GOOGLE: HEADS WILL ROLL
Summary
TLDRIn this episode of Unrivaled Investing, Daniel discusses the recent controversy surrounding Google's Gemini AI, focusing on public backlash over its 'woke' image generation and text interpretation features. The discussion includes critiques from notable figures like Nate Silver and technology analyst Ben Thompson, who suggest that Google needs significant cultural and operational transformation akin to Elon Musk's approach at Twitter. Amidst the controversy, there's speculation about CEO Sundar Pichai's future and the impact on Google's stock. Despite the challenges, the video explores the potential for Google to learn from the feedback, highlighting the company's strong financial performance and the broader implications for its role in the evolving AI landscape.
Takeaways
- 💭 Google's AI project Gemini is under scrutiny for producing outputs that some users consider 'woke', leading to discussions about the company's direction and leadership.
- 🔥 There is speculation about CEO Sundar Pichai's potential departure due to the controversy surrounding the Gemini AI's outputs and the company's current culture.
- 📊 Google's financial performance remains strong, with significant revenue and profit growth, despite the controversies surrounding its AI technologies.
- 🛠 The backlash against Gemini AI highlights a broader debate on technology, diversity, and societal values, with some advocating for a return to a 'colorblind' approach.
- 👨💻 Prominent figures like Nate Silver and Ben Thompson have criticized Google's AI for its handling of sensitive topics, suggesting the need for major changes.
- 📈 Google's stock experienced a 4% drop, partially attributed to the controversies and calls for a change in leadership and company culture.
- 🧑🧑🧑🧑 Technology analysts and influencers are closely watching Google's next moves, including potential layoffs and strategic shifts to address the criticisms.
- 📱 Google's advantages in AI development, like Gemini 1.5 and its ability to process extensive data, suggest potential for significant future advancements.
- 📉 Despite current challenges, Google's extensive ecosystem, including YouTube and Google Cloud, provides a solid foundation for growth and adaptation in the AI era.
- 💻 The debate over Google's AI and company culture reflects broader industry and societal discussions about technology's role in shaping values and information.
Q & A
What is Google's Gemini AI, and why has it been controversial?
-Google's Gemini AI is their solution to meet the challenge posed by ChatGPT, offering revolutionary AI model capabilities, including text-to-image creation. It became controversial due to claims of it producing 'woke' content, leading to Google announcing a relaunch of the tool to address these concerns.
What specific criticisms did Nate Silver raise about Gemini AI?
-Nate Silver criticized Gemini AI for struggling to provide common sense answers to comparative impact questions, such as evaluating the societal contributions between Adolf Hitler and Elon Musk, highlighting an issue with the AI's judgment in distinguishing vastly different historical impacts.
How did some users react to the image creation feature of Gemini AI?
-Users criticized the image creation feature of Gemini AI for producing content that was perceived as 'woke' or not reflecting reality, such as altering the skin colors of historical figures inaccurately, sparking debates on forced diversity and historical accuracy.
What does Ben Thompson suggest Google needs for its transformation?
-Ben Thompson suggested that Google requires a transformation akin to Elon Musk's overhaul of Twitter, including significant layoffs and a shift in focus towards building quality products and services rather than imposing ideologies.
Why was Google's stock down by 4% as mentioned in the transcript?
-Google's stock was down by 4% due to the backlash and controversy surrounding its Gemini AI, with critics calling for significant changes in the company's culture and potentially even the removal of CEO Sundar Pichai.
What are the potential benefits of AI for Google, as mentioned in the script?
-The potential benefits of AI for Google include improved feedback mechanisms from a wide user base, leading to better and stronger AI models over time. Additionally, AI advancements could enhance Google's services like YouTube, with new content creation capabilities.
What is the 'Paul Graham rule' mentioned, and how does it relate to Google?
-The 'Paul Graham rule' mentioned by Brad Gerstner suggests that absolute monopolies like Google are at risk because they lose the self-correcting imperatives of competition, implying that Google needs significant changes to remain innovative and responsive to user needs.
How does Google's financial performance relate to the concerns raised in the script?
-Despite the controversies and challenges mentioned, Google's financial performance remains strong, with significant revenue and profit growth. However, there are concerns about future risks, particularly from AI-driven competition, that could impact its dominant position in search and advertising.
What does the future of AI technology hold for Google according to the script?
-The script suggests that Google is actively developing advanced AI technologies, like Gemini 1.5, capable of processing vast amounts of data, which could revolutionize how users interact with AI and maintain Google's competitive edge in AI innovation.
What are the key points for investors to consider about Alphabet (Google's parent company), as mentioned?
-Investors should consider the solvability of Google's current problems, the compelling ROI of Google's advertising platform, and Google's potential to remain a leader in AI technology. Despite short-term challenges, Google's assets and innovation capacity may offer long-term growth opportunities.
Outlines
📉 Google's Controversial AI Developments and Public Response
Google has faced criticism due to concerns surrounding its AI model, Gemini, intended as a response to ChatGPT. Public backlash has arisen from perceived issues with the AI's output, labeled as 'woke' by critics, including the way it handles image creation tasks. Notably, Gemini has been called out for not aligning with common sense in comparisons, such as between historical figures and current personalities, leading to calls for its shutdown. The criticism extends to how AI interprets historical figures' depictions, pushing a narrative that some find misaligned with reality. High-profile figures like Nate Silver have replicated controversial outcomes from Gemini, fueling debates about the necessity of revisiting Google's core values and approach to AI development. This situation has sparked discussions on the importance of a colorblind society and the dangers of enforced diversity and equity over equal opportunity. The dialogue highlights a broader tech industry conversation on product development priorities and societal impact.
🔍 Google's Strategic and Cultural Challenges Amidst AI Disruption
Google's stock faced a downturn attributed to concerns over its AI strategy and organizational culture, amidst speculation about CEO Sundar Pichai's future. Despite strong financial performance, Google's handling of its AI advancements, specifically the Gemini project, has come under scrutiny. Critiques focus on the AI's 'woke' tendencies and its impact on product and societal perceptions. The debate encompasses broader Silicon Valley and investor perspectives on Google's direction, emphasizing the need for a culture shift similar to transformations seen in other tech entities. High-profile commentary, including from technology analyst Ben Thompson and investor sentiments, points to a need for Google to prioritize product excellence over ideological agendas. The discourse extends to Google's potential in the AI space, balancing innovation with public and investor expectations.
🚀 Google's AI Prospects and Industry Positioning
Despite facing public and investor scrutiny over its AI initiatives, Google's position in the AI revolution appears promising. Analysis suggests a significant potential upside for Google's stock, contrasting the negative sentiment from its 'woke AI' controversy. AI-driven forecasts align with conservative Wall Street expectations, indicating room for growth and innovation. Google's AI, particularly the Gemini 1.5 model, demonstrates cutting-edge capabilities, offering a glimpse into future advancements and their potential impact on data processing and knowledge application. This optimism is shared by prominent investors, highlighting Google's resilience and adaptive capacity amid challenges. The narrative underscores Google's ability to navigate the complexities of AI development and market expectations, aiming for a balanced approach to innovation, societal values, and shareholder interests.
📊 Analyzing Google's Response to AI Challenges and Market Dynamics
Google's strategic response to the backlash over its AI policies and the call for a cultural overhaul emphasizes the company's commitment to addressing these challenges. Insights from the tech and investment community suggest a path forward that includes significant organizational changes to align with market and societal expectations. The potential for Google's AI technology, particularly in enhancing platforms like YouTube, suggests a strong foundation for future growth. However, the immediate need for Google to course-correct its AI strategy and address concerns over its cultural direction is evident. The discussion reflects broader industry trends towards accountability, innovation, and the delicate balance between technological advancement and ethical considerations.
Mindmap
Keywords
💡Google Gemini AI
💡Nate Silver
💡woke ideology
💡Ben Thompson
💡forced diversity
💡transformation
💡Sundar Pichai
💡anti-fragile approach
💡AI revolution
💡financial performance
Highlights
Google's Gemini AI, designed to compete with ChatGPT, faces backlash for 'woke' content and inaccuracies, leading to a planned relaunch.
Nate Silver criticizes Gemini AI for failing to distinguish between historical figures and current public personalities in a meaningful way.
Google plans to address and correct the 'woke' bias and inaccuracies within its Gemini AI image tool after public backlash.
Critics argue Google's approach to diversity and representation in AI-generated content deviates significantly from historical accuracy.
Ben Thompson and others suggest Google needs a major cultural transformation, akin to Elon Musk's overhaul of Twitter, focusing on product quality over ideology.
The controversy around Gemini AI and Google's culture has led to a significant stock price drop, raising questions about leadership and future direction.
Despite recent controversies, Google's earnings remain strong with significant revenue and profit growth, highlighting the company's underlying financial health.
The rise of AI poses a potential threat to Google's search monopoly, with increasing competition in the AI space.
YouTube and other Google services are expected to benefit significantly from advancements in AI technology.
Experts predict Google's AI, including Gemini 1.5 and future versions, will significantly enhance data processing and user interaction capabilities.
Prominent investors like Bill Ackman continue to support Google, emphasizing its potential despite current challenges.
The debate over Google's AI ethics and cultural direction underscores the tech industry's broader struggles with balancing innovation, representation, and historical accuracy.
Google's potential course corrections in response to backlash highlight the dynamic nature of AI development and corporate governance.
The controversy suggests a growing demand for technology companies to reconsider how their products reflect societal values and historical realities.
The situation at Google serves as a case study in the complexities of managing AI ethics, corporate culture, and stakeholder expectations in the rapidly evolving tech landscape.
Transcripts
in the last few days Google has been in
the news for all the wrong reasons
causing some investors to wonder
speculate if the top dog C Pai will be
fired Heads Will Roll that is the clear
perception on what could happen with
Google and to understand the news you
know if this is your first time tuning
in by the way my name is Daniel you're
watching unrivaled investing and so if
you you know look at the news you know
it it involves their Gemini AI this is
their solution to meet chat GPT and
their
revolutionary AI model so Google's
pushing with Gemini they've talked about
the Gemini era we'll talk about that in
just a bit because this is revolutionary
technology that Google is bringing but
some people are immediately pushing back
they're saying well wait a second look
at some of the solutions here that it's
you know it's doing and one one of the
things that it did was you know you
could have a text to image creation
using Google Gemini saying hey you know
create an image of XYZ and people are
saying wait a second this is woke you
know this is bananas and so Google
saying oh okay we're going to relaunch
the woke Gemini AI image tool in a few
weeks it's not working the way we
intended and you know as an example of
some of the things that you've seen Nate
silver uh prominent uh statistician who
correctly called several elections
didn't didn't call them all right though
he talked about how asking Gemini who
negatively impacted Society more uh
talking about Hitler versus Elon
tweeting memes uh he was able to
replicate the fact that you know Gemini
struggled with what would arguably be a
very common sense answer that Elon has
actually added immense value to society
and one person has you know killed
millions of people so been responsible
for that so you know this is he's saying
look he's he was able to replicate some
of these woke claims they need to shut
Gemini down so that's that's a very you
know it's it's when when you have
someone that's not necessarily on the
tech scene calling out like hey look you
you have an offensive product out there
because of how woke you've made it it's
it's worth understanding that you know
you need to revisit some of your core
values in that case and you could see it
again you know here's here's one Twitter
profile calling you know calling out n
wokeness where they talk about how if
you want images of the founding fathers
that gave you uh you know people's skin
colors that didn't match reality and
that's that's ultimately the challenge
here is that you want to say look let's
Embrace reality let's not try to
apologize for your skin color no matter
what color it is and ultimately get back
to the idea of a colorblind Society
where you want to build things and you
want to root for society and not say hey
let's have a diversifi society and force
that diversification on past ideas so
you don't want to have this forced
diversity forced Equity that creates
real problems for society ultimately you
want the equal opportunity but not
necessarily the equal outcome and when
you start plugging it in you get some
very bizarre outakes for what you know
oh this is what the founding fathers
look like I don't think so for for at
least the United States perspective and
so you know Nate silver following up on
this point saying Gemini is behaving
exactly as instructed you know if you
ask it to draw different groups of
people for example Vikings or NH NHL
players talk about National Hockey
League you know the base case is not an
edge case so what you're looking at here
is you know this this does reflect that
there's been you know these these groups
within
that are sufficiently corrupting this AI
model uh that's ultimately getting
rolled out to millions of people now I'd
argue one advantage that Google has is
that they're going to get this feedback
so yes it is painful in the short term
for them it is sort of a slap in the
face like uh like how did you you know
do this um but at the same time like why
did you do this yet at the same time
it's you know they're going to get
better from this this is if you were to
think about a fragile versus an anti-f
fragile approach this is the type of
thing that makes them better so this
advantage of being able to roll out to
billions of people that'll provide this
feedback will ultimately make their AI
better and stronger I believe over time
this is also this this type of publicity
has also gotten Ben Thompson who pens
stratechery this is a very prominent uh
technology piece that's read by a lot of
people in Silicon Valley as well as Wall
Street so he recently wrote about Gemini
and Google's culture with a fundamental
conclusion that Google needs a similar
transformation you're talking about
transformation in the business much akin
to how Elon Musk transformed Twitter you
know talking about 70% people layoffs
the company ought not to be ought not to
to tell users what to think but to help
them make important decisions return
decision-making to those who actually
want to make a good product so he's
talking about look lay off anyone that
doesn't want to make good product I
think that's super important to get back
to and that's what I was talking about
it's not about the color of your skin
folks it's about hey do you want to
contribute to society and you want to
you know build awesome products and not
to be about not to be apologetic on some
sort of perceived you know misdeed and
so that's that's really what you're
talking about here and this must mean
and this is a very bold call from Ben
Thompson I believe this is part of the
reason why Google stock was down 4%
today must mean removing those who let
the former run a muck up to and
including CE CEO Sund pachai this is a
big call you know will heads roll will
you see the top dog at Google you know
fall because of this and it's very
possible it's it's it's not nothing
certain here because you have
significant amount of voting shares you
know with the original founders of
Google so I I suspect they would be able
to say hey if we want Sund we're going
to keep Sund but you know that's comes
down to Larry and Sergey but you know
looking at this you are seeing a lot of
pressure to say hey you know what this
has gone too far it is time to change
this culture now looking at their
underlying results I did a previous
video on alphabet's earnings I mean look
the stock sold off on earnings but
reality was the earnings were quite
strong you know strong you know very
reasonable Revenue growth very
significant profit growth I mean look
the earnings per share went from a buck
05 to a buck 64 I you know I wish most
companies could post those types of
numbers I mean that's fantastic but wall
Street's also forward-looking wall
Street's thinking about the future
thinking about wait a second there is a
dragon an AI Dragon coming to destroy
the Google moot the Google Monopoly in
Search and this is going to happen in
the years ahead with AI we'll talk about
that risk in a second I view the the
story as somewhat I I view that risk as
legitimate you know I certainly view the
cost of search might change
significantly and the user base might
change significantly so that is a risk
especially because they've won they own
that market it's like 90% Plus
but I do view that this it's a it's a
very changing landscape you know there's
a lot of moving pieces here for example
you know they will likely be a huge huge
winner with YouTube and YouTube is doing
very well and as you know open AI talked
about Sora a new model where it's text
to video as more and more content
creators create videos they're going to
upload that content to YouTube so that's
going to make YouTube even more powerful
that is the go-to platform as more and
more creators feel empowered so this
isn't you know it's not a clear-cut
story that oh you know the alphabet you
know the the Yellow Pages are going to
zero because the internet's coming
around it's it's a much more different
story here with with Google because
there are these different pieces you
know looking at the underlying business
YouTube i' I'd suspect will be a huge
winner with AI so what happens from here
what are my thoughts first of all quick
plug this is not Financial advice in
Full full disclosure I do own some
Shares it's not my highest conviction
bet I've talked about Fairfax Financial
which is you know one of my top Holdings
I talked about that on this channel you
can check out that video but also quick
plug recently an unrivaled investing
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that's at unrival investing I also have
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investing if you're interested in let's
say learning how to read financial
statements or learn how to value
stocks so you're seeing not just Ben
Thompson not just Nate silver but a lot
of prominent investors you know come you
know starting to say wait a second this
has just gone too far Brad gersner he's
talking about the Paul Graham rule how
absolute monopolies endanger themselves
and he's talking about how they lose the
self-correcting imperatives of
competition and that's what Google needs
Google needs Elon Musk level course
Corrections it needs to see that type of
huge employee change you know where
you're saying look we are focused on
building awesome products leading this
revolution not about imposing an
ideology onto the masses that don't want
to hear it to be frank Jason
kakis uh you know he's talking about my
gut tells me there'll be a significant
shakeup at Google any moment so you're
seeing a lot of people this was you know
viewed by several hundred thousand
people suggesting that Google's going to
get the same sort of treatment that you
might see a Twitter maybe not as severe
the 70% layoff but it's you know they're
going to talk about thousands of people
of Staff Cuts but it won't be for
financial reasons it'll be the remove
the woke mind virus that they're talking
about here when I look at alphabet you
know thinking about how it could perform
in the years ahead I'm asking AI ticker
chat first month is free see the link
below you know how can it perform in the
years ahead incorporating the latest
Financial dat data looking at
transcripts and it's effectively saying
based on a range of Revenue growth range
of profit margins range of earnings
multiples in the years ahead it might be
flat to nearly 200% upside over the next
5 years which is actually very you know
interesting to me this this does not
suggests you know this sort of downside
that you would expect given the pressure
that you're seeing from you know sort of
uh Wall Street you know saying H you
know like what's going on here woke mind
virus and it interestingly enough
comparing the predictions or the Outlook
from AI ticker chat versus what Wall
Street analysts are predicting Wall
Street analysts are these these solid
lines the bars are what AI ticker chat's
predicting you can see that AI ticker
chat's actually broadly in line to even
conservative versus Wall Street uh you
know Wall Street here's the average and
you can see the average is much lower
for AI ticker chat and you can see how
this applies to earnings where wall
Street's much more optimistic in terms
of how earnings will play out over the
next few years versus terer chat so this
would suggest to me that you know if if
AI taker chat on the upside is
suggesting 200% and you know and wall
Street's assuming earnings could be much
higher that would smell very interesting
to worth review further to reflect
further on this business you know and
and so I I will be thinking about
alphabet in the coming months you know
whether or not I want to upsize a
position not right now personally but
you know seeing this sort of okay AI
ticker chat's saying this and here it is
it's saying 200% upside Wall Street
think it can do a lot better that is
interesting that is a key you know data
point to reflect on I think there are a
few key points though a few additional
key points that or worth reflecting on
if you're considering or thinking about
alphabet number one is this problem that
Google has and it is a legitimate
problem a lot of people are calling it
out uh you know Ben Thompson Nate silver
uh Tim Urban he also called it out
comparing how different types of books
were were getting different types of
commentary uh at the end based on you
know whether or not it promoted this
sort of woke ideology that that Google
clearly you know it's been infected with
and so it's a solvable problem this is a
fixable problem it's about saying hey
are we are we going to be forcing these
values or are we going to be saying
let's build some awesome stuff and if
the culture can go back to we're
building awesome stuff and this is not
for you you know and you're not if
you're not interested in building
awesome stuff bone voage then
okay like then you move on and and you
have an appropriate adjustment that's a
fixable problem this is not terminal
cancer that's a big deal to recognize
from a shareholder perspective and they
still have a lot of calls in the fire
that can work out really well Google
Cloud YouTube those are things that are
doing quite well search is the part
that's uncertain their their Network you
know of of AD Revenue that's been coming
under pressure recently so that is an
example of a possibly the mode getting
filled in so that's the first data point
by and large solvable problem the second
key data point that I think is
worthwhile for investors to consider is
that you know I've talked to a friend of
mine who you know invests spends over a
million dollars on their marketing with
Google and he's made it very clear to me
that look he continues to own Google
Shares and he makes it clear like look
uh there aren't a lot of better
Alternatives out there in terms of Roi
that you can get from a customer you
know acquisition perspective and at this
point
and probably for the next couple of
years you're you know this is probably
the best place for millions of merchants
to spend money so that key aspect of the
compelling return on investment that
hasn't been disrupted yet what we're
really talking about is the concern that
it will in the future as AI gets better
and AI will get better it clearly will
and this is this gets to the third key
Point there's going to be a lot of
change but Google does you know have a
contending position
I'm a contender you know they they have
a contending position um to be a winner
here in the AI Revolution I mean just
this past week you know they talked
about there was an interview with Demis
aabas who runs their deepmind
initiatives that's their AI lab you know
and he talked about how they have Gemini
1.5 which can do up to 1 million tokens
processing digesting that so that that
would be the equivalent of uploading
like a like a series of books a series
of movies and then asking question about
it and then getting you know effectively
nearly perfect responses back that is
just world changing type of stuff and
Demus was like yeah that's that's just
what we're letting some users play
around with we actually have a 10
million token that he plays around with
so just like you're you're talking about
libraries of data now that you can have
total recall on of like oh yeah and I
can help you out with this based on my
this knowledge of all these books that
it has so that's it's just a matter of
time until users get get these
incredible tools right now it's about
you know getting the cost structur down
uh and also you know making sure you red
team it and make sure it doesn't go off
the rails but you also don't want to
make sure you don't you know your course
correct you you you go too far and
that's prob you know part of the problem
that we're seeing here so I I look at
this and just think you know there's a
reason why prominent investors like Bill
Amman are still touting and pounding the
table on alphabet and Google you know
make it part of his core portfolio he's
say you there are these core challenges
but they also have just tremendous
assets one of which is going to be this
feedback feedback cycle where they will
be in the news but you should expect to
see within a few weeks a new and
improved model so I I look at alphabet I
still find it to be very interesting I
also do recognize this is an advertising
business so despite the super exciting
aspect of AI uh you know if there is any
sort of impact in recession or anything
like that that would become even that
would that would be an even greater
near-term impact than AI just because
it's so economically sensitive the the
ad advertising business so I hope this
video talking about alphabet has been
helpful for you uh sharing you know some
of these different gives and takes
what's going on why people are calling
for the the top dogs under Pai to to
step down you know I can understand why
they're doing it I'm
personally let's see I'm personally
inclined to say let's let's see a course
correction from here before you before
you sort of first that move but I could
definitely understand why some people
are saying it so if you have a
perspective on this would absolutely
love to read it in the commentary below
thanks so much for tuning into to
unrivaled investing
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