[wrsh07]

This take overlooks most of the work that Google has been doing in the past decade.

Have you seen their Cloud business?

Moreover, Google has continued to drive search growth since ChatGPT arrived and is executing competently. Their models are good (not great), but they have enough compute and one of the best ML-focused chips such that they aren't beholden to Nvidia (instead, they're beholden to fabs: tsmc - this is a much better dependency since Nvidia is hell bent on extracting as much value as they can from their position in the stack and it would be against the nature of tsmc to behave similarly)

Will Google's ad revenue decrease? Advertising is an incredible business because it is anti fragile.^ Even if search revenues decrease from their current highs (I would bet heavily against this), they still have YouTube with shorts and a robust display ads business that is going to improve if AI supercharges the economy (more companies - # startups founded in Jan 2026 is much higher than # founded the previous January, more products, advertising and distribution become the differentiators for these products)

If you're wondering how anthropic is going to continue to grow its base, the answer is advertising. In fact, Google is situated to fundamentally support everything that anthropic needs. Who cares if they make worse margins than anthropic? They'll benefit from the entire ride up, and they'll do the same for the next startup of that scale.

^ https://stratechery.com/2024/metas-ai-abundance/

[keeda]

Right, but my theory is that the ad business, still the biggest chunk (75%+) of their revenue, is extremely hyper-optimized for the current search journey-based UX and enjoys a monopoly + auction rigging premium (e.g. Project Bernanke) primarily through tremendous ad volume. That is, their current growth is largely based on stuffing more and more ads into commercial-intent SERPs.

However the agent-based conversational future simply does not support that level of valuable [1] ad volume, which collapses Google's carefully optimized tech+business stack.

Like I said, they will still thrive, but more because of GCP (which might see the biggest growth due to AI and the other tech + infrastructural advantages you mentioned) and the other businesses (YouTube, Waymo, etc.) However, their current cash cow is being disrupted, primarily by themselves, and I don't yet see how they can monetize agents nearly as lucratively as they've monetized search.

[1.] Sure, they could keep stuffing ads into each turn of the conversation, but 1) as I theorized in the linked post, those would be meaningless and low-value, and 2) that could just push users to competitors like ChatGPT, Anthropic or Perplexity that can offer a cleaner UX because they're starting from a clean slate and don't (yet) have the same revenue expectations to meet.

[wrsh07]

> I think their revenues and profits and dominance will be much lower than what they are today

While your linked post was explicitly about ads, this line wasn't and is just baseless

If you think that (the quoted line) you should short Google (haha you will lose all your money even if you're right, market...irrational...solvent)

Search is going to be fine. It's about half their revenue. Display is another large chunk and feels largely immune to the affects of AI, and Google is not a static entity. And their Cloud business is seeing unbelievable growth.

[keeda]

> While your linked post was explicitly about ads, this line wasn't and is just baseless

I mean, the ad business is still by far the largest chunk of their whole business, which is why I think their overall revenues, profits and dominance will decrease ¯\_(ツ)_/¯

Display is another good example of why. Like half (?) of it is YouTube, which will be fine, but the rest comes from non-first party properties, which are already seeing drastic drops in traffic. Just as with the shrinking of SERP ads, there's no way to stuff enough ads in chatbot conversations or to compensate for the display ad revenue dropping either.

I'm long Google (monopolies are usually good bets, bullish on AI + GCP, plus it is disrupting itself before others can so has good long-term prospects) but I can't see how that will compensate for its main cash cow today being cannibalized, so I fully expect future returns to be less than historic ones.

[wrsh07]

My hot take here is there searches will drop some but overall the thing we know as search will be fine because it will evolve. And revenue will go up.

I mean, the product might not be called Google search, but the thing that Google search transforms into will likely make more money than it does today and my bear case is that it would still make >80% of today's watermark.

Also Google's going to grow auxiliary businesses around AI that will change the balance of their assets dramatically (waymo is ~nothing right now, cloud is growing well, and there's no reason Google shouldn't be able to produce a top coding model for speed if not frontier level)

[djhn]

On TSMC: what is your reasoning or source of belief that ”extracting as much valie as they can” is against TSMC’s nature? Is there some charity charter or non-profit governance arrangement I’m not aware of? Or are you saying that geopolitics affects their pricing power?