Welcome back, everyone. Today on the Joseph Carlson
Show, we're going to be talking about Palantir.
Palantir has had an incredible year.
The stock is up 121 percent this year, so it's been a good one
for Palantir investors. This has been one of the best
stories. It's been riding the AI wave,
but unfortunately, this monumental rise in stock price
has led the stock to be extremely expensive.
With this being one of the most known popular stocks among
social media and retail investors, I think it's good to
take a look once in a while at the valuation.
So we're going to be taking a look at Palantir, going through
the valuation and explaining why I believe this stock is
extremely expensive. Now we also have news from
Bloomberg that Netflix saw a spike in cancellations after the
former CEO Reed Hastings donated millions of dollars to the
Kamala campaign. It upset conservatives.
There are protests. We know that a lot of people are
posting screenshots of them canceling the service.
Now we have some analytics and data to show that this did in
fact, Causeway a spike in cancellations.
We're going to be going over what this means for Netflix.
As a Netflix investor, how do I view this company leaning so
liberal, being such a a Democrat liberal company and why it's
continually targeted by leading conservatives like Elon Musk?
We have news at Tim Sweeney, the owner of Epic Games, which is
the creator of the game Fortnite, is once again unhappy
with Google. He's suing Google once again.
And this time Samsung as well for good measure, will be
looking into those lawsuits. And then finally, we also have a
report that Google apparently paid $2.7 billion to bring back
a single employee, an AI genius. That's quite the price tag to
pay for one employee. We'll be looking at why Google
decided to pay $2.7 billion for this employee.
Now, we start off today with the main story, which is Palantir is
now an extremely expensive stock.
Whether it's overvalued is a different question, but it is
very, very expensive. Now, I know anytime you say
something like this for a very popular stock, one that there's
a lot of social media, one that a lot of people have their money
in, there's a an immediate backlash.
People immediately jump to the keyboard.
They go down to the comments section in a fury with full of
full of anger and hatred towards anyone that criticizes their
company. So before you do that, before
you race to the comments section to leave a comment that Joseph
doesn't know what he's talking about.
Joseph is just coping because he miss Palantir.
Joseph just doesn't don't like Alex Karp's hair.
None of that is true. So just slow down a bit.
None of that is true. I do like Alex Karp's hair.
I think it's it's cool. He has great style.
He's very eccentric leader. I do think that Palantir is a
great company. So it's not true that I have
something against Palantir. In fact, I've been very positive
about Palantir for a long period of time.
So before you jump to judgement and start leaving angry
comments, just slow down a bit. Wait until you at least watch
this first segment, then leave the angry comments afterwards.
Now, like, like I said, Palantir is one of the most popular
stocks among social media and retail investors.
And this isn't something that I'm just saying because I, I
kind of see it. It's also something that I'm
saying because the data supports it.
Over 50% of Palantir shares are owned by retail investors.
A minority is owned by institutional investors, meaning
that it's a lot of individuals buying this company, a lot of
individuals, a lot of small funds.
It's not major institutions buying up Palantir, which I
think is fine. That's a great thing to have
individuals buying shares in a great company.
So I don't see any problem with that, but it just shows that
this is a really, really popular stock.
There's no set answer in valuation.
In fact, there's a number of ways to value a company.
You can value a company through revenue multiples.
You can value it through earnings per share.
You can value it through free cash flow, free cash flow per
share share. You can value it through EBITDA
or enterprise value. There's all sorts of ways to
look at valuation of a company and rather than focus on just
one and try to nitpick one way of valuing Palantir, I want to
look at it through multiple ways.
We can illustrate the price of Palantir by looking at it
through multiple lenses. Now the first one we can look at
is the free cash flow. This is one that I look at for
every company. Basically what Qualtrum shows
here, this free cash flow yield is the yield you're getting when
you buy the stock. And this is very similar to the
yield that you get from a bond. For example, if you look at a
stock and it has a 4% free cash flow yield, that means that if
you invest $100 based on their last 12 months of cash flows,
they can pay you $4.00 back in a calendar year.
So you invest $100, you get $4.00 back per year.
Now hopefully they grow that amount year over year.
Bonds can't do that. They just pay you the same
amount. Hopefully stocks will grow and
they'll pay you $4.00 and $5 and $6 back per year.
But this is the current yield, $100 invested.
Getting back $4.00 per year means a 4% yield # here right
now, not factoring in stock based comp, not factoring in
dilution, which is a whole other thing we could factor in.
But even leaving that out, has a .81% free cash flow yield based
on the trailing 12 months. Again, if we look at this and we
look at the free cash flow # tier generated $700 million of
free cash flow. That's a lot of free cash flow.
But unfortunately, the market cap is $82 billion.
The way you look at the yield is you divide the amount that they
generate in cash flows. That's the 700 million divided
by the $82 billion market cap. You move the decimals 2 places
and you get that .85%. And that's how we get the free
cash flow yield of .84%, a below 1% yield, which is important.
If we look at Palantir from this lens, that means that based on
the trailing cash flows, if we invested $100, we get back $0.84
per year based on $100 investment.
And that is rather low even looking at Palantir compared to
comparable companies. Now I realize that Palantir is
unlike most companies. It's an AI company, It's led by
a great leader. It has a great story.
Palantir is awesome. But there's also a lot of other
great companies, a lot of other great similar software
companies. And if we compare Palantir to
any of them, you may notice a difference here, for example, we
look at another company, Crowd Strike.
This is one that's just incredible.
The growth is monumental. It is growing lockstep every
single quarter even after their failed a software update where
they had problems. You can take a look at the
revenue, it looks like it's fabricated, but this is real.
This is all recurring subscription revenue.
So this is virtually the best type of revenue you can get.
It's profitable subscription revenue, fast growing cash
flows. If we look at the free cash
flow, the customer growth, all of it is growing, lock step more
predictable, more reliable than most software companies and the
free cash flow is at $1.1 billion, again growing every
single quarter of the year lockstep.
So this is a fantastic company. And if we look at the free cash
flow yield, it is double. Palantirs As expensive as
Crowdstrike is, this company's still at double the yield of
Palantir's. So Palantir is far more
expensive on a free cash flow basis than Crowdstrike.
But we can look at other companies here again, Palantir's
at a .84% yield. ServiceNow is at a 1.67, it's
over double. We have Palo Alto Network,
another great fast growing company at a 2.81% yield.
This is about 3 times what Palantir's is.
Datadog at 1.74, we have Synopsis at 1.28.
Even Microsoft, which I consider really expensive right now, has
over double the free cash flow yield is Palantir.
Viva Systems has three times the yield at 2.86, Adobe's at 2.83,
Intuit's at 2.67, Hubspot's at 1.19, Oracle is at 2.44,
Snowflake is at 2.23, Roper's at 3.47, Autodesk is at 1.81, at
Lassine's at 3.41, Work Day is at 3.34, SAP is at 2.5, and
Salesforce has the highest free cash flow yield, meaning based
on the cash flows, it is the cheapest company out of every
major enterprise software company with a free cash flow
yield of 4.39. So in summary, when we look at
the free cash flow yields of every major enterprise company,
Palantir has around half the yield of the average, meaning
that on average it's around double the price of any other
major enterprise company based on its trailing metrics.
Now it is true that Palantir may be growing faster and maybe it
will grow it's free cash flow way faster than these other
companies. Maybe it's all worth it.
I'm not saying it's not. I'm not saying that Palantir
can't make it worth it. But what I am saying is a lot is
already priced into the stock based on the cash flows.
Investors in Palantir are assuming that the stock is
roughly twice as valuable as any other comparable stock and
software. Now, again, that may be the
case, but that's quite the assumption to make.
Now again, there's many ways to value a stock.
The free cash flow yield's not the only one.
We can also do it based on an earnings per share basis.
This is where you take the next four quarters of the annals
estimates and then you see the multiple that investors are
paying for those next four quarters of earnings.
With Palantir, the forward PE is currently 87.8, so it's almost
pushing a 94 PE ratio. We can look at other, again,
very great companies, ones like Crowdstrike.
They have huge total addressable markets.
They have all subscription revenue.
They're growing very fast. They have still very fast
revenue growth that is faster than Palantir's revenue growth.
And this stock is still trading at a lower PE ratio.
We have one like ServiceNow at a 53.
Again, that's compared to Palantir's 88.
We have Cadence Design at A39 4PE.
We have Palo Alto Network at a 53.
We have Datadog at a 58, Synopsis at a 34, Microsoft at a
32, Viva at a 34, Adobe at a 25, Intuit Data 32, HubSpot at a 59,
Oracle out of 26, Snowflake out of 38, Roper out of 27, Autodesk
at a 33, Atlassian at a 48, Work Day at a 35, SAP at a 33 and
Salesforce at a 27.8. So once again, we find that
Palantir has a multiple on its earnings that are roughly double
the average of every major enterprise software company,
many of which are growing really fast.
They have free cash flow that's growing quickly.
They have very resilient business models, but Palantir's
still worth roughly double. Now again, you may say that
Palantir so far really shouldn't be judged on an earnings basis
or even a free cash flow basis because so far they're just
trying to land contracts. They're trying to grow their
revenue and grow their reach. They're not super focused on
generating profits today, and that may be the case.
That's the case often with software companies that are
still in the expansion phase. But there's also ways to value
it based on pure revenue, revenue multiples based on the
enterprise value to sales. Sales is another word for
revenue. If we look at the relative
valuation of Palantir compared to other enterprise software
companies on an enterprise value to revenue multiple, you'll
notice that one sticks out a little bit from the others.
We have here all these companies that we've been looking at, all
of these great companies with wide moats, resilient business
models, and most of them trade at an enterprise value to sales
multiple of around 9.9 times. That is the median across the
industry, so just shy of 10 times.
Palantir's enterprise value to sales multiple is 27.7.
It's over double the median of all of these companies, and in
fact, it's far more than anyone even close even crowd strike.
For as expensive this company is, it has an enterprise Value
to revenue multiple of 15.3 against Palantir's 27.7.
This should paint a stark picture of what's currently
being priced into this stock. And you'll notice here that the
one that's supposed to be the loser of Palantir, the one that
has all the gloomy sentiment right now, is Salesforce, which
on almost every metric is currently the cheapest
enterprise stock. But this stark visual should be
a reminder of what you're paying for a company.
The reason I bring up all of these visuals is just to
illustrate that this company is expensive when you base it off
of any relative investment. Palantir is expensive on a free
cash flow yield basis. Palantir is expensive based on
an earnings per share basis, and it's expensive based on a
revenue basis. No matter which way you slice
it, this company's trading at an extremely rich valuation.
Now, I've been very careful in both the title of this video and
in the video itself to use the terms expensive and cheap, not
the terms overvalued and undervalued, because a company
can be expensive and still be undervalued.
We've seen examples of that before where company looks
incredibly expensive and it turns out it was still
undervalued at the time. That's happened before, and I'm
not saying that that can't happen with Palantir.
There is a chance of this company outperforming
expectations and turning out to be undervalued.
Whether or not a company's truly undervalued or overvalued
depends heavily on how much cash they generate in the future.
Since we don't perfectly know the future, we don't perfectly
know if a company's overvalued or undervalued.
But judging whether or not a company's expensive or cheap
trading with high expectations or low expectations is based on
history. Now, I don't bring up any of
this to attack your stock or to bum you out if you're invested
in Palantir, I promise you that's not the goal.
In fact, I've been in the same situation before with some of
the companies that I own. For example, Costco, Costco's a
very expensive stock based on almost all of the metrics.
You look at it at a free cash flow yield instead of 1.8%.
It's not nearly as expensive as Palantir, but for a company
that's more established the larger chain, it's a company
that that's a retail company, 1.8% is very expensive.
It also trades at A50 Ford PE ratio which is around double
what Walmart and Target trade at.
So Costco stands out just like Palantir as being a very
expensive company and I still refuse to sell it.
So I knowingly hold a very expensive company.
When I look at My Portfolio, I look at the companies I hold.
I've held Costco for such a long period of time.
It's been such a great stock. It it's just continued to grow,
its earnings grow, its cash flows, pay huge dividends.
At the same time, I'm so much in the green on this stock that I
just don't feel like selling a company that has so many things
going the right direction. So in many ways, I feel very
similar with the way that I hold Costco today, that I think the
same way many investors in Palantir fill where the stock
has done so well, you know, it's trading up to a very rich
valuation. But in many cases, you might
just choose to hold onto it anyway.
And I respect that decision. The one risk of holding a
company like Costco or holding one like Palantir, one that's
trading at a very high multiple and a rich valuation is there's
no room for mistakes. There's no room for any holes in
the armor of these companies. If Costco is to show any real
weakness at all, any problems with the business model, any new
competitors that are really threatening its business model,
this stock would crater. The stock could go down from a
54 PE to a 30, going down 40% in value.
It could go down even further. Costco's currently priced to not
have any major challenges or mistakes, and I hold Costco
believing that it's not going to have any major challenges or
mistakes. I'm extremely confident in the
future of the company. I think it's one of the most
proven resistant all weather businesses that exist today.
So I'm OK holding the company at a high valuation because I think
the chances of something wrong with it, something challenging
happening with it are extremely slim.
Palantir is currently priced the same way.
Palantir is priced in a way where if investors find
themselves having any concerns about the future, any changes in
forecast for future expected growth, any problems with
competition, any negative turn in their story and this stock is
going to sink. It is not price for negativity.
Palanter is currently priced to have an extremely prosperous
future. We also saw the same thing from
Morningstar. They're bullish on the stocks
future. They think it has a great
future, but they're concerned about the valuation from a
valuation standpoint. While our forward-looking
estimates testify to our optimism on the name, we remain
skeptical of the exuberant valuation at which Palanter is
trading. Even without factoring in the
sharp rise in the firm stock price after hours, Palanter
remains the most expensive software company in our coverage
with an enterprise value sales multiple of around 20 times.
Now it's getting closer to 30. We'd caution investors that sky
high expectations baked into the firms current valuation.
Any small bump on the road can crater the stock price and
they're of course correct in that statement.
Any bump in the road can cause a huge problem for Palantir.
So overall that was basically it.
I thought it'd be good to check in on Palantir as I've been
following this company for years and give some updated thoughts
on it right now, again, I'm not bearish on the company.
I think they're doing a great job.
I like their product road map. I like that they're taking over
market share. I like Alex Karp is a leader.
I've been impressed by him. So I like this stock a lot
fundamentally, but I also think it's good to compare that
against what's currently priced in and try to do updated
analysis on the risk and reward. And right now, Palantir has
shifted into that bracket where I think there's a lot higher
risk in valuation than there was just a couple years ago.
But I'll continue to follow it along and see how it develops.
Now let's go to move on to some news stories here.
The first one is we have an update on the news that I
covered a couple weeks ago. If you followed this channel a
few weeks ago, I covered news that Netflix had a bit of a
controversy, and they do from time to time.
But this one was because there's a big headline that this guy,
Reed Hastings, the former CEO of Netflix and current chair of the
company, he donated, I think it was like 4 or $5,000,000 to
Kamala Harris's campaign through some super PAC.
So he has a lot of money. He founded Netflix, he was like
the creator of it and he donated some money to his preferred
candidate. Now he donated his own money.
He didn't use Netflixs balance sheet or Netflixs funds.
He used his personal money that he made working at Netflix, but
it was his personal money that he donated.
So Netflix can't control the donations of their employees.
That's not something that you can legally do.
Netflix can't say, hey, employees, stop donating to
specific candidates. You just can't do that.
But regardless, the affiliation of him being the former creator
of Netflix and donating such a large money to the Kamala Harris
campaign meant that he was targeted by a boycott from
conservatives. I think that's OK to do.
You can support whatever business you want, but we didn't
really see what happened from that boycott until we got the
analytics. And that's what this article
shows. It shows an update on what that
boycott really did. The headline is that the Netflix
cancellation spiked after Reed Hastings donated to the Kamala
Harris campaign. Looking further into this, they
say Netflix suffered a surge in cancellations in the days after
the Co founder and chairman Reed Hastings endorsed Kamala Harris
for president and donated millions to our campaign.
The rate of cancellations, or churn in the industry parlance,
nearly tripled in the US after his endorsement, according to
the researcher. Antenna, the streaming giant,
has the lowest turn in the history.
So they're basing this off of the research of Antenna.
They have some different ways of getting this data because of
course Netflix isn't releasing daily cancellation rates, but I
think they can use some other third party stuff like credit
cards and PayPal and and different transactions and
traffic to different websites to try to determine what the
normalized cancellation rate and then if there's any spike.
I think that's how they're getting this data.
They say the customers in the US canceled Netflix at a higher
rate in July, 2.8% than any month since February.
But the five day period after Hastings endorsement was unusual
even for July. Hastings, long time Democratic
donor endorsed Harris in a post in the social media platform.
A day later, Hastings told the information that he had donated
$7,000,000. So it was 7 million.
That's a that's a lot of money to the Pro Harris super PAC.
Shortly after Hastings endorsement, fans of Donald
Trump begin urging people to drop the service.
Some posted photos showing that they close their accounts
alongside the hashtag cancel Netflix three days after the
donation became public. July 26th was the single worst
day for Netflix cancellations this year.
So this looks bad for Netflix having.
Any spike in cancellations is never a good thing, especially
when the company is so dependent on their subscriber number.
We've seen this in the past. Netflix is reporting their
subscriber number until the beginning of 2025, so they're
still going to be reporting it next quarter, which is coming up
in just a month. If there is a spike in
cancellations and Netflix reports a lower amount of
subscribers than expected, that could cause a sell off in the
stock. And we've seen this before.
They say the spike in cancellations at Netflix lasted
just a few days. And they also note that it
wasn't as severe as reaction in 2020 when conservatives asked
Netflix to take down the French movie Cuties, which they felt
exploited children. So if you remember that whole
controversy, that was one of the biggest ones Netflix has ever
had. They licensed this movie called
Cuties. I haven't watched it, but a lot
of people are very upset with it because it it potentially
exploited children. It was a big mess and a lot of
people cancelled Netflix, millions of people.
Did they say that this is not quite as bad, that this one only
lasted a couple of days? It hasn't been as big of a
reaction as the French movie Cuties.
Now, obviously, I'm an investor in Netflix.
I've held this company for some time.
I think it's a great investment. It's one that's it's done really
well so far. It's recovered.
There's a lot of bullish momentum in Netflix and it is
true that a large amount of cancellations, like a million
people canceling the service over Reed Hastings donating
Democrat could potentially harm the stock.
So I wouldn't be surprised if this next upcoming earnings was
a little bit risky for Netflix. We could see a drop after hours
if they have disappointing subscriber numbers, but Even so,
I'm still not concerned about this stock and any large drop in
the stock price, in my opinion, is a buying opportunity.
If we look at the data here from Qualtrim, we have one of the
KPIs that tracks the total subscribers over time.
This is what it looks like. They say that this controversy
so far has not been as bad as the Cuties controversy.
So we go back to August or September of 2020.
We have the amount of subscribers right here.
Netflix had around 195 million subscribers when they had that
big controversy and boycott over the Cuties film.
Since then, Netflix has gained roughly 75,000,000 subscribers.
They're now at 277 million subscribers.
That is after that boycott. This is what I mean by Netflix
being inevitable. It's true that a boycott can
take down the subscriber number by a couple million or half a
million for maybe a quarter or two, but overtime, the dominant
streaming player will continue to gain global market share.
The company's current path and global growth, in my opinion, is
inevitable and the donations of a former CEO are not going to be
enough to change that course. Now, on a side note, Elon Musk
continues to go after Netflix by sharing how liberal or Democrat
the company is. For example, he says just
yesterday on Twitter that donations by Netflix employed
could not be more lopsided in favor of the Democrat Party.
It's nearly 100% Democrat. And he shares this graphic here,
which shows the election contributions in 2024 by major
companies. Netflix is nearly 100% to the
Democrat side. Then you have other companies
like Alphabet at 89%. You have Twilio at 100%.
You have other companies like Blackstone that are mostly
conservative, but basically every media company and
technology company is mostly Democrat.
And this is where, frankly, I don't agree with a lot of these
posts and the criticisms focus solely on Netflix.
It is true that Netflix is a mostly Democrat or liberal
company, but so is every entertainment company.
If you were to cancel Netflix and find your entertainment
somewhere else, where else are you going to go?
What is the conservative entertainment company that's
also a dominant streamer that provides thousands of hours of
entertainment? Are you going to go to YouTube?
Google's 90% liberal or 90% Democrat based on their
donations. Out of the 180,000 employees,
there are 160,000 that are Democrat.
So YouTube is not some conservative bastion.
It's not some conservative place to go.
Are you going to go to Warner Brothers Discovery?
It's almost 100% Democrat. Are you going to go to Peacock
with NBC? Do you consider that a
conservative company? Of course it's not.
Companies that are in show business and entertainment are
mostly liberal or Democrat. Companies that are in
agriculture, oil and gas, trucking, farming, those are
mostly conservative. So this mostly just speaks to
the industry these companies are in and the headquarters of where
they're located. I also disagree with the
caricature painted here that Netflix is just a leftist
company making content only for Democrats or liberals.
It sure doesn't seem that way with many of the pieces of
content they're putting out. They invite on people like Joe
Rogan, Bill Burr, Dave Chappelle, Shane Gillis.
These are people that I don't think are necessarily right
wing, but they're also not extreme leftist by any means.
So I think Netflix tries to create content that is consumed
by everyone. It's a global company.
They're going to have some content that appeals more to the
right, some that appeals more to the left.
And I have to believe that this boycott because of this donation
will likely be forgotten about in a few months.
Now, moving on, we get to the story that Google is once again
being sued by Tim Sweeney, the owner of Epic Games, which is
the creator of the popular game Fortnite.
He has sued them before. They note that he's actually won
the case in the past December, and Epic is now suing them
again. The Fortnite game developer has
filed a second antitrust lawsuit against Google.
And now additionally, Samsung accusing them of illegally
conspiring to undermine third party app stores.
So they're accusing them of a conspiracy here.
That's quite the accusation. Let's take a look at what
Samsung and Google are doing. The lawsuit revolves around
Samsung's auto blocker feature, which now comes turned on by
default on new Samsung phones. While it's turned on, it
automatically keeps users from installing apps unless they come
from authorized sources, namely Google and Samsung's app stores.
So unless you download something from the Google or or Samsung
App Store, it gets blocked by this auto blocker feature.
Epic claims that there's no process for any rival store to
become authorized. They have a screenshot here
showing if If we zoom in on this it it shows an example of this
being blocked. It can't install the app from
unknown source. Auto blocker is on to keep your
phone safe. You can only install apps from
authorized sources. That seems you know, when I
first look at this headline, a lot of times what Tim Sweeney
complaints about I think is is not realistic.
A lot of times he's complaining about stuff where I don't think
he has a serious complaint. But this is one of the cases
where I actually agree with him. It's blocking the download of
the App Store, but it's also not giving you just a permission.
It should be more like Windows 10 or 11 where it says, hey,
this is from an unauthorized source.
Are you sure you want this developer to be able to make
changes to your device? And then you have to OK it.
That's a permission. And it allows you to just one
click download the thing and let it make changes to your device.
In this case, it looks like it's not only saying hey, you don't
have permission for this, but you can't easily give it
permission on this screen. And that's the big thing that
Tim Sweeney is upset about. Epic claims that it now requires
an exceptionally onerous 21 step process to download a third
party App Store onto the Samsung phone.
Now I haven't confirmed if it's really 21 steps, but if it was,
that seems ridiculous. I would agree with Tim Sweeney
there, they say. While saying it's 21 steps seems
like an exaggeration, on Epic's own website they claim that you
can turn off this auto blocker feature in just four steps.
Now in my opinion, either way, that's too many.
You shouldn't have to take multiple steps.
It shouldn't be a multi step process to download an extra App
Store. They say.
Not only does the auto blocker prevent me from installing the
new Epic Game Store, but the can't install app pop up no
longer tells how to turn auto blocker off.
So user wants to download Epic Games apps, they want to
download the Epic Game App Store.
They go to download it. It says that you can't because
of the auto blocker feature. And then you're just left to
figure it out yourself. You have to go to Google.
You have to Google how to turn off the auto blocker feature to
download Epic Game Store. Then you have to go to Epic
Games website and go through four steps.
So this does actually feel like Google and Samsung are doing
what they can to create as much friction as possible in
downloading this other store. Tim Sweeney says this thing is
not designed to protect against malware, which would be a
completely legitimate purpose. The things designed to prevent
competition. Now I'm reading this headline.
I originally didn't believe I'd be agreeing with Tim Sweeney,
but in this case, he's right. This isn't some protective
measure that Google and Samsung's taking to protect you
from viruses or malware. They are doing this to create as
much friction as possible, as much confusion and downloading a
competitive App Store. And I think that this argument
is going to pill to the judges. If I had a guess right now, I
think Epic's going to win this one too.
Now, this isn't a headline you see every day.
Google paid $2.7 billion to bring back an AI genius who quit
in frustration. This is the guy here.
I had no clue who he was until I read about this story, but
apparently he's so worthwhile to Google that they paid nearly $3
billion to bring him back. They say that at a time when
tech companies are paying eye popping sums to hire the best
minds in artificial intelligence, Googles deal to
rehire Noam Shazier has left others in the dust now again, I
didn't know who this was but apparently he's authored a lot
of papers on AI. He's someone that's kind of like
a thought leader in it. He co-authored a Seminole
research paper that kicked off the AI boom.
He quit Google in 2021 to start his own company after the search
giant refused to research a chat bot he developed.
When that startup character dot AI begin to flounder, his old
employer swooped in. Google wrote character a check
of around $2.7 billion, according to people with
knowledge of the deal. Within Google, Shazir's return
is widely viewed as the primary reason the company agreed to pay
multibillion dollar licensing fee.
So the story goes that this guy worked at Google.
He was one of the main research guys, one of the geniuses behind
this. He got frustrated because Google
wouldn't let him go his own direction within the company.
He starts his own company, character AI, which has trouble.
It flounders in their own words and then Google wanting to get
his talent back buys the entire company, but mostly just for
him. Google really doesn't care that
much about character AI or licensing what they created.
They just want Shazer back at the company.
Now the article goes further through the story of this guy,
how he got frustrated with the company, him coming back to
Google and of course him helping to create new AI creations and
innovations at Google. But I think overall the biggest
point out stress is just the headline of this article.
It really puts into picture how much money these companies are
willing to spend an invest in AI, $27 billion to get back one
emloyee, one talent. He's not an executive, he's not
leading the company, but they need his talent for AI.
And it shows that AI research and AI spend is reaching a
boiling point. Companies are spending more and
more money on AI every single day.
And so far, the revenue and profit they've generated from
that spend has been questionable.
So overtime, we'll get to see if all of this AI spend is really
worth it. That's all for this episode.
Hope you enjoyed. See you in the next one.