Transcription
Welcome back everyone. Today on the Josel Carlson show, Google stock is currently down around 4% on the news that OpenAI has officially launched their new browser. They're calling it Atlas and they're advertising it as the browser of the future. They want you to give up on Chrome and they want Google investors to be concerned about this new competitive threat. But should Google investors like me be concerned about this? Well, I don't believe so. And I'll be explaining why. We're going to be going over why Google's so well positioned to deal with the competitive threat of Atlas over any other product that OpenAI has ever released.
Now, we also have a lot of other news to get into. Salesforce stock is going up. Why is it going up? Well, we're not sure, but we're going to discuss the possibilities. We also have Equifax reporting their earnings this morning. The stock was down 4% because of some commentary of the CEO despite the fact that they beat their estimates. They raised guidance. Overall, things look really good with the company. We'll be going over that earnings report. We have Warner Brothers Discovery now saying that they're selling all their stuff. They're putting it up for sale. They're getting bids on all of it. There's a lot of interested parties. Of course, we have Paramount. Maybe we might have Apple or Amazon. And of course, we have Netflix. Maybe my own Netflix would be interested in buying some of the assets from Warner Brothers Discovery. We'll be looking at that as well. And then finally, we have the fail of the week, which unfortunately in this case comes from a company that I know and love. The fail of the week is an easy choice. It's Amazon with their epic collapse of AWS yesterday, taking down a big part of the internet as well as Qualrum, my own website, for almost the entire day. We'll be going over this epic collapse of AWS, how this is going to impact Amazon in the fail of the week.
Now, we start things off today with the big news that Google stock is currently down around 4% on the basis of OpenAI officially launching their new browser and live streaming the demo and event showing off all the new features. Now, in terms of competitors to Google and companies that can make this stock go down, there's not many. Google is an incredibly powerful, expansive company with enormous assets and and resources. And there's not many companies that just by a tweet, just by an announcement, can make the stock drop 4%. But that's exactly what OpenAI did. Just by this simple tweet that's a few seconds long, it caused one of the biggest companies in the world to have their stock price drop 4%. Let's go ahead and take a look at it. That's it. Just the announcement of a new browser.
Now, we know OpenAI's browser is going to be fully integrated with chatbt with operators with Aentic technology. It's going to be able to take over and book restaurants and do all sorts of things that you would want an AI enabled browser to do. But why are investors so concerned about it? We've seen this before. We saw it with Comet, the Perplexity browser, and Google investors weren't too concerned about that. Well, simply because OpenAI is a far more formidable competitor, a far bigger threat to Google. We've seen the success that OpenAI has had with Chat GBT, one of the most incredible breakthrough products ever that caused Google to dance, to cause them to flurry, to cause Google to really start to up their game and compete. ChachiPT did that with information gathering and search and now OpenAI is trying to go after Google Chrome. Google has fought for a long period of time to keep Chrome. That was one of the biggest things that they fought for in this last antirust trial was the ability to just keep this part of the company. There was a good chance that it was going to be broken up. And part of the reason that Google fought so hard to keep Chrome as part of the company is because they know how important Chrome is. It's like this entrance, this window to the internet. Being forced by a judge to sell Chrome would have been a massive blow strategically and to the overall ecosystem of Google. So they avoided the worst fate. They still have Chrome, but now they're facing a new challenge, which is new AI competitors. Ones like the OpenAI browser, ones like the Perplexity browser. I'm going to explain why these challenges are not going to keep Google stock down. I'll explain why Google stock continues to go upwards despite these challenges.
Investors are correct, and I I don't want to overstate this. I think that investors are correct to have a little bit of caution when OpenAI is announcing new products. OpenAI has an incredibly good track record of success with their product launches. For example, ChatGBT we obviously know has been a great launch. But beyond just the initial launch of it, it's just been a great evolving product. All the features within Chat GBT, their API, their use of API integrations with different companies like Booking and Uber, these are fantastic products. They've been a really good steward over this product for a long period of time. So investors in Google looking at this know that they are facing a real competitor and the stock is reacting by being down a little bit today. But as someone that has Google as my largest position, my highest conviction pick currently. If we look at this, I have right now around $150,000 worth of Google stock, $51,000 in the green. If I look at it in terms of my portfolio composition, it makes up 11.1% of my total portfolio, bigger than any other single holding. The reason that I have Google as such a large position is because frankly I'm not concerned about these minor challenges. I consider these minor details in the long grand scheme of things. For example, we know that OpenAI and other competitors will be coming after Google. They're going to be launching these browsers with the Gentic technology with operators that can do all these flashy things. Also, Chachebt has a way to advertise and to get customer acquisition. They already have 500 million people using ChateBT every single day. So, they'll likely start putting little popups in Chat GPT when you use the app saying, "Download our browser. Make it the default." They'll try switching their users from Google Chrome into their new OpenAI browser. And they'll do that by virtue of the network they've already created. This is part of OpenAI's broader their broader ambitions to become a fullyfledged ecosystem not just an app. They want to become Google and at the same time Google wants to become ChatBT. So you see the boundaries merging with these two companies. But I believe in this case that Google's actually far better positioned. In fact, Google has every advantage in this race. While it's true that chatbt can come out with a lot of new features, they can move a little bit faster than Google because of their smaller size and they can advertise their new OpenAI browser right within ChatCBT. It's also true that Google has enormous assets to advertise their browser. They're basically defaulted on every single Android phone. They make it so that they're just built into it. Google owns their own phones. So any Pixel phone, you're going to have the Chrome browser. On top of that, Google has Gmail, they have Google Docs, they have Google Calendar, they have Google Photos, and they have YouTube and they have YouTube TV. They have YouTube Music. They have so many different assets that they can advertise their own products. For example, if Google actually saw that it was losing meaningful market share to OpenAI's browser, they could simply start to advertise it on YouTube. Imagine that every single time you visit YouTube, there's a little thing at the top. If you're not using Chrome, it just says, "Hey, try out Chrome. It works best with YouTube. You get all these advanced features. You auto log into YouTube. Repeat exposure would convert people back to Google Chrome." But yet, Google hasn't done that. They haven't employed those tactics yet. They don't feel a need to do so. They have other ways of gaining customers that are even cheaper and less intrusive. But that fullcourt press, the ability for Google to start leveraging all their various assets to push their own browser still exists. They could put it on YouTube. They could put a nice little popup. They could put it on Gmail. They could put it on Google Drive and so on and so forth to billions and billions of users every single day. They could advertise their own browser or their own products. But yet, Google doesn't feel the need to do that. On the flip side, OpenAI has one single form to do these type of cross-selling, which is the chat GPT app. They can try to advertise it within the app that will convert a number of customers, but it's going to be more difficult to do that than when you have various products and you have a whole ecosystem. So, OpenAI is already starting with a major disadvantage.
Another thing that I think is important to note here is when chatbt initially launched, part of the reason it had such massive rapid success was because it was so much more advanced than anything we've seen. Google had nothing close. Nobody had anything close. It was unparalleled. There's nothing close to it. Google hadn't released bar. They haven't released Gemini. They had been working on these models for a long time, but they weren't ready for prime time. So the reason that chat GPT got massive user adoption is that it was orders of magnitude better than anything else in existence. And that's not the case with the open AI browser. If you haven't been paying attention, Google has been suddenly rapidly moving to enable Chrome with every AI feature imaginable. And notably, after the judge said that you can keep Google Chrome, Google decided to up the cadence of updates to Google Chrome, rapidly releasing far more agentic and AI technologies than ever before. In fact, every single update that I do with Google Chrome has a whole page of new AI features. They're just overwhelming at this point. I mean, everything is integrated with Gemini. Everything is searchable. You can literally just highlight parts of the screen and do a gentic search at any part of any page. I can just click a button here and ask Gemini anything I want to ask about this page. It knows everything that I'm doing. Google has built this all right into Chrome. They've also made it incredibly fast and reliable.
Another thing that OpenAI is going to struggle with, an advantage that Google Chrome, another advantage that Google Chrome has that OpenAI will struggle with is simply the overall ecosystem. Part of the value of Google Chrome is having all the login, all the passwords of every website you use on a daily basis. For example, if you're logged into your YouTube account, your Gmail account, your calendars, your photos, all that type of stuff, that's already recorded in Google Chrome. OpenAI is at a starting point where they're going to have to have you merge all that information into their ecosystem. So, that's another disadvantage they have that Google Chrome will leverage. So, a big reason I'm not concerned about this with OpenAI's browser and all the cool AI features is because Google Chrome is on top of this. They're already building these features. They already have a leading model. They've already developed all these type of agentic and operation technologies. So we already have that built into Chrome today. The differences and distinctions that the OpenAI browser have are far less they're far more minimal than the differences and distinctions that Chachd had to anything prior to its release. Chacht's release was incredibly distinct, incredibly different than anything we've seen before, and it's just not the case in the browser war today. So far fewer people find meaningful reason to move away from the Chrome that they've used and love for years to these new AI browsers that in many cases do the exact same thing that Chrome is doing.
The other part of the reason I'm simply just not concerned about this is stuff that's totally unrelated. It's literally just part of the investment thesis of the the stock. I've been going over and reviewing the stories of different great companies. And out of all the companies that I review the stories of, I believe Google has the best one of any large cap company today. Google search continues to grow double-digit revenue while increasing in engagement. Advertising is shifting from printed media and linear TV to digital. Gemini model is as powerful or better than chatbt. Gemini is taking market share each month from chatbt in generative AI. Google Cloud continues to grow very quickly and it has a unique advantage of having Google's Gemini built in. YouTube is a very unique asset, a crown jewel and it's taking market share in TV streaming and continues to grow in relevancy. YouTube Premium Google One subscriptions continue to grow, surpassing 300 million subscribers. So, Google's becoming more of a subscription company. Whimo is rapidly scaling to more cities and opening to food delivery. Google also has a sizable long-term bet in quantum computing. This is something I'm learning more about, but it's just more potential upside for the company. The balance sheet is perfect with $70 billion in net cash, and the stock is trading at 25 times Ford PE while factoring in stock-based comp as an expense. Google is currently the best story of mega cap tech. Investors should be a little cautious and we should be humble enough to look at competitors as real forces. But the overall story of Google remains intact. The company is still, I believe, the best story today. And if this causes a meaningful sell-off, if it goes down 10 plus percent, I'll certainly be buying more Google as a result.
Now, moving on, we get to news that Salesforce is going up. And this is notable because Salesforce stock that typically is not the story here. Typically, Salesforce stock is going lower and lower. Investors are more bearish on the company. Sentiment gets worse and worse. But we see here a nice little spike over the past week. In fact, if we zoom into just the past one week, it's up 12%. So, pretty significant bounce. Of course, the stock is still down 20% year-to date. It's by far my worst performer in my portfolio in 2025, but we are seeing progress with this company. It's gone up for the past couple of days. When I look at Salesforce, we can look at it in my portfolio. It's now down $1,800, down 3%. So, we have almost erased all the losses in this company. We're almost moving back up into the green. At one point I was down around $10,000 in Salesforce, now down just $1,800. And if we look at the reasons why, of course, we had their Dreamforce conference where they laid out a very bold vision. They gave guidance that I believe was very positive, very strong guidance, but a lot of investors have trust issues with Salesforce. They don't believe the company. They believe that they're just throwing out numbers and they're not going to really perform. But even if you have trust issues with Mark Beni off, even if you don't like his personality or you think he's bombastic, you have to respect the actual numbers, what a company's actually doing. And this is something that I try to highlight from time to time. If you are a fundamental value investor, then you have to have the real evidence, the numbers be the biggest thing that you're looking at with a company. That's how you evaluate the performance of a company. After a certain point, the fundamentals in and of themselves will become a catalyst for the company. Even as bad as sentiment is, if fundamentals continue to move upwards and upwards, it's only a matter of time until sentiment shifts. When that happens, the pricing of the company can shift rapidly.
Now, moving on, we get to Equifax, one of the companies in my portfolio that just reported earnings. Now, this morning, the stock was down around three or four percent. It looks like it's made back some of those losses. And frankly, this is one of the examples and I see this often where a company reports earnings, the earnings were great, the guidance was great, everything looks extremely solid, but the stock price goes down. Why does the stock price go down? Because investors fixate on one little thing that the CEO said during the call. In this case, the CEO of Equifax said that they're competing aggressively with FICO, that they're going after them with the Vantage score. And the way that he worded it wasn't the right way. it wasn't what the market was looking for and so the stock price drop 4%. And we've seen this same thing over and over again. I've seen it many times with Netflix. The Netflix CEO says something that's a little bit off or a little bit different, the stock price goes down. I've seen it before with just ASML not too long ago. The CEO said that he couldn't confirm growth in 2026 even though he was expecting it. The stock dropped 10% as a result. It was ridiculous. And eventually the stock went back up far surpassing where it dropped. But this is the type of thing that I see continually with these companies. These companies are posting fantastic earnings. They are both beating their expectations and they're raising guidance. Sometimes this type of stuff happens and it's not a big deal.
When I look at Equifax today, I will note that this is in a group of companies that have no momentum right now. So if you're investing in S&P Global, in Moody's, in Mastercard, in Equifax, these type of companies, even FICO, they they just don't have any love this year. 2025 has not been the year for them. All of them have been up a little bit or flat or down, but most of them don't have any momentum. And that's fine. That just means the market's not rewarding them today. If we look at the fundamentals of these companies, every one of these companies is growing substantially this year fundamentally. So even though they're not moving a lot with momentum, the stock price isn't surging up like it is with some AI names, these companies are compounding. Their intrinsic value, the best estimate we have of that, which is their free cash flow per share, is moving up along with their revenue, along with their market share, along with their customers. So, you have to decide whether or not you're an investor that's okay holding companies that are intrinsically compounding even though the share price doesn't represent it today or whether you have to have every one of your holdings be in the most momentum names in the market. If you sell out of every company that doesn't have momentum and you try to just buy only momentum stocks, that's when you get really hurt during sell-offs. Those are the first names to turn backwards. These type of companies are incredibly highquality, diversified companies that are increasingly worth more in their intrinsic value. And I see that today with Equifax. So, I'm happy with what I see here. I see the fundamentals moving in the right direction. I'm going to continue to hold for now. After looking at this and the reaction that the market has based on commentary from the CEO, this is the type of thing where I wouldn't be surprised if Equifax ended this week as a green week, a week where the stock price was up at the end of the week. Once investors take they take a day or two to just kind of settle with this and realize that it's not the end of the world with the company that they're competing with FICO, I believe investors will get on board with this stock. But right now, none of these companies, FICO, Equifax, Moody's, S&P Global, none of them have momentum right now. You have to be okay with that. Be a little patient. These are long-term long-term assets. Uh they will have their day someday. The magic will come back to these stocks.
Now, moving on, we get to some big news. This is Warner Brothers Discovery now exploring a sale in potential industry shakeup. This is from the Wall Street Journal. They say that they're reportedly potentially selling all or some of their media assets, setting into motion a deal process that could reshape the entertainment industry. It's reported that Paramount recently made a second offer for the company, according to people familiar with the matter. Warner also received interest in just its studio and streaming assets from multiple parties. So, a lot of people are interested in bidding on Warner Media and Warner's saying, "Hey, Paramount, we want to start a bidding war, right? We want to drive up the price of our assets and we don't just want to sell to you with the first or second offer." And I think that's a smart move here. And I'd say surprisingly, we also may see Netflix interested in this. Now, I studied Netflix for a long period of time, and Netflix does not like buying assets. They're not an inquisitive company. They're not going around buying studios left and right. Netflix either licenses content or they generate content. They create their own. So, they're not in the business of going around buying studios all the time. But Netflix, I believe, does adapt and evolve over time. They've changed their policies before. And although I believe there's no chance Netflix would buy all the legacy assets, they'd never buy legacy cable or, you know, assets that are primarily for the movie theater. I could see Netflix being very interested in buying strategically different streaming assets. When we look at the breakdown of what Warner Brothers Discovery owns, they have the movie studios, Warner Bros. Pictures, they have the streaming assets, Discovery Plus, and HBO Max. They have the top cable networks. All of these are things that I think Netflix and different parties would not be interested in. Then they have the other properties, CNN. I don't believe Netflix is going to be interested in that. They're not that newsy of an organization. Then you have the major franchises, the DC Comics, Game of Thrones, Harry Potter, and Lord of the Rings. Out of all these assets that they own, I believe the ones that Netflix would be most likely to show interest in are the movie studio assets. Netflix has been trying to make better movies. It's been one of their big ambitions and owning Warner Brothers pictures could be a way to get into that to make better movies. The other thing I think they'd want to own is HBO Max. I believe that that fits well within the Netflix catalog. Then finally, I believe Netflix would express some interest in the single franchises in the Game of Thrones, the Harry Potter, the Lord of the Rings, or the DC comics. But in this case, I also believe it's a bit risky. Buying franchises sometimes works and sometimes it doesn't. You could purchase a franchise and then if your next release of the movie doesn't go well, suddenly people are less interested in the franchise. We saw that with Game of Thrones. the ending of it kind of ruined that franchise for a lot of people. We also see that now with Star Wars. A lot of people are less interested in Star Wars after how Disney has handled it. So, I don't believe that Netflix will be likely to buy a franchise at an incredibly high price.
Now, on the note of Netflix, we're also going to see their earnings results today. So, those will be in today. I'll have more coverage in depth on the results going through them and breaking them down later this week. So, just make sure that you're following along if you want to see that. In the meantime, I want to look at what Tom Rogers says about Netflix because I believe that he's been spot-on with Netflix. He's someone that's really got this company right, and he kind of illustrates the position that Netflix is in today. Well, Brian, as one analyst said uh in a Netflix note, uh congratulations on your engagement uh because their engagement with uh the biggest movie they've ever had over this last quarter, K-pop Demon Hunters, which my grandkids watched thousands of times, contributing to what was 500 million views on Netflix, was a true K-pop Demon Hunters got 500 million views. That's not a music video. That's a full movie. A full movie got 500 million views. Um and uh despite No King's Day, they do remain the king of long- form streaming. Uh they've cracked the code on pricing like nobody else has. Uh their programming budget is uh enormous relative to competitors on streaming. uh they have uh international production, global subscale uh and an ad revenue business that's uh growing extremely well. Uh put all that together and uh they're going to remain the kings. They're not going to be dethroned in when it comes to long- form streaming. >> They will remain the king. And he's exactly right.
Now, finally, we move on to the fail of the week. In this case, unfortunately, it's one of my largest positions, which is Amazon. The day Amazon broke the internet for millions of Americans. A glitch with an obscure Amazon database disrupted life for millions of people across the US as a core internet service failed to function for an array of companies. Alexa devices couldn't hear. Corporate Slack messages wouldn't post. Students couldn't turn in assignments or access materials for courses. Financial trades were impossible on certain platforms. Users on Zoom, Venmo, Instacart, and a host of other services faced prolonged outages that rippled through homes and businesses. The trouble started a few hours after midnight in the East Coast. A minor update to what is called the domain name system or DNS. It says it's the kind of software tweak that happens millions of times a day on the internet sent the welloiled machine that underpins the modern web careening towards a crash. DNS acts as a kind of telephone directory for the internet. instruction machines on how to find each other. The faulty update gave the wrong information to Dynamo DB, an Amazon Web Service or AWS product that had become one of the world's most important databases. Suddenly, machines on the East Coast that tried to process trillions of requests were getting the internet's equivalent to a wrong number. Amazon services were some of the first to feel the effects. Around 2 am on Monday, the system that helps Amazon sort packages into trucks and guide drivers on the road went down. According to an internal message viewed by the Wall Street Journal, by 3:00 a.m. the outages blast radius had spread far beyond Amazon, cascading across the internet, delaying more than 4,000 flights, knocking out news websites such as the Wall Street Journal, affecting the financial transactions and extending into every life everyday life. The episode, which turned into one of the most prolonged daily outages for AWS, offered a reminder of the fragility of global connectivity, which has gone dark a number of times in recent years after seemingly minor software updates. By late afternoon Monday, Amazon said that it had restored much of the service that had been knocked offline.
So there we have this single update. One wrong thing, one wrong piece of code causing a cascading event of failures, making it so that millions of websites were down or completely non-functional. So I faced this as well. I woke up on Monday morning ready to start the week, ready to record a video. Then I got a bunch of messages through email and Discord saying, "I can't log into my Qualrum website. What's wrong with my username and password?" Said, "That's odd. We haven't launched any new updates. I don't think we broke anything." So then I look at the news and see that AWS is down. That's a bummer because Qualrum does run on AWS. So after responding to a bunch of emails making announcements that this isn't really Qualum, this is a bigger part of the internet going down, the rest of my day was trying to look at what was going on and trying to get Qualrum back up and running. It was one of these things where you simply could not do it without Amazon fixing AWS. See, there's normally fallback systems. When one server goes down on Amazon, there's a bunch of regional servers that you can roll over to. We pay extra for services like that. But even those services were down. There's no servers to roll over to. The services that do that failed. So if your website was down, it was down and there was nothing you could do about it. Entire companies were taken offline for the entire day until later evening on Monday. Down for 10 hours plus. This was an incredible failure by Amazon. In fact, many companies much bigger than Qualrim, ones that pay Amazon 50 million, 70 million, $90 million per year in AWS budget, were also offline the entire day. And Amazon will be paying a lot of money to make up the damage they caused. This is one of the things that I think is going to be an immediate impact to Amazon. And many of the contracts that bigger companies negotiate with AWS, they have promises of uptime. They have promises that there won't be any type of critical failure and in the contract they outline that if these type of events happen then they get discounts they get computing for free they get AWS for free for a time or they get refunds. So AWS is actually going to be impacted immediately by this outage by causing all of these companies critical companies offering critical services downtime. They're going to have to really work hard to keep these customers happy, to give them more computing for free, to try to ensure them and promise them things in the future. AWS did massive reputational damage because of this outage.
But then even worse is the bigger and more long-term effects of this outage. It's not just bad that it caused companies to go down in the short term. It's not just bad that they're going to have to give out some money or maybe some refunds in the short term. This also has an impact on the overall reputation of AWS. Now, it's no longer going to be looked at as infallible or unbreakable. In fact, the word that they're using to describe AWS is fragile. The fragility of the system. They're acting like it's a system you can't count on. In fact, you'll have to have backups from AWS to something else like Google Cloud. So now I could even see a lot of discussions with big companies saying, you know what, this was so bad for our business to go down for the entire day. This is such a massive failure. We we upset so many of our customers that we can't rely solely on Amazon anymore. We're going to have to split the cloud. We're going to have to go 50/50 AWS and Azure or 50/50 AWS and Google Cloud. more companies are going to be strongly urged towards moving to multicloud and that's not good for Amazon either because Amazon has the most customers on their cloud. Multicloud benefits all the other clouds. It doesn't benefit Amazon. So this was a massive fail of the week. In fact, I would even categorize this the fail of the year. This was one really big blunder by Amazon. There's going to be heads rolling, people fired. They're going to change things internally. And hopefully this type of a failure of this length never happens again. That's going to be it for this episode. Hope you enjoyed.