Tech companies are generating excitement among macro tourists by merely mentioning “AI.” But short-term stock rips aren’t a sustainable solution for actual fundamental issues within the business.
“Google does have to deal with their core business called ‘search engine,’” explains Keith McCullough in this clip from The Call @ Hedgeye. “They can’t just run around saying, ‘AI, AI, AI.’”
A New York Times article this past weekend said Samsung is considering dropping Google as its default search engine on phones. Meanwhile, Google’s efficiency with advertisers has dropped significantly.
“AI will help with that eventually, but you have to go through that whole process. It’s just too early,” explains Communications analyst Andrew Freedman. “I don’t think we’ve seen a reset on expectations here yet, and I think that’s coming. Google’s going to make some headlines today.”
McCullough believes Google’s situation is a microcosm of earnings season as a whole.
“The narratives on Wall Street are, ‘I want to buy stock when companies cut cost structure and fire people. But then I want to buy AI,’ which you have to spend on,” adds Hedgeye’s CEO.
“It’s so bad right now. You can’t quite pin the tail on the narrative donkeys daily. It’s so bad, but it’s so good in terms of generating opportunity.”
Watch the full clip above.
