1. The “YouTube Ads” segment shows some very interesting variability. A spike or drop in this segment, however, would be a false positive or a false negative, given how massive of a share the “Search” business has. 
2. In the highlighted time period, there is some suggestion of a seasonality effect in “Search” revenues. This is a very weak signal, though. While the highlighted time period shows a consistency in Q1, there is no such consistency in Q2 or Q3. Furthermore, going back in time further weakens the seasonality argument. 
3. The high variability in “Cloud” and “Other Bets” segments also inevitably become a false signal, given how massive a share the three advertising segments’ revenues have on the total bottom line.
4. The size of the “Search” business cannot be overstated. Overall, the bottom line is highly correlated with the “Search” business’ revenues.

Macroeconomic Factors and Price Ratio Trends

Given the importance of advertising, the company’s fortunes bear a striking resemblance to that of Meta Platforms (which had been covered last week).  Thus, the overall picture for advertising is generally similar: revenues are generated from advertisers and not the users. While digital ad spending is here to stay and will remain the dominant form of advertising, how much or how often advertisers will spend is absolutely dependent on macroeconomic conditions.

The overall macroeconomic outlook has been covered in a number of articles over the past few months. Overall, it’s not a pretty picture: individual debt remains high and wage earnings growth isn’t really keeping up with inflation. 

Overall, Consumer Price Index levels show a returning trend in increasing month-on-month deltas in inflation since July: