You are wrong. Search is already profitable. It doesn't need to become more profitable. The profits can simply be used to improve the profitability of other offerings like Google Cloud.
You are wrong. Search is already profitable. It doesn't need to become more profitable. The profits can simply be used to improve the profitability of other offerings like Google Cloud.
That’s not the way Wallstreet thinks. They insist on continuing growth, year over year. Accelerating growth, even.
If you don’t show growth every year, then your stock tanks because you can’t show them the profit that they would make through buying your stock today and then selling it next year.
At least, that’s the way they normally think.
Yes and... parent was making the aggregate conglomerate profitability growth case instead of the single-product one.
Wall Street generally cares about the former more, unless the single-product is only-product.
In this case, that's the fundamental question about Google: is it only an ad company (in which case those numbers are the only ones that matter) or more (in which case total corporate revenue is more important)?
For Wall Street, I think they feel like Google/Alphabet is just an advertising company.
Everything else is an also-ran, and doesn’t materially affect anything, unless it costs a huge amount and doesn’t provide a suitable ROI. And here, AI and mega data centers would definitely be a problem — way too much capex, not nearly enough ROI.