Welcome back, everyone. Today on the Joseph Carlson
Show, we have a topic to cover that's been discussed a number
of times. We know that the markets are
being carried by a handful of companies.
We can call it Big Tech, the Magnificent 7, Fang stocks,
whatever you want to call it it, it's a handful of companies that
drive the total stock market returns higher and higher.
In a way, there's been articles highlighting over and over again
that the entire performance of the stock market hangs in the
balance from these few companies.
And against all odds, these few companies tend to continue to
outperform over and over again every single year.
It's almost become routine at this point.
Big tech stocks continue to outperform, but investors are
skeptical. They find reasons to avoid these
companies. In most cases, they do so at
their own peril. We have articles like this from
today just from Barron saying Amazon and the Mac 7 are falling
again. It's not time to buy.
Portfolio manager says there are many fund managers, active
investors that say to avoid big tech companies, that you're not
going to get alpha investing in companies that everyone knows
about and everyone has done analysis on.
After all, you're working with the same data as everyone else.
How can you have outperformance? That's the arguments have been
made for a decade and I'm here to say that they are once again
wrong. I believe that Big Tech still
today remains undervalued and still has a high potential to
outperform over a long term basis.
And I think it's time that we revisit the argument of why Big
Tech has this tendency to always perpetually be undervalued, even
when investors are looking at it, even when analysts are
covering it. These companies tend to be
undervalued for long periods of time.
They tend to drive markets higher and higher for long
periods of time. And this all comes down to a
very specific set of reasons causing the systemic and
perpetual undervaluation of big tech.
So we're going to be going over why these companies are still
likely undervalued today. Now, of course, we have some
other news to get to. Waymo is on the move.
This is a company owned by Google.
I've been talking about it more and more recently because
frankly, I'm getting more excited about what they're
doing. I think that Waymo, it's just
incredible what they're accomplishing and I think it
needs to be paid more attention to.
Now. Barron's has an entire write up
saying that the way that Waymo is working with other companies,
specifically Uber, is good for both these companies, that it
will benefit Uber and it's going to benefit Waymo as well.
They say that Uber is a buy right now, even with Waymo
expanding and Waymo continues to expand.
The next stop is in Washington DC.
Waymo just announced that they have plans in 2026, next year to
have paid robo taxi rides in Washington, DC.
So they're on the move, continuing to expand.
This time they're going to be driving around right in in front
of the White House. Now, as Google's Waymo continues
to expand without much attention paid to it or celebration, it
goes to this overall theme of Google being underestimated by
investors, and we see more news of that.
In fact, on the betting website Polymarket, there is a bet of
which company would release the best AI model by the end of
March. That was a real bet and we had
the contenders. Here.
We have companies like xai, DeepSeek, Open AI, Anthropic,
Alibaba, Meta and Google. For the majority of the month,
Google was near the bottom, right next to DeepSeek.
XAI was towards the top. Open AI was well above Google.
And then you see the change as Google just released a new
model. Now that Google just recently
released their latest AI model, it outperformed all the others.
We'll be looking at the benchmarks and what this one
means. But now the odds of Google
winning have bumped up to 95% chance, and that is up from .7%
just a couple days ago. This is the continued story of
Google being underestimated. So we'll be looking at how
impressive their latest AI model is.
We have an update from Amazon that they're finding all
different ways to benefit from generative AI.
We'll be taking a look at some of the specific ways that Amazon
is benefiting from AI and in one way that they're competing
directly with Google. And we have a story that
Berkshire Hathaway employee wins $1 million in the Warren
Buffett's March Madness bracket challenge.
We'll be going over this story and whether or not it's a good
idea for companies to do stuff like this.
Now we start today by talking about this whole idea of these
systemic or perpetual undervaluation of big tech,
meaning that these big companies, companies like Apple
and Microsoft and Amazon and Google and Meta, the five
biggest companies in the world, these ones that have been around
for a long period of time and everyone knows about, everyone's
seen, everyone's done some analysis on them.
They remain undervalued and that seems counter intuitive.
It seems as though if these companies are so popular and
there's so many analysts talking about them, there's so many
people on CNBC chatting about these companies, that they
couldn't be undervalued. They'd be priced to perfection,
that the analysts would be able to forecast the future growth
and they'd be accurately priced as such.
But that's been disproven over time.
In fact, these companies have outperformed the broader market
for over a decade by a massive extent.
They haven't had marginal outperformance.
They've had massive outperformance.
They've continued to be the biggest companies in the world
year after year. They've continued to push the
indices, the S&P 500 up more and more.
As a whole, part of My Portfolio and part of my investing
strategy and the reason that My Portfolio has done so well is in
part simply because of Big tech. For example, if I look at My
Portfolio, the passive income one, we have decent gains here,
especially for the amount of time that I've had this capital
invested, most of it after 2020, it's made significant gains.
And that's in large part by investing in big tech.
I overweighted those companies. I made them a much larger
portion of My Portfolio. Now if we look at big tech
currently, I have a couple holdings here that are large
positions invested in big tech. One of them is Microsoft.
I have $63,000 in Microsoft. That's a $21,000 game.
I just bought into Google, $46,000 in this portfolio.
This one's a rather new position.
It's currently down $1000, but Apple is another key performer
in My Portfolio. Over the past six years, Apple
was one of the first companies that I bought.
I continue to overweight it as a bigger percentage than the S&P
500. Apple performed incredibly well,
giving me $33,000 of gains, 246% money weighted return over that
time period. Apple was first bought at a
share price adjusted for stock splits at around $40.
In My Portfolio now, it trades above 200.
So this has been an incredible performer in the passive income
portfolio. Now, Big Tech isn't the only
companies that I've done well on over the years.
I've had some other random bets that have done quite well,
specifically Costco and Texas Roadhouse.
Those ones have helped out the gains a lot.
But a lot of the easiest bets and the easiest money I've made
is by simply buying more Big tech.
In the story fund, we can see a similar thing happen at one
point in time. This is basically a big tech
portfolio. A lot of people criticize this
portfolio for being unoriginal. Well, it's not that smart to
just invest in big tech. Anyone can do that.
Well, that's true. The goal in investing is not to
be the smartest one in the room, it's to make money.
Investing in big tech doesn't make you look unique or uniquely
smart, but they make a lot of money.
When I look at Amazon as my largest position, this one's up
an incredible amount over just the past couple of years.
Even when I bought Amazon high before the big drop, buying more
of it during the dip and letting it compound and grow brought it
from deep in the red back into the green.
We have 20, $7000 of gains in Amazon alone.
The next one that isn't technically big tech, but I
throw it in because it's a large aggregation platform.
It's a company that used to be a Fang stock is Netflix.
This one has been discounted now it's been thrown out of the big
tech label, but I still consider Netflix to be a big tech like
company. It is massive.
They have hundreds of millions of paid subscribers.
Netflix has been a substantial winner with the majority of my
value in this company being gains $55,000 of gains in this
one alone. I have another $42,000 of
Google, but this position is $13,000 in the green.
So another big tech company in the portfolio outperforming the
indices. Then we have Microsoft, another
company that's outperformed both the S&P 500 and the QQQ, $19,000
of Microsoft stock, another $7000 in the green.
At the beginning of every month, I release a report that goes
over every position, the current value, the current gains, the
current weighting in the portfolio for both the passive
income portfolio and the story fund.
It even mentions a little bit of history of companies that I've
sold, and it has my overall performance and time weighted
returns from the beginning of 2022.
This is before all the volatility in the big drop in
the market. Since then, both these
portfolios have done really well, outperforming both the S&P
500 and the QQQ. The Story Fund in particular has
had excellent performance, mostly due to Netflix.
In most cases, when investors outperform, they like to make it
sound like they did something complicated, like they achieved
some great feat in investing, when in reality, I didn't do
anything complicated. I put most of my money in the
group of companies I consider to be the highest quality in the
world, large aggregation platforms, ones that are nearly
unstoppable, ones that have moats that are so big they seem
nearly indestructible. I put the majority of my
invested capital into these companies that everyone's
looking at and they outperformed, and I believe it's
likely to happen again. The basis of these few companies
continuing to outperform the broader market is based on the
fact that investors continue to make the same mistakes.
They've always at the same reasons they're not investing in
big tech or overweighting these positions are the same reasons
they didn't five years ago. I can even list out the reasons
I've heard them over and over again over the past 10 years.
Because so many analysts cover them, they're already fully
priced. This is an argument that's been
made for years. Big tech has by far the most
analyst coverage, therefore making them the most efficiently
and accurately priced companies in the world.
This has been proven wrong time and time again.
They'll be disrupted by smaller, more nimble companies.
This is the Kathy Wood arc. Investment, disruptive
innovation. Big tech are old and slow
moving, so they're going to be disrupted by smaller, more
nimble companies. That's been proven wrong over
the past five years. They've gotten too big.
The laws of large numbers will kick in.
That's just the general idea that these companies are already
so big, how can they continue to grow bigger?
That's another idea that's been proven wrong as they've grown
substantially bigger than when people first started making that
argument. The world is a large place and
the Internet is a very efficient way to grow a business.
Past performance is not an indicator of future performance.
While that's true, and we should never invest in a company purely
based off past performance, quality of a business is an
indicator of future performance, and big tech companies keep
getting higher and higher quality.
They're more expensive now than they've ever been.
This is another argument that's been brought up time and time
again, but big tech has a way of growing earnings much faster
than people predict. So while they're seemingly
expensive in the short term, over any long term stretch they
turn out to be cheap. Every single argument against
investing in big tech time and time again has fallen apart.
It's crumbled, and that's because of some specific
mechanisms that work with big tech and big tech only.
The argument is on the basis that these large companies have
something other companies don't. They're large aggregation
platforms. They're naturally growing
monopolies, and they'll eventually get bigger and
bigger, even bigger than people expect.
Big tech in the emergence of the Internet era.
Aggregators and platforms require a fundamental rethink in
how we structure our investment portfolio.
We are in the early stages of this fundamental rethink, which
has caused shares of the most successful aggregator platforms,
IE Big Tech, to be continually undervalued.
Although they are the most well researched stocks, the systemic
undervaluation will likely persist and only gradually
reduce overtime as these companies mature and investors
better understand the new market landscape.
The current supply demand imbalance of Big Tech shares
provides a significant opportunity for unconstrained
investors, meaning that investors that don't work for
institutions and have to order their portfolio in a specific
way. So individual investors like you
and me, they have the ability to invest in whatever we want,
whatever percentage we want, have a big advantage over
institutional investors. He says that a portfolio
compatible with this new reality should be more concentrated with
a larger maximum position size. Many foundational practices of
how investors structure their portfolio today were primarily
built on data and realities of the pre Internet world, where
Internet enabled aggregators and platforms did not yet exist.
For example, the SEC rule that places a soft cap of 5% on the
maximum position size of a diversified mutual fund came out
in 1940, while modern portfolio theory was introduced in 1952.
The corporate competitive landscape back then was also
more intense, and without the Internet, the largest companies
in a given industry weren't able to aggregate demand in the same
extent current aggregators are able to.
The first argument addressed here is that you need to have a
well diversified portfolio. Now, most investors agree that
diversification is a good thing. But the definition of
diversification has changed over time.
In the 1940's, the definition of a diversified portfolio was no
company in your portfolio has a greater than 5% weighting.
That means that you simply have at least 20 companies, at least
20 companies of equal weighting, or less than 5%.
In most cases, you invest in hundreds and hundreds of
companies with no big, large concentrated position sizes.
But overtime, especially with the Internet, the dynamics have
changed. There's fewer companies that
take a bigger portion of the overall industry because the
Internet has an aggregation effect and the Internet allows
scaling across the entire globe with relative ease.
So these companies can take a bigger aggregation and they can
grow much faster pace for a longer period of time.
Therefore, meaning to have a properly diversified portfolio,
you should concentrate into these aggregators to a larger
extent. It seems counterintuitive, but
this is the argument that he made a couple years ago, which I
fully agree with. To elaborate on this point, in
the Internet era the companies who became the dominant
aggregators or platforms have vastly different competitive
risk profiles than industry leaders of the pre Internet era.
Even when there is more than one successful aggregator in an
industry, for example video on demand, they don't always
directly compete head to head but rather offer complimentary
products and or focus on fulfilling different demands.
Netflix and Disney. Disney's not a direct competitor
to Netflix. They do compete.
They have some overlap. They both compete in family,
family friendly shows, but there's a lot of content on
Netflix you simply can't get on Disney.
As a result, the concentration risk is not nearly as high as
history would suggest when taking a larger position in a
winning aggregate platform. Due to this now altered
competitive reality for these dominant companies, valuation
risk is often more considerable than company specific risk.
However, the relative and absolute valuation risk of big
tech is quite low. The Internet continues to cause
this ongoing effect of aggregation, and that's a very
important word in investing and may be the most important
attribute of a company. Aggregation is when things
naturally gravitate towards the market leader, where one company
wins the majority of market demand and it's impossible to go
around or circumvent that company.
For Amazon, they're the aggregator in many different
industries, but especially online retail.
It's very difficult to sell a product online while avoiding
Amazon. You have Booking Holdings in the
aggregation of vacation rentals in Europe.
They've aggregated demand. It's very difficult to
circumvent them. You have companies like Netflix
that have aggregated a lot of streaming demand.
It's difficult to get your comedy special seen by a lot of
people if it's not on Netflix. You have YouTube and the
aggregation of online do It yourself media.
You have Uber and the aggregation of ride sharing.
You have Meta and the aggregation of social media.
You have Apple and the aggregation of all
communications going through singular devices and so on and
so forth. Every large scaled winner is an
aggregate platform and these companies can aggregate demand
to a massive extent. It is a natural monopoly
increasing recently, the market is moving towards having fewer,
larger and more durable quality companies.
So how one structures their portfolio should take that
reality into account. For example, the advertising
market evolved from thousands of then wide Moat TV stations,
radio stations and newspapers globally to now with over half
of the demand aggregated just by Google, Facebook and Amazon
alone. The Internet generally shifts
demand from companies operating in the middle of the pack to a
few truly scaled winners. One should not be underexposed
to these winners when asked why these companies are perpetually
undervalued. Part of the reason why is
because we have these fewer globally dominant aggregate
platforms that aggregate all the demand in these incredibly
important industries. They generate enormous amounts
of excess profits, but they're only in the hands of a few
companies. So investors naturally are
hesitant to have their portfolios resemble this new
reality that the majority of your money should be in these
few great companies. Most investors want to take the
more conservative approach, the more risk averse approach of
instead of investing most of their capital in these great
companies, they diversify in the name of lowering risk in their
portfolio. But they may actually be
increasing risk by under exposing themselves to the best
companies in the world, the most risk adverse, the best business
models, the biggest aggregate platforms.
And this is part of the reason that these companies could
remain undervalued all the time is investors are unwilling to
invest in them at the extent they deserve to be invested in.
Therefore, they don't have the supply demand economics of a
normal company. Given how market participants
currently behave, a significant portion of the future demand for
big tech shares may come from retail investors.
This cohort of dollars is increasingly going to skew more
conservative. Nonetheless, the incremental
retail demand will come from two sources, those who already own
it and they want to own more big tech, and those who don't
currently own it. The more mature big tech
becomes, the broader the appeal of the shares.
More specifically, the stronger appeal to the more conservative
investors who hold a lot of the incremental demand.
Microsoft and Apple are on the more mature and less undervalued
side, while Amazon and Facebook are on the less mature, more
undervalued side and Google is somewhat in the middle.
Things that help broaden the appeal of shares include capital
efficiency, stable and increasing earnings, dividends,
the volatility of the core business, limited capital,
commitment to moon shot investments.
So this is the qualities of a more mature company, one that's
a bit safer. As big tech moves more and more
to this type of situation, they bring in another entire cohort
of investor. All the conservative investors
start piling in. All the dividend investors start
buying the stock. All the ones just looking for
the more Coca-Cola like companies start to pile in.
And that's what's happened to Apple.
Part of the reason that Apple is such a great investment and it's
done so well, even though the growth has slown, is because of
these reasons. It's now a capital efficient
business with stable growing earnings, has a growing
dividend. The volatility of the core
business is very low and it has limited capital to moon shot
investments. They're only doing stuff that's
mostly tried and true. So Apple has attracted every
cohort of investor. So Apple has brought in the
appeal of their shares. Their shares now have maximum
demand from investors. Now Apple is on the more mature
side and it's less undervalued than the rest of big tech.
But these other companies, specifically Amazon, remain on
the more immature side side. Amazon does not appeal to every
type of investor. They don't pay a dividend,
they're not doing buybacks. They're not doing many things
that attract a large cohort of investor.
Amazon most clearly exemplifies the above mentioned supply
demand imbalance of a company's shares.
On the demand side, Amazon does little to appeal to more
conservative investors. Current accounting earnings are
small compared to the company's true earnings potential, which
in conservative investors minds cast doubts about the ultimate
degree of long term profit potential.
So Amazon understates their current profit potential
dramatically by doing continued huge investments into CapEx and
building out new things. That doesn't appeal to the
conservative investor. They want companies like Apple
that are producing profits. Today, Amazon continues to
invest heavily in its core business as well as various
moonshots. So investors that are
conservative, looking for stable profit growth over time don't
care about these moon shot bets. They don't want to invest in
companies that have this type of risk.
The company provides zero financial or other disclosures
regarding moon shot investments. Amazon is very opaque of what
they're doing with their research and development.
They don't give you much insight at all.
And what those $70 billion per year is being spent on Amazon
pays no dividend. That's another thing where
they're not trying to attract investors through their capital
allocation. If Amazon wanted to broaden the
appeal, if they wanted to make their company more attractive to
every cohort of investor, they'd basically do everything the
opposite of what they're doing today and look more similar to
Apple on the supply side. Amazon is the only big tech
company that doesn't engage in buybacks today, so they're not
trying to woo investors in by lowering the share count to
making it so that other investors that are nervous about
the company can exit without the stock price going down.
Buybacks are a massive thing that investors look for.
Amazon does none of it. This large imbalance likely
makes Amazon the most undervalued big tech company
today. Now prices have moved around a
little bit. Amazon has come U in share price
but overall the argument remains the same.
Amazon is not nearly priced to the full extent it will be over
time as it matures and becomes a more Coca-Cola like company as
it includes more investors from more cohorts, more investors
from the dividend growth category, more investors from
the buyback category, more investors looking for the stable
earnings growth and free cash flow per share growth.
All the investors that are looking for a more stable,
mature company will come to Amazon over time pushing up the
share price, but it's not there yet.
So this company, very similarly to Google and Meta remains
undervalued. Now moving on, speaking about
aggregation platforms, this is a story from Barron's that's
bullish on Uber. And Uber of course is a massive
aggregation platforms of ride sharing.
Part of the success of Uber is dependent on whether or not they
can keep those sticky dynamics of a network effect.
Now Barron's is overall very bullish on Uber.
They think the stock is a buy like many other people right
now, and I find their argument for it pretty compelling.
They say shares of the ride sharing company have been stuck
in neutral since October when Tesla announced that production
of its first robo taxi that would begin in 2026.
Now this is where two different groups of investors are being
separated. Many Tesla investors don't like
Uber. Many Uber investors don't invest
in Tesla and you see the dynamic here.
Now there are some investors that are invested in both, but I
think those are few and far between.
In most cases, investors are betting on one of these two
outcomes. Either Uber keeps its network
effects, it remains a large aggregate platform, or Tesla
disrupts it. That's one of the two outcomes
that Tesla investors believes will happen.
Now this dynamic of companies like Tesla saying that they're
going to control the world with robotaxi and people like Kathy
Wood saying it's going to 10X in five years, all these people
believing it's going to scale super fast into every market has
created a bit of uncertainty with Uber.
Investors are in a in a bit of skepticism.
Uber is being treated as though it's just an uncertain future.
And some of that is true not just from Tesla, but you also
have Wemo, which is proven, tested, and working in multiple
markets. They're expanding from market to
market with their autonomous vehicle business.
Waymo's already accepting 200,000 paid rides per week, so
that is a real tested business that could become a competitor
to Uber. Now they don't believe that's an
issue. The ride sharing issues are
overblown. Uber could be seen as a partner,
not a victim of autonomous vehicles.
The company already works with Waymo in Atlanta and Austin, TX,
and could join up with it in other cities as well.
What's more, Uber's app is more than 171,000,000 phones and its
businesses, which also include food delivery and advertising,
are well diversified beyond providing cars to passengers.
With the stocks valuation cut in half over the past year, now
looks like the time to buy. They mentioned that the
valuation for Uber has been cut in half over the past year.
That seems a little extreme. But if we bring up Uber here on
Qualtrim, which by the way, you get access to this website if
you join the Patreon, but if we look at the valuation of Uber
over time, we can easily see this on the valuation chart.
We'll look at it on the free cash flow basis.
The free cash flow yield of Uber one year ago was 2%, just about
two point 1%. In early 2024, it moved up to
2.7%. Now as this number goes up, the
company becomes cheaper on a free cash flow basis.
Today it's at a 4.4%. So the valuation of Uber has
been cut in half over the past year.
And other Tesla bulls are now even starting to give a little
bit of leeway to the idea that Uber still could be successful.
Dan Ives being one of them, quote.
You have the possibility that the autonomous debate starts to
swing in their favor. Now he's not saying that they
will be the ultimate winner or that Tesla won't do well, but
there is arguments now being made that Uber may have a more
resilient business than people expect.
Now Uber does have more grandiose plans with their app.
They don't just want to be a ride hailing platform.
They want to be a one stop shop for rides, food and booking
travel. So they want to become
competitors to Expedia or Booking Holdings.
Now there's even rumors of of Uber potentially buying or
acquiring Expedia Group. This is a company that the CEO
of Uber was the former CEO of, so he knows the business really
well. But either way, if Uber does get
into travel, that expands their total addressable market even
more. And remember, they have a lot of
people already using their app. This is a company that exhibits
a lot of the traits of an aggregate platform.
So many users already using their application that they can
continue to aggregate demand, They can continue to expand in
different verticals. And this is part of what makes
Uber such a compelling investment.
But this is one that I consider myself more close to buying than
other companies. Now finally, we get to another
piece of funny news here. I thought this was amusing.
There is the website Polymarket where you can bet on just about
anything. You can create a bet for
anything. And then people can wager and
embed against each other. And this bet was which company
will have the best AI model at the end of March.
And you can see the odds over time, XAI, Open AI, DeepSeek and
Google, Google's right there close to the very bottom at 5%
for the majority of the time. Not many people betting on
Google, They're always just betting on XAI and Open AI.
DeepSeek is also below Google. I don't think anybody expects
DeepSeek to make another model this quick.
But regardless, we have Google there at the bottom.
And then immediately it bumps up to 95% as they released a new
model. The model is called Gemini 2.5.
Now, this goes along with the greater theme that I've argued
before that Google just doesn't get credit for what they're
doing. Just think about their business.
They rarely get credit for what they're actually doing.
They have Waymo, which is a an autonomous robotaxi network
accepting 200,000 rides per week, expanding to different
cities over time, constantly expanding, and all people talk
about with robotaxis is Tesla. Very few people actually
mentioned Waymo when they're doing the very thing that Tesla
investors are wanting Tesla to do.
There's all these little caveats and you know, differences that
Tesla will scale faster and Tesla has better manufacturing
and whatnot. But right now we have 1 company
proving to the market with real paid rides that ride sharing
works. And they're doing it and
expanding rather rapidly. They've grown the amount of
rides, paid rides by 20 times in the past two years.
So they're scaling rather fast, but yet it's a side note with
Google. Then you have the AI battle.
You always have the AI companies mention X AI, you have Chachi
PT, you have Amazon, you have basically every other company.
And then Google's kind of thrown into the mix when Google has
been leading this race of having the best models for a long
period of time, even before Gemini 2.5, Google has had an
incredibly strong model with Gemini 2 point O better than
most. But Google's inability to market
this and the crate buzz and excitement like other companies
means that they're continually under appreciated.
Now we look at the the new announcement of this new model
and it is incredible, they say. Today we're announcing Gemini
2.5, our most intelligent AI model.
Our first 2.5 release is an experimental version of 2.5 Pro,
which is a state-of-the-art on a wide range of benchmarks and
debuts as the number one LMA or LM Arena by significant margin.
That is a test where they basically have users blind taste
test. They just look at all the
different models and they assess which one is giving them by far
the best answers. So it's a blind test.
They don't know which AI model they're being presented with.
They rank all of them, and it ranked #1 users like this
model's results and the answers above any other.
Gemini 2.5 models are thinking models capable of reasoning
through their thoughts before responding, resulting in
enhanced performance and improved accuracy.
In the field of AIA, system's capacity for reasoning refers to
more than just classification and prediction refers to its
ability to analyze information, draw logical conclusions,
incorporate context and nuance, and make informed decisions.
For a long time, we've explored ways of making AI smarter, more
capable and reasoning and through techniques like
reinforcement learning and chain of thought prompting.
Building on this, we've recently introduced our first thinking
model, Gemini 2 point O flash. Thinking now again, this one got
little acknowledgement. Everyone focused on DeepSeek
because it came from a China, It came kind of out of left field,
but Gemini 2 point O was actually ranked higher than
DeepSeek on both benchmarks that it was ranked on.
Now with Gemini 2.5, we've achieved a new level of
performance by combining a significantly enhanced base
model with improved post training.
Going forward, we're building these thinking capabilities
directly into all of our models so they can handle more complex
problems and support even more capable context aware agents.
Now they show the three different benchmarks that they
use on reasoning and knowledge. It ranks above all the others by
a pretty high margin. In the science category, it
again outranks all the other models.
Open AI is the closest and in mathematics it again outranks
all the other models. Opening Eye is slightly below
and they actually show here how you can make this dinosaur
jumping game, This little game you can make with a single
prompt in 45 seconds. Here they're they're they're
showing it being made. Run it.
It's speeding through the process here.
We're at like 67 seconds to create this, copy the code, put
it into an editor that can run it, and you have yourself a
game. So that's how coding has
developed with these new models. It's getting to the extremes Now
moving on, Speaking of AI, we also have the companies that are
not just creating new models, but the ones that can implement
artificial intelligence in the most profitable way possible,
that can create new experiences and new advantages for their
business. I've argued that Amazon, with
how vast their business is, with how much optionality it has
baked into the company, there are so many different ways that
Amazon can benefit from artificial intelligence, ways
that we can't even think of right now.
Amazon, in an effort to infuse generative artificial
intelligence across a wider spot of its e-commerce universe,
recently began testing a shopping assistant and health
focused chatbot with a subset of users.
AI has become a major area of investment across Amazon,
including in retail, cloud computing device and healthcare
businesses. Within the retail business,
Amazon has already launched a shopping chat bot and AI
assistant for sellers and AI shopping guides.
On top of that, they're using AI to summarize reviews to help
create descriptions. It's just part of everything.
Every part of Amazon is going to be made better by artificial
intelligence. The new services Amazon is
testing appeared on its app or website in recent weeks.
An Amazon spokesperson confirmed that the features are being
tested in beta with some customers.
The shopping tool, called Interests AI, prompts users to
describe Interest using their own words, and then it generates
a curated selection of products. The Amazon spokesperson said
that Interest uses the large language models to translate
everyday words or phrases into queries and attributes that
traditional search engines can turn into product
recommendations. They're making this feature
available in the US soon, Andy Jasia stressed.
They're literally really using over 1000 different ways to
implement generative AI into the business across AI applications.
One of them is in the cloud offering a chat bot called Q and
Commerce. The company has rolled out a
service for consumers as well as its millions of third party
sellers. Amazon is also exploring ways to
use artificial intelligence that can address medical needs.
The company is testing a chat bot on its website on a mobile
app called Health AI, which can answer health and Wellness
questions, provide common care options for healthcare needs and
suggest products. And they have clinically
verified badges denoting that it's been reviewed by AUS based
license clinician. So this is not just pulling up
random data. The real responses here will be
verified. Amazon already announced Alexa
Plus, which is included with the Prime membership, which makes
the Alexa devices far smarter. They're now infused with
artificial intelligence. This is something where I think
we're just scratching the surface.
I really think with a company like Amazon, we're just getting
started with their implementations of artificial
intelligence. I can't tell you how it's going
to change the business. I don't know all the ways
they're going to implement AI across all their verticals, all
the various things that Amazon does and competes with.
But there's more than 1000 ways that Amazon's going to benefit
from AI. We don't know about what those
are right now, but we're going to find out over time.
Now finally, we get to this news where we have Berkshire Hathaway
doing this is a little bit of a employee.
I think it's just a fun thing for employees.
Berkshire Hathaway employee wins $1 million in the Warren
Buffett's March Madness bracket challenge This is the first time
in nearly 10 years a Berkshire Hathaway employee claimed Warren
Buffett's 1,000,000 grand prize for his company's NCAA bracket
contest. This anonymous employee from the
aviation training company Flight Safety International, it's a
subsidiary of Berkshire, won the annual internal bracket contest
after correctly calling 31 of 32 games in the first round of the
men's basketball tournament. This is by far one of the the
coolest things I've seen a company do.
Give out $1,000,000 to a random employee.
Not entirely random, but one that fills out the NCAA bracket
competition correctly. It'd just be a fun thing.
Wouldn't that be insane in the company you work for being able
to fill that out and have a chance of winning $1,000,000?
There's no downside and you're not gambling.
You don't lose anything if if you don't win, but you get to
see potentially someone in the company that's been working
their normal job doing the same thing everyday, have their life
randomly change from filling this out correctly.
I think this is something just fun and more companies should do
it. And even the people that were
runners up, the 11 that won $100,000, that's also a life
changing amount of money. I mean, that really is, is such
a cool thing to have happen. So Warren Buffett does it again.
One of the cooler things the company's done that I've seen
over the past the past year. That's going to be it for this
episode. Hope you enjoyed.
See you in the next one.