Four ways Google’s new CFO could improve investor visibility, more By Investing.com

Investing.com — With the appointment of a new CFO, Google (NASDAQ: ) is at a critical juncture where it can improve investor communication and transparency, thereby fostering greater trust and improving its market multiple.

Morgan Stanley analysts suggest that several targeted initiatives by the new CFO could go a long way in clarifying Google’s evolution and boosting its valuation.

By focusing on key areas such as GenAI disclosure, financial guidance, business segment clarity and public relations, Google has an opportunity to reshape its narrative and encourage more favorable investor sentiment.

One of the key steps Google’s new CFO could take is to increase transparency around its Generative AI (GenAI) initiatives.

As artificial intelligence becomes more integrated into Google’s ecosystem, providing more detailed information on how these technologies work could substantially improve investor confidence.

While Google has already begun sharing some details, there is a strong case for more quantitative and qualitative disclosures that provide a deeper understanding of how these innovations drive revenue and engagement.

For example, Morgan Stanley notes that Meta (NASDAQ: ) has been able to provide detailed reporting on engagement metrics for its Reels and AI products.

Such disclosures have helped the market better understand the ROI of Meta investments, providing a framework that could work just as well for Google.

By providing clearer data on how GenAI influences user behavior and revenue growth, Google could give investors the information they need to better assess 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 around capital expenditure (capex), operational expenditure (opex) and revenue.

In the face of big investments in AI, the lack of clarity on Google’s spending plans has contributed to market uncertainty. While some competitors, such as Amazon (NASDAQ: ) and Microsoft (NASDAQ: ), provide detailed quarterly updates that help investors anticipate financial changes, Google has so far offered relatively vague forecasts.

For example, Google’s statement that “the risk of underinvestment is dramatically greater than the risk of overinvestment” has left a wide range of investment expectations for the future, making it difficult for investors to model free cash flow (FCF) and earnings trajectory .

By tightening its forward guidance — perhaps providing capital ranges or clearer operational discipline — Google could give the market a more stable view of its financial future. Steady upward revisions to these guides would also signal a well-run and growing business, leading to improved investor confidence and likely multiple expansion.

Another crucial area where Google could improve investor visibility is its business segment reporting, particularly for YouTube and Google Cloud.

These are key growth areas, but the current level of disclosure around them leaves a lot to be desired.

YouTube, for example, is a platform that generates significant revenue from advertising and subscriptions, but Google’s current reporting on it tends to underestimate its full potential.

Analysts at Morgan Stanley believe that separating YouTube’s advertising and subscription revenue, and providing more detailed information on its profitability, would allow investors to better model and evaluate the platform, especially compared to other video streaming players such as Netflix (NASDAQ :).

Similarly, within the Google Cloud segment, a clearer differentiation between Google Cloud Platform (GCP) and Workspace would give investors a better understanding of how Google competes with AWS and Microsoft Azure.

Because cloud services are a vital growth driver for Google, providing 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 to the benefits Google brings to users, businesses and society as a whole could help counter some negative sentiment.

Google’s products like Maps, Translate, and its contributions to small businesses and developers are significant but often understated in the larger 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 improve its public image.

Google could benefit from a similar approach by more actively communicating how its products positively impact billions of people around the world, from providing free mapping services to facilitating 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.