At face value, Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) reported an in-line third quarter Thursday afternoon, but nervous investors were expecting more from the tech giant, according to Loup Ventures managing partner Gene Munster.
The Analyst
The research analyst-turned-venture capitalist commented on Alphabet's earnings in a Friday blog post.
The Thesis
Munster and Loup Ventures associate Will Thompson highlighted six takeaways from Alphabet's earnings report:
- Management's focus on the evolution of search suggests it will evolve to become more visual with a greater degree of artificial intelligence technology.
- Alphabet's management focused a lot on its hardware products, which implies it is likely mimicking certain aspects of Apple Inc. (NASDAQ:AAPL)'s integrated hardware and software approach.
- Waymo's evolution in the quarter is still in the early stages, although it could become the third-largest business in Alphabet's portfolio behind search and YouTube, but ahead of Cloud.
- The earnings report and conference call was void of commentary and questions related to privacy issues, especially to its privacy strategy.
- Also absent was a deep dive into the requirement to charge for Android use in the European Union. This could add 1 percent to Google's revenue in 2019 and stems from an earlier ruling by the European Commission.
- Artificial intelligence, machine learning and other similar buzz words were mentioned by management just 25 times during the conference call. This marks a decrease from last quarter's 38 mentions, although in-line with a two-year average of 25.
Price Action
Alphabet shares were down 2.91 percent at $1,071.44 at the time of publication Friday.
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