Transcription
What's going on, everybody? We are live. It's earning season here, Q2. Uh, we got a crazy show today. We've got Tesla just put out their earnings. Google just put out their earnings. Service Now just put out their earnings. Uh, three different companies that some of our analysts at Milk Road Pro invest in, and obviously market-moving companies. Uh, you know, with Tesla on the AI application side, Google on the just the capex in general, uh, in terms of what that means for the entire market. Um, and then we've also got Service Now, which tells us what's going on in the software world. So, it's a, it's a really big day. We're going to go through all three of these companies. I'm just going to start sharing this so that people can see, uh, on, on, um, on Twitter and YouTube. We're live on both. So, if you guys are in here, um, then, uh, then feel free to to jump in and comment and say what up. Uh, I see someone, Trojan Horse, on YouTube already saying hi in the comments. So, thanks for doing that. Let me just get a couple re-shares in here just to make sure that everyone knows this show is happening right now. And then we're going to kick off. Uh, it's been a crazy, crazy day already. So, um, let me just see. How do I share this? One second.
All right, guys. Um, repost there. And one more. All right. Who do we want to start with? Tesla, Google, or Service Now? That's the question. Um, let's probably just start with Google because I think that probably matters the most to the market. Um, so let me just pull up my screen share here and I'll walk us all through, uh, the situation. So, Google is a beast of a company. I got Tesla up, but let's go Google here. Market doesn't know what to think, but they are an absolute beast of a company. They, uh, crushed earnings, um, to be completely honest. Um, if we look here, the market was expecting about 117, uh, billion in revenue, um, year-over-year for Q2. They hit 119.8. So, almost 120, uh, 24% year-over-year growth from last quarter, uh, last, uh, Q2 last year. So, that's huge. Um, the, you know, Google Cloud business is just an absolute beast. 25 billion. It almost hit, uh, it was estimated 22.46 billion. Um, so let me just go to the actual numbers here. Look at these numbers, guys. Uh, earnings highlights. So, 24% year-over-year growth, as I just, uh, mentioned. The Google Cloud up 82% year-over-year, which is just unbelievable. They've got $514 billion of backlog. This was like 400 and something last time, uh, this was, um, this was reported. So, that's a huge, huge, huge difference. Um, and, and huge growth there. What's interesting to me, guys, is 950 million Gemini app monthly active users. That might be the most used AI in the world right now, right? Like OpenAI with ChatGPT is around, um, is around this, like 900 million. I don't know that they've ever reached a billion, at least they haven't suggested that yet. So, Gemini is close. Now, to be fair, a lot of Gemini is, is free users, right? Um, they're just using it through, you know, Google or Google Docs or whatever, YouTube. So, there's different ways that people can use it, and a lot of it is free for Google. So, it's a very different story than, than ChatGPT or, or Claude, of course. Um, but still, there's obviously a lot of value potential there. Um, so, big number. Now, they went over a little bit on their capex. So, I think that's the thing that the market doesn't love. So, um, but it's not a ton. They were estimated, I think it was actually 43. I don't know why this says, um, 40, 44, but they hit about 45 billion in capex. Um, so I think the market doesn't necessarily love that. And then also the, the search and ad revenue, um, was, was under what the market thought. No, not by much, by barely anything, but it was still under. So, the market doesn't love that, of course. So, those are the things that the market's not loving. What really matters, and I don't know when Google does their, um, actual, uh, earnings call. I think it's now or maybe in a half hour or something like that. I'm sure we'll see it live on this show here, uh, on Twitter when this is all happening. Um, but what we need to know is, are they going to raise their capex moving forward? The market is unsure what to do there. If they do raise, I imagine Google will go down. Um, currently, what are we looking at? Let's just pull up the actual stock here and just see what's going on. Tesla, I just gave away what's going on there, but the market's not loving it right now, but that's okay. That's okay. We said that that was going to happen. Yeah. So, it puked at the start, then it went higher, and now we're kind of back where we were, uh, when the market closed. So, um, what's really going to move the market here in the post-market after hours is going to be, do they raise capex or not? Um, but some interesting stuff that also came out right at the close here was, uh, where is it? Here. Um, Sundar, the, the CEO, he posted and showed that they are for the first time launching, um, some Gemini intelligent features within, uh, Android during, within the Samsung phone. So, this is huge. This is what I've been talking about for the last two weeks for anyone that's been following me. I talked about it on the live show, I think, on Monday. Um, but I think Google's really well-positioned to start to integrate Gemini into, uh, into the phones, into Android. Um, I've talked about this a lot with Apple as well, into their phones. Um, and so we're starting to see it. Uh, it's a small amount on just one phone so far, but I think this is going to be the big thing to watch over the coming year is, can, uh, can Google make an impact on consumer agents? Um, and I think that's really what we're looking at here. So, um, we're starting to see it. Uh, and I think a bunch of, you know, they had the Frozen chip that they announced two days ago. That's all about speed and efficiency. I know a lot of people were complaining that Google didn't launch the smartest model. At this point, I don't think it matters. The models are smart enough. They don't need to be number one every time anymore. What they need to be focused on is token efficiency, uh, and speed. Meaning, if I ask an AI a question or I want it to do a task for me, how quickly can it do that? How quickly can it respond? How quickly can it take action? Um, and that needs to be much faster than it is today. And so, sometimes you might not care so much about how intelligent the thing is as long as it's still intelligent enough, but it's how fast can it do it. And I think that's what Gemini and Google's working towards. And so, um, they want to be the consumer agent inside of phones. And I think they're so well-positioned for it because they own the entire stack, everything from the chips, uh, to the model itself, um, to, to even the, the, the phones and, and the operating system with Android. So, um, I think, uh, super bullish for, for what Google's doing there. And yeah, overall, I mean, a great earnings. I don't think there's anything to, to complain about on, on, um, on this. We'll have to just see what, what kind of guidance they give in terms of, uh, uh, in terms of their capex. So, okay, let's jump over. We'll come back to Google. Of course, you guys have questions, toss it in the, um, in the, in the comments. Uh, I'm just going to pull up, whoops, my Twitter here just so I can see everyone that's in Twitter because I don't have that going on right now. Um, just in case there's any questions. Nice. All right, now I can see the comments for those of you that are on Twitter.
All right, let's jump over to Tesla. So, Tesla's down, uh, on their earnings. I think they're down, uh, quite a bit, two and a half percent, uh, so far. Now, why is Tesla down? Um, Tesla actually had a really good quarter. Uh, so, it is their, um, highest Q2, uh, revenue ever. Like, they hit 28, um, 28 billion in revenue, which is actually higher than the estimates. So, if I go to the estimates, dang, all my stuff's all messed up here. Tesla, here we go. Uh, estimates were 26 billion. They hit 28. So, um, it was a big number. There's actually one thing that was really important. So, one, it was obviously they had more cars delivered. We knew that was going to happen. Um, but what's really interesting is the FSD subscriptions jumped from 1.28 last quarter to 1.48. for it. Now, this is huge. This is the most amount of FSD subscriptions they've ever added in one quarter. This is one of the three things that I said we really need to understand, uh, during this, um, earnings is, are we seeing a jump in, in FSD and in the software services that, um, car owners can subscribe to? The answer is yes. We actually saw way bigger than I thought. I didn't think it was going to be that big because they did a huge, um, campaign back in Q1 where they got rid of the, um, where you could buy it kind of outright. So, you could buy it for like, I think it was like $10 or $12,000. You could buy it for, for life. They got rid of that, um, and basically said, you know, you've got three more weeks to buy that. And so, I thought everyone who wanted to buy FSD would buy it in that moment. And so, we probably have more of a flat FSD, uh, for, for Q2. But in fact, we've seen 1.48. So, um, over 200,000 FSD subscribers in one quarter. So, again, biggest quarter ever in terms of jump of new, um, new car owners getting FSD. So, that is huge. Um, part of that is because of the amount of deliveries they had, right? So, that does make a difference. Um, and then, uh, and then also they've now have FSD that's available, I think, in the Netherlands, um, and, um, uh, Lithuania, I think it is, and, and maybe a few other countries. So, they're starting to see this, um, in, in Europe, which is great. So, that's the good news. Um, the, the only real bad news here, um, for, for Tesla was capex. So, capex was way higher than, um, than the market wanted. Uh, so, we hit, uh, 5.8 billion, um, which, you know, made them not even profitable for, or no free cash flow, um, for the quarter. So, actually negative, um, and so I haven't had that in a while. But the good news is, if you look at this chart here, um, if we look back at the last 12 months of Tesla, um, they have now reached 100 billion in revenue, uh, in the last four quarters for the first time in company history. So, you know, for those that were following, I think I talked about this on Monday, I said we're probably going to have one of the best earnings ever for Tesla, and they did. They actually did. Uh, and probably on the FSD side, um, I think they, they even outperformed what I thought was going to happen. So, that's the good news. The real question to come, and this is going to be what they say on their call, it's not till 5:30, so we've still got another hour to go here, um, is what are the plans with the robo taxis, right? Obviously, they launched and, and they talked about it here in their, um, in their earnings. Uh, where did they show this? Right here. So, they've now launched in three cities in, in Florida. So, Miami, Orlando, and Tampa. They just did a land in Tampa yesterday. Um, so they're ramping in those three cities unsupervised. Same with in Texas, Austin, Dallas, and Houston. And they've announced that they'll have Phoenix and Las Vegas coming soon. So, at some point, probably in Q3, I would imagine we'll see those. So, okay, that's, that's good news. The problem is, is like these have like 10 robo taxis, not even, right? So, it's very, very, very limited. The only one with real size is Austin, which I think is up to close to 200 at this point. So, um, there's not a lot of scale, uh, in any of the jurisdictions that they're currently in. And they're quite small jurisdictions, too. Um, so, it's not a great service today. So, it's, it's theatrics more than anything. But, of course, you got to start somewhere, right? You got to get them live. You got to do a little bit of testing. Um, you got to have, so it starts small and then it grows. So, the real question is going to be guidance on today's call on how big can these get and how soon. Um, and if they don't give any answer on that, I think Tesla's going to stay down. If they do give some answers, then I think Tesla will go back, um, to where it was before close. The other interesting tidbit that they put in here is they listed their production numbers, and I don't think they've shown this before, but they are now showing that a CyberCab they can produce more than 125,000 of these. Um, these only started in production this quarter. So, we've never seen this number before. We saw there was something like, you know, two, 300 CyberCabs that have been manufactured and produced over the last, uh, couple weeks, um, in Texas, but we didn't really know if they were going to continue that. We don't really know, you know, how much rent can come from that, what kind of production we can see. And so, um, again, we'll have to wait for the call. I'm sure they'll give more specifics, but, uh, first time we're seeing that they are able to produce over 125,000. Obviously, the endgame that they've talked about is one to two million, uh, per year. Um, they're not there yet. It'll probably take two years for them to get there, but even just seeing a number on this is, is good to see. So, um, all eyes on the guidance that we get in, uh, in the call. Uh, let's just see if the market has moved at all. Yeah, it's starting to climb back up. Um, you know, it was down to, I don't know, 360. We're back up at 365. Um, Tesla always does this. It's all about the guidance. We'll have to wait and see what Elon and the squad say on the call there. Um, so, overall, not bad for Tesla. Um, one thing that I don't love to see, uh, is, let me just pull Tesla's chart up here. Um, if I full screen this chart, we're going to dip below, barely actually. Actually, yeah. So, if we open, we're going to dip below this trend line that I was been pointing out. I think I tweeted about this earlier. That's okay. We've done this before. You know, early 2025, we dip below a bunch. We shot above, uh, back in 2024. We dip below, we shot up above. So, not overly concerned. Um, if we, if we dip below again, I think, um, it's all going to depend on what they guide here on the call.
All right, that's Tesla. Service Now, this is an exciting one, guys. Um, Service Now, where are we? Sorry, I'll get my tabs figured out next time. This is my first time doing this, obviously. So, um, let me just show this tweet first. So, Service Now, this is a big one because the market has been calling that SAS is dead for a long time, and Service Now is the first in Q2 to do their earnings to kind of let us know what do we think, what's going to happen with SAS. Um, and they beat on every single number. So, um, their subscription revenue, uh, is, is up 24.5% year-over-year. So, that's great to see. Uh, total revenue is, is, um, up versus estimates, 3.99 instead of 3.92. So, that's great. The number that really matters, and we've been talking about this over the past week in Milk Road Pro for those that are members. So, you already know this. Um, CRPO. This is basically their, um, revenue that is, uh, contracted out for the next 12 months. Um, will this go up or will this go down? Estimates were around 19%, uh, potentially even lower, and, um, it beat, so it went up 21% year-over-year. So, this is huge. This shows the business is growing. They're actually locking in contracts. The reason why this number matters is, um, everyone thought because of IBM and, uh, who was the other one? Pang, Pang, um, in their earnings over the last week, they said that, um, on the, the SAS side of things, you know, people are holding out on, on, um, basically paying for more because they're so focused on what do they need to do for cybersecurity because these new AI models. Um, and so the market kind of tanked on that. You saw Service Now, uh, you know, over the last little couple days here, has gone down big. I think it was down like 6% today. Uh, let's just pull up the chart. Um, you know, Salesforce was down, I think, three or four percent today. Uh, where is it? Yeah, so 4% today. Service Now is down six and a half percent today. So, um, you know, they were down pretty bad and, uh, based on these fears, and it looks like anyway, um, there was nothing to be afraid of because their numbers are actually looking pretty good. So, this is great news. Again, we'll have to hear what they say in terms of guidance, um, moving forward, uh, if this will continue. But the fact that you're seeing that their, their 12-month, um, uh, revenue that's contracted, uh, is growing, and it actually grew higher than what everyone expected. Uh, this is, uh, this is a really good, really big deal. Um, now, I haven't had a chance to actually read through their earnings yet. So, I don't have more details on that. Uh, let's do a quick search on Twitter and just see what, uh, let's see what the market is saying, um, about, uh, about any of these. See if anyone cool is saying something fun. Um, by the way, if you guys are listening in, feel free to share in the comments. Yeah, you know, we're up, what are we up in the after-hours here? 4%. So, still below what we were, uh, at the start of the day, right? So, it's not like we, we made any clear progress here, but ultimately, still good to see, um, that, you know, we're beating, um, and, uh, we beat the high end of our guidance range across every top line. Yeah. Yeah. So, Service Now had some, um, you know, they guided a lot lower, uh, previously for this year. Um, and so maybe that was by design. But I mean, Service Now has been down like 30, 40% over the last year as a result of that. Uh, let's see what we actually are, just so we have the numbers correct here. Maybe even more. Uh, this looks like more like 50%. 60%. Uh, and so they, they guided down. So, I think this was kind of expected, but now they're actually able to guide back up and they're starting to beat again. So, that's, um, that's good. This is what you want to see. You want to see them kind of manage like this. Um, looks like Service Now just reported a major dropping in gross margin. This marks their lowest figure in more than a decade. That's not great. Um, so, that is one issue that we'll have to look into and see why that was. Again, they'll, they'll talk about this on the call. Um, what else? Anything else in terms of, of Service Now? [gasps] Um, that's kind of it for now in terms of what we're seeing, uh, in their, their numbers. So, overall, guys, um, I would say a pretty good earnings for all three companies. Um, and, you know, I know Tesla's down, but we expected that. We called that, and, and we've been sharing that in, in Milk Road Pro for all pro members. So, you guys kind of knew that we expected them to do well, uh, but to ultimately the stock not to perform very well. But what you're seeing here is, look, consumers and enterprises, they're spending money. We're buying new cars, right? There's tons of things happening in terms of, you know, spending money on ads, buying, uh, cloud, and buying software. And so, um, ultimately these companies are doing well. So, I think this is a good start to earning season. Think if you're seeing these three companies with good numbers, you're likely going to see many of the other companies with good numbers, and probably you're already seeing a reaction in the after-hours, uh, from some other companies. Let's see if anyone else is up as a result. Um, not so much. Again, what, what we really need is guidance here. So, you'll see Nvidia and all these other companies in the, um, AI infra space, they're going to move once they hear what Google says about their capex, uh, for the rest of this year. If that raises, you're going to see probably Nvidia and Micron, Nibius, etc. They're gonna, they're gonna probably move in, in after-hours. You're already seeing, uh, Nibius up a little bit. So, um, it's all eyes on, on the earnings calls. Uh, and, uh, and we'll see kind of what happens, um, from there. But overall, this is, this is great. This is exactly what you want to see in your first, um, you know, three big names for this week. Uh, and then for the next couple weeks here, we're going to have a ton of earnings calls, uh, coming in. So, uh, oh, someone in, in the Twitter comments is saying that they worked with Google Cloud Platform, uh, saying it's a really good platform. Yeah, I mean, they're an absolute beast. They're the best cloud platform, at least by revenue in the world. Uh, and, um, I don't think Google is going to stop that. So, they've got, what did I say? 520 billion now in, uh, in their backlog. Where was that number, uh, for Google? Where's the backlog here? That backlog is crazy. And so the thing to understand about that, guys, and why that number is so important is that's like over the next, you know, couple years, how much are they going to be able to sell in terms of their cloud? Um, and they've already got a backlog of 500. I think it's 10 or 515 billion. Um, which just means, you know, these are contracted out. This is revenue that that's coming. And so, it's clear for them to sell, uh, to spend more on capex, right? Uh, they can build more, uh, they can go further into their AI, into their cloud products because the revenues are coming in. Now, the free cash flows are not there for the first time, um, in, I don't even know how long. Where is the number here? You'll see that they were actually negative in free cash flow, right here. So, by 5.8, 8 billion. So, we've never seen, we haven't seen that in a very long time for, for Google. You know, we were 10 billion last month or last quarter, 25 billion the quarter before that, 24 billion the quarter before that. Um, so, if you look at their, their trailing 12 months, they're still 53 billion in free cash flow, but for the first quarter in a while, they are negative. Um, and I expect that to continue, uh, for a few more months. But they can do that, right? Like they've, they've got the money on their balance sheet, so they're fine. They can raise capital. Um, and I think ultimately, you know, they're showing that they're able to generate revenue from it. They can generate revenue from, um, their, their cloud business, right? A lot of this capex goes into cloud. Um, and so, and that's growing at, what did I say, 80 something percent a year, which is absolutely unbelievable. Um, so, you know, why not continue to pile money into this cloud business that's growing 82% per year? And then obviously they've got, um, you know, their ad business, which is growing, but I think they'll be able to improve this using AI over time, like Meta has, like Amazon has. So, I think there's still room for this to grow. Um, there is concerns that maybe their search business is kind of, um, starting to fade away because of AI, though, you know, they're still growing at 17% year-over-year in terms of their search. A lot of that comes because they've included AI into their search function. So, they have the AI overview and the AI mode when you go to search now in Google. So, they're monetizing that quite well, and I think that'll only, uh, actually probably improve, especially as they integrate AI into how to do that. Um, and then, I mean, they've got a whole new world of, of, um, kind of like surface area to, to monetize, which is, you know, their 950 million new Gemini app users. I think that's, that's crazy, and I don't think the market fully respects what that means. Um, because there's just so much they can do for that, especially when they can start to integrate that into phones, into Android, um, and have the agentic world play in. And understand Google is the best set up for this because they know how to crawl the internet better than anyone. They own the devices and the, and the operating system. And then, um, and then they've got the users already, right? And so, they're, they really are going to, um, be the forefront, the leader of this next sort of like consumer agentic adoption. Um, and so, uh, yeah, they're going to continue to, to scale their capex. If my guess is, they're going to raise, uh, whenever this call is, if it hasn't already happened. And, um, market might not like it, but I think long-term Google's an amazing buy here at its current valuation. So, I think, uh, yeah, great news for Google, great news for Service Now. And, um, I, I don't know. I, I don't mind Tesla's numbers seeing here. The fact that FSD grew that much pumps me up. And I mean, for anyone who's, who has a Tesla that's using FSD, um, it's incredible, and they're adding new features, you know, every day here. Um, so, one of the things that they're adding right now is the main problem with FSD is like, it's parking, and it doesn't remember the routes that you take to like go home or to go to the gym or to do whatever. They're now fixing that. They're adding that in. That should be coming, they said, this summer. Also, the ability to talk to Grok and just tell Grok, hey, can you park over there or can you do this over here? Like, we can talk to Grok right now in the car and it'll find directions for us. But I can't get it to do things in the moment like, "Hey, could you park near the front of, you know, whatever my gym?" I can't do that. And once you can do that, then this machine is going to be incredible. You're going to be able to literally control your car by speaking. Um, and so, if you talk about more ways to get people to sign up to FSD, these are the ways to do it. And, you know, I almost never need to, um, intervene to my FSD today. So, this, this car is unbelievable. And I think this is why we're seeing FSD growth so high right now, uh, is because people are, are realizing it is so much better not have to pay attention and drive your car and let your car do it for you. So, they've unlocked an incredible product, and there's no doubt in my mind that continues to grow. Um, but all eyes on robo taxis. Now, I can tell you from experience of having a car, the car is good enough to drive people around without a doubt. I do it literally every day, and it is way, way, way better than a human driving. But, of course, they need to make sure they have zero accidents, zero injuries, um, and get approvals. So, it's a slow and steady grind to get all this stuff, uh, you know, approved and live. So, um, it'll come, but it's going to be slow and steady, but we'll have to wait and see what they say. The other thing actually that I'm, I'm waiting to hear for them to say on the call is why did they have such an increase in their deliveries? Is it because the price of oil? Because, okay, that's great, but that might not be sustainable. Or is it because of FSD? Did they see a bunch of people buying the car specifically to get FSD? If that is the reason they saw record numbers in Q2, that would also be a very bullish tell for Tesla. Um, so that's the one thing that I think there is some upside in that I think the market's not really seeing is if we get that. Now, I don't know what the reason is going to be. Um, but seeing FSD up that much, uh, up 200,000 in a quarter, um, makes me think that there is potential they're going to, they're going to suggest that. So, that would be the other thing that'd be really cool to see.
Well, guys, uh, I think we're going to wrap there, but, uh, that was a great show. So much going on here in earnings. And, uh, I'm going to start doing this every single week. By the way, if you want, um, to see what we think about these companies and markets before all this happens, go Milk Road Pro. There is a link in the description below this post, uh, both on YouTube and on X for those listening. It's $1 to try it. You try it, you get to see five analyst portfolios. We update you every day. There's like seven updates today inside the platform talking about all the different earnings that are coming out, what our thoughts are on them, what we're expecting, what we want to see. Um, and so you get that before everyone, before I come on the show, if you are a Milk Road Pro member. Plus, you get to track our, our live trades in our portfolio. So, uh, it's crazy not to do that because it's $1. So, why would you not do that? Um, and, uh, yeah, otherwise, I'm going to do this live probably three times a week, maybe even get to five times a week at some point. Uh, we'll see how things go. But, thanks everyone for tuning in. Thanks for joining. Uh, a lot of fun on earnings day. Maybe next time I'm going to have to actually just, you know, live, um, screen share the, the, uh, the earnings calls so that we get more information because there's only so much you get from these earnings, right? You need to hear the calls and, and listen to them and see what they're saying and what they're guiding. Obviously, can't do that. Still too early. That's only happening, uh, in the coming, um, 30 minutes here, at least for Tesla. So, next time we'll do that maybe. But thanks again everyone for joining in and, uh, take care.