00:00Mandeep, I want to focus on Alphabet. Let's just sit on that name right there.
00:03Were those names reporting good numbers or what? When I look at Alphabet and I look at
00:07the individual divisions, they put up some decent results.
00:11They did. And, you know, for a company of Alphabet size to grow 24% top line is just phenomenal.
00:19And,
00:19you know, cloud segment had margins almost double compared to last year. So you can't
00:27make the case that, you know, there is no ROIC on this CapEx when that cloud business,
00:32which was growing 25% to 30% before, is now growing 80% plus and your margins have doubled.
00:39So from that perspective, I think they have earned the right to spend more. And
00:43they talked about how they have to rent compute capacity from the likes of SpaceX and NeoClouds
00:49in the near term, which may drag the margins down a little bit.
00:54This is a full vertical stack company. And, you know, the cloud business was non-existent
00:59a few years back. And now that's what's driving the growth. And 24% is just phenomenal.
01:06Mandeep, that's my struggle this morning. I understand the concerns about CapEx,
01:10where the money's coming from. But the numbers themselves justify the spending. So when I see
01:15the stock down in the pre-market, I'm just trying to work out, is that all about positioning?
01:19Is that just about price? Or is it actually something fundamental about whatever the company
01:23reported overnight?
01:25I mean, the fundamental, I guess, take which is driving the stock down is their Gemini 3.5 Pro
01:34model has been delayed. They were asked about why you haven't caught up in the coding agents
01:39compared to where the frontier labs like Entropic and OpenAI are at. And look, Entropic is one of
01:46their biggest customers on the cloud. Out of that $514 billion in backlog, 200 plus comes from
01:52Entropic. But Entropic is also a competitor for them when it comes to the large-angleic model race.
01:59So there is that dynamic where Alphabet, if it falls behind in the large-angleic model race,
02:05will have an impact on their search business. And so from that perspective, there are things that
02:10you can be concerned about. But overall, I think some of the CapEx increases tied to memory price
02:17increases. So that's transitory. And so from that perspective, there's not much to make out of
02:23the fact that they have to pay up along with everyone else when it comes to memory prices.
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