- Asymmetric Investing
- Posts
- Google's AI Momentum and AI's Sustaining Innovation
Google's AI Momentum and AI's Sustaining Innovation
Alphabet is still the best AI stock today.
Travis Hoium
June 28, 2025
For more background on Alphabet, check out these articles:
Alphabet’s AI Chapter (a review of Q1 2025 results)
Is artificial intelligence a disruptive innovation or a sustaining innovation?
If you can answer that question with certainty, there’s a pot of gold at the end of the AI rainbow.
I’ve placed my money on artificial intelligence being largely a sustaining innovation, and I think Alphabet $GOOG ( ▲ 1.56% ) $GOOGL ( ▼ 0.37% ) is the best investment among the big tech stocks today. That opinion is partly based on the company’s positioning, but it’s also the value of the stock. While most AI companies trade at nosebleed multiples, Alphabet is going for 19.4 times earnings.
What interests me today is the fact that Alphabet, via Gemini and DeepMind, seems to be getting its mojo back!
Innovation Definitions
Clayton Christensen introduced the idea of disruptive innovations and sustaining innovations in The Innovator’s Dilemma. According to Gemini, here’s how they are defined.
Disruptive Innovation:
Based on the work of Clayton Christensen, a disruptive innovation is a process by which a product or service initially takes root in simple applications at the bottom of a market—typically by being less expensive and more accessible—and then relentlessly moves upmarket, eventually displacing established competitors.
Sustaining Innovation:
Based on the work of Clayton Christensen, a sustaining innovation is an improvement to an existing product or service that allows companies to sell better-performing products for higher profits to their best (most demanding) customers.
One of the ways I like to think about disruption is as a competing product that the incumbent can’t respond to for structural reasons.
So, is Alphabet facing a disruptive innovation from AI that will break the company? Or is AI a sustaining innovation that will make Alphabet stronger?
Right now, I think we’re leaning toward the latter.
Gemini’s Comeback
Gemini is Google’s response to the ChatGPT app. If you haven’t downloaded it, it’s worth trying because it’s in many ways superior to ChatGPT. And people are starting to notice. I thought this take summed it up:
Okay, if you want to hear what people really think about $GOOGL gemini…
On My First Million, @ShaanVP dropped a great analogy about Google’s Gemini
“It’s like that kid who comes back from summer break suddenly hot but everyone still remembers the old version.”
While
— Options Selling with Ram (@options_selling)
3:21 PM • Jun 27, 2025
Between October 2024 and March 2025, Gemini increased daily active users from 9 million to 35 million, and the number of monthly active users stood at 350 million.
Subscribe to Premium to read the rest.
Become a paying subscriber of Premium to get access to this post and other subscriber-only content.
Already a paying subscriber? Sign In.
A subscription gets you:
- • Exclusive access to all premium content
- • 1-2 company deep dives each month
- • Timely updates on Asymmetric Universe stocks
- • Asymmetric Investing portfolio (including trades before they're made)
Reply