During its earnings call yesterday, Google said it was planning to spend more this year than last. Maintaining its edge over ChatGPT and Bing will come at a price.
“They have to make incremental investments in AI to maintain their competitive advantage to preserve their search share, even though it’ll come at the cost of their margins on a consolidated basis,” explains Hedgeye Communications analyst Andrew Freedman in this clip from The Call @ Hedgeye.
If even 1% of people migrate to ChatGPT or Bing as their go-to search engine, it is all downside for Google.
“The analog is Tesla with an EV in the beginning – and a cool EV at that – and then everyone having EVs,” says Keith McCullough.
The narratives surrounding major tech companies shift so quickly, it’s enough to make your head spin.
“You go from, ‘Oh shit, it’s Phase 1 of a bear market, stocks could go down,’ to ‘Oh, I gotta buy them on cost cutting’ to ‘Oh I love AI, but you gotta spend against the cost cutting now to grow,’” adds McCullough.
“None of these companies are talking about being in a recession, by the way. I guess spin, spin, spin is my macro theme of the day.”
Watch the full clip above.
