The AI Trade Gets Tested as Freight Stocks Recover
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What is the main topic discussed in this episode?
Investing is simple, but don't confuse that with thinking it's easy. A stock is not just a ticker. At the end of the day, you have to remember that it's a business.
Just my reminder to people who own cyclicals, don't be surprised when there's a cycle.
If there's uncertainty in the markets, there's going to be some great opportunities for investors.
This has to be one of the biggest quarters I've seen from this company in quite some time.
Welcome to the Canadian Investor Podcast. I'm Simon Belanger. I'm back with Dan Kent. We have a jam-packed episode. We are in the middle of earnings season. We'll be starting off with Alphabet reporting a pretty monstrous quarter. Some good, some not so good. We'll go over that. I know we did talk, Dan Fosch and I, a little bit about it, but we'll be digging a bit deeper on what we saw during that quarter. you'll talk about celestica the canadian darling that is benefiting greatly from the ai tailwinds after that we'll talk about sk inex so the recent ipo on the us market through the adr so american depository receipt that recently ipo'd on the u.s markets they came out with their first quarter since then really strong quarter we'll be talking about cn rel and tfi international in the logistics space
and transportation, see how those are going. Also be talking about Corning. So one of the names that we picked for our custom indexing with Questrade, the partnership we have. So the TCI podcast index, hidden AI winners. And then we'll also finish by talking, if we have enough time, Coca-Cola, just have a quick look at how they compare to Pepsi, who has been struggling recently. So I wanted to compare and see if Coca-Cola is doing better or worse. So stay tuned until the end for that. So we'll have to... We'll try to get all of that done in about 45, 50 minutes. But let's get started. There's just a whole lot. So alphabet. So I'll probably refer to it Google for the most part. Yes, everybody does. I don't know, man.
It's just easier. So on the surface, really massive quarter from Google. Revenues were up 24%. Google Cloud revenue was up 82%. So that's what the bulls really focused on. Cloud backlog increased more than 10% to $514 billion. That's another strong point from the quarter here. Net income increased a whopping 298% to $112 billion. But then There's a little asterisk next to that. It's actually quite a major asterisk. So 98 billion of that was due to an unrealized gain on their investment. This is something they have to do in terms of accounting. So it looks better, but you know, next quarter that won't be there. So you have to zero that out because it's not really the business. Sure, these are investment gains, but they are unrealized.
So you have to take that into account. But I think the quarter looked better on a net income basis than it actually did. And operating income, which is definitely a better indicator here, that was up 30% to $40 billion. Before I keep going, any quick comments here?
I'll just say that I was actually surprised at like the number of large accounts on X that were reporting. Cause Google was estimated to earn, I think it was close to $3 a share. And there was a lot of accounts that were talking about how they topped estimates by like 300 some percent that, that $3 estimate would be adjusted earnings. Whereas these were just reported earnings. So yeah, there's a lot, there's a lot of, uh, I don't know, I guess not necessarily hate, but you have to pay attention to what adjustments are being made because some companies kind of abuse this. But in this case, it is 100% reasonable to take out paper gains on investments when you're looking at earnings. Yeah, exactly.
You want to know how the business actually does, not just a one-time thing. And of course, to the defense of some of those accounts, I think sometimes they just... rush to get information out there as the earnings are coming out so they don't really dive into it but to me you know something i would always look for is when something's like way above expectations there's usually a reason if you're beating expectation it's one thing but if you're smashing them and it's like almost a head scratcher at first gun there's usually a reason and
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:01–8:15
2
Why did Alphabet's strong quarter still spark investor concern over AI CapEx?
8:15–9:11
3
How much did Google Cloud and operating income grow and what hides in the net income spike?
9:11–20:36
4
What are the risks of Alphabet's rising CapEx, depreciation and unclear ROIC?
20:36–49:16
Speakers
3 identifiedMore from The Canadian Investor
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