Alphabet's AI problems: Stock falls 4%

Alphabet's stock has fallen 4% amid concerns over its AI capabilities following the problematic Gemini rollout. Despite being a pioneer in AI with DeepMind, the company faces challenges in the market's perception of its reliability in AI. There's also criticism about Alphabet's hiring practices and employees' focus on social issues, which some believe distracts from the company's core interests. The situation raises questions about the company's future in the competitive landscape of AI and technology.

Takeaways

• 📉 Alphabet's stock is underperforming and has fallen 4% due to recent issues.
• 😤 Shareholders like Joe, Jim, and Josh are frustrated with the stock's performance and the company's handling of AI.
• 💭 There was an expectation that Alphabet would catch up in performance, but it has not lived up to expectations.
• 📊 Alphabet's stock never recovered from the earnings report which showed softness in Google's ad revenue.
• 🤔 Questions are being raised about Alphabet's reliability in AI after recent troubles with the Generator rollout.
• 🔄 Despite setbacks, Alphabet has a history of innovation in AI and owns DeepMind, positioning them well for future success.
• 📉 Alphabet's stock is considered cheap, possibly due to an anticipated disruption in their search engine business.
• 💡 Silicon Valley stock prices can reflect perceptions that may or may not become reality, impacting company valuations.
• 🚨 There are internal issues at Alphabet, including excessive hiring and employees focused on social issues rather than company interests.
• 💸 The company may need to consider layoffs and streamlining operations to improve profitability and focus.

Q & A

What is the current performance of Alphabet's stock?

Alphabet's stock has fallen 4%.

What was the expectation for Alphabet at the beginning of the year?

At the beginning of the year, Alphabet was identified as one of the mega caps with the most opportunity to catch up in terms of performance relative to others.

Why hasn't the stock recovered since the earnings report?

The stock hasn't recovered from the earnings report due to softness in Google's ad revenue.

What concerns are raised about Alphabet's AI capabilities?

Concerns are raised about Alphabet's reliability in AI, especially after the troubles with the generator and the market's current debate on the company's AI capabilities.

How has Alphabet's stock performance been in the past year?

Despite the recent issues, Alphabet's stock has been up 56% in the past year, matching the S&P 500 return.

What is the significance of Alphabet owning DeepMind?

Alphabet owning DeepMind signifies that it is one of the pioneers in artificial intelligence, having been involved with the company for many years.

What challenges does Alphabet face according to the discussion?

Alphabet faces challenges such as excessive hiring, an incoming virus, and employees focusing on social issues, which may distract from the company's core interests.

What is the perception of Alphabet's stock price in Silicon Valley?

In Silicon Valley, stock prices can become a perception that drives the prices in the short-term, potentially crossing over into reality, a concept referred to as reflexivity by George Soros.

What is the suggestion for Alphabet to improve its situation?

The suggestion is for Alphabet to focus on advancing the company's interests, which may involve letting go of employees who have their own agenda that distracts from the company's goals.

How does the discussion relate to other tech companies?

The discussion compares Alphabet's situation to Meta's, where targeted layoffs were made to improve the company's profitability and efficiency.

Outlines

00:00

📉 Alphabet's Underperformance and Future in AI

The paragraph discusses the underperformance of Alphabet's stock, which has dropped 4%. It highlights the frustration of investors who had high expectations for Alphabet's performance relative to other mega caps. The conversation focuses on the challenges faced by Alphabet, particularly the issues following the Gemini rollout and the softness in Google's ad revenue. There's also concern about Alphabet's reliability in the AI space after recent troubles with their generator. However, an argument is made that despite setbacks, Alphabet, with its history and resources, is well-positioned to succeed in AI. The discussion touches on the company's past successes and the potential for future growth, despite the current market skepticism.

Keywords

💡Alphabet

Alphabet is the parent company of Google and several other subsidiaries, involved in various sectors from technology to health. In the context of the video, Alphabet's performance in the stock market and its role in artificial intelligence are being discussed, particularly in light of recent challenges and public perception.

💡Underperforming

Underperforming refers to a situation where an entity, such as a company or an investment, does not meet expected performance levels when compared to others in the same sector or to previous benchmarks. In the video, Alphabet is described as underperforming in the stock market and facing challenges with its AI initiatives.

💡Gemini rollout

The term 'Gemini rollout' likely refers to the launch or release of a new product or service named Gemini by Alphabet. The video suggests that this rollout has not gone as smoothly as anticipated, leading to concerns about the company's ability to innovate and lead in AI technology.

💡Google Ad Revenue

Google Ad Revenue refers to the income generated by Google through its advertising services, which is a significant part of Alphabet's overall revenue. In the context of the video, there is a mention of softness in Google's ad revenue, indicating a potential decline or slower growth in this income stream.

💡Artificial Intelligence (AI)

Artificial Intelligence, or AI, refers to the development of computer systems that can perform tasks typically requiring human intelligence, such as learning, reasoning, problem-solving, and language understanding. In the video, Alphabet's commitment to and challenges in the field of AI are discussed, particularly in relation to its stock performance and public trust.

💡Generator

In the context of the video, 'generator' likely refers to an AI-based tool or system developed by Alphabet that has caused some concern or controversy. This could be related to content generation or other AI functionalities that have not met expectations or have led to issues.

💡Market Debate

A market debate refers to discussions or disagreements among market participants regarding the value, performance, or future prospects of a particular investment or company. In the video, the market is debating Alphabet's reliability and leadership in AI, influenced by recent events and financial performance.

💡DeepMind

DeepMind is an artificial intelligence research lab that was acquired by Alphabet. It is known for its work in advancing AI technologies and has been a pioneer in the field. The video mentions DeepMind to highlight Alphabet's long-standing commitment to AI research and development.

💡Innovation

Innovation refers to the process of creating new ideas, methods, or products. It is often associated with solving problems in new ways or improving existing technologies. In the context of the video, Alphabet's ability to innovate in AI is being questioned due to recent challenges, but the speaker argues that the company has the tools to succeed despite these setbacks.

💡Social Injustices

Social injustices refer to unfair or unequal treatment of individuals or groups within society, often based on race, gender, or socioeconomic status. In the video, there is a critique that Alphabet has hired too many people focused on addressing social issues, which may be detracting from the company's core business objectives.

💡Reflexive

In the context of the video, 'reflexive' is used to describe how perceptions in the market can become self-fulfilling prophecies, influencing the reality of a company's situation. It refers to the idea that if enough people believe something will happen, their actions can cause it to occur.

Highlights

Alphabet's stock falls 4% due to underperformance and market pressure.

Shareholders express frustration over Alphabet's performance this year.

The rollout of Google's AI, Gemini, has been less than successful.

Alphabet was expected to catch up in performance with other mega caps.

The stock has not recovered since the earnings report showed softness in Google's ad revenue.

Investors question Alphabet's reliability in AI after recent troubles with the Generator.

Despite issues, Alphabet has been a pioneer in AI with its ownership of DeepMind.

The company's stock is considered cheap, possibly due to an upcoming disruption in search.

Silicon Valley stock prices can reflect perceptions that may become reality, as seen with Alphabet.

There's a problem at Alphabet with excessive hiring and a focus on social issues.

Alphabet employees are accused of having personal agendas that distract from the company's goals.

The company may need to make layoffs to streamline operations and improve profitability.

There's a debate in the market about Alphabet's future in AI and its reliability.

Investors are questioning whether they can trust Alphabet's AI initiatives.

Alphabet's AI has had missteps, but the company is still seen as capable of innovation.

The AI industry is challenging, and even pioneers like Alphabet can make mistakes.

Alphabet's stock price reflects a broader issue with the company's direction and focus.

The company's commitment to addressing social issues is seen as a distraction from its core business.