Alphabet (GOOG) in Wedgewood Partners Q2 2024

AI and Cloud Services Propel Growth Amid Competitive Pricing

Apr 15, 2025

Summary

Core search business grew by 14%, with cloud infrastructure business up 28%.
Cloud services priced competitively to gain market share from AWS and Azure.
Strong differentiation in AI offerings expected to drive future returns.
Risks include pricing pressures and regulatory scrutiny.

Alphabet (GOOG, Financial) was a top contributor in Wedgewood Partners' Q2 2024 letter, reflecting its robust growth in both search and cloud services. The fund, led by David Rolfe (Trades, Portfolio), noted Alphabet's strategic pricing and AI differentiation as key factors in its performance.

"Alphabet was also a top contributor to portfolio performance during the quarter. The Company's core search business showed a healthy +14% growth, while its cloud infrastructure business grew +28%. The infrastructure business is at a nearly $40 billion revenue per year run-rate; however, we think it underearns compared to its peers as the Company has priced its services to take share from its two larger peers, AWS and Azure." — David Rolfe (Trades, Portfolio), Wedgewood Partners, Q2 2024 Fund Letter

Read full letter at gurufocus David Rolfe's Wedgewood Partners 2nd-Quarter Letter: 'Apple of Our AI' 2024 Q2 page.

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