Analyzing Earnings: Alphabet and Palantir Take Center Stage

In this podcast, Motley Fool analyst David Meier joins host Mary Long to discuss the latest earnings reports from Alphabet and Palantir.

Their discussion covers:

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• The power of YouTube’s advertising.
• Understanding Palantir’s business model.
• The enduring relevance of cloud computing.

Additionally, Motley Fool host Ricky Mulvey speaks with television writer and novelist Jordan Harper about the influence of PR firms on public perception and how to recognize their presence in the media.

To listen to full episodes of all The Motley Fool’s free podcasts, visit our podcast center. For beginner investors, check out our guide to stock investing. When you’re ready to dive in, explore our top 10 list of recommended stocks.

A complete transcript of the podcast follows the video.

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This video was recorded on Feb. 05, 2025

Mary Long: Welcome back to business discussions. You’re tuned into Motley Fool Money. I’m Mary Long, here with David Meier. It’s great to have you with us today.

David Meier: It’s great to be here, thanks for having me.

Mary Long: Always a pleasure. Recently, we’ve been focusing on tariffs dominating the news cycle, but today provides a chance to return our attention to company earnings. We’ll start with a major player—Alphabet. The headline from their earnings report is that Cloud revenue fell short of analyst expectations. However, it’s important to provide context: the Cloud division saw a remarkable 30% growth in revenue last quarter, totaling $12 billion, up from just over $9 billion a year ago. Wall Street may be disappointed, but this growth is significant. David, from a long-term investment perspective, should this 30% growth worry us?

David Meier: Not at all.

Mary Long: Moving on, then.

David Meier: It’s a minor miss, but we’re discussing a substantial market that continues to expand. While there might be small fluctuations in short-term expectations, overall trends tend to balance out over time. The cloud business is here to stay, and while these misses can lead to negative daily stock fluctuations, they shouldn’t deter long-term investors.

Mary Long: Another notable figure from the earnings report is Alphabet’s projected spending of around $75 billion on capital expenditures this fiscal year, rising from $52.5 billion last year. This trend of increased capital expenditure isn’t exclusive to Alphabet. Recently, we also discussed Meta and Microsoft, all reflecting a significant focus on AI infrastructure. Given this context, how can investors assess these massive spending numbers in a competitive landscape? Alphabet plans to spend $75 billion, while Meta is aiming for $60 to $65 billion and Microsoft targets $80 billion—does that mean Microsoft’s spending is inherently “better”?

David Meier: It’s important to avoid relying solely on the raw dollar amounts. All three companies—Alphabet, Microsoft, and Meta—generate substantial revenue and are responding to market demand with their investments. The real metric to focus on is the return on invested capital (ROIC), which indicates how well a company turns its investments into profit. Ultimately, evaluating past performances, like Amazon’s ROIC during AWS expansion, provides better insight into the effectiveness of these expenditures.

Mary Long: While we started with Alphabet’s Cloud business, it’s worth noting that at its essence, this company thrives on advertising, which remains robust. YouTube, in particular, reported impressive ad sales, bringing in $10.5 billion—setting a record. In terms of viewership, YouTube is a leader, capturing over 11% of TV viewing in December 2024, in contrast to Netflix‘s 8.5% share.

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YouTube and Palantir: Insights on Data-Driven Success in Streaming and Analytics

The Rise of YouTube’s Viewership on Connected TVs

Connected TV streaming is a growing trend, with YouTube users watching over a billion hours of content daily. What lessons can other streaming platforms learn from YouTube’s approach to video content?

David Meier: YouTube excels at understanding viewer preferences. Personally, I enjoy golf, music, and snowboarding, and I turn to YouTube for tailored content on these interests. The platform continually updates my feed based on my viewing habits, creating a personalized experience. This level of targeted content is also evident in Netflix, which curates recommendations that often resonate with viewers. Both companies leverage impressive algorithms that not only cater to existing user interests but simultaneously encourage content creators to produce more of what audiences crave.

All of Alphabet’s Business Segments Under the Google Umbrella

While Alphabet’s vast empire encompasses more than just Google, a significant portion of its revenue stems from the tech giant. Google’s portfolio includes Cloud services, YouTube, Maps, Gmail, and more. Given this complexity, how should investors evaluate the company’s overall worth?

David Meier: Valuation of Google has sparked debate among investors for years. Ruth Porat, who became CFO, emphasized disciplined capital investment, resulting in some ‘moonshot’ projects losing backing. However, Google still boasts numerous invaluable features, each potentially worth a substantial amount independently. As of the latest information, Google has approximately 12 to 15 properties with over a billion users each. This user base signifies a standalone business value. Investors can use public data to assess the worth of individual components, summing their valuations for a comprehensive picture. Moreover, while some long-term projects hold uncertain outcomes, mature properties generate significant revenue and cash flow, forming the crux of Google’s value.

Alphabet’s Current Stock Performance and Future Outlook

Mary Long: Before we explore our next story, what else caught your attention in Alphabet’s earnings?

David Meier: Despite a dip in stock price today, Google continues to progress positively. These fluctuations can be advantageous for investors seeking opportunities. Despite being a multi-trillion dollar company, Google projects double-digit growth in the coming years, which remains impressive for a company of its size. Keeping an eye on Google could yield promising results.

The Growing Success of Palantir

In contrast to Google’s reality, Palantir Technologies recently reported a 24% increase in stock price, totaling a 40% rise since the year’s start. However, many investors remain unclear about what Palantir does. David, can you clarify this for those investors?

David Meier: Absolutely. Palantir specializes in a technology platform that aids companies in analyzing their data for a fee. Their mission revolves around enabling businesses to make informed decisions based on extensive data analysis. A compelling example involves their partnership with Ferrari in Formula 1 racing. Palantir assists Ferrari in real-time data analysis, providing insights that help the race team optimize their cars for better performance. By communicating such adjustments to drivers, they can improve racing outcomes significantly. This principle applies broadly: while the stakes in business may not resemble those of a race, Palantir’s goal is consistent—help businesses enhance their operations and drive growth.

Understanding the Appeal of Data Analysis

This practical example illustrates the relevance of data analysis and AI. While some might find the terminology overwhelming, understanding the real-world applications can transform abstract concepts into valuable tools for business improvement.

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Examining Palantir’s Stock and the World of Crisis Public Relations

David Meier on Valuation and Caution with Palantir

Palantir’s stock currently trades at more than 170 times its expected earnings. Investors navigating a turbulent market filled with uncertainty might be tempted by the company’s surging stock and the confidence of its CEO, Alex Carp. But is it wise to jump on this “race car” of an investment? David Meier cautions against this rush despite the company’s impressive achievements. He reminds us of Warren Buffett’s wisdom: “Price is what you pay; value is what you get.” As the market valuation increases, Meier warns that the risks of losing money may outweigh potential returns. Thus, patience is a prudent choice for investors at this time.

Mary Long Wraps Up the Conversation

Mary Long appreciates David Meier’s insights, praising his ability to clarify the complexities surrounding Palantir and reminding listeners that patience often leads to success.

Exploring Crisis Public Relations with Ricky Mulvey and Jordan Harper

In an upcoming segment, Ricky Mulvey and novelist Jordan Harper will delve into the strategies of crisis public relations—often characterized as “Black Bag PR.” This discussion highlights how various entities, including corporations and celebrities, manage public perception, especially in challenging times. The role of crisis managers has become increasingly relevant as companies face scrutiny and seek to reshape narratives.

Jordan Harper’s Journey into Crisis PR

During the production of a pilot episode based on James Elroy’s novel “LA Confidential,” Harper became familiar with crisis public relations when rumors emerged about CBS chief Les Moonves. Although the anticipated article didn’t drop during filming, it later exposed key issues within the network, demonstrating the importance of timing in public relations. Harper’s experience in Hollywood inspired him to explore the role of crisis PR managers, viewing them as intriguing characters in modern narratives.

Researching the Crisis PR Industry

Jordan Harper undertook various approaches to understand the crisis PR field, starting with foundational resources like Wikipedia. While researching, he engaged with individuals skilled in crisis management within Hollywood, revealing how they operate behind the scenes and interact with the media.

The Tactics of Crisis PR Professionals

Harper emphasizes that successful crisis PR professionals cultivate relationships with journalists. Like politicians, they rely on access and cooperation with reporters, treating them as allies. This mutual respect allows them to set the narrative effectively. A particular tactic highlighted is the “Lead Steer Theory,” which refers to pitching a story to a prominent media outlet, like The New York Times, to influence the subsequent narratives from other reporters.

Jordan Harper’s Insights on the Narrative Building

Through these connections, crisis PR agents can effectively shape public discourse. They focus on establishing trust and understanding with journalists, thereby setting the tone for the information that eventually reaches the public.

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Big Food’s PR Strategies: A Closer Look at Ultra-Processed Foods

Ricky Mulvey: Setting the right tone can be the decisive factor in a debate, especially in today’s media landscape. After reading your book, *Everybody Knows*, which I’ve recommended on the show, I found that it really made me slow down and think. It was a gripping read that kept me turning the pages. Thank you for that.

Jordan Harper: Thank you for the kind words.

Trends in American Eating Habits

Ricky Mulvey: I’m noticing a significant trend in the U.S. where people are increasingly conscious about their eating habits, particularly regarding ultra-processed foods. There is a discussion emerging about what exactly constitutes such foods. For instance, an article in the *Atlantic* questions whether items like Coke and whole-grain bread should be classified together. Additionally, the *Wall Street Journal* highlights an NIH study where participants reported feeling just as full on an ultra-processed food diet as they did on a diet of whole foods. This raises the question: Are big food companies using public relations strategies to confuse the public about these health topics? The contrast in how filling a piece of beef is compared to a McDonald’s meal is quite evident. I believe we might be witnessing the influence of Crisis PR here. What are your thoughts on this? Are large food companies reacting to the trend of healthier eating?

Jordan Harper: Indeed, in a broad sense, I think you’re onto something. It’s important to distinguish that Crisis PR is typically employed during a genuine crisis. However, Black Bag PR can encompass various tactics, including what you mentioned. The food industry has a long history of shaping media narratives. They often collaborate with scientists to promote selective studies. A notable instance is the historical battle concerning sugar and fat, where the focus was placed on fat, thanks to Black Bag PR efforts, despite several studies suggesting sugar was the greater culprit. Unlike fat, which is found in many foods, sugar has a well-organized backing. It’s essential to approach news critically, understanding who benefits from these stories. Each time you read an article, consider the question: who stands to gain from this information?

Learning from History: PR Case Studies

Ricky Mulvey: Can you provide examples of how PR strategies have impacted public perception?

Jordan Harper: A comparison between Two significant case studies sheds light on this issue. The first is the Three Mile Island incident, where a nuclear accident was met with corporate cover-ups, overshadowing the actual crisis. In contrast, during the Tylenol scare, Tylenol took immediate responsibility for the crisis caused by cyanide-laced products, pulling their product off the shelves. Their transparent handling not only restored trust but allowed the brand to thrive in the long run. Formerly reactive PR stems from bad practices, whereas proactive communication can serve a company well.

Recognizing PR Manipulation in the News

Ricky Mulvey: For everyday news consumers, how can they identify when PR strategies are at play?

Jordan Harper: A good starting point is to notice what questions aren’t being posed and which ideas are being taken for granted. Understand the gaps and inconsistencies when reading articles. I often check articles on familiar topics, and I recognize the missing pieces and inaccuracies. Another approach is to pay attention to how statements from publicists sound—do they reflect genuine opinions or PR language? Certain trends may also signal a manipulative narrative, especially if multiple articles are suggesting the same theme without clear diversity in viewpoints. Recognizing the key players behind these narratives can help you determine the motivations at play. It’s about asking specific questions—who benefits, who funds this information, and who has the power to sway public perception?

Mary Long: As a reminder, those listening should consider that participants in this program may have interests in the stocks discussed, and The Motley Fool may have formal recommendations regarding those stocks. Always conduct your own research before making financial decisions based solely on what you hear. For David Meier, Ricky Mulvey, and Jordan Harper, I’m Mary Long. Thank you for tuning in, and we look forward to seeing you tomorrow.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is also on The Motley Fool’s board. David Meier has no stock positions mentioned. Mary Long has no positions in any of the stocks mentioned. Ricky Mulvey owns shares in Meta Platforms and Netflix. The Motley Fool holds positions in and recommends Alphabet, Meta Platforms, Microsoft, Netflix, and Palantir Technologies. Boffering options, The Motley Fool supports long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. For additional disclosures, please refer to our policy.

The views expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.

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