Recent earnings report by Alphabet (NASDAQ:GOOG ) led to a minor correction in the stock as its performance in many segments was below expectations. O

Google: Global Trends Provide A Massive Tailwind

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2023-03-17 22:30:06

Recent earnings report by Alphabet (NASDAQ:GOOG ) led to a minor correction in the stock as its performance in many segments was below expectations. One of the key growth segments for Google has been YouTube ads. This business showed a massive 8% YoY decline and dropped to $7.96 billion compared to $8.63 billion a year ago. Macroeconomic factors played a role in this decline but there were some company-related issues also. There has been a massive growth in user engagement on YouTube Shorts which is not being monetized at a high rate. The daily views on YouTube Shorts crossed 50 billion compared to 30 billion daily views in Q1 2022.

The Wall Street Journal recently reported that TikTok could soon be banned if its Chinese owners don't sell their stake. TikTok CEO is set to appear before Congress and we could see increasing calls for a ban on TikTok from both sides of the aisle. This would be a massive tailwind for YouTube Shorts which is already growing rapidly. Monetization and higher user engagement on YouTube Shorts could help Google report rapid growth in ad revenue in the next few quarters. This should improve the sentiment towards the stock and increase the valuation multiple.

Geopolitical tensions have been rising for the past few months. It is highly likely that we will see a complete ban on TikTok in US as data security and national security become the top priority. Legislators from both sides of the aisle are pushing for it. As we head into the next Presidential election cycle, TikTok will face greater calls for a ban.

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