# 642 – 😡 Google’s AI attitude problem – The Average Joe
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    # 642 – 😡 Google’s AI attitude problem

    victorlei

    February 29, 2024

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    Good morning. Is Gen Z really as tough to work with as they say? A new survey suggests otherwise, and in fact, young employees are showing eagerness to return to the office:

    • Only 11% of Gen Z employees are all for working from home full-time — while a whopping 34% of older workers prefer the remote setup.

    • What Gen Z really digs is a blend of both worlds — 74% are keen on a hybrid work model, compared to 52% of older folks.

    And as for those horror stories about Gen Z slacking off, the study found that 45% of Gen Z respondents are inspired to work hard for their company… a percentage right in line with other generations.


    ALPHABET (NASDAQ:GOOG)

    Alphabet’s New AI Model Was Supposed to be a Gamechanger. Instead, It’s Controversial, Biased, and Problematic.

    Alphabet, Google’s parent company, has a problem with its AI. No, it’s not stalking people’s search history, tracking your every move, or responding to the company’s growing stack of antitrust lawsuits… yet. Actually, its problem is that it’s not really that intelligent at all.

    Last year, when Google rolled out its first mainstream AI model, Bard, employees begged not to release it — calling it “worse than useless” and “a pathological liar” while complaining of ethics concerns. The company launched the product anyway — but a year later, Bard’s ghost is back to haunt the company.

    From hype to hate: The company’s new AI model, Gemini, was intended to position Alphabet as a serious contender to ChatGPT. While the model initially excited users, it’s now frustrating them with “offensive” text responses and imagery.

    • People criticized the model for being biased and “left-leaning,” with a tendency to insert people of color and women into historically inaccurate contexts.

    • It famously generated a Black George Washington, and another viral tweet showed the model comparing Elon Musk to Adolf Hitler.

    Can Alphabet spell its way out of this?

    Alphabet CEO Sundar Pichai called the problematic responses “unacceptable” and urged the AI team to work around the clock to resolve its issues. It’s the first time its CEO publicly acknowledged that Google has a problem building relevant, useful, and long-lasting products.

    • Alphabet has long relied on its commanding presence in the digital ad business, where it generated over $237B (77.8%) in revenue last year, mostly from its search business and YouTube.

    • But competitors like TikTok and Amazon are gaining ground — with more young users doomscrolling, searching, and shopping on other apps instead.

    Where’s the vision? Google’s AI controversy adds to charges made by former employees and founders that Google lacks leadership and is inefficient. Pichai has shuttered many of the company’s 293 products and laid off over 13K employees in a Meta-esque push for efficiency. But where Meta and Alphabet differ are their returns, with Meta (NASDAQ:META) up nearly 40% this year while $GOOG is down 2%. This places Alphabet alongside Tesla (NASDAQ:TSLA) as one of the only two Magnificent 7 stocks experiencing a decline in 2024.


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    LARGECAP RECAP

    🪙 Bitcoin ($BTC) nears all-time high as the Halvening approaches

    Will Bitcoin meet Odysseus on the moon? Bitcoiners sure think so. Just last month, the Securities and Exchange Commission (SEC) approved the first Bitcoin ETFs, which have been pulling in around $200M in inflows daily this month. And investors are flocking to the world’s largest cryptocurrency ahead of the upcoming Halvening event, slated for late April.

    • What’s the Halvening? It’s a process that occurs every four years, cutting the number of new Bitcoins entering circulation in half — which has been bullish for $BTC in each of the past three events.

    • Heightened demand ahead of the event sent Bitcoin sprinting past $63K at one point yesterday, within 10% of its all-time high in Nov. 2021.

    Michael Saylor’s stack: Benchmark analysts have upgraded one of America’s most Bitcoin-heavy companies, business intelligence company MicroStrategy (NASDAQ:MSTR), which spent years amassing a 193K Bitcoin pile worth $11.8B at current prices. That’s nearly 70% of the company’s total market cap and about one-third of the total Bitcoin holdings in all publicly traded Bitcoin ETFs as of today.

    🛳️ Norwegian is cruising its way toward a post-pandemic rebound

    Norwegian Cruise Line (NYSE:NCLH) posted its first profitable year since the pandemic hit. The turnaround came as net losses fell to $106.5M in Q4, compared to $482.5M a year prior. The company’s 2023 revenue climbed by 32% from 2019, buoyed by strong bookings and increased spending per passenger.

    • Looking ahead, Norwegian anticipates a profitable 2024, with expected earnings of $635M in profit and an overbooked occupancy rate of ~105%.

    • However, recent uncertainty in the Middle East has forced Norwegian to reroute some cruises to alternative Mediterranean ports.

    Rising tide: Norwegian’s shares jumped 20% after the strong earnings report, a welcome change of pace for the company, which started the year down ~19%. Rivals Royal Caribbean (NYSE:RCL) and Carnival (NYSE:CCL) also saw gains in sympathy with Norwegian’s good news. Cruise prices from all three companies have remained reasonable since the pandemic — but that could change down the line.


    JOE’S MARKET PULSE

    🔗 Snowflake / Beyond Meat

    Bikes are entering their golden electric years: Thanks to City initiatives to electrify transportation, the growth of the eBike industry has exploded — taking Veer along for the ride. The company replaces outdated metal chains with patented carbon fiber belt drivetrains — making bikes cheaper, lighter, safer and more fun to ride. Since its 2019 launch, Veer has grown 200% year-over-year, shipped thousands of drive units and developed a network of 50+ retail dealers globally. Invest in the rapid growth of the eBike industry →*

    Markets & Economy

    US growth rate in Q4 revised slightly: Originally at 3.4%, GDP growth was ticked down to 3.3% — still remarkable given the tough rate environment. Forecasts indicate continued growth of around 3% in Q1, driven by strong consumer spending. [Read]

    Klarna’s AI chatbot does the work of 700 people: If you thought customer support calls with a human were hard, wait ‘til you meet the bots. AI handles two-thirds of Klarna’s technical support, replacing ~700 employees the company laid off in 2022 — but the Swedish fintech firm asserts the layoffs and this AI efficiency are unrelated. [Read]

    Share of women-owned businesses continues to expand: Women are opening more home services businesses in traditionally male-dominated categories like plumbing and HVAC, with impressive growth of 38% between 2022 and 2023. [Read]

    Business & Wealth

    Bumble (NASDAQ:BMBL) cuts 30% of workforce: The sharp reduction followed bleak earnings and a grim 2024 forecast as the amount of paying customers slows. Bumble’s also losing Gen Z users to Match Group’s (NASDAQ:MTCH) Tinder and Hinge as dating app growth slows. [Read]

    The sad state of the media industry: Publications old and new are shutting their doors as the media makes its rocky adjustment to the social media landscape. While the layoffs sting in the near term, the long-term implications are disturbing: “The whole concept of ‘news’ is fading.” [Read]

    Stripe’s valuation soars to $65B: Despite delaying IPO plans until at least 2025, the fintech giant is buying ~$1B in current and former employees’ shares — pushing its valuation above the $50B mark from a year ago (but below its $95B valuation in 2021). [Read]

    *Thanks to our sponsors for keeping the newsletter free.


    CHART


    DIGIT OF THE DAY

    Robinhood Has a Target on Its Back As Brokerage App Webull Goes Public in a $7.3B Deal

    Robinhood (NASDAQ:HOOD), once the go-to for retail investors, now faces competition as one of its major rivals, Chinese-owned Webull, enters the public market. Webull, which scrapped a $400M IPO in 2021, is now going public through a special purpose acquisition company (SPAC — yes, those again) set up by one of South Korea’s largest conglomerates.

    • The deal with SK Growth Opportunities (NASDAQ:SKGR) will value the company at $7.3B, up 630% from its 2021 valuation of $1B.

    • With $100M raised from the listing, Webull plans to enhance its mobile platforms with advanced trading and educational features.

    Stonks only go up (again): Retail trading is back in demand — and 53% of retail traders are feeling bullish on US stocks, according to the Charles Schwab Trader Sentiment survey. Trading platforms are capitalizing on this trend, with Robinhood attracting long-term investors with incentives on retirement accounts and eToro gearing up for its own public offering this year. Now, all we’re waiting for is the return of Chamath.


    EXTRA JOE

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