Google's Inevitability: Artificial Intelligence Changes Everything and Nothing

Spend any time in the world of investing and you’re bound to hear about artificial intelligence. It will change the world, disrupt technology, and fold our laundry!

Getting excited about new technology is understandable, but outside of the Silicon Vally/investor bubble, I have yet to be convinced that regular people give a crap.

Is AI a revolution or just hype?

Like most things, the truth is probably somewhere in the middle.

ChatGPT and Everything AI

In November 2023, a year after ChatGPT was launched, OpenAI introduced what they called custom GPTs. Users could create a custom chatbot without any coding knowledge by inputting instructions and uploading documents.

More than 3 million custom chatbots have been created on ChatGPT, which at least shows a high level of interest among users.

But how will regular people use custom GPTs and what’s the business behind them?

This week, Ben Thompson of Stratechery and Allen Pike offered a more creative vision for the future of GPTs:

Custom GPTs could upend Google search!

All people have to do is:

1. open your smartphone

2. open the ChatGPT app

3. activate voice commands

4. ask your question

5. and wait for an answer.

That’s a heavy lift for finding answers to a question that today is a browser away.

And if OpenAI has any level of success attracting users or advertisers to this GPT model, won’t big tech companies with billions of users just copy the idea?

Apple users could ask Siri questions through their iPhone, Apple Watch, or AirPods with just voice commands.

Have an Android device? Just say, “Hey, Google.”

Alexa users could just ask Alexa.

The idea of ChatGPT becoming an Everything Engine is great. But reality says it’ll be a bigger lift for OpenAI to attract a billion regular users than it will be for the big tech companies with billions of users today to incorporate AI features in their products.

The Touch Point Matters

The current excitement over artificial intelligence is often vague and futuristic. It’s humanoid robots folding shirts…except the robot can’t actually do that yet, so just kidding! AI could write this article…except it would hallucinate half of the concepts and cite sources that don’t exist.

I think AI will play a role in the future, but we aren’t “there” yet.

As AI tech advances and use cases emerge, what’s missing is that you still need to interact with a device. That device ultimately controls how easy/hard it is to reach any AI application.

That’s why companies like Humane and Rabbit have introduced devices with AI front and center.

Wait…aren’t we overthinking this?

Do we need another device?

Don’t we already have devices that can answer our questions?

AirPods seem to be in everyone’s ears constantly.

Google Home/Alexa/Siri is probably listening to me type right now.

As investors, we have to ask: Can an existing company with a billion users copycat faster than a new company can attract a billion users?

If the answer is “YES” — and I think it is — AI will only make us more dependent on Apple, Google, Meta, and Amazon.

As investors, we want to own the incumbents in AI, not the startups.

In business theory terms, this is a sustaining innovation, not a disruptive innovation.

Technology and Boiling Frogs

Nearly every company will have an AI play, but I still think Google is the most likely winner with 9 products that have over 1 billion users, a hardware operating system, custom AI chips, AI models, and cloud infrastructure.

Google will have the adapt to AI, maybe by giving answers rather than 10 blue links. But I think that’s a more reasonable lift than convincing billions of people to carry another device.

Why would anyone think those AI answers wouldn’t be sponsored, as Pike points out above? And who has the biggest ad network in the world?

We’ve seen Google make user experience changes and they slowly teach you how to use the tools they’re building. When I started using Google in the early 2000s, you needed to know a strange language Google could understand. Real questions or conversational searches were foreign to Google.

Search has evolved. It’s happened slowly and you didn’t even notice Google was teaching you how to communicate with it better. But it did. Just like the frog who didn’t notice the temperature rising until it was too late.

I think AI will be the same. It’s been coming for years. It’ll be slow to be adopted directly. Slowly but surely, AI feature after AI feature will be added to the devices we already use today.

In the end, it won’t change where we look for information or the winners in tech.

Until that’s proven wrong, Google (and maybe Apple) are the most likely winners in AI.

Disclaimer: Asymmetric Investing provides analysis and research but DOES NOT provide individual financial advice. Travis Hoium may have a position in some of the stocks mentioned. All content is for informational purposes only. Asymmetric Investing is not a registered investment, legal, or tax advisor or a broker/dealer. Trading any asset involves risk and could result in significant capital losses. Please, do your own research before acquiring stocks.