Group 1: Quantum Computing Industry Overview - Quantum computing presents unique challenges due to its reliance on qubits, which can store values between zero and one, making it exponentially faster than traditional computers [1] - The industry faces limitations as many quantum computing companies struggle to generate sufficient revenues, leading to difficulties in maintaining stock gains [2] - Pure-play quantum computing companies often depend on government contracts, which do not cover their operating expenses, making them less attractive investments [6][9] Group 2: Alphabet's Position in Quantum Computing - Alphabet (Google's parent company) is highlighted as an attractive investment in the quantum computing space despite not currently generating revenue from this technology [4][14] - The company reported over $90 billion in revenue in Q1 2025, primarily from digital advertising and Google Cloud, raising questions about its focus on quantum computing [5] - Alphabet has significant liquidity of $95.7 billion and $19 billion in free cash flow in Q1 2025, allowing it to invest in quantum computing initiatives [10] Group 3: Development of Quantum Technology - Alphabet has developed the Willow quantum computing chip, which completed a benchmark computation in under five minutes, a task that would take traditional supercomputers 10 septillion years [11] - The Willow chip also addresses error rates, a significant challenge in the industry, by reducing errors as the number of qubits increases [12] - Continuous investment in improving the Willow chip positions Alphabet competitively in the quantum space, preparing it for future applications of the technology [13][16]

Financial Performance - Total revenues increased by 7.1% year-over-year, reaching $636 million in Q1 2025 compared to $594 million in Q1 2024[12] - Adjusted operating profit (AOP) grew by 21.9% year-over-year to approximately $93 million in Q1 2025, up from $76 million in Q1 2024[9, 12] - AOP margin increased by approximately 180 basis points year-over-year to 14.6% in Q1 2025[9] - Adjusted diluted earnings per share increased to $0.41 in Q1 2025, compared to $0.31 in Q1 2024, a 32.3% increase[12, 59] - Adjusted operating costs (AOC) grew by 4.9% year-over-year, primarily due to higher cost of revenue, product development, and adjusted general and administrative expenses[9, 40] Subscriber Growth - The company added approximately 250K net digital-only subscribers in Q1 2025, bringing the total subscriber count to 11.66 million[9, 14] - Bundle and multiproduct subscribers now constitute 49% of the company's total subscriber base, an increase from 48% in Q4 2024[9] Revenue Streams - Digital-only subscription revenues increased by 14.4% year-over-year due to growth in both digital subscribers and total digital-only ARPU[9, 28] - Total digital-only average revenue per user (ARPU) increased by 3.6% year-over-year to $9.54[9] - Digital advertising revenues increased by 12.4% year-over-year, driven by strong marketer demand and new advertising supply[9, 35]

We lower ests across the board, detail macro/tariff impacts to ecom/digital ads and showcase a "visibility to FCF vs valuation to bear case" framework analyzing valuation support and where we expect durable out-performance first. META/GOOG/UBER screen best followed by CHWY/DASH/U/AMZN/BKNG/RDDT. First, 3 Macro Factors We Are Most Focused On: The MS macro team continues to expect muted GDP growth (0.6%/0.5% '25/'26 real GDP growth), firming inflation and a steady Fed in '25. As tariff headlines and realities ...