00:07:06 · S3, Ed Ludlow, Carol Massar, S2
[00:07:06] S3: None of these companies are exactly the same here, Ed. I mean, but we tend to kind of put them all in the same bucket, these hyperscalers, but they all have different core businesses. [00:07:16] S4: Okay, free cash flow. I mean, going into these earnings print, that is the comparison that you make. So in the quarter, Alphabet had negative free cash flow of $ 9. 1 billion, which actually shows worsening free cash flow from last quarter was just under $ 6 billion. Compare and contrast, kind of fun. Microsoft had free cash flow of almost $ 19 billion. And if you just take those hyperscaler names or the Mag7, and you look at the stock, their performance since last quarter's earnings, or year-to-date, the best performers are those throwing off cash, Nvidia, Apple. The worst performers in the stock market are those with negative free cash flow. And so you can't take like the search miss in isolation with Alphabet. You have to look at all of it. And so the cloud growth is amazing, astonishing. The spending we know about, but now, you know, Wall Street has this high bar where it's looking at the negative free cash flows. And that also is a factor in this reaction. Microsoft has good free cash flow. [00:08:19] S0: I'm going to give you props. [00:08:20] S3: You said it on surveillance this morning with Tom and Paul, just saying that Wall Street is increasingly, they care about free cash flow, right? You're these publicly held entities. [00:08:28] S0: You're spending a lot of money. [00:08:30] S2: People are looking.
00:08:30 · S2, S3, Carol Massar
[00:08:30] S2: People are looking. [00:08:31] S3: And investors can be fickle for each specific story, but they're increasingly, they care about this stuff and we're seeing it play out. [00:08:38] S2: Hey, Ed, I want to talk a little about the other business over at Alphabet. And forgive us for sticking on Alphabet, but this is the one. [00:08:45] S0: That really has my attention. Are you talking about YouTube? [00:08:47] S2: No, I'm talking about the CapEx coming in below estimates at $ 51. 36 billion. And Ed already mentioned the growth of cloud. Google cloud revenue grew 103% in a different world, Ed. And by a different world, I mean a different quarter. Those two things that I just read would be greeted by investors sending shares the other way.
00:08:47 · S2, Ed Ludlow, S3
[00:08:47] S2: No, I'm talking about the CapEx coming in below estimates at $ 51. 36 billion. And Ed already mentioned the growth of cloud. Google cloud revenue grew 103% in a different world, Ed. And by a different world, I mean a different quarter. Those two things that I just read would be greeted by investors sending shares the other way. [00:09:13] S4: Okay, but this is what I mean by you can't take any of these data points in isolation. So CapEx in the quarter was actually slightly below expectations. I think it was like 51.4 billion, right? But if you just take where they are nine months into the year, Alphabet spent about $ 132 billion. They guided that for this year. CapEx will be in the range $ 195 to $ 205 billion. That's a lot. A year ago, in any given quarter, Alphabet was spending like $ 25 billion. Now that obviously is tracking way ahead of that. So the cloud growth is there and growth in the operating income from it as well. But again, balance it against the spending commitment and how deeply that is putting them into free negative free cash flow irrespective of their operating cash flow and i'm not i'm not an accountant or forensic guy by any means but yeah i think that's the math people. [00:10:07] S3: Are doing but you gotta keep looking at it but he plays one on tv he does play one on tv he does it pretty well he does it pretty well all right ed ledlow uh you know we always appreciate you jumping on with us and walking through these earnings uh no one like you uh Ed Ludlow.
00:10:07 · S3, Carol Massar
[00:10:07] S3: Are doing but you gotta keep looking at it but he plays one on tv he does play one on tv he does it pretty well he does it pretty well all right ed ledlow uh you know we always appreciate you jumping on with us and walking through these earnings uh no one like you uh Ed Ludlow. [00:10:21] S0: He'll be continuing to cover this. He is the host of Bloomberg Tech. [00:10:23] S3: Catch them and catch him and his team on Bloomberg Television at 11 a.m. [00:10:27] S0: Wall Street time.