Now the question is how are those equity securities valued.
If for example they value their Anthropic stake based on the latest funding round then it's not very reliable (it's not clear if they can ever realize that gain or if the gain doesn't turn into a loss).
Search revenue miss, apparently. Not sure whether this has happened before. But I wonder if this could be the long-predicted beginning of the downfall of search as a "money printer".
Down $13+ (about 4%) after hours, and the drop was apparently after they mentioned the search revenue miss on the earnings call because it was flat when I looked an hour ago. So not entirely priced in.
IIRC there was a search revenue miss last quarter too. Likely because of AI cannibalization of search results. Classic search is very heavily monetized, and a monopoly ad market. AI mode is currently lightly monetized, and a much more segmented market, and one that is harder to target ads for. Plus there are easily half a dozen LLM vendors now, while Search was a clear monopoly.
This is something investors should be very concerned about. It's not at all clear that whatever comes post-Gemini will be nearly as profitable as Search has been for the last 20 years.
- Negative free cash flow for the quarter
- $98B in unrealized gains on equity securities
- Cloud revenue are up 82% to $24.8B