Market Data 
Investing.com — With the appointment of a new Chief Financial Officer, Google (NASDAQ:) is at a pivotal moment where it can enhance investor communication and transparency, thereby driving greater confidence and improving its market multiple.
Morgan Stanley analysts suggest that a few targeted initiatives by the new CFO could go a long way in clarifying Google’s growth story and boosting its valuation.
By focusing on key areas such as GenAI disclosure, financial guidance, business segment clarity, and public relations, Google has the opportunity to reshape its narrative and encourage more favorable investor sentiment.
One of the key steps Google’s new CFO could take is to enhance the transparency around its Generative AI (GenAI) initiatives.
As AI becomes increasingly integrated into Google’s ecosystem, providing more granular insights into how these technologies are performing could substantially improve investor confidence.
While Google has already begun to share some details, there is a strong case for more quantitative and qualitative disclosures that offer a deeper understanding of how these innovations are driving revenue and engagement.
For example, Morgan Stanley notes how Meta (NASDAQ:) has been successful in offering detailed reports on engagement metrics for its Reels and AI products.
Such disclosures have helped the market better grasp the ROI of Meta’s investments, providing a framework that could work equally well for Google.
By offering clearer data on how GenAI is influencing user behavior and revenue growth, Google could give investors the information they need to better evaluate the long-term potential of these innovations, which in turn could strengthen confidence in Google’s growth narrative.
Equally important is the need for consistent and clear guidance on Google’s financial outlook, particularly regarding capital expenditures (capex), operational expenditures (opex), and revenue.
In the face of heavy investment in AI, the lack of clarity on Google’s spending plans has contributed to market uncertainty. While some competitors, like Amazon (NASDAQ:) and Microsoft (NASDAQ:), provide detailed quarterly updates that help investors anticipate financial swings, Google has so far offered relatively vague projections.
For instance, Google’s statement that “the risk of underinvesting is dramatically greater than the risk of overinvesting” has left a wide range of capex expectations for the future, which makes it difficult for investors to model free cash flow (FCF) and earnings trajectories.
By tightening its forward guidance—perhaps by providing capex ranges or clearer opex discipline—Google could give the market a more stable view of its financial future. Consistent upward revisions of this guidance would also signal a well-managed and growing business, leading to improved investor confidence and likely multiple expansion.
Another crucial area where Google could enhance investor visibility is in its business segment reporting, particularly for YouTube and Google Cloud.
These are key growth areas, but the current level of disclosure around them leaves much to be desired.
YouTube, for example, is a platform that generates significant advertising and subscription revenue, yet Google’s current reporting on it tends to understate its full potential.
Analysts at Morgan Stanley believe that separating YouTube’s advertising and subscription revenues, and offering more detailed insights into its profitability, would allow investors to better model and value the platform—especially in comparison to other video streaming players like Netflix (NASDAQ:).
Similarly, within the Google Cloud segment, clearer differentiation between Google Cloud Platform (GCP) and Workspace would provide investors with a better understanding of how Google is competing against AWS and Microsoft Azure.
Since cloud services are a vital growth engine for Google, offering more detailed disclosures here could significantly improve how investors perceive Google’s competitive positioning and growth potential.
Google’s new CFO could help take control of the public narrative by emphasizing the positive societal impacts of the company’s products and services.
At a time when regulatory pressures and legal challenges are mounting, shifting the conversation towards the benefits Google brings to users, businesses, and society as a whole could help counteract some of the negative sentiment.
Google’s products like Maps, Translate, and its contributions to small businesses and developers are significant, yet often underplayed in the broader narrative.
As Morgan Stanley points out, Amazon has been effective in highlighting its societal contributions, such as job creation and community investment, which has helped enhance its public image.
Google could benefit from a similar approach by more actively communicating how its products positively impact billions of people worldwide, from providing free mapping services to enabling life-saving medical translations.
Such efforts could not only bolster its reputation but also contribute to a higher market multiple by aligning investor sentiment with the company’s broader value to society.
