Tech Stocks Take a Dive | Pivot

Scott, we're back for our second big story. The NASDAQ has taken its biggest tumble since 2022, thanks to earnings reports from Alphabet and Tesla. Alphabet's quarterly earnings showed a slowing growth in advertising sales with ad sales rising 11%, down from 13% in the previous quarter. On top of that, Wiz, the cybersecurity startup we had talked about Alphabet planned to acquire, had decided to turn down the $23 billion offer. Alphabet shares are down almost 5% in the last five days at the time of the taping. Um, I wanna talk about this, but I'm gonna mention Tesla earnings have showed a 7% decline with auto revenue, with earnings per share coming down below Wall Street estimates. Tesla shares are down 10% in the last five days, giving up a lot of the gains they've been making. Um, NASDAQ is down over 3% in the last five days, and the S&P is down 2% 'cause of these tech companies. Um, I'd love to hear your thoughts on this. This is your big area of expertise. Talk a little bit about, uh, Alphabet first and then Tesla.

Well, Alphabet actually had a decent quarter. It's just that, one, I mean, eh, Alphabet's dealing with this existential issue of having one foot in and one foot out of AI in the sense that they have Gemini, but Gemini gets about an eighth of the traffic of OpenAI or-

Mm-hmm.

... of ChatGPT. And when you think about all the head start and the captive audience, uh, across Google and Android, to have only the eighth of the traffic of what is supposed to be a startup but is really just Microsoft AI-

Mm-hmm.

... is unusual. And the question is, they're trying to incorporate AI into their core platform search, and they're still a little bit, people would argue, trapped in the innovator's dilemma. And that is they don't wanna go all in on Gemini at the risk of cannibalizing this quarter of a trillion-dollar tollbooth, amazing, best business probably in history called Search. So they're still kind of, I would argue, a little bit one foot in, one foot out, trying to have their cake and eat it too. I understand why they're doing. People got spooked about YouTube, uh, sales slowing. I didn't think it was that big a deal. And the other thing that's hurting their earnings is, like everyone else, they're now, uh, except for Apple, they're now in this arms race, and their CapEx-

Right.

... was, um, dramatically up, sort of-

Smart, yeah.

... which sort of hit, hit earnings. The, the bigger story, I think, or what was more, like, genuinely bad news was, um, Tesla.

Mm-hmm.

And that is the EV market, I think it's interesting. An interesting analogy would be the streaming market, and that is, it was overinvested 'cause people saw it as the future, and now there's a bit of a shakeout. And that is, eh, and the way you see the shakeout is in a, an intense price competition. A year ago, the equivalent EV was $8,500 more expensive than its, um, than its internal combustion, uh, peer. Now, that number, that margin, that premium has dropped to $1,500. In the F-150 Lightning, the EV is actually $10,000 less than its internal combustion, uh, counterpart, probably 'cause they produced too many. In addition, the, while the market continues to grow, Tesla has not. A lot of people would describe its products-