r/valueinvesting
Is alphabets business story negatively affected if Gemini fails to lead coding (they’re currently actually quite behind in that domain)?
Questions if Alphabet's business is at risk if Gemini falls behind in agentic coding vs OpenAI/Anthropic, despite massive AI capex.
- Google is making other long-term bets like AI Mode for search and bolstering TPU cloud business.
- Gemini is SOTA in many areas like multimodal, showing they can build frontier models.
- Agentic coding might become a race to the bottom, minimizing the impact of missing out on it.
- Gemini is significantly behind competitors like Anthropic and OpenAI in the critical agentic coding domain.
- Google doesn't seem to take coding models seriously, allocating minimal funds compared to its massive $200B capex.
- If agentic coding becomes a high-premium business, missing out entirely could negatively impact their core business story.
How would it affect Alphabets business if Gemini doesn’t lead coding? it’s currently very behind
Anthropic has been code first for years
OpenAI just dropped everything (Sora etc) to FULL PORT on coding models too
Google… just doesn’t seem to be taking this one that seriously? This year it seems to be spending compute on other things like AIMode for search at scale, bolstering the TPU business via cloud, etc.
after Gemini 3 pro proved GOOG could have a frontier, they haven’t done much after and appear to be making other long term bets
(sure they bought Windsurf but $2B is pennies compared to their $200B annual capex on physical infra)
Gemini is SOTA in many areas like multimodal etc but way behind agentic coding
\\QUESTIONS\\:
- does this matter?
- Is agentic coding gonna be a high premium business where value is captured by incremental intelligence gains? Thus they miss out?
Or will it be a race to the bottom with GLM5.2 etc
- What happens if it is a big market and they miss out entirely? Are any of their main businesses affected?
Not if they keep search
Their businesses won’t be affected. Ultimately they will be basically like a combination of the existing ads business and aws, which makes its valuation look reasonable. The issue is the people who incorrectly think that Gemini makes gcp far beyond aws, Gemini is like almost always a horrible product I actively avoid .
Its current valuation is reasonable , but it’s not a. Value investment at this price
Ah. Wait no GCPs edge is NOT Gemini
However they do have a clear edge with TPU that’s a true nvidia competitor (unlike Trainium etc)
Remember that tpu requires avgo to do some of the design work (unlike tranium where aws does everything above fabrication)
Maybe that explains why TPU is a better chip than Trainium tho
Topping the coding leaderboard is like being the fastest runner on a team that also owns the stadium, the TV deal and the parking lot. Fun to brag about, but Alphabet still collects on Search distribution, YouTube and Cloud no matter who's number one on the model charts that month. Gemini just has to be good enough that nobody bothers to switch away.
Google owns 14% of Anthropic. They get the upside without the catastrophic downsides.
Google set up a strike team lead by Sergey Brin exactly to tackle this, so they are taking it seriously. To me it just doesn't seem like Demis Hassabis doesn't see specializing in code as the best path for their models.
In the past Google was able to eventually respond and do really well when people counted them out.
I have heard that google’s internal codebase is essentially a proprietary coding language, and that this has made using ai coding agents difficult to implement internally, since there is less data to train on and external models aren’t trained on it at all. I wonder if this also adds difficulty in creating + testing a good agentic coding model.
Doesn't matter that much. Google just need to prove:
- Search is not disrupted by AI (proved already), and ads revenue isn't impacted.
- Google can make money through GCP, by selling their compute power (data center). It's proving, as seen by their unfilled orders, they huge YoY growth, and it's rental agreement with xAI to get more data center (to sell to Anthropic, OpenAI and cloud customers)
So Gemini itself doesn't matter that much.
Fewer people are clicking on search results and there are much fewer impressions now that people are using Ai or even Gemini more.
Their ads revenues from clicks and impressions is going to crash.
Nope, Google ads revenue has been growing pretty well in the past 4 years. Do som research
Stopped reading at business story
No, read up on their business more.