What AI Bubble? Google's Stock Is Soaring

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Alex Ossola (0:26)

Republican lawmakers take aim at safety requirements that they say will make cars too expensive. Plus, many tech stocks are down this month. But Alphabets just keeps rising.

Dan Gallagher (0:36)

They're really the only company that has what you might call a vertically integrated model here. Having their own AI, their own cloud network, and even their own silicon kind of makes them a very unique business model in AI right now.

Alex Ossola (0:49)

And why the maker of popular chatbots is cutting teens off. It's Tuesday, November 25th. I'm Alex Ossola for The Wall Street Journal. This is the PM Edition of What's News, the top headlines and business stories that move the world today.

We're exclusively reporting that Senate Republicans plan to challenge safety requirements for cars at a hearing next month. People familiar with the situation say Republicans are aiming at automatic emergency braking and alarms that remind drivers that a child is in the back seat because they think they're not effective and make cars more expensive. But vehicle safety advocates say such mandates save lives and don't go far enough. CEOs of the three Detroit automakers and a Tesla executive were asked to testify at a January hearing on why cars have gotten so expensive. General Motors and Ford spokespeople say the car companies are weighing whether to send their CEOs to the hearing. Jeep maker Stellantis declined to comment. It's been a brutal month for tech stocks, especially those associated with the artificial intelligence boom. Since the NASDAQ peaked on October 29th, the stock price of Microsoft, Oracle, Nvidia and Meta platforms have seen double-digit declines. But Google Parent Alphabets is soaring, up nearly 18% in the same period, even though the company isn't exactly sitting on the sidelines of the AI race. For more on why Google's stock is defying fears of an AI bubble, I'm joined now by WSJ Heard on the Street columnist, Dan Gallagher. Dan, you write that one reason Alphabet is pushing higher is that Google's core business outside of AI, that is, search, is going strong. But that's also true of Microsoft's core business, right? But its shares have dropped. So what makes Google special here?

Dan Gallagher (2:38)

Google just has a lot of things going in its favor right now. It's got its own internal AI that's doing well that Microsoft doesn't have because Microsoft still depends a lot on OpenAI for that element. Google has actually been designing its own silicon, its own chips, a little bit like NVIDIA, which gives a competitive element there. All these worries about the sustainability of AI and AI spending don't seem as serious for them. So if a company like OpenAI struggles, that has major implications for Microsoft and NVIDIA and these other companies. But OpenAI struggling is actually good for Google. They're really the only company that has what you might call a vertically integrated model here. Having their own AI, their own cloud network, and even their own silicon kind of makes them a very unique business model in AI right now.

Alex Ossola (3:26)

So one place where we've seen that play out is with Google's recent launch of Gemini 3, which it trained on its own networks using its own chips. How is this vertical integration, as you say, helping Google compete with ChatGPT, which of course is from OpenAI?

Dan Gallagher (3:42)

Gemini 3 is getting a lot of rave reviews, and it did well in these benchmark tests where people are talking about it seems to be actually better than what ChatGPT offers right now. But Google also, because they have search, they can get their AI in front of so many people, almost any time you do a Google search, you're probably gonna get some AI results fed to you through Gemini. There's lots of ways Google can kind of push its AI in front of people, which gives it a strong advantage, even over JAT, GBT, which kind of has this first mover advantage going on.

Alex Ossola (4:13)

That was WSJ Heard on the Street columnist, Dan Gallagher. Thanks so much, Dan.

Dan Gallagher (4:18)

Thanks for having me.

Alex Ossola (4:19)

And Alphabet stock rose 1.5%, pushing it closer to a $4 trillion valuation. It closed just under that, at $3.9 trillion. Major US indexes also closed higher. The Dow added 1.4%, the S&P 500 was up 0.9%, and the NASDAQ gained 0.7%. US officials say Ukraine told the Trump administration it would sign a peace deal ending the war with Russia that was put together by the US. But diplomatic hurdles remain. Ukraine's national security adviser says Ukrainian President Volodymyr Zelensky hopes to meet with President Trump to negotiate final points in the coming days. Officials say crucial issues such as Ukraine giving up territory and whether it can join NATO are left for the two presidents to hash out. US officials say they expect a positive response from the Russian government. But more meetings between Washington and Moscow may be required. Coming up, why mental health concerns have led an AI company to put an age limit on users of its chat bots. That's after the break.