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Alphabet announces $80B equity capital raise to expand AI infra and compute

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Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#231

Post by wrsh07 »

gls2ro wrote: post #228
wrsh07 wrote: post #130

Earlier quoted context omitted.

This is a sensible-seeming take at first blush, but it doesn't hold up to any scrutiny (or maybe my scrutiny is faulty - you tell me!) Sundar and many of his executives have certainly read or heard of The Innovator's Dilemma, and I expect they're all moderately paranoid that it will be their downfall. Also, that's not it. Google has a great ai app called Gemini where they have at various points hosted the top ai imag…

The thing about Innovator's Dilemma is that even if you know about it you mostly cannot escape your own company culture and norms. If there is a "crack" there you might be able to get out of it, or it will let a disruptive idea to grow, but my way of thinking about innovator's dilemma is that is it a "culture bias": knowing about it give you some small advantage but it needs a real change to maybe have a chance to es…

Google ran a code red for a couple months iirc

But I also disagree with your reading of the innovators dilemma. You're being far too absolute

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#232

Post by wrsh07 »

keeda wrote: post #229
wrsh07 wrote: post #220

Earlier quoted context omitted.

This take overlooks most of the work that Google has been doing in the past decade. Have you seen their Cloud business? Moreover, Google has continued to drive search growth since ChatGPT arrived and is executing competently. Their models are good (not great), but they have enough compute and one of the best ML-focused chips such that they aren't beholden to Nvidia (instead, they're beholden to fabs: tsmc - this is a…

Right, but my theory is that the ad business, still the biggest chunk (75%+) of their revenue, is extremely hyper-optimized for the current search journey-based UX and enjoys a monopoly + auction rigging premium (e.g. Project Bernanke) primarily through tremendous ad volume. That is, their current growth is largely based on stuffing more and more ads into commercial-intent SERPs. However the agent-based conversationa…

> I think their revenues and profits and dominance will be much lower than what they are today

While your linked post was explicitly about ads, this line wasn't and is just baseless

If you think that (the quoted line) you should short Google (haha you will lose all your money even if you're right, market...irrational...solvent)

Search is going to be fine. It's about half their revenue. Display is another large chunk and feels largely immune to the affects of AI, and Google is not a static entity. And their Cloud business is seeing unbelievable growth.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#233

Post by keeda »

wrsh07 wrote: post #232
keeda wrote: post #229

Earlier quoted context omitted.

Right, but my theory is that the ad business, still the biggest chunk (75%+) of their revenue, is extremely hyper-optimized for the current search journey-based UX and enjoys a monopoly + auction rigging premium (e.g. Project Bernanke) primarily through tremendous ad volume. That is, their current growth is largely based on stuffing more and more ads into commercial-intent SERPs. However the agent-based conversationa…

> I think their revenues and profits and dominance will be much lower than what they are today While your linked post was explicitly about ads, this line wasn't and is just baseless If you think that (the quoted line) you should short Google (haha you will lose all your money even if you're right, market...irrational...solvent) Search is going to be fine. It's about half their revenue. Display is another large chunk…

> While your linked post was explicitly about ads, this line wasn't and is just baseless

I mean, the ad business is still by far the largest chunk of their whole business, which is why I think their overall revenues, profits and dominance will decrease ¯\_(ツ)_/¯

Display is another good example of why. Like half (?) of it is YouTube, which will be fine, but the rest comes from non-first party properties, which are already seeing drastic drops in traffic. Just as with the shrinking of SERP ads, there's no way to stuff enough ads in chatbot conversations or to compensate for the display ad revenue dropping either.

I'm long Google (monopolies are usually good bets, bullish on AI + GCP, plus it is disrupting itself before others can so has good long-term prospects) but I can't see how that will compensate for its main cash cow today being cannibalized, so I fully expect future returns to be less than historic ones.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#234

Post by enos_feedler »

jgalt212 wrote: post #106
enos_feedler wrote: post #34

Earlier quoted context omitted.

who cares about marketing when you have distribution? Probably a smart move to pump dollars into the product and not the marketing.

in high margin businesses, customer acquisition is everything.

And Google acquired you in 1998 with search.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#235

Post by polski-g »

okdood64 wrote: post #219
bel8 wrote: post #17

Earlier quoted context omitted.

They know Google has a ton of data to train LLMs on. Recently I have been asking YouTube's new AI about some videos ("when is Steam metrics mentioned in the video?" for example), which means they also index videos. This is an unthinkable amount of data. I'm actually impressed at how bad Alphabet is with LLMs since they invented the thing as we know AND have all the data to train on, yet OpenAI and Anthropic are eatin…

> yet OpenAI and Anthropic are eating their pie I'm actually impressed by how much the Hackernews crowd is sleeping on Google & Gemini. Yes, it's lagging behind in coding, but it's consistently much better and more reliable at literally everything else. Also there was a period of time when Gemini was the best model out there...

It's pretty hard for the nerd crowd to believe that only 4% of traffic to GPT is coding related.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#236

Post by felixfurtak »

merelydev wrote: post #160

That's 80B that doesn't go to OpenAI or Anthropic.

And Alphabet already has an established customer base / product infrastructure to roll out it's AI products, and is highly profitable. This makes it a far less risky investment than a loss-making start up. Berkshire seems to agree. It's a great power play that can only hinder competitor IPOs.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#237

Post by thefounder »

wrsh07 wrote: post #218
thefounder wrote: post #168

Earlier quoted context omitted.

Even if they include ads in Gemini the issue is that Gemini is not the best AI app. It’s maybe the 3rd or 4th. So if Google becomes the 3rd best “search/AI engine” the future is not that bright.

Gemini is a brand new surface that Google has created to capture the current excitement around AI, but it's not the only surface into which they're shoving AI.^ ChatGPT's growth is incredible, but they essentially have to get all of their growth from inside codex or ChatGPT apps. Google can auto query Gemini with every search. There's an interesting piece of data which is that this tells them (on a conditioned basis^…

People stop searching (aka googling). They just want to do stuff with AI and Google’s AI stuff is bad. That’s my whole point.

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#238

Post by travelalberta »

polski-g wrote: post #235
okdood64 wrote: post #219

Earlier quoted context omitted.

> yet OpenAI and Anthropic are eating their pie I'm actually impressed by how much the Hackernews crowd is sleeping on Google & Gemini. Yes, it's lagging behind in coding, but it's consistently much better and more reliable at literally everything else. Also there was a period of time when Gemini was the best model out there...

It's pretty hard for the nerd crowd to believe that only 4% of traffic to GPT is coding related.

I would have assumed that it was like 50%... I always assume everyone knows how to code or is code adjacent in some way. Remind me to go for a walk today...

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#239

Post by wrsh07 »

surajrmal wrote: post #223
thefounder wrote: post #168

Earlier quoted context omitted.

Even if they include ads in Gemini the issue is that Gemini is not the best AI app. It’s maybe the 3rd or 4th. So if Google becomes the 3rd best “search/AI engine” the future is not that bright.

Search's AI mode is by far the most popular "AI app". Most of the time I don't end up using Gemini, it's because search's AI mode is good enough for my needs and I use it out of habit. I imagine a lot of other would-be Gemini users are in similar shoes.

Google doesn't care if you use Gemini or Google search. But they are so so happy if the ai results in search are "good enough" that you don't need to go use a "frontier llm"

Re: Alphabet announces $80B equity capital raise to expand AI infra and compute

#240

Post by JacobAsmuth »

dnnddidiej wrote: post #167
asdfaoeu wrote: post #147

Earlier quoted context omitted.

Not at all since the company is also +80bn cash.

But they are about to set it on fire? But null hypothesis p=0.3 or something right?

Set it on fire? I'm confused what your model of Google leadership is. Do you think they're being duped? Or controlled in some way? What is your theory of mind for Sundar's decision making process here. That he's committing fraud?

Because the obvious answer is that he has compelling financial data telling him that this $80B now will produce a positive return on investment in the future. But you of course seem to disagree.

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