We repeat: one of the most cash-generative businesses in history has had to raise cash.
What do we think about this?

We think that Google is both in a better position than anybody else to understand AI, both technically and as a business. Google actually invented the modern Transformer architecture that was essentially the invention of the modern LLM engine. We think that Google is in a better position than anyone else to exploit AI for many reasons including its large server business, its ability to make its own AI chips, and the traffic that it consistently has coming to its various sites to get answers to questions.

Trying to ride the biggest wave to hit the beach just using the cash flow you already have is like tying one hand behind your back. Sure, people will be impressed if you make it, but they will be keeping their eyes on the 2nd and 3rd best surfers who have tied none of their limbs behind their backs. If the iron is hot it should be struck as often and as hard as possible, and failing to raise cash to do that would be downright unAmerican!

But the stock is abnormally risky. The core business is being disrupted, and that disruption
may be total.

What does that mean, the disruption may be total? Their compute centers will be worthless? That is not what anybody else in AI is suggesting, rather the opposite. People will stop googling stuff? If AI succeeds Google will be right there with it, but if it fails, why would they not retain their pre-eminent spot as search engine of choice? Can you imagine their AI bet somehow costing them even $500 billion of total loss? That would drop their market cap by 12%. For a company which has been earning more than 20% of its market cap every year for more than 20 years, this could set them back more than 6 months!

If Anthropic takes over the world, whos servers are they going to use? Who is going to bring them all their queries? Is there a single reason in the world to think that what Google has won't be important part of that answer no matter who wins?

Me and Greg and Warren are going long GOOGL. But if you have a very outsized GOOGL position, trim it back to where it was a few years ago, you will still do OK even if Google doesn't bobble its AI bet! IMHO of course.

R: