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Google's business model appears more resilient than peers: Mizuho's James Lee - YouTube
Channel: CNBC Television
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james you've heard about what we've been
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talking about how do you judge this
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quarter separate of this pop that we're
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seeing is it justified is it enough is
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it too much in the stock right now
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yeah thanks for having me uh certainly
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from our perspective
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on google's business model alphabet's
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business model is a lot more resilient
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than its peers right we're seeing
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consumer mixing
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shifting their spending very quickly to
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offline to travel and google is able to
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benefit from that specifically at the
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same time we saw cloud business remain
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pretty healthy but keep in mind you know
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there is a lot of macro uncertainty
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going to back half especially into fy23
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yeah so james expand
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i'm sorry to interrupt you expand on the
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cloud business because i did feel that
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there was a big difference between what
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microsoft said about the cloud versus
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google um the management team was
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pressed by analysts on the call to kind
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of at least just talk about what they're
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seeing in terms of demand and they
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really refuse to versus that 40 plus
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outlook from microsoft how confident can
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we be about the trajectory of google
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cloud
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yeah fair point right they said they
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haven't seen any slowdown but we have
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done independent checks we did a survey
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with 250 cios
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and they're indicating that
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they are anticipating a recessionary
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scenario a shallow recessionary scenario
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and they are planned to cut their cloud
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spending growth about 10 points at the
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same time i'll separate checks showing
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cell cycles are extended and at the same
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time some of the vendors on the cloud
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side are evaluating price concessions
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and the reason probably we're not seeing
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any slowdown in cloud spending right now
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because the lead time for implementation
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for cloud projects typically take about
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six to nine months if cios decide to
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take any actions it's going to be fy 23
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as opposed to fy22
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uh james how much of what we're seeing
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out of alphabet today
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is not a reaction to
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uh the earnings themselves but a
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reaction to the fact that we didn't get
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a replay of what happened with snap
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right we're people some people anyway
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afraid of what google might say in terms
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of a slowdown and that's what we didn't
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get
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yeah that's a fair point john right what
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will happen with snap and we think it's
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more company specific right and
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obviously social media advertising has
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been more impacted due to macro at the
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same time we see quite a bit of
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competition from tick tock right we
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recently did our checks on tick tock
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specifically despite the weak macro john
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they're still targeting to
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double the us revenues from 2.5 billion
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to 5 billion so obviously the gaming
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market share at the expense of some of
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the players in social media space
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so what does this mean especially given
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that we had
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strength in in travel and retail from
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google in particular in this current
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quarter what do you think that means
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heading into q4 i've i wonder what's
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happening with retail inventory given
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that retailers are just telling us you
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know walmart it was two days ago walmart
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telling us that they're uh marking
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things down trying to clear things out
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target having said that uh a couple of
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weeks ago as well maybe that exactly
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doesn't continue into q4 and i'm not
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sure how great
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an insight these companies always have
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into
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exactly the reason why uh these
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categories are are good
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yeah good point john we think the
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mixture to make the essential product
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into grocery and to travel they'll
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continue into q4 so we're not very
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concerned about search for this year
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specifically maybe a little bit of
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weakness on the margin what we're
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concerning you know as consumers
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continue to be strapped heading to fy 23
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they need to continue to make choices
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you know especially on travel right or
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especially on services industry
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entertainment in general and that's why
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in terms of
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advertising revenue for alphabet we're
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below consensus for fy23 the street's
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looking for 14
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we're currently at 9 at this point
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shepard smith here thanks for watching
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cnbc on youtube
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