Tech Giants’ Troubles: Google
Google stocks are trading 30% off their peak prices. The recent earnings report for the Q4 2022 was mixed as advertising revenues dropped by 3.5% amid a poor economic environment. However, cloud services rose by 32%. The division is not profitable yet, but is gradually improving its margins, and may become a key revenue source in the future. The company received $60 billion in cash in 2022, and delivered a buyback of its shares of $59.3 billion. So, the company is handing over the cash received to investors instead of accumulating it as it did in the past. The fact that worries the company the most is the newly emerged ChatGPT neural network sponsored by Microsoft. Such networks may change the entire search business. Google has its own Bard neural network, but it is too far from the effectiveness presented by ChatGPT. Nonetheless, Google management expect the Bard to optimise various processes, including raising monetisation of Shorts and some other business processes. All these expectations are more related to 2024. Investors are not rushing to buy stocks amid promises, even if they are made by a giant like Google. The neural networks search abilities battle is far from being over, so it is very difficult to judge who is the leader. First financial results should be delivered to make a preliminary opinion on this. Vast research abilities of Google are univocal, and the company has been developing its product for several years. So, the sentiment could make a U-Turn, rewarding early bird investors generously.
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