Google And Tesla Earnings Prediction

Welcome back everyone. We have a busy week to get into and we're starting it off with a bang. If we look at the market today, as the kids say, the market is getting cooked. Everything is just bright red. It's red across the board. We have NVIDIA down 5%, Apple down 3%, Amazon's down 3%, Google down 3, Meta down 3.6, Tesla down 7%. We have one company sticking out there, this green one that's Netflix. We'll be going into that a little later.

They just reported earnings. But other than that, overall, the market is getting crushed today. Now, as our portfolios are getting cooked, we do have a chance of redemption here. It's earnings week. We have a chance for our companies to prove that they're worth more than what they're trading for. And they can do that by reporting their earnings and giving strong earnings and strong guidance. And this week, we have some of the most important companies in

the market reporting earnings. We have companies like Google, Tesla, Moodys, Equifax, Chipotle, ServiceNow all reporting earnings this week, and I'll be going over all of them. We're going to be going over some predictions with what Google is going to say, what Tesla is going to say, what I believe these companies are going to be doing this week. So we have a lot to jump into. We have continued news of the political battles, like President Trump is now really going after Jerome Powell.

He's ramping up his attacks on Powell, saying that he's a loser, demanding the Fed chair lower rates. Now we'll be going over what this means, how it impacts the market and the likelihood of President Trump firing Jerome Powell. So we have a lot to get into. Let's go ahead and start off with the biggest earnings reports of the week. We have a handful of really big

companies that are reporting this week, but I think we should start off with the most important ones of the week. Thursday after market close, we have Google reporting earnings. Now let's go out and bring this up and look at a few things with Google specifically. Google usually beats on their earnings per share estimate. We can see that here. The times they've missed her in red, the times they've beat are in blue. If we look at how much they beat by, typically it's by a decent margin.

Now last quarter was really close. In fact, they they barely beat on their earnings per share. And last quarter they also missed on their revenue just barely. Even though this is mostly in line across the board, Google traded down after their last quarterly report. So there's no guarantee that even if Google beats on their earnings per share and they beat on their revenue, that the stock will go up.

In fact, I believe there's a strong chance that Google will report a beat on the top and bottom line and the stock will still trade down. And that's because investors really aren't too concerned with what the report was over the past three months. So much has changed in just the past couple of weeks that they're more concerned about the future. Everything with these reports isn't really going to be about what happened, it's going to be more so about their commentary of the future.

It all depends on if Google can paint a bright future ahead, a very prosperous future, and one insulated from the many challenges they're facing. For example, if we look at what to watch for, this is where we feed Qualtrim a lot of data and their earnings transcript. We ask it to look for what is the most important things coming up this quarter, and it outlines 5 different things. The top one here is by far the most important, which is AI integration into core products.

We've seen this happening over time. Google's integrating artificial intelligence into Google Drive with their spreadsheets. They have AI functionality in them now. They're integrating AI into Gmail. They're integrating AI into search with AI overviews and AI mode. They're integrating AI into YouTube with AI summaries, and you can prompt questions about YouTube videos and every single property of Google. They're now integrating AI into all of them. Now, of course, it's not just

Google doing this. Every company's trying to integrate artificial intelligence into all of their products. You can see basically every company doing the same thing. But Google has a lot of properties to be able to leverage AI more than most companies. So they have a lot of opportunities for growth here in artificial intelligence.

But this is also probably one of the biggest questions of concern for Google. We know that one company in particular, a private company, is growing very, very fast. Open AI. Chachi PT, I believe, presents the biggest existential threat for Google. Now, Google faces a couple threats. Of course, there's just the normal level of competition that

Google faces. And then on top of that, there's all the regulatory issues they face with potentially selling off Chrome and breaking up the company. But even beyond all of that, I believe the biggest existential threat that Google faces is the growth of Chachi PT. I really think that that's the number one thing that investors are going to be focused on going into this quarter. Let's take a look at one graph as a piece of evidence here.

Right here we have the ChatGPT VS Gemini monthly active users. I'll move myself out of the way so you can see the growth in each of these applications. Gemini, the orange one is Google's version of ChatGPT. It's the LLM app, and then you have the blue one there, which is ChatGPT. Even though Google has all of these properties of owning YouTube, owning Gmail, owning Google Drive, they haven't so far launched this product successfully enough to gain

massive traction. Chachi PTS growth is insane. To put this in perspective, if Chachi PT continue to grow at the same rate it has for the past six months, it would surpass Google searches traffic by the end of 2026 in only two years. Now that's a big assumption to make that it will continue growing at this rate, but it just shows how fast it's grown. They now have over 500 million

weekly active users. Sam Altman just said a couple weeks ago that ChatGPT traffic has caused so much strain on their server that the usage has nearly doubled in only a couple weeks. If all these people flock over to ChatGPT and fall in love with these LLMS, they're consuming all this information in a different way. And even though the use cases are different, the way that they're consuming the content is different. It does present a relative threat, at least down the road.

ChatGPT could change their service to have greater overlap with what Google does. So I see that right now as the number one concern for Google. They need to show their strategy for how they're addressing so many people using LLMS, how they're addressing so many people going over to ChatGPT. They need to stem the flow. They're starting to do that with AI overviews. They now have an AI mode in Google, and they're now promoting Gemini to a greater

degree. They're also allowing more things to be free on Gemini, which I think is all the right move. They should put Gemini in front of people more. They should really market this product to get it into more hands. Next up, we have the brightest spot for Google, which is the cloud business growth and expansion. Alphabet has achieved significant growth in its cloud business, noting an increase in customer commitments and

strategic deals. The focus on enhancing AI powered cloud offering is expanding data center capacity is crucial for meeting growing demand, indicating continuous revenue growth, market penetration in the cloud sector. Additionally, they also just purchased a cybersecurity company specifically for multi Cloud, which is another tool that they can use to sell cloud to different businesses.

And while that cloud revenue is growing quickly, we also have the cloud operating margins moving up substantially to now 17 1/2%. Investors will be laser focused on what the cloud revenue looks like. This is going to be a major part of Googles report. If they disappoint on cloud, if they don't get as many commitments, if it doesn't look like it's quite as strong, then the stock will likely go lower. And then finally with Google, we have to take a look at their commentary regarding

infrastructure and investments. Remember that last quarter they said they were going to put way more into cloud infrastructure than investors anticipated. And that's part of the reason the stock sold off. Investors were a little concerned with how much money they're flowing into CapEx. That money takes money out of free cash flow.

So even though Google's a company with fast growing revenue, fast growing EBITDA and net income, the free cash flow really isn't growing that fast because the free cash flow subtracts out CapEx, filter out everything but the capital expenditures and see it double over just the past year. We want to know as investors what they're spending this money on and what the expected return is and when. We want to know the ROI that we're getting. So investors need to demand that information.

We'll be listening for it on the earnings call and in the commentary. Overall, Google investors can expect a very strong Q1 of 2025. They're going to post some great numbers, but more importantly, investors will be focused on what's happening now and the future. The commentary with four key things to focus on. One, what is the LLM landscape look like? What is their plan to deal with Chachi PT?

This is top of mind for investors, and Google has to answer these questions with very good answers #2 what does the landscape look like with the amount of lawsuits and regulations that they're receiving? What is your expectations with all of this uncertainty with regulation three? What is cloud look like? Are they growing in cloud? Is the margins increasing? Do they still remain very bullish on cloud? And then #4 what is the CapEx outlook look like?

Are they going to spend the same amount that they already said? Are they going to raise the amount or lower it? And what is the expected ROI? We want answers on that as well. So going into Google's report, I think there's going to be a lot of questions that need to be answered. If Google management doesn't answer these questions well, the

stock will struggle. Now Next up, we jump into Tesla, which is reporting earnings this week Tuesday after market close. So tomorrow after market close, typically around 20 minutes after the market close is when Tesla reports their earnings. And for Tesla investors, this is going to be a really interesting one because Tesla is really likely to miss on the revenue or the earnings per share this time. They just are. There's a lot of unknowns.

There's a lot of uncertainties because there's been some brand damage by Elon Musk. There's been protests, there's been outright backlash and attacks on Tesla owners. There's been a lot of things that's happened with Tesla that makes it highly unpredictable this quarter. And when we look at the historical performance of Tesla with their expected earnings, they miss frequently. In fact, out of the past six quarters, they've missed on five of them. So recently, they've missed on

the majority of their reports. Now, missing on your earnings per share in revenue estimates is not the end of the world. Investors in Tesla are investing for the long term. They're investing for step changes in disruptive and innovative technology. So if you're invested in Tesla, let's be honest here. Your biggest concern is not whether or not they meet their earnings per share or their

revenue estimates. Your concern is on the next five years of Tesla and whether or not they meet some of their major initiatives. We have a couple really important things to focus on with Tesla. One of them is the production and delivery records, and I would say even more so, the overall demand outlook. What does it look like across the globe? What does demand look like in China? What does it look like in Europe?

We know that there's been significant backlash against Elon Musk's politics in Europe, specifically Germany. Now Elon Musk seems to have responded to that. He seems a little less politically focused on Europe. He's not really as involved in it as much, and there's reports

that he's leaving Doge soon. Both of those should help heal some of the issues caused by the brand damage with Elon Musk in Europe. But then you also have the question of China. Tesla does a lot of business in China, and the tariff battle between the US and China certainly hurts that business. And investors will want to know the extent of that damage. How much is it impacting their sales in China? Tesla has likely suffered both significant demand decrease in Europe and China.

Not only is Tesla a car company right now, at least a large part of their sales comes from vehicles. And that's already a cyclical business. It's a tough business in and of itself. When you layer upon that political commentary, feuds between different countries, it only adds to the intensity of that cyclicality. So Tesla has had some major headwinds fighting against it. We want to see clarity on this

going forward. Tesla investors want a brighter story ahead, one that's less politically involved and one that has greater clarity with the tariffs. Hopefully, these large tariffs against China will resolve quickly so that companies like Tesla can operate with greater clarity. Elon Musk is likely to talk about version 13 and 14 of the full Self driving, which reportedly is much better than previous versions. A lot of people are raving about version 13.

He's also likely to talk about the future deployment of their robotaxi network. Elon Musk has promised driverless rides this year. That means no one sitting in the driver's seat as you have passengers taken from point A to point B, no one in the driver's seat. Even though Elon Musk has repeatedly kind of given timelines and he's extended those timelines, he's been very definitive on this timeline of it happening this year. So that's going to be a real test for Tesla.

What does the progress look like? The other big thing that they're focused on is humanoid robotics, specifically Optimus. We see little previews of the technology that it's now walking more normally. It's not walking like an old man. Optimist now looks a little bit more agile, little bit younger, and this is something that's a bit further off. This could be 5 to 10 years off, maybe even further.

But investors are excited at the prospect of owning a company that's working on humanoid robotics. My expectations are, again, that if Tesla has a poor quarter and they don't have good numbers this quarter, they'll spend a lot of time focused on humanoid robotics and robotaxi. When we look at the differences of these two companies reporting this week, it's important to know the differences in how they look going into this week. For example, Google and Tesla

both face many challenges. Google has to deal with LLMS. Tesla has to deal with all this evolving technology with Waymo, with disruption as well. So both of these companies have challenges and risks to their investment thesis. But when we look at the valuation, one of the key differences is that Google trades at a 16 Ford PE ratio. When we look at Tesla stock, I evaluate it as being much higher risk than Google because it trades at an 80 Ford PE ratio, a

100 PE on a trailing basis. So while you have valuation support with Google, with Tesla you do not. And it's more reliant on the narrative. Elon Musk and the management team needs to paint a very

convincing narrative to keep this stock higher. Now Next up, we have Moody's and Equifax. These are two companies that are in My Portfolio. We'll start off with Moody's here. I think overall, Moody's is going to be much more mundane, a little bit more boring than the likes of Tesla or Google, but there's still some interesting things to look at with this company. My prediction is Moody's will have a great report. I think they're going to post

some really good numbers. I think there's been a lot of debt issuance, a lot of companies doing business. Companies are likely to pull back on that a little bit with the tariff concerns. So I believe that we're going to see some commentary there. But overall, when we look at these different things happening with Moody's, I see them happening in directionally the right direction. There's going to be strong revenue growth.

Moody's Investor Services, which is their credit rating business, is going to get forecast of what they think global debt will be, what the issuance will be. That's a major part of this business and a very lucrative part. This part of the business will do well. Now, I'm not expecting interest rates to drop anytime soon, but Even so, I think that Moody's Investor Services is well

position. We also have the expansion of Mooby's analytics. This is the other half of the business where they package all of this data and sell it as analytics. They have decent revenue growth and they're usually deeply embedded in companies, so it's not that exciting of a product, but it's one that really is profitable and growing. When we get to Equifax, this is another company that's new to My Portfolio. I have a small position in it, but I'm still building it up.

My prediction for Equifax is that this report is going to be mostly negative. Equifax has almost every headwind you could imagine. Almost every aspect of their business, cyclicality and macro wise, is moving in the wrong direction. For example, with the mortgages, the company has seen a significant decline and mortgage credit inquiries now forecasting a drop of approximately 12%.

This is a credit Bureau offering the raw data of different people wanting their credit rating whenever they get a mortgage. So when people are buying homes less frequently, their business declines. We also have hiring market weakness. There's already a notable decline in hiring volumes with expectations of an 8% decrease in 2025 relative to 2024. I think that Equifax is likely to say that this decrease will be great, greater than 8%.

It's going to be 10 to 12% because they said this before tariffs, before all of this economic and political uncertainty, before a huge trade war with China, before tariffing all of our allies 10%. With this trade policy rolled out the way that it has, it's certainly caused companies to be more cautious about their hiring practices. If they pull back on their hiring at all, then the work number one of the key products from Equifax is going to be

impacted. So that's macro effect #2 impacting this company to a greater degree. Some bright spots with Equifax is they're currently becoming a more lean business, more efficient with app deployment and service deployment because they've moved everything to Google Cloud. That's been a very expensive thing to do. But now they're mostly through that process. So we're going to see commentary

on that as well. But overall, my expectations with Equifax is going into this week, it's going to be a rough 1. The earnings reports going to be really tough. I believe there's going to be a lot of negative commentary, negative data pieces being shown, and the stock is likely to fall further. If that happens, I'll continue to buy because I'm not buying this company for the next two months or the next three months. I want to own this one through this entire market cycle.

Through the other side of this, I believe that intrinsically Equifax is worth a lot more than it is today. Now Next up, we have the burrito company Chipotle reporting

earnings Wednesday after market close. This company typically beats on the earnings per share because they have a, they have a huge degree of control over their margins, but it's iffy whether or not they'll beat on the revenue. So the top line is, is very iffy. I think there's a 50% chance of them beating the earnings per share they're likely to beat. My concern for Chipotle is in their guidance.

I think they're going to be a bit cautious because we've seen what's happened with other food companies. Texas Roadhouse noted A notable slowdown the past few weeks prior to them reporting earnings. So overall, I'm cautious about Chipotle this quarter. I think there's a good chance that management will warn about demand. Now finally, we have a company that I've mentioned a few times, it's reporting earnings this

week, but it's one that I've never invested in. It's ServiceNow. ServiceNow is very similar to Salesforce in a lot of ways. In fact, if I just give a brief summary of it, Salesforce is more for like the marketing salespeople, customer service. It's your communication between your company and the customer. It tracks all your leads and all the interactions you've had and it has a lot of marketing tools.

ServiceNow is like the other side of things where it's more on the IT side, the process side, the HR side, all the back end things that happen with the company. So while Salesforce is more outwards customer facing, ServiceNow is more internal facing.

Both of them serve different parts of organizations, but ServiceNow is a company that I've been looking at because on paper it matches the philosophy of the compounding machines better than Salesforce. They don't do as many acquisitions, More things are organically grown within the company. The company has substantial revenue growth, it has margin expansion, and it's even shown to have more operating leverage than even Salesforce.

So this company in terms of compounding machines, looks like it has better overall characteristics than even Salesforce. The only issue with this one is it's substantially more expensive than Salesforce. So while I'm evaluating both of these companies, the characteristics and the valuations, I'm making judgement calls. And right now, even without good ServiceNow is how incredible the characteristics of this business

are. I believe there's just better opportunities in this market, companies that are still really good that are selling quite a bit cheaper. But ServiceNow is just an incredible company. For example, if we look at what to expect this earnings report, we can see the history. This isn't a mistake. They never miss on their earnings per share. So statistically speaking, based on history, they have a very low

likelihood to miss. Now with ServiceNow, I'm going to be looking at this report and seeing what type of new products are coming out with and specifically how they're leveraging AI because like all of these companies, they are implementing AI into every aspect of their business. But ServiceNow is a highly. Integrated product. Last quarter, ServiceNow reported a remarkable 150% quarter over quarter deal with their growth in their Pro Plus

AI offering. So this is their version of implementing AI. It grew 150%. Obviously, that's from a very small base, so we want to see how that grows throughout 2025. Investors, of course, will be looking at their growth prospects for their top and bottom line. For example, ServiceNow is leaning more heavily into HR capabilities. We want to see whether or not they're able to continue taking market share there. Overall, I'm more bullish on

these type of companies. I actually think that Salesforce and ServiceNow alike will have a decent report. They're not directly impacted by the tariffs, and if there's not significant economic weakness with people being laid off left and right, these companies should be able to still grow. But we'll see how things go this Wednesday. Now moving on, as we look at today's market that's deeply in

the red, it continues to just go down further and further. Right now, it looks extremely red across the board. Even Netflix is just hanging on by a thread. Even Netflix is now just .3% in the green. So across the board, we have deeper and deeper red numbers. And most of this is spurred by commentary from President Trump

over the weekend from CNBC. President Trump on Monday ratcheted up his pressure campaign against Federal Reserve Chair Jerome Powell, calling him, quote, a major loser and warning that the US economy could slow down unless interest rates are lowered immediately. Trump has said that there's virtually no inflation and that the cost for energy and most other things are on the decline. Quote, with these costs trending so nicely downward, just what I predicted they would do.

There can be almost no inflation, but there can be a slowing of the economy unless Mr. Too late, a major loser lowers interest rates. Now, End Quote. Trump is ramping up the attacks on Jerome Powell, and the market doesn't like this for a couple of reasons. One of them is that Jerome Powell is a good Fed chair.

He's actually been decent in terms of what Fed chairs are able to do. Now, it's very easy to criticize the Fed chair from a standpoint of sitting on the sidelines and looking at data after it comes in. But the Fed has to make very difficult decisions, and they incorporate a lot of data into those decisions. The Fed also is supposed to remain apolitical, not giving in to political pressures like what the president is doing now. And the market is concerned about this for a couple of

reasons. First of all, the market does not like the idea of President Trump firing Jerome Powell. And it seems like it's getting set up that way a bit more and more as the criticisms get more ramped up, more ratcheted up, it seems like he's getting closer to actually taking steps to fire him. And that would cause chaos in the market. The market would look at that is another unpredictable thing happening now.

We don't even know who the Fed chair is or what their history is. We know that Jerome Powell's a very stable, level headed person. That's data dependent. Who would be the new person that's put in as a Fed chair if Jerome Powell gets fired. So that's a big uncertainty. And I believe that if President Trump fires Jerome Powell that it will cause the market to go much lower. Scott Bessent knows that and I believe that he's advising Trump to not fire Jerome Powell.

Another thing that investors are concerned about in particular with these attacks on Jay Powell is that it lays the framework, the pretext for if the US economy goes into session, it can be blamed on Jerome Powell, on him not lowering interest rates fast enough, him being too late. When in reality, the biggest factor going into that would be the tariffs, the additional tax, the friction that that puts on

businesses. So it's also a little bit of a blame game, Saying this is going to be Jerome Powell's fault, he's too slow, it's going to cause economic slowdown are the words that President Trump used. In reality, these massive

tariffs are causing businesses to slow down as well. So while there's multiple factors here, this also sets up for playing the blame game if we get into a recession. Now, even though President Trump is attacking Jerome Powell on these different Truth Social posts and tweets, it is still unlikely that he's going to take the action of firing Jerome Powell because he's likely been informed that that will cause more significant uncertainty and the stock market to react

negatively in a very big way. I believe that this is more of a concern of setting the pretext of laying any type of upcoming slow down in the economy on Jerome Powell. Now moving on, we get to the report that Netflix reported last Thursday before the long weekend in the market. The report overall was really strong, being on the top and bottom line, giving very strong guidance, very optimistic

management. Another thing the management did was they talked about the different rumors, the different reports, reports from the Wall Street Journal, the report that they're aiming for a $1 trillion market cap by the end of 2030. They're aiming to double their revenue, triple their operating profits, become a substantially bigger company. And they basically, without saying so, confirm the report. They said it was disappointing that it was leaked, deeply

disappointing. But overall, they're long term thinkers. And I think there's a lot of room for Netflix to grow and become a more global company. And that brings us to phase two of this company. I've been invested in Netflix for some time. And in fact, right now, I must admit, Netflix is basically carrying My Portfolio. It's, it's just carrying the whole thing on its back at this point.

If I didn't have Netflix in the story fund as a major position, the story fund would be doing dramatically worse. So this stock has been one of the best picks. It's now become my biggest position, $56,000 in gains, which is more than the entire rest of this portfolio combined. As Amazon, Google continue to plummet, Netflix continues to soar. Year to date, Netflix is U past 13%. Over the past one year with the QQQ being up 3%, Netflix is up 80%.

So the relative performance of Netflix against the QQQ or the S&P 500, it's not even close. It's dramatically better and that's the reason that this portfolio has outperformed the S&P 500 to the degree it has. But so far, up until this point, my thesis on Netflix has been that it is the best position to win the streaming war. The whole debate is over all of these different streamers like Disney, HBO Max, Peacock, Apple TV and Amazon. The whole debate was what will

win, who will come out on top. And I made a heavy bet that Netflix would be that winner. And about a year ago, I made the call. Netflix is 1. They beat the competition and now I think that that's become more clear over the past year, almost indisputable. Nobody even argues that Netflix won the streaming war. And I think it's time to move on to phase two of this battle. So far the battle has been Who Will Win the streaming war.

Now the next phase of Netflix's story, I'll call it Phase 2, is global domination. Which company in entertainment will become the globally dominant, total addressable, market saturated company? Which one will offer global entertainment to every country, every single culture and be the one that everybody turns to? There's going to be huge network effects that carry one of these winners.

And now Netflix has moved firmly on from that phase one category of just winning the streaming wars, becoming the first scaled streamer to be profitable to much bigger and larger

aspirations. Now they've moved into the category of chasing the entire world as their market, becoming a total addressable market, saturated company in streaming and entertainment, expanding their value proposition, being just as saturated in all over the world minus China and Russia as they are in the United States. They have a huge task ahead of them. The reports right now show that Netflix has around 300, maybe 310 million subscribers after this most recent quarter.

And the total addressable market of broadband enabled households X China and Russia is 750 million. So they're only 40% of the way through their total addressable market. And as they work their way through that market, that total addressable market will continue to grow as more households become Internet connected. So Netflix is now into phase two global domination. I'm going to continue to hold the stock throughout that journey. But this report was fantastic.

Netflix deserves to be at the price that it is. And I think over the fullness of time, the next 5 to 10 years, this stock will still outperform the market. That's going to be it for this time. See you in the next one.