Alphabet, Tesla, IBM, Texas Instruments Earnings Reports | Closing Bell

[00:00:00]And right now we are two minutes away from the end of the trading day.

[00:00:03]Romaine Bostick here with Katie Gravelle taking you through to that closing bell.

[00:00:06]It's a global simulcast. Carol Massar ten scientific.

[00:00:09]They join us now. Welcome to our audiences across all of our Bloomberg platforms. Television, radio.

[00:00:13]Our partnership with YouTube taking a look at equity markets right now.

[00:00:18]Carol Massar a bit of a holding pattern as everyone right now awaits for some big earnings out of big Tech. Yeah, it's a big report in after the closing bell, I'm thinking about alphabet.

[00:00:28]We talked with our Mandeep Singh and trying to like understand the I spend the CapEx spend. Um what's going on.

[00:00:34]And he said that this is really a key report.

[00:00:36]What we get from alphabet, what they have in terms of cloud spending, but what they are doing in particular, there's some really high estimates about CapEx out on the street. Yeah.

[00:00:45]The big question is when is CapEx spend going to slow down?

[00:00:48]Mindy doesn't think it's going to be today.

[00:00:49]Doesn't think it's necessarily going to be this quarter in which company will be the first one to blink. He doesn't think it's going to be alphabet. He doesn't think it's going to be Amazon. He thinks it's going to be meta platforms. Interesting.

[00:00:59]Yeah we know that uh, meta has certainly sort of been at the front of the pack when it comes to their CapEx spend and a lot of questions as to what they're actually spending it on versus, you know, a more traditional hyperscalers such as an alphabet, but we don't have too much longer, maybe the middle classes. Yeah, exactly.

[00:01:16]Those are costly. But, uh, it'll be interesting to see what happens, whether or not when we get through some of these big tech earnings, beginning with alphabet, whether that starts to reset the tone for The Magnificent Seven, which we know has been lagging.

[00:01:28]Yeah. For alphabet, obviously a lot of people want to see what that global Google cloud business has done in the most recent quarter. Expectations for 60 plus percent growth on Tesla. It's going to be a lot about those X, uh, auto GM, X credits there, as well as of course, everything going on with the robotaxi and IBM. Of course, with that pre announcement just a while ago here, it'll be interesting to see whether they adjust anything further right across the screen on this Wednesday afternoon.

[00:01:56]The Dow Jones Industrial Average relatively unchanged on the day down about five points S&P 500 losing about ten points, or a 10th of a percent.

[00:02:03]The Nasdaq Composite down about 6/10 of a percent on the day.

[00:02:07]And the Russell 2000 lower by about 9/10 of a percent.

[00:02:10]All right, guys, as we await those big earnings, uh, S&P 500 kind of an even split 246 names to the downside. Um, actually 246 to the upside.

[00:02:19]Excuse me. 257 Katie to the downside.

[00:02:22]A quick look at the sector level as well.

[00:02:25]Nearly an even split as even as you can get uh, six sectors in the green led by utilities higher by about 2.3%. Materials, energy.

[00:02:34]Also having a good day. Uh, then you take a look at the downside communication services falling by about 1.3%.

[00:02:41]You also had consumer discretionary as a sector fall about 8/10 of a percent.

[00:02:47]And that was followed by a bit of a decline when it comes to health care as well. That sector falling by about 6/10 of a percent. All right guys are waiting for earnings just now crossing Texas Instruments. Uh, second quarter CapEx 514 million.

[00:03:01]That's light 676.3 million was what the street was expecting.

[00:03:05]Second quarter EPs coming in better than forecast, $2.14 a share.

[00:03:10]Street estimate was $1.93 two. The outlook third quarter EPs.

[00:03:14]Coming in light $2.23 to 257. Actually forgive me, that's a range.

[00:03:19]So we'll see what that compares to third quarter revenue.

[00:03:22]They're looking at 5.65 billion to 6.15 billion right now the street remain.

[00:03:27]You can see it just down about 3.5% here.

[00:03:29]So some disappointment. Yeah.

[00:03:30]Kind of interesting to see where all that CapEx uh number came from at 514 and the street looking for 676 year, whether that is a one off here.

[00:03:39]But the company is saying that it is sticking, uh, to its full year CapEx plan of 2 to $3 billion. So this does appear to maybe be just a one quarter adjustment with regards to that alphabet earnings.

[00:03:51]Now crossing the wire. If we want to get to that guys.

[00:03:54]Yeah. Let's do it.

[00:03:55]Yeah. Let's do it.

[00:03:56]All right. You take a look at alphabet right now just parsing through some of these numbers.

[00:04:00]Second quarter revenue coming in at $119.8 billion.

[00:04:04]That is ahead of estimates for about $170 billion.

[00:04:09]Meanwhile you take a look at the cloud revenue, which we know has been in focus. That is the red headline on the terminal coming in at $24.77 $77 billion for second quarter cloud revenue.

[00:04:21]You take a look how that compares to the estimate, slightly ahead of estimates of $22.46 billion. Shares rising a little bit here as we pass through some of these numbers. But a second quarter beat when it comes to Google Cloud revenue, a second quarter beat when it comes to EPs as well. Yeah.

[00:04:40]Overall revenue 2 in 1 19.8 billion. The estimate was for 117 billion.

[00:04:45]Second quarter revenue excluding traffic acquisition costs.

[00:04:49]Uh coming in above estimates 103.62 billion.

[00:04:52]The estimate for $101 billion. Uh search and other revenue coming in ever so slightly shy of estimates. We can go ahead and say that meets estimates. YouTube ads revenue did beat that Google cloud revenue though the important number that people are watching that beat 24.77 billion. The estimate was for $22.46 billion, uh, second quarter CapEx coming in at 44.92 billion.

[00:05:14]The estimate is 44.15 billion in the after our shares bouncing around a little bit, but up about well, now down just about 3/10 of 1%.

[00:05:21]And I would argue search and ad revenue also key because this you know is a company. This is so important to their financial picture. And you know whether or not we saw a big outperformance last quarter going back to advertising revenue up 14% year over year, 81.63 billion. That is just slightly above the estimate on the street of 81.12. Uh, going to search and other revenue up 17% year over year. 63.27.

[00:05:48]So folks, that's pretty much what the street was expecting.

[00:05:50]I'm not surprised to see the stock just up about 8/10 of a percent.

[00:05:53]I'm wondering whether the street was looking for a little bit more here.

[00:05:56]Well, it's kind of but you're still talking about 80% growth that that Google Cloud business. And of course you're talking about operating income for that unit. Uh, more than a doubling.

[00:06:04]And it gets to this idea here as to are people still kind of looking at the expenditure numbers? I'm wondering how that all balances out.

[00:06:11]Of course, there was also the big news with regards to the release of some of these new AI tools. And the company now talking about saying that its Gemini app now has 950 million monthly active users.

[00:06:24]Uh, whether that's good or bad, I guess we'll have to defer to I on that one.

[00:06:28]Okay, well, well, we wait for by analysis there.

[00:06:30]Let's talk a lot about what's happening with Tesla.

[00:06:33]Second quarter adjusted earnings per share coming in below estimates at $0.33. Shares a Tesla down by about 1.3%.

[00:06:40]Second quarter revenue coming in at $28.24 billion.

[00:06:43]That beat estimates by just about $2 billion.

[00:06:46]Second quarter negative free cash flow 1.09 billion.

[00:06:49]The estimate is for -$3.64 billion of full self-driving penetration continued to grow in the quarter, the company says.

[00:06:57]The company also saying second quarter gross margin came in below estimates at 16.8%. The estimate for that was 19.4%.

[00:07:05]Once again, second quarter revenue coming in above estimates at 28.24 billion, beating estimates of 26.32 billion.

[00:07:12]Shares of Tesla down about 1.4%. Yeah, and this was a company that needed some good news. When you take a look at Tesla's year to date performance, I also want to point out, uh, when you break down their revenue number, revenue overall, uh, actually beat estimates.

[00:07:25]But energy generation and storage revenue coming in at $3.14 billion, that's actually a little bit light versus estimates of about $3.77 billion.

[00:07:35]We know that as Tesla, you know, works through, uh, some of its traditional car company, uh, issues and headwinds that have weighed on the stock that the, uh, energy and the battery business have sort of been a bright spot.

[00:07:48]But again, revenue in that specific segment, a little bit light versus estimates. Yeah.

[00:07:53]And just in terms of kind of, you know, future businesses, uh, Tesla expecting Optimus production in Fremont later on this year.

[00:07:59]We're talking about, you know, different things like whether it's EV spending, autonomy or robotics. These are all part and key to the Tesla future story. But I think that second quarter negative free cash flow of 1.09 billion, the estimate was for 3.64 billion.

[00:08:14]You're seeing the stock down about 3.5%. And then again that second quarter adjusted EPs coming in pretty light. Uh, again that second quarter EPs.

[00:08:23]Uh, the company also more than doubled its Texas onsite computing, uh, during the first half and giving us some more, uh, about the business.

[00:08:31]Semi and Mega Pack three remain on schedule for production, so getting a little bit more color in terms of the business, but investors don't seem that impressed. Stock right now down about 3%.

[00:08:42]And before we go, I do want to go back to alphabet and just take a look at that backlog on the Google Cloud business. You said you were talking a little bit earlier, uh, Carol, with mandates thing. And it's really kind of hammering home the point here that is not only about the revenue growth in that business, but the backlog as well. That did increase to about 514 billion, up from roughly about 450 to 460 billion.

[00:09:02]But again, there's a lot of calculus going on right now.

[00:09:05]Is that sort of how that shakes out with the companies plans to spend as much as $190 billion this year on CapEx, right, and as much as 262 billion next year, based on Bloomberg calculations. They don't really articulate that in any of the written statements that they have released.

[00:09:20]But I'm sure this will come up on the conference call in just about 30 minutes. Yeah, we're going to have Mandy back in a moment, too, but and I'm sure you guys are talking to him as well.

[00:09:27]But beforehand he had said it needs to be worth, I think it was about 600 billion in terms of that backlog. So it's coming in at 514 billion.

[00:09:35]Still a big number, still impressive. But is it impressive enough.

[00:09:38]And we did see uh certainly shares of alphabet under some pressure.