Google stock is one of the large-cap tech stocks that is pushing the Nasdaq100 a lot higher due to the buzz around AI since February of this year. However, due to this recent rise, it’s one stock I’m going to stay away from at least for a few months now.
I should have made a fortune on Google stock between 2010 and 2020 but I didn’t because I didn’t know of any online stock broker platforms. They all seemed to appear magically at the same time of the pandemic which I now know was because they saw the bubble coming and wanted to profit from it. But that hasn’t stopped me from remaining an investor. I want to be in the market long term even though Charlie Monger and Warren Buffett have said it is becoming increasingly difficult to make money in the market due to more investors crowding the market and pushing the prices of stocks up. Google is one of the stocks I feel like I understand the most, but funnily enough, I haven’t been heavily invested in it yet. And that won’t be changing now either.
You have probably heard of Bing’s chatbot called ChatGPT which is an AI-enhanced chatbot designed to make searching for answers to your queries easier. Chatbots such as ChatGPT have the potential to destroy many businesses including my own if people stop reading articles to find the content that are looking for and instead expect it to be delivered via a chatbot but we will have to wait and see.
Google also has a chatbot called Bard. Bard is a word in the English language meaning something akin to a poet, which I think is a very good name for a chatbot. Bard has the potential to dramatically change the way Google does business in the future. 80% of Google’s revenue comes from the fact that people click ads on Google results pages. So it’s important for Google that people continue clicking those ads. The way ChatGPT is set up in Bing would drastically reduce Google’s revenue if it were to adopt it. So the assumption is that Google will think of creative ways to implement Bard similar to ChatGPT but without taking away its revenue. But it’s not easy to come up with solutions as to how they would do that, which is why I’m waiting to see the solution before I believe it. If Google were to fail at coming up with a Bard solution that doesn’t take away from its 80% revenue coming directly from search results pages, the stock is going to decline a lot — potentially by 80%. So to me, it doesn’t make sense to be invested in Google stock today. The buzz surrounding AI will keep the stock price elevated, but watch out for a potential decline if Google can’t come up with innovative solutions for Bard that don’t take away its existing revenue.