Google search revenue increased 14% year over year to nearly $49 billion, with paid click volume up 6% and revenue per click up 7%. AI overviews contributed to search volume growth and user satisfaction, aiding paid clicks.
While YouTube ad revenue growth dropped to 13% from 20% the previous quarter, no concrete explanation was provided except citing a tough year-over-year comparison, potentially due to increased competition in the streaming ad market.
Alphabet shows no signs of slowing down infrastructure investment, expecting around $50 billion in capital spending by 2024. The company believes its capacity increases will be utilized, even if AI growth disappoints.
Alphabet stock is currently trading just below the fair value estimate. Risks include a slowdown in ad demand or search volume growth. Positive catalysts could be an acceleration in Google Cloud or AI-related revenue.
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