Core Fund Update 1 + Alphabet's Earnings Analysis

July 17, 2023

Author

Wiko Steyn

#5 of 20 stocks added to our Core Fund. $MSFT $ADBE $AMZN

Alphabet's Earnings Analysis

An initial overview of Alphabet's earnings might not give a very good impression, but we dive a bit deeper to see what the current state of Alphabet, Google's parent company, is. The earnings summary is attached as an image. One glance and you will see a lot of misses, but the first thing to notice is that these are not big misses.

Positives

Google search is still growing at >20%
Google Cloud growth is >40%
Operating Margins is almost 30%
YouTube short videos has increased daily viewing by 400% from last year
Aggressive share buybacks

Negatives

YouTube ads is down
Google Cloud margin remains negative

Ruth Porat the CFO mentioned that YouTube was impacted the most from the war in Ukraine due to the suspending of the vast majority of their commercial activities in Russia.

Given the opportunity in Google Cloud investors should remain patient and continue monitoring the margin.

FU Investments is adding to our position on share price weakness and we now have a 50% allocation in Alphabet.

We also initiated 3 more starter positions in industry leaders while the market is trying to figure out its next move. Amazon with a score of 76, Adobe with an 81 and Microsoft scored 83, placing all three in our Core Fund Approved category. These companies are still showing double-digit growth and expanding their product offerings. We are starting with 25% positions in Adobe and Amazon, again to limit the risk, especially since both companies still need to report earnings and this can be a very volatile time. Microsoft posted excellent results with beats across the board so we are starting with a 50% position.

Portfolio Updates Summary