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테슬라 실적에서 순이익 급증은 SpaceX 지분 투자이익 덕분이며 이를 제외하면 순이익이 75% 감소. 자동차·에너지 마진 하락, 잉여현금흐름 적자 전환으로 30억 달러 신용한도 확보. 옵티머스 양산·로보택시·세미 자율주행은 지연 전망. 구글은 Anthropic 등 투자이익으로 순이익이 뛰었으나 제외 시 감소, 잉여현금흐름 적자 전환, 클라우드 가격결정력 상승은 긍정적이나 TPU 백로그 불확실성 지적. 전반적으로 테슬라는 고평가·마진 약화, 구글은 상대적으로 저렴하다는 평가.
다듬은 글
It's official. If you combined the money that Tesla and Google just lost , you would effectively wipe out the entire company Starbucks and Palantir combined. That's how much money was literally destroyed as Tesla shares plunged 14% and Google nearly 9% after the earnings report. Of course, there's a lot going on in the world right now , including Iran and other events, but in this video I'm going to give you a novice vs.
pro breakdown of Tesla and Google's results. I have put a lot of effort into providing you with clear details for beginners and pros and making it easy to understand. So, with that in mind, let's get down to business. But first, something completely free that I think you'll like. In fact, I know you'll love it.
You know how I see earnings reports the second they appear on my newsfeed? Now you can get it absolutely free on the Meet Kevin app. This is what it looks like. Tesla reports come out at 1:05. We're starting to see notifications about what was said, what the earnings are, what's happening during the earnings conference call, and you can get those financial results and news, any breaking news, absolutely free.
All you need to do is download the Meet Kevin app. And in the Meet Kevin app, you can also receive these notifications. Download the Meet Kevin app. You log in via Google, Apple, or create an account and log in. Once logged in, you can use the same login details to also access the web version. So, you can have it on your phone or use the web version.
Completely free. app.meke.com. Check it out for yourself. Hello everyone, I'm Meet Kevin, and the first thing you need to know about Google and Tesla, starting with Tesla, is this. The newbie will tell you, " Hey, everyone, don't worry. Tesla is doing great. Tesla's earnings per share just skyrocketed because the company's net income doubled ." In fact, if you look at Tesla's net income, you'll see that it grew from $491 million to $1.1 billion.
So , even though Tesla now has negative free cash flow, that's nothing. Tesla's net income is growing rapidly. But here comes a pro to ruin the holiday. Unfortunately, Tesla only received a billion dollars in additional revenue. One billion and five million is right here thanks to their investment in SpaceX shares.
And if you exclude SpaceX's profits, Tesla's net income actually fell by 75%. So Tesla's net income, which looked like it was soaring, actually collapsed. This is not very good. A professional looks at this and says, “This is going to be a problem in the future. Let's see if there's another vertical for growth somewhere or what opportunities we have to make a little more money." And the next thing that is usually addressed after the automotive margin, which, unfortunately, has decreased slightly, is that we see that the margin excluding loans received has indeed fallen.
Automotive margin excluding regulatory credits decreased from 19.2% in the previous quarter to 16.3%. This is because they benefited by $ 230 million in the first quarter from a reduction in warranty reserves and some tariff benefits. So, essentially, they were already predicting last quarter that the good margins they had then wouldn't last long.
Most attentive people saw this, and if you followed last quarter closely or, frankly, watched the videos on this channel or the live streams for course participants, we've already discussed that Tesla is likely to become negative on free cash flow. So none of this should have come as a surprise. The bigger surprise was what happened to the energy sector.
Here's a note on free cash flow. But the problem we really had was this note about energy. The energy storage business returned to growth, achieving its second- best quarterly performance and record deployment volumes. This is great. We are pleased to hear that the energy sector is recovering. But there is a small problem here, and we should figure out what exactly is happening with the margin in the energy sector.
And that's where we come to this page. The newbie says, “Hey, energy is massively renewable. We are recovering. Sure, Tesla may have difficulties with cars, but at least we're making more Megapacks and batteries . That's good." But a professional looks at this and says, " Slow down." Average selling prices of industrial energy storage systems are decreasing.” I literally read the words of their leaders.
They also say that long-term margins in energy should stabilize in the 22.5% range. This is significantly lower than the 30–35% margin that Tesla previously had. And in this last quarter, we saw margins even lower—only 20.4%. So suddenly the margin in the energy sector also started to fall, despite the fact that the volume of energy project implementation is growing very well .
Look, if you look at the deployment of energy systems, you will see that the use of storage has increased by 41%. A professional looks at this and says, "Energy projects have increased by 41%." That's great, but wait a minute. Your energy revenue only increased by 13%. Why did deployments grow by 41%, but revenues only by 13%?
And because the margin literally collapsed . Margins on energy products have essentially halved . It has halved, from 39% to about 20%. This is a warning signal that professionals are paying attention to regarding Tesla : "Wait, this is not good." If auto sales are slowing, margins in the auto sector are falling, and now margins in energy are also falling, then Tesla's core business lines, which previously had exceptional profitability, are starting to weaken.
Of course, this doesn't make Tesla a bad company . There is a lot of good here, and we will now look at it. I don't want to sound too pessimistic or downplay it. There just has to be a reason why the stock fell 14%. When you examine the income statement in detail, you see two very serious problems. Now, when we look at other indicators, we get quite conflicting information.
The first thing I want to do is talk about something good. Since we just discussed the not-so- great moments, let's move on to the positives. Let's take a look at Tesla's balance sheet. Tesla's balance sheet is apparently in fantastic shape. Although it is not as " money" as is often said about Tesla.
Typically, when people analyze Tesla's balance sheet , they overestimate the amount of cash the company has on hand. And Tesla itself announced that it is taking out an additional $ 30 billion credit line to finance its costs for can see this right here. Look at this. Immediately under the mention of the decrease in average selling prices in the energy sector, we see: in addition to using our own cash for investments, we are also raising debt funds, which will give us the opportunity to borrow up to $30 billion to accelerate these investments.
In other words, even though their balance sheet is good, they are taking on even more debt because they predict they are going to spend a lot of that cash. So investors should be prepared for this . Let's take a look at the balance sheet. The balance sheet shows a cash and accounts receivable position of about $47.5 billion, but the company has about $319 billion in accounts payable and about $21 billion in long-term debt.
This really shows that the company has enough cash, accounts receivable, and inventory, if you want to add those in, to easily pay all of its bills and long-term expenses. But if we are now moving into a negative cash flow mode, meaning we are losing money, we may eventually have to raise capital. And the best time to take out a debt is before you need it, because otherwise the banks will just rip you off.
Currently, free cash flow is negative and amounts to one billion. Assuming negative cash flow grows to -3 billion, they will have about five quarters of cash left. This $30 billion credit line will triple the amount of cash available and the number of quarters they will have enough funds for. So, this credit line is a very smart decision by Tesla management.
They're going to need it, especially because we'll see, and I'll explain why in a moment, why cash flow, you know, will continue to be negative. It's smart of them to prepare for this, even if it would have been preferable to just rely on "Daddy Elon" to come with a lifeline from SpaceX, which has apparently raised enough capital to save Tesla or simply acquire it at some point, which frankly I expect.
We on the channel have been waiting for this for some time. It is worth remembering that SpaceX's own shares are not doing well after the end of the second quarter. Tesla eventually closed down about 35%. So, the stock closed at $167 on June 30th, and that's where they recorded that one billion dollar profit.
Tesla will actually have to turn that profit into a loss next quarter, because SpaceX shares are currently trading at $114 divided by 167. That means they're down about 32%. So the 32 percent drop in the value of SpaceX shares, which Tesla owns, will unfortunately hurt and be reflected in their bottom line, and it could actually turn what has led them to a significant profit this time into a large net loss.
This could lead to a large net loss next quarter as they will now have to write off the profits they previously recorded thanks to SpaceX. It's a bit unfortunate that Tesla has such a large stake in SpaceX, because every quarter you have to say, "Oh , we got this." We lost it." You 'll see it on Google in a moment.
This is quite extreme. Google's taxes quadrupled due to profits from Anthropic and other things. We'll talk about it. But, uh, it's their line of credit. This is, uh, energy margin, automotive margin. Let's talk a little about Optimus. Okay, here's the thing. As for Tesla, the newcomers say that production of Optimus robots will begin this year.
This is truly exciting and a huge moment for Tesla. But the professional says: " Stop, stop, stop, stop, stop, stop." "Not so fast." Just during the reporting conference, Elon tells us that the initial portion or initial phase of the Optimus lines' deployment and how many of them will be built will be, I quote, " pretty flat and long" due to the novelty of the robot's details.
And this is a really big problem, because Elon is known as a person who speaks and gives very exciting expectations about how great the future can be and what Tesla can achieve, when everyone can have driverless cars and add their car to the robotaxi network. But then reality sets in, and we are usually years behind on many of these commitments.
Elon is actually surprisingly candid with investors. He says, "Hey, I know we're launching Optimus this year, but it's going to be a very slow process." And in my opinion, what this really means is that starting production does not mean scaled production. Starting production means we'll start marketing that we're making Optimus robots, but we won't actually be producing them on a large scale for a very long time.
So don't say I didn't warn you. This is strange for Elon, because he is usually very optimistic and not very, how should I say, cautious in his statements. Here he is actually being cautious. But in reality, it goes further, because when we start talking about the uh-huh agility of robots, we get another warning.
You see, at the reporting conference, Elon is applauded by, I'll say this, newcomers. So, the newbies after the Tesla report say, "Wow, yeah, Elon, all those other robotics companies are remotely controlled, and they have a lot of problems because it's just pre- written dances or movements that they do." But the pro watches Elon deny it during the earnings call and says, “Wait a minute.
When you held an event with Wii robots on October 10, 2024, which was almost two years ago, your robots were also controlled remotely. There were people in suits handing out popcorn, operating robots remotely for guests. Same with drinks or water bottles, or the robot that was briefly placed in a Tesla diner in Los Angeles and disappeared, apparently when it ran out of energy to distribute popcorn.
This is a warning signal. And Elon is very frank here. The pro digs into this and realizes that Elon has been telling us for 2 years that even the hands and dexterity needed by robots are so complex that it will take a long time to perfect them. And until then, we shouldn't have high hopes. This is a warning sign that a pro pays attention to, while a beginner completely misses it.
Elon is being deliberately cautious here. And since he is usually very optimistic, that probably means we should be even more careful. Now that that's out of the way, let's move on to the hint of a merger with SpaceX. So, I thought this was actually quite interesting. Well, he, Elon Musk, was actually directly asked about the possibility of merging with SpaceX.
And you know, a newbie usually says, “Hey, that’s great! You know , uh, Tesla and SpaceX could merge; there is so much synergy between these two companies . And the pro turns it around and says, “Let’s be realistic about why Elon wants to merge Tesla with SpaceX: In SpaceX, Elon Musk owns 82% of the voting shares.
He controls SpaceX. In Tesla, he owns only about 15% of the voting shares. So, he has no control over these Optimus robots and the future of AI. And Elon, whether it's out of ego to beat Sam Altman or something else, desperately wants control, and he's not getting it. Unless, of course, SpaceX somehow eventually gains control of Tesla.
Then his 82% control in SpaceX would allow him to control Tesla. And that's why when he's asked about it, he just says, "You know, we do a lot of collaboration with SpaceX, and there's a lot of common ground, especially at the Terraab facility, where we're going to be working together on chip manufacturing, which is actually going to start as kind of an idea or a conceptual plan for chip manufacturing," which in itself is a wake-up call, right?
Oh, and then we're going to use these chips to help train or control the Optimus robots. Oh, and of course, we can't merge or talk about merging companies during an earnings conference call. This should be done through appropriate procedures . Which is really interesting, because right after Elon is asked about the Tesla and SpaceX merger, he refers the question to his corporate lawyer.
And his corporate lawyer ends his answer by talking about the deepening relationship between Tesla and SpaceX, citing projects like Terra, which I just mentioned, and Digital Optimus. So, Digital Optimus is essentially the same kind of surveillance that Meta applies to its employees. So they can somehow track keystrokes or what their employees do with email, code, or whatever.
So , in the future, you can start collecting this training data for Optimus robots. This is where Meta may have an advantage thanks to the Meta glasses, which Elon doesn't have, but he does have the Digital Optimus system for his employees. Meta has an advantage because it has both employees and customers .
In this case, Elon only has the advantage of the joint project between XAI and Tesla, which he spoke about in March. So this is quite interesting and shows where the company is really heading. This is truly a directional bet on optionality. You're betting on this more exciting future, where Optimus robots will be able to do much more than they do today, where they essentially do nothing.
Well, and in the long run, they will become very functional. We just need to collect training data, and we've already started doing that. The question is , how long do you want to be on this trip? Because that brings us to the next part. I hate to do this, but I have to. Newbie says, "We're finally going to produce the Tesla Semi." How exciting.
Tesla Semi trucks are launching. Profi says, "Did you miss what Elon said about the Semi? One of the biggest benefits of the Semi is that it's basically being postponed . Look at this. We expect the Tesla Semi to have Autopilot up and running probably around the end of this year or early next year. I just don't want to get distracted by that.
So the autonomous truck is going to be on the back burner for about the next 6 months. So in other words, the selling point of the semi is, forget about the fact that you have to plug it in and charge it at a charging station network that does n't really exist yet . The promise that this semi will drive itself is really going to be on the back burner.
We're not going to focus on FSD for semis right now. We're going to put that on the back burner. Maybe next year. And we don't really have any training data on trailers or that type of chassis. So it might be a little bit longer before we finally release FSD. And that's it. Here, my friends, you should think: wait, how are they going to collect data to train on semi-trailers?
It's the same thing that professionals think about when it comes to robotaxis. Look, you and I, driving a Model 3, Model Y or whatever, are providing Tesla with a lot of training data so they can implement full self-driving for that type of chassis. But how much training data do they have on people driving trailers?
The answer to that is very, very little. At least as far as we can tell. Mainly because if you hook up a trailer to a Tesla today, you can't turn on full self-driving once you connect to the electronic circuitry to connect the brakes to the trailer. FSD is turned off. Which is unfortunate because that means less training data again for those semi-trailers.
While it would be a different type of trailer, at least it would be a trailer. And that also, unfortunately, comes up when we talk about robotaxis on on the roads. I mean robo-taxis, specifically the Cybercab. It should be noted that because this is a new vehicle chassis. We need to accumulate driving data specific to the Cybercab before we can put a lot of them on the road.
It's the same problem with the semi-trailer. But the problem here is that the number of Cybercabs on the road right now is very, very small. We have maybe 40 to 50 robo-taxis. And it's not even necessarily Cybercabs on the road. We only have a handful of them on the road. Uh- huh, and out of those 40 or 50, we'll be lucky if at least half of them are actually fully autonomous right now.
So we've been waiting 13 months for robo-taxis to really take off. And 13 months later, when we were originally promised that there would be thousands of robo-taxis on the road, we're still stuck with 40 to 50 robo-taxis on the road. You know, this is not pessimism, this is just being blunt. A newcomer comes along and says, " Robo-taxis scalable.” We launched robo-taxis in Austin, Texas, last June.
Robo-taxis are on the way. Cybercabs are being developed. “But a pro knows how Tesla really is.” The truth is quite different. A pro understands: in 13 months, we have only 40 to 50 robo-taxis on the road. Only about 17 to 21 of them are considered fully autonomous. And maybe only one or two of them are actual cybercab chassis, which is a big problem.
Because if Elon says we do n’t have enough data yet for cybercab autonomy, then an investor waiting for robo-taxis to develop should be much more patient than Elon has promised before. This is another reason the stock is down: although we have this option, and it’s great and exciting . He said we will have autonomous cars that should be safer.
Tesla has not yet been able to prove it at scale , which probably explains why Elon is now belittling waiting. This is another unfortunate setback. Next problem: Elon tells everyone, " Optimuses are coming, but Optimus 2 is not commercially viable." And then the newcomer comes along and says, "Don't worry ." Tesla's Optimus 2 is not commercially viable.
Instead, Optimus 3 is coming. " And Tesla will be able to mass produce Optimus 3." They're already preparing the old Model X and Model S lines for Optimus 3. That's great news. And the pro says, "While you're celebrating the release of Optimus 3, which was first announced late last year, Optimus 2 turned out to be unviable," Elon Musk said.
Unfortunately, Elon Musk has already switched from Optimus 3 to something else. Elon Musk is already talking about Optimus 4 right now. Optimus 4, which will be assembled in Austin, will be much more vertically integrated than Optimus 3. So while Elon previously had hopes of producing about a million Optimus 3 robots, his goal now is 10 million Optimus robots.
4, in terms of manufacturing capacity. At this point, we haven't seen any of the Optimus robots scale. That doesn't mean it won't happen, and it doesn't mean Elon isn't on the right track. It just tells you that at the end of last year we were thinking, " Okay, Optimus 3 is going to be the model that we're really scaling ." "Now that threshold has actually been changed to ' no,' we're actually going to scale the Optimus 4 in a big way." The main takeaway for investors to think about is that it's going to take longer, and the stock market is historically impatient, especially with the 10-year Treasury yield at 4.7% and Brent oil at $100, which could actually be good for Tesla.
Markets and investors get impatient when things are constantly changing or not going the way they expected. It's also worth noting that Elon was saying, hey, we're going to have to build small microfactories to upgrade cars. with version 3 to version 4. Uh, he already gave up on that. So I think it would be more logical or more sensible for people to just upgrade all the cars that have older equipment than version 4.
Almost all cars that have cameras and wiring are going to need too many modifications. My dad has a Model X, my previous black X. I loved driving that black X. Uh, an early Tesla with 3 Series equipment. I believe he got the upgrade to version 3 because he had even older equipment before that. And he has a lifetime subscription to FSD and lifetime access to Superchargers.
It looks like in order for Dad to get the latest full autopilot system that he paid for 9 years ago, he's probably going to have to upgrade the car. Honestly, the car is 9 years old. So maybe the upgrade was inevitable anyway, and it's worth considering. These are some of the observations that we we're getting from the earnings conference calls, and they show that there are some issues.
Now the next thing we need to look at is —we already talked about the EPS decline. We need to talk about the valuation of Tesla. So let's look at that first. That's the energy decline that we talked about earlier. We see that energy is up compared to the first quarter. But remember, a lot of that was driven by the demand that was ahead of the curve in the fourth quarter because of the tax breaks expiring.
It's like a coupon that expires, right? If you buy later, the price will be higher. And that's what's happening right now at meetcaven.com. Our coupon expires tonight. Well, mostly because I'm going on another cruise tomorrow. So there's another vacation. I need to catch up on vacations. But anyway, the vacation coupon expires tomorrow.
I'll be here for most of August, and it's very cool. No more vacations. But remember, if you use this coupon code and join, you get all nine courses and every trade alert. We just bought back the dips. We added some new stocks. If you want to see that, be sure to join mekevin.com. You get access to every private broadcast , every alpha report, and fundamental analysis that we do.
People also say that it's tax deductible . So consider joining and deducting it on your taxes. Let's look at Tesla's valuation. If we look at Tesla's valuation, we can kind of project it based on the growth numbers. We're expecting about $1.84 in earnings per share at the end of the year. That's great.
But the problem is , the stock price is about $345. Well, that was when I was writing this. The stock price is lower now. You still have a P/E ratio of about 187, and the growth is estimated at about 42.9%. That's about flat. You know, we've been seeing this forecast for probably a year and a half now that EPS is going to grow 42.9%.
But the problem is that it's coming on the back of no growth. This is coming after the last four years where adjusted EPS has fallen 29%, 20%, 41% and 38%. So right now, by investing in Tesla or owning Tesla, you're betting that this is the bottom and we're going to grow, because even with an average growth rate of 42.9% over the next four years, the stock is trading at a PEG ratio of 4.37.
That's pretty aggressive, actually doubling. Why are they doubling their capital expenditures? Part of it is because they're starting to build their cyber taxi lines. The problem with their cyber taxi lines is that they're not generating revenue. And I think that 's a really important point that people need to make.
remember, it's not just the data you need to train, but people aren't buying these taxis right now. Cybercabs are being used as an experimental tool to get to full autopilot, which is something we've been working on at Tesla for 13 months now on real roads. And we have 40-50 cars, only about half of which are autonomous again.
We're going to be producing cybercabs that are not technically ready for full autonomous driving yet. And that creates some problems. Elon is very clear about that . So it's again deferring earnings while increasing capital expenditure. So I think that capital expenditure is actually going to increase.
But again, they have the balance sheet to support that. You also have Elon's outstanding shares , which is a bit of a dilution, but you can expect further dilution as he hits new targets, including the production of Optimus robots. That's one of the reasons he wants to start building them, because it will give him an even bigger stake in companies.
Unfortunately, the next point where newbies often stumble is when they say, "Wow, over 55% of new deliveries include a subscription for full self-driving." "That's a huge number, because the full self-driving usage rate used to be less than 15%. That's an optimistic signal for Tesla. But the pro sees the trickery that's going on here, and it creates a problem for investors.
Look at this. If you buy a Tesla now and you check that box, you can sign up for full self-driving for $99 a month. But the problem is that the first month is actually free. So people can sign up, get a month of use for free. And then if they cancel—and you can cancel at any time—that usage rate is going to plummet.
That's what we expect. So the pro looks at this and says, "I don't care what the usage rate is when you get the car." I want to know what the subscription revenue is going to be at day 31 after the purchase. This is where we need to talk about Google's revenue, and we'll finally get to Google. So welcome to the part of the video where we talk about Google's earnings.
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So check it out at meetkevin.com. Now let's get right to the point. First of all, when people hear about Google, they think, "Oh, Berkshire Hathaway just invested in Google." They must have a lot of money, right? They must be a great company with a lot of money, such a rich company, and their advertising is growing.
Google is doing great. In fact, you could go so far as to say, "Hey, the newbie even says that Google is a very rich company with a huge balance sheet ." Unfortunately, as always, the pros know that the details aren't so great. In fact, a professional looking at Google last quarter said, "Wow, they might have $126 billion in cash, but they have $104 billion in accounts payable." That means they only had about $22 billion left , and on top of that, they had $100 billion in long-term debt, which means they were short on cash last quarter.
And guess what? The very next quarter, they finally came out and said, "Hey, uh, we're going to have to raise money by selling and issuing stock." So they ended up issuing $49.6 billion plus another $40 billion in stock so they could keep spending on AI. And the sad part is, as of June 30th, they hadn't sold a single share of their $40 billion program.
That means when the stock was trading at, let's see, the valuation at the end of last month, you could see right here, at the end of last month the stock was $347. At $347, the company had not actually started issuing or selling the exact shares that it promised to sell. So you have about $40 billion of selling pressure on that stock.
And as of June 30th, when the stock was $340, it had n't even started. A professional understands that, a novice doesn't even notice it. So obviously, by doing that, they raised money. The first part of the money that they already showed on their balance sheet, uh, from the first $49 billion that they raised, not from the $40 billion, has already shown up on their balance sheet.
So we certainly see a nice significant increase in cash as of June 30th, which is great. However, even though we're showing 242 , uh, well, billion dollars of capital actually, we see that we have long-term, uh rent and bills of $17 billion and uh we have short-term bills of $17 billion. So if we add them together, we're actually still at about $234 billion in total debt compared to the $242 billion in cash that they have right now.
So they really had to raise this money because they were frankly running out of money, which is shocking. How could a company like Google run out of money? And of course, it comes down to the fact that they're spending most of it. In fact, their free cash flow has gone negative . This is the first quarter in 10 years that Google has had negative free cash flow.
And when a lot of people look at Google's earnings, they do the same thing they did with Tesla, saying, "Wow, look at this." Google's net income soared to $174 billion for the year to June 30th. That's up from just $62 billion in the same period before that. So, the first half of last year, but the problem was that in the first half of last year, Google only recognized, excuse me, Google recognized about $11 billion in profit from its other investments.
This year, in the first half of the year, they recognized about $136 billion in profit from other investments. So think about what that means for a moment. The novice says, "Wow, Google increased its net income from $62.7 billion to $174 billion in the first half of 2026." The professional says, "No, they actually recognized $135 billion in profit from investments like Anthropic or OpenAI, which means the company's net income fell from $62 billion in the first half of last year to just $39 billion if you exclude those profits, which shows " It's partly because of the taxation of those profits, but the bottom line is that net income hasn't taken off.
A pro knows that. A novice doesn't notice that. And that might be one of the reasons why Google is having a little trouble in the stock market right now. Still, it's worth looking at. Yes, their taxes have gone up dramatically. And so their tax payments have gone up by about $30 billion. So you want to factor that in.
And it's also partly because of their net income, frankly, because of these profits from Anthropic, OpenAI, or whatever. So the comparison might be a little skewed because of these additional costs and taxes that they're paying. Now let's look at some other things that we have on Google. Google Gemini's monthly active users have reached about 950 million.
That's pretty interesting, because when companies talk about monthly active users, I start to worry that they're acting like Elon, mentioning that in X about 600 million monthly active users . But while Google and Elon are talking about monthly users, Mark Zuckerberg is talking about 3 billion daily active users.
That's a much more granular number, and I think Google is deliberately hiding it, because Gemini has been a bit behind the curve in the last few months. Also, Pro says, "Hey, that's one of the reasons they delayed Gemini 3.5 Pro, because frankly they've been slow to roll out their AI for coding, and their last model didn't live up to expectations ." That's a bit of a bummer for Google.
But the good news for Google is that Google Cloud revenue has actually doubled, and they've added about 12,000 employees, which is pretty impressive. So while it's easy to criticize Google for exploding capital spending, going negative free cash flow, and bloated expenses, it's worth giving them credit.
That credit is in pricing power , or as I like to call it, EP. Margin services last year was 40%. Now it's 48.4%. 4%. And Google Cloud's margin, which was 25% last year, is now 35%. Probably because Google's enterprise offerings for Gemini Enterprise, the agent portal, the Gemini extension for Drive, chat, and better interaction with Google Drive, or even just interaction with Google search through Ask AI, Ask Gemini, or Ask Gemini on YouTube.
That's probably, at least at the enterprise level , leading to a stronger pricing power for the company. So you have to give them credit. Even though they're raising capital and needing more money, their balance sheet is not as good as it used to be. But their pricing power is actually increasing. So let's give them credit where it's due.
Good job, Google. Pricing power is increasing. Unfortunately, the market is punishing them, probably in part because of their valuation, which is not as attractive as it used to be . Google used to have a PEG ratio of less than one. It's now about 1.3. So Greg Abel is in the red right now because of Berkshire's acquisition of Google shares, because they were buying them at about 350-360.
And if you look at Google's expected growth rate over the next four years, it's about 16.1%. expected growth. That's pretty good. And if you divide that by the P/E ratio, which is now about 21.5. you get a PEG ratio of 1.3. But again, the biggest problem is negative cash flow. Their cash flow yield has gone negative.
Their cash flow is negative. We expect that to continue. forecast by $15 billion . The share count has also increased. They're no longer repurchasing shares. So you also get that additional dilution. Now, on the capital gains component that we saw. Let's go to Google's earnings report. I have to say, Google's ad revenue growth rate surprising.
In the second quarter, Google's YouTube ad revenue grew 13% compared to the second quarter of last year. However, Meta, if you look at it, showed ad growth of 32.9%. This suggests that more money is flowing into Meta's ads than Google's ads are growing, especially considering that we don't have second quarter data for Meta yet, so this was a bit of a surprise.
In terms of the backlog, it's growing here; it's probably growing at about 45% to 70% per year, and that's on their compute, but there's a little problem. Google includes TPU sales. They mentioned it right here. The vast majority of the $514 billion in cloud computing backlog is related to cloud computing deals.
But TPU chip sales are also included in that backlog. So it's worth considering that the growing portion of the backlog that Google is talking about is actually related to the sales of the chips that they make. These upcoming Chip sales could start to crowd out some of the compute services portfolio.
Compute is likely to be higher margin. We don't even know yet what the expected margin is for TPUs, Google's tensor processors. And they don't expect revenue from those TPUs until 2027. So let me summarize, because that might sound a little bit complicated. In general, the news about Google is like, "Hey, Google has this huge backlog , over $500 billion in cloud computing." But the expert says, "Oh, not so fast." Some of that includes chip revenue that won't start until 2027, if anyone wants to use tensor processors in 2027.
And some of those tensor processors , well, actually, all of them... let's rephrase that . All of the tensor processor revenue has an uncertain impact on Google's bottom line because we don't know what the margins are going to be. So let's clearly: the professional looks at it with more nuance, saying, " Look, this backlog is good, but you're starting to confuse what this backlog means by adding uncertain orders to what we like— cloud contracts ." Although I will say that Google's increased pricing is a positive , and Google's valuation is certainly better than what we've seen at Tesla.
So if you compare them: Tesla has a higher valuation, higher capex and declining margins on cars, declining margins in energy, and uncertainty on robo-taxis and Optimus. Whereas if you look at Google, yes, they have higher capex as well. We have uncertain margins on future products like tensor processors, but we actually have more pricing power where it matters—in cloud computing.
There's a red flag right now about why advertising is growing so much slower than Meta, but when you compare the two companies, Google is now, definitely a lot cheaper than Tesla. So that's a complete beginner vs pro breakdown of Tesla and Google. I hope you found this helpful. If so, consider subscribing. t.
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