Warning: The Coming Death of Google & Google Stock.

well Google is down four percent in

pre-market and people are freaking out

that Google's dying about two weeks ago

I actually filmed a segment on the meet

Kevin report and I never posted the

actual video of it separately but we'll

look at that later the segment that I

posted was all about analyzing Google's

fundamentals and its massive risk to

artificial intelligence we'll review

some of those numbers here but boy oh

boy a piece in the New York Times this

morning really is starting to drive

Nails into the back of Google and

potentially into their coffin and it's

not that great take a look at this New

York Times piece which is pretty damning

for Google it is not something to be

very excited about if you are a Google

investor I personally have no exposure

to Google stock either in a long or

short in fact when I first said I want

to stay away from Google uh after this

AI Revolution this sucker was somewhere

around 100 bucks a share and even though

it's down four percent right now that

still leaves it at 105. so again I ain't

trading Google but I tell you long term

I'm a little bearish on Google right now

and I love Google I use Google for

everything absolutely love the company

but boy oh boy I think they got caught

flat-footed here listen to this from The

New York Times

Google devising radical search changes

to beat back AI Rivals folks they are

shaking in their boots they got caught

with small PP at a time you better have

a little big one not a small one this is

not good for Google's a pricing power at

all so what do we see here we see

Google's employees were shocked when

they learned in March that the South

Korean consumer electronics giant

Samsung was considering it hasn't

happened yet but considering replacing

Google search engine with Bing as the

default search engine on its devices

folks default search engines are the

lifeblood of Google you will get an

iPhone you open up Safari yes you could

change the default search engine guess

how many people actually change it maybe

one percent yes you can download a

different browser on your phone guess

how many people actually do maybe one

percent I don't know but most people

don't actually even go through the

settings on their phone they just use

what it is when that default search

engine is Google the default is more add

money to Google well that domination

might be getting questioned here listen

to this

Google's reaction to Samsung's threat

was quote Panic according to internal

messages reviewed by the New York Times

an estimated three billion dollars in

annual revenue is at stake with the

Samsung contract an additional 20

billion dollars is tied to an Apple

contract which is also up for Renewal

this year now Google is racing to build

an all new search engine platform

powered by Google's AI technology which

so far Google's technology has kind of

falling a little flat in demonstrations

in fact in their popular demonstration

that they rushed together after openai

released their chat gpt3 publicly and

now we're on four

Google's presentation

flopped because their AI gave some false

data which is a terrible explanation or

a terrible example of their AI now

Google's been working on AI for years

but one of the concerns Google had even

about five six years ago was that Google

had a their AI had a tendency for

providing false or unbiased results well

that was still true in their

presentation a couple months ago

actually only about a month ago and so

now Google's trying to rebuild an

all-new search platform to combat this

potential pain coming for basically a

search engine shakeup uh in other words

Google could literally lose its

dominance now why is this really

important well what I want you to know

is look at Google's last earnings okay

look at their Q4 earnings now I usually

go through earnings in depth with course

members but let's give you a little

preview of what's going on here Google

search

makes up

69 of their revenue but it's not just

Google search folks you have to

understand a company like these

publishing companies that run a lot of

ads companies like the New York Times

They get 50

of their reach from search networks so

in other words when people like Google

news or Google or whatever and the New

York Times pops up that creates 50 of

the New York Times views what happens

when AI steps in and says you don't even

have to go to those websites anymore

well now not only do you potentially

lose the Google search Revenue because

rather than searching 10 times for an

answer people just search once and your

Google search ad Revenue goes from 69 to

potentially 6.9 percent obviously

wouldn't scale that way but as an

example it would basically Fall by by a

factor of 10. the other thing that

you're also going to lose folks Google

Network advertising look over here

Google Network advertising is when

Google advertises on a web page that

somebody hosts so if you go to like Zero

Hedge or the New York Times and you see

an ad Google might be placing Those ads

well that network is worth 8.4 billion

dollars in a quarter to Google go Google

search is worth 42.6 billion dollars in

a quarter combine those two together you

have over 50 billion dollars of Revenue

simply from things that search could

absolutely destroy their total revenue

total revenue all everything combined

Google cloud services you name it with

76 billion dollars for Q4 well if you

potentially drop search and net and

website placement by 90 then you're left

with five instead of 50 billion right

and so now all of a sudden your revenues

at the company plummet you go down to 31

billion dollars of quarterly revenues

instead of 76 billion that is a decline

of roughly 60 percent

Google earnings could decline 60 now

think about that from a valuation point

of view for a moment if we just look at

the earnings per share for here and

let's go ahead and annualize them for

Giggles okay this is not exactly what

you're supposed to do but we're just

going to play are you here you know

we'll take the year end let's take the

year end uh rather than annualizing the

quarterly we'll take the year-end EPS of

5.6 uh okay and then let's put a little

uh 5.6 right here so 5.6 is the EPS well

that means this company right now at 105

bucks is selling for let's divide 105 by

5.61 they're selling for about 18.7

times price to earnings let's say their

forward is about six let's give them a

forward of six right if their forward is

six then we're looking at 17.5 on a

forward PE basis right now on a PEG

ratio basis let's say they're expecting

to grow earnings at twenty percent

they'd be selling for a one peg little

under a one pack it'd be wonderful right

but wait a second what happens if there

are earnings instead of being a forward

of six actually drop sixty percent uh oh

well all of a sudden you'd be looking at

a company that has a forward p e ratio

uh or a forward earnings per share of

2.4 now all of a sudden 105 divided by

2.4 the company would be selling for

43.7 times at a forward P that's very

expensive you'd be at a 2.15 ish Peg

that's very expensive there are better

opportunities at that pricing so the

stock probably tanks on that kind of hit

now I don't actually think that Google

is going to get hit by like uh uh you

know 60 decline in Revenue but I want

you to see how much of their revenue is

at stake and there's a reason why they

are freaking out they are freaking out

because of a lot of their revenue being

at stake now under the new project name

code Magi uh we got some Gamers over

there uh there's a new project named

Magi and basically what they're doing is

they're throwing together designers

Engineers Executives and they're

freaking out in these rooms called

Sprint rooms to modernize their people's

experience with AI powered search

features that will launch soon

uh the AI powered search will include ad

placements underneath uh the the the uh

those uh those segments uh so the goal

is that they would still be able to

provide a search Revenue but again if

people are searching one-tenth as much

when you're providing AI search even

with ads you're not going to protect

that mode as much this is coming as a

shock to Google employees uh initially

here it is they held off on AI because

it was prone to generating false and

biased statements now the Magi project

has 160 people working on it full time

uh they're racing to try to mix ads in

to search results that are generated by

AI now I have to say when you Google how

many employees does Google have and see

in the future we could chat GPT that or

maybe AI let's say but anyway they had

somewhere around 187

000 employees in September of 22. they

have 160 people working on Magi I mean

it starts making Wonder wait a minute

dude if if your most important project

that represents potentially 60 of your

revenue is in the hands of 160 people

out of 187 thousand

either how important is the project to

you or how important are the other 186

000 people working at Google I mean just

to give you an understanding of how Wild

this is this is literally

0.08

of their Workforce the legal drinking

limit the blood alcohol limit for your

blood alcohol content for driving is

0.08 percent they literally have the

legal blood alcohol limit of their staff

working on what's probably the most

important project of Google's sole

existence the I uh it sounds low to me

I'm just gonna put it that way it's

either we're seeing massive layoffs

coming or that number's too low

probably layoffs honestly because like

how how many people do you need to

revise the search engine I mean the more

people you put in the more clunky things

might get I don't know I don't know

company plans to release initial

features to 1 million people

progressively increasing that to 30

million by the end of the year they plan

to incorporate tools like Jiffy that

would use AI to generate images for you

in Google search result or Trivoli tutor

which would teach you a new language

through open-ended AI conversations can

also give you some insights into what

activities are near you when you are

looking at um uh airbnbs look you

actually had Google CEO a freak out

yesterday on CNBC sorry csmv he was on

60 Minutes uh it's not CNBC it was on 60

Minutes yesterday he uh he discussed

that Society is not prepared for the

rapid advancement of AI that AI will

impact everything single product in

every single service at every single

company this is actually very much in

line with what I've previously said and

I'm not trying to Pat myself on the back

but but people have asked me like it

would be Kevin how are you going to use

Ai and you study it's like listen every

company in the future is going to use AI

just like every company uses email you

don't have to create your own AI you

could take a chat GPT and then train it

to be what you want it to be every

company in the future is going to use AI

just like every company used to use fax

machines and then emails it's going to

happen and the companies that don't will

die but I loved the analogy because that

uh that the the CEO gave because he

mentioned look if if a radiologist has

to go through a hundred Radiology scans

for potential cancer every morning they

wake up AI might be able to sort those

from highest priority to lowest priority

four uh for the the doctor for the

radiologist and this could potentially

prioritize care for people that was just

one example I found that example very

relatable because I use that as real

estate that's what we do with our AI we

use our AI as a way to prioritize which

deals in a certain Market are most

desirable or most likely to be

consistent of a wedge deal for us so

that a we don't miss the most important

ones because they have a highlighter

through them and we can focus our

attention on those right that's what

we're doing at househack and this is

very similarly what I expect to happen

throughout the rest of the world when it

comes to AI use but AI is trembling uh

and uh it's not a server Google is

trembling because of AI and it's not a

surprise this is a massive piece and

it's something that we've been talking

about for a while now we'll do a little

bit of a deeper dive into Google's

revenues again but we've already done a

pretty good dive here and I have to say

I I think the message here is clear for

me Google has way too much risk it's not

something I could consider investing in

I basically think the mode of Google is

gone like everybody's still using Google

but the moat of Google is gone in fact

look at some of these notes that I wrote

down I wrote these notes down on

February 9th February 9th is when I did

this course member live stream where I

went through these numbers and I wrote

down the following in red in Orange is

when I came back later and I wrote down

a couple little things in Orange there

but in red is what I wrote down in Q4

and here's what I wrote down I wrote

Google negatus flat slash week

advertising even their YouTube revenues

are falling right I mean you can see it

right here look at this you go to

Q4 YouTube hold on a sec q4q4 where's

that where's it where's it ah

now I can't find the revenue anyway

their YouTube revenues are falling not

only are you there here it is uh YouTube

revenue is falling 7.8 Google search

following 1.6 Google Network nine

percent yeah Google cloud is growing but

it's still a small part so what did we

write down over here in red Google

negatives flat slash weaker advertising

growth AI could weaken that Search

growth even more you become a results

Engine versus a search engine and I'm

personally not convinced that Google is

going to be the best beneficiary of AI I

wrote that down because that's the fact

of the matter we don't know that Google

is going to be the best AI right it's

easy to invest in Google when we know

they're the best search engine but if

the mode is gone who knows see I wrote

here who actually wins from AI is it the

neural net or is it the company training

the neural net is it the processors the

data centers is it the Nvidia is it in

finiband Ethernet for the connections on

those servers is it apple or is it chip

makers we don't know now who really

benefits from AI well it's going to be

consumers and businesses right consumers

and businesses are going to be the ones

that benefit from AI if Google usually

makes five cents per sure search and

somebody searches 10 cents for an answer

versus one time that's your factor of

potentially 10 in terms of of loss right

of Revenue but who loses with AI search

engines and labor right who benefits

maybe advertisers maybe if they can

figure it out but almost certainly the

people who win are businesses and

consumers who learn to harness the power

of AI am I convinced that even if Google

provides more Ai and advanced AI

platforms that they are going to somehow

be the greatest beneficiary of AI

absolutely not and so that's where I

have to say

not wholly enthused about the potential

for Google as an investment I actually

think there's a lot of risk in Google as

an investment and for me that makes me

want to pass I don't like a lot of risk

I know sometimes people think I'm crazy

and that and that's fine you know maybe

I am probably yeah but I don't really

like Risk I'm a little baby I like

companies I can really believe in

and huddle without the risk of their

moat going away that's not cool

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