00:00 Speaker A
The release of Google’s updated Gemini 3 AI model last month has spurred a surge of users that prompted OpenAI CEO Sam Altman to announce a code red code to improve the quality of its chatbot, Chat GPT. Our next guest says it’s also touched off a civil war within AI, adding to the divide between the Google complex and those who support the open AI complex. Joining me now is Michael Ower, Chief Market Strategist at Creating Jones. Mike, nice to see you again. Thank you for being with us. So, you know,
00:33 Speaker A
We’ve already talked about your belief that AI is actually trading in a bubble here. And we’ve gotten more headlines like this one where there’s a lot of competition within the AI space. It seems like the Bulls bet everything to win, right? That it’s a big enough pie that everyone gets a piece. Is this what people should think?
01:03 Michael O’Rourke
Uh, I don’t think that’s the way people think about it. Um, but we’ve developed a pattern over the last 15 years that when a uh, you know, a leader in the technology space comes along, it seems to be the one that takes all the offers. And that’s why investors are willing to pay extremely high multiples, especially in the early stages because you’re expecting the company to own the space over the long term and you’re going to build it over time.
01:43 Michael O’Rourke
But I think what the events of the past few weeks have shown is where Google came out of left field with the Gemini 3. Uh, you know, all of a sudden it opened up AI to be the best performing um LL LLM and uh, and then in parallel with that, they have, you know, their own GPUs where they trained on Gemini 3. really good And of course those videos are much cheaper than GPs.
02:30 Michael O’Rourke
And while all of these companies are now certainly in a place where the space is growing for all of these companies, but it makes you think, well, obviously success breeds competition and what you’re going to see is that it’s going to get, I’d say it’s a blood game between the biggest, most capitalized organizations in the world, with another competition at the end.
03:00 Michael O’Rourke
And that’s where the risk lies because they’re trying to outdo each other and outdo each other to win this place. And traditionally, they usually had weak competition, not the biggest organization in the world.
03:23 Speaker A
So that’s what we’ve seen as of late pulling the Nasdaq back into the market, right? It hasn’t been a big pullback from the high. It’s like 3%. Does that bring some rationality to it? Or do you think there is still a long way to go?
03:47 Michael O’Rourke
I think it brings a little more rationality to what we’ve seen is the rotation at Google and Broadcom as some of the profits have been taken in video and the likes of Oracle partnering with Open AI. Um, so you’re seeing rotation, which is healthy because at least investors are recognizing that there are risks that somebody else could come out again, another player or, you know, somebody else could come in and make a big move somewhere.
04:22 Michael O’Rourke
And it’s good that investors are at least acknowledging that there is risk. But in the same context, we’re pricing in many cases, uh, you know, forward earnings for the next several years based on forecast estimates. I mean, I think the biggest problem with the biggest uh pro investors in the market is, you know, $1.4 trillion in commitments to spend on everything Open AI does.
05:01 Michael O’Rourke
Which is integrated into the order books of all the major technology firms, uh, in the world for that matter. And and you know, they’re not sure if Open AI will be able to make good on those commitments. And then suddenly you have something, you know, Google goes ahead, it raises more doubts. So I think that’s where the risk lies. Yes, we know earnings estimates are good, we know forecasts are good, but everything has to be taken with a big grain of salt at this point because the landscape has changed over the past few weeks.
