Episode summary
Earnings Roundup: Alphabet Beats on Cloud Sales, Tesla's Profit Disappoints | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 19 min · Hosts: Carol Massar, Tim Stenovec · Guests: Ed Ludlow, Keith Naughton, Mandeep Singh
Summary
Alphabet’s quarter was framed as a strong validation of its AI spending, with analysts focusing on cloud revenue growth of 82% and a cloud backlog that has climbed to more than $500 billion. The analyst argument was that the cloud business is now a roughly $100 billion run-rate operation, but that the market still wants more clarity on whether Gemini usage is becoming a meaningful growth driver beyond Google’s distribution advantages in search, YouTube and Android.
Tesla’s results were read as a profit miss that underscored the tension between its car business and its AI ambitions. A guest said the company earned 33 cents versus 51 cents expected, and that lower average selling prices, gross-margin pressure and negative cash flow show the automaker still needs car profits to fund capex for robotics, autonomy and AI. The host and guests also said Tesla is increasingly being judged as a broader Elon Musk compute-and-robotics story rather than a pure auto company.
The conversation returned repeatedly to capital spending and free cash flow. For Alphabet, one analyst said the market may tolerate a move toward negative free cash flow if the spending continues to drive cloud growth and token consumption. For Tesla, the problem was more immediate: the company has made big promises on robotaxis and Optimus, but the call did not yet show enough tangible progress to reassure investors.
Key takeaways
- Alphabet’s cloud revenue jumped 82%, which one analyst called evidence that the company’s AI investments are already paying off.
- A guest said Alphabet’s backlog still lagged the market’s expectations, even though it has grown into a more than $500 billion pipeline.
- Tesla missed profit expectations at 33 cents versus 51 cents, and a guest said lower ASPs and weak margins hurt the quarter.
- The panel said Tesla still needs strong car profits and cash flow to fund its $25 billion capex plan for robotics and AI.
- One analyst said investors are focused less on consumer AI features and more on enterprise token usage and cloud demand as the real proof of AI monetization.
Notable quotes
“cloud 82% growth. uh it's a hundred billion dollar run rate business now which is phenomenal”
“that's a big miss. You know, 33 cents versus 51 cents”
“the street wanted to see Tesla spend a lot of money, more money than they are spending currently based on the trajectory of capex”
“I think overall uh it's hard to find any fault in the print”
“the world of AI is measured in terms of token consumption”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world.
We really want to go all in on Alphabet and Tesla. We've got a great team effort uh to do just that. Uh in the house with us is Art Mandep Singh.
He is of course uh Bloomberg uh intelligence, excuse me, head of global uh technology. We've also got our Keith Nton, Bloomberg News Auto Reporter. He joins us here in our Bloomberg interactive broker studio along with Mandep.
And then we've got Ed Llo Bloomberg tech uh host out there in our San Francisco bureau. All right, we're going to start. I do want to start with you Mandep only because I feel like the AI trade is so important.
Um what do you make of it?
I mean great print. I think overall the results were great. cloud 82% growth.
uh it's a hundred billion dollar run rate business now which is phenomenal you know for a company like Alphabet which was really consumer focused but backlog is probably where I would say uh the whisper number was higher simply because when I look at Microsoft's backlog number it's higher than alphabets and given it's growing 82% and it has got anthropic as one of its main customers of Google cloud I would have expected that to go up I Anthropic is signing deals left and right. So why is it not showing up in the Google backlog number?
Gemini models now process 22 billion API tokens per minute and the Gemini app has 950 monthly active users. Contextualize that Mandy for us compared to open AI and — I mean it's great but look Gemini has an attach rate because of all the other properties that Google has the search YouTube.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- megacap tech earnings
- alphabet cloud revenue
- tesla profit expectations
- ai investment returns
- autonomous driving and robotics
Companies and tickers mentioned
- GOOGL
- GOOG
- TSLA
- Alphabet
- Tesla
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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