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.