Margins pressured on TAC, investment increases
Alphabet delivered another strong topline performance in Q118, but operating profit missed as revenue mix continued to shift to lower margin sources and the company invested aggressively in cloud, Assistant, AI and hardware. We are lowering our EPS estimates to reflect higher spending, and our YE18 PT comes down to $1,250, but we remain O'weight given the continued significant long-term growth potential.Alphabet is a holding company. Through its subsidiaries, the company is engaged in a collection of businesses, which its primary business is Google. The company reports all non-Google businesses collectively as Other Bets. Google's main products and platforms are Android, Chrome, Gmail, Google Drive, Google Maps, Google Play, Search, and YouTube. The company also provides advertisers with tools that help them attribute and measure their advertising campaigns. In addition, Other Bets includes Access, Calico, CapitalG, GV, Verily, Waymo, and X, among others. Other Bets primarily engages in the sales of internet and TV services through Access as well as licensing and research and development services through Verily.
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