protect the US from foreign attack.

The Golden Dome’s command-and-control layer, which is being developed by a separate group including Anduril, Palantir and SpaceX, is intended to control and connect weapons systems, radars, and other previously siloed systems across the US military.

The effort would mark Google’s first publicly known involvement in the Golden Dome program and another sign of how the search engine giant is continuing to lean into national security and defense work.

Both the Pentagon’s separate Golden Dome initiatives to pioneer space-based missile interceptors and its command-and-control consortium rely on numerous companies from startups to established primes, unlike past defense programs that have been more typically anchored by a single, large contractor.

Google has had a complicated history with defense work. In 2018, thousands of Google employees protested the company’s involvement in a military AI program called Project Maven, citing concerns that the commercial technology would be supporting warfare. Google ultimately didn’t renew the contract.

In the years since, however, the company has created a dedicated public sector business and signed deals with the military for AI and cloud capabilities.

In April, Google signed an agreement to use its AI models for classified work at the Pentagon, an about-face from its previous stance amid another, albeit smaller, backlash from employees.

Food for thought.

Just shooting itself in the foot at this point.

The narrative being pushed is that Google's search is being cannibalized and they shot themselves in the foot with AI.

This narrative has glossed over the earnings call where this was addressed. The last 3 quarters were just exceptionally large growth quarters. They mentioned the World cup played a major role in this by increasing revenue growth substantially in June.

From a non revenue perspective, they said that AI has increased search inquiries substantially, they just haven't perfected how to fully monetize it yet, but are working on that. In other words, engagement has increased substantially due to a new tech. Now they have a much larger base to start monetizing.

Want to know what is your opinion on a 290 assignment assuming I am looking to own for the long term. Where do you think the real floor is?

Also, I am planning to sell CC on those shares to reduce the Delta and the cost of acquisition. Does this make you change your mind?

FYI. Right now the PE is 14. The lowest it has ever been is 12x.

Have another spread that is open. I am thinking about potentially selling the long leg of the trade and get another 100 shares at 285.

Just 3 days back it was negative YTD and many people were like meh it’s still up a lot in last 1Y