Alphabet will continue to dominate.
At the time of investment, Alphabet trades at $185.06. Sentiments on the company is mixed with a negative lean due to perceived threats by search disrupters, including OpenAI, and the possibility of a Google Chrome divestiture from an antitrust case ruling. In this thesis, I argue that the advent of Artificial Intelligence will further entrench Alphabet's position as the leading tech giant by elevating their entire line of products and services offerings.
Sustained Brilliance: Sir Demis Hassabis is leading the AI race. The central figure in this thesis is Sir Demis Hassabis, CEO and co-founder of Google DeepMind and Isomorphic Labs. Demis already had a long history of brilliance across multiple fields even before becoming the frontman of Alphabet's entire artificial intelligence efforts. Here is a brief snippet of some of his achievements:
It is our opinion that a man that has displayed a lifetime of success across various disciplines has an unusually high probability of continuing to outperform. To complete the analysis, there are two additional questions to determine if his personal outperformance will translate to financial success for Alphabet:
An insightful reference to answer these questions is his interview with Professor Hannah Fry titled "The future of intelligence | Demis Hassabis (Co-founder and CEO of DeepMind)". (YouTube)
[30:31 to 31:57]
"I don't worry too much about whether we are in a bubble or not, because from my perspective, as you know, leading Google DeepMind, and also obviously with Google and Alphabet as a whole, our job and my job is to make sure either way we come out of it very strong. And I think we're very well positioned, and I think we are tremendously well positioned either way.
So, if it continues going like it is now, fantastic. We'll carry on all of these great things that we're doing and experiments and progress towards AGI. If there's a retrenchment, fine. Then also, I think we're in a great position because we have our own stack with TPUs. We also have all these incredible Google products and the profits that all that makes to plug in our AI into.
And we're doing that with Search, which is totally revolutionized by AI overviews, AI mode, with Gemini under the hood. We're looking at Workspace, at email, at YouTube. So, there are all these amazing things in Chrome. There's a lot of these amazing things that AI, we can see already, are low-hanging fruit to apply Gemini 2, as well of course, as the Gemini app, which is doing really well now, and the idea of a universal assistant. So, there are new products, and I think they will in the fullness of time be super valuable, but we don't have to rely on that. We can just power up our existing ecosystem, which is all sort of, I think, what's happened over the last year. We've got that really efficient now."
[51:50 to 53:03]
Demis Hassabis: And we've seen that that is the story of humanity: we are tool-making animals. And that's what we love to do. And for some reason, we also have a brain that can understand science and do science, which is amazing, but also insatiably curious. I think that's the heart of what it means to be human. And I think I've just had that bug from the beginning. And my expression of trying to answer that is to build AI.
Hannah Fry: When you and the other AI leaders are in a room together, is there a sort of sense of solidarity between you — that this is a group of people who all know the stakes, who all really understand the things? Or does the competition keep you apart from one another?
Demis Hassabis: Well, yeah, we all know each other. I get on with pretty much all of them. Some of the others don't get on with each other. And it's hard because we're also in the most ferocious capitalist competition there's ever been, probably. Investor friends of mine and VC friends of mine who were around in the dotcom era say this is 10X more ferocious and intense than that was. In many ways, I love that. I mean, I live for competition — I've always loved that since my chess days. But stepping back, I understand, and I hope everyone understands, that there's a much bigger thing at stake than just company successes and that type of thing.
[54:24 to 55:30]
I think my mission has always been to help the world steward AGI safely over the line for all of humanity. So I think, when we get to that point, of course, then there's superintelligence, and there's post-AGI, and there's all the economic and societal stuff we were discussing. Maybe I can help in some way there. But I think at that point, my core life mission will be done. I mean, only a small job — just get that over the line, or help the world get that over the line. I think it's going to require collaboration, like we talked earlier. And I'm quite a collaborative person, so I hope I can help with that from the position that I have.
Demis Hassabis will continue to work for Alphabet for the foreseeable future. While cognizant of the safety of AI and AGI, Demis is hyper-competitive and his core mission is to help steward AGI safely over the line for all of humanity. There is almost no reason for him to walk away from the best position to fulfill his lifelong ambition. The only possible negative driver is if there is an ethical or moral misalignment between him and the company, but he acknowledged candidly that his job is to make sure the company comes out strong financially with or without an AI bubble. His collaborative nature also suggests that he will have few problems attracting other talents to work with him in Alphabet.
Users will give up privacy to Gemini. For the last two decades, users searched mostly without context. Now, users are giving away their privacy and deeply personal data in exchange for better answers. In fact, with Google AI Pro and Google AI Ultra subscription plans, a segment of users who would have searched for free are now willingly paying Google for it.
Gemini: "I want to travel to Bali next year. Tell me the best month to go and recommend cheap flights for that month. Help me plan a 3-day itinerary focused on outdoor activities and good food. Avoid seafood and peanut allergies. Emphasize on diving and snorkelling, do not include ATVs."
YouTube will grow massively due to increased accessibility across languages and ease of production.
Waymo
Isomorphic Labs
At Chumo Capital and Research, we believe that superior returns are the product of an uncompromising pursuit of truth. Our approach is anchored in intensely deep research to uncover the fundamental drivers of value. We are our own harshest critics, constantly re-evaluating our theses and questioning our own assumptions to ensure our conviction is rooted in reality rather than consensus. We are not interested in the noise of the media and the quarters. We have the clarity required to commit to long-term investments with unwavering patience.
*Chumo Capital is a personal investment journal and does not constitute financial investment recommendations or advice.
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