May 2025

The Fight For AI Supremacy

We are getting to the part of the cycle where tech could potentially be cannibalizing each other.

The fact is that the overall pie is not growing fast enough, and competition is.

Search is a massive market, and participants are all vying for ad dollars.

Once what was thought of as a duopoly is no longer that and Facebook and Google will need to fight that much harder to command the growth rates they were accustomed to.

The US consumer is gradually becoming weaker and allocating a bigger part of their budget to essentials.

An Apple testimony by one of its executives has now revealed that search operations on Google via Apple's Safari browser decreased for the first time in April 2025, attributing this decline to users increasingly opting for AI-powered tools instead of traditional search engines.

Google’s parent stock Alphabet, was crushed in trading.

This time of development is really damaging for Google, and it puts doubt on their ability to negotiate higher ad rates moving forward.

The executive blamed AI platforms like OpenAI, Perplexity, and Anthropic as alternatives that are becoming more appealing to consumers, signaling a future where AI could play a central role in search functionalities on Apple devices.

The implications of Cue's testimony are profound, especially considering that Apple reportedly receives over $20 billion annually from Google to maintain its status as the default search engine on iPhones and iPads. This lucrative arrangement lies at the heart of the antitrust case brought by the U.S. Department of Justice against Google, raising questions about the competitive landscape of the search engine market.

The market believes that AI will disrupt Google's dominance in search. The decline in stock prices reflects investor anxiety about whether AI could significantly erode Google's market share, which currently stands at approximately 90% of the global search engine market, including a commanding 94% on mobile devices and 79% on desktops.

As the landscape of search technology evolves, the competition between traditional search engines like Google and emerging AI platforms will likely intensify.

As the antitrust case against Google unfolds, the stakes are high not only for the company but also for the broader tech ecosystem. The outcome could have lasting implications for how search engines operate and how consumers access information in the digital age.

Technology is barreling straight into a hairy situation in which the winner will take all in the AI race.

There won’t be enough profits to share around, and the company with the best product will win with consumers.

Search is just one place where AI is being fought.

I do believe we will see the fall of big tech companies, and the ones who are one-trick ponies will run the risk of becoming irrelevant quickly.

Is it fair?

No, but the market will tell us how good each tech companies does AI.

This is bad news for both Apple and Google, and it is not news that these two are lagging far behind in the AI arms race.

However, I do believe this is a good short-term buy-the-dip moment for Google for a trade.

With us moving deeper into 2025, investors are chomping at the bit to hear the commentary about AI developments.

There will be some big disappointments, are those companies unable to recover will be a sell the rallies type of stock.

May 9, 2025 - Quote of the Day

Tech Letter

“Any product that needs a manual to work is broken.” – Said CEO of Twitter Elon Musk

May 9, 2025

Jacque's Post

(AMERICAN TRADE POLICY HANDS AUSTRALIAN BEEF A TOP SLOT)

May 9, 2025

Hello everyone

The Fed left rates unchanged, as expected, citing inflation concerns and continued uncertainty across the economic landscape.

Australia scores big thanks to Trump

President Trump has just gifted Australia near monopoly status in China’s almost $5 billion premium beef market.

Chinese officials have effectively blocked American beef from entering the country, leaving Australia with the top of the market almost to itself. America sold $2.4 billion (US$1.6 billion) to China in 2024.

America’s missteps with China have put Australia in a very fortunate position, where they should benefit handsomely.

Beef is Australia’s biggest agricultural export to China, worth more than the wine and lobster trade combined. Australian farmers sold $2.2 billion worth of beef to China in 2024, making it Australia’s second biggest beef market after America (which bought $4.4 billion worth of Australian beef to the chagrin of the Trump administration).

With billions of premium beef sales potentially up for grabs, a herd of Australian beef exporters will fly into Shanghai within a fortnight for SIAL China, an important trade event for the food and beverage industry in the world’s second biggest economy.

Since securing a second term as Prime Minister of Australia last weekend, Anthony Albanese has been enjoying praise from Beijing, and Chinese media highlighting the prospects of future trade ties between Australia and China.

Australian wine exporters, along with exporters of cotton, timber, wheat, and lobsters, are also experiencing a role reversal, as these former victims of Beijing’s trade restrictions now find themselves benefiting from Chinese trade imposts on America and Canada.

Favourable bilateral politics – and a desire to find non-American supplies – also helped Australian gas giant Woodside recently snare a 15-year-long supply agreement with a Chinese state-owned giant.

Beijing’s first strike on the US herd came in March, as Chinese officials refused to renew trading licenses for American beef companies. Even if it lands at the port, they are turning it away.

In April, Mr Xi responded to Mr Trump’s 145 per cent tariffs on China with a 125 per cent tariff imposed on American imports. Even if American beef could get into China, those tariffs would decimate the trade.

Kevin Wang, A Beijing based sales manager of high-end beef importer Tenderplus, said “People are looking for Australian partners to import beef. Some have already flown to Australia to talk with trade partners.”

Menus have already been reprinted at premium restaurants around China. Even the most patriotically American places are looking increasingly Australian.

Americans digesting tariffs on Australian beef.

The Shanghai and Beijing branches of New York institution Wolfgang’s Steakhouse are now selling Australian porterhouse, striploin, rib eye, and filet mignon as its supplies of American beef are two weeks away from extinction.

In the centre of Beijing, we find Morton’s, which is owned by Houston billionaire Tilman Fertitta. Here, the restaurant has swapped its house red from an American drop to a Clare Valley Shiraz, a very good match with its Australian porterhouse from Rangers Valley in NSW’s northern tablelands.

China’s biggest sources of beef are Brazil and Argentina, but they sell at the cheaper end of the market.

Restrictions on other high-end sellers in Japan and Canada effectively shut them out of China’s market.

The results of Beijing’s “safeguards” investigation, due in the second half of the year, could see it increase tariffs on foreign suppliers. High-volume, low-cost sellers look to be most at risk, but it could shrink the size of China’s market considerably – including the premium end.

Australian Shadow Trade Minister, Kevin Hogan, looks beyond trade negotiations and considers the macro landscape.

Watch this space.

Move over MicroStrategy, Strive is offering a new product

A new NASDAQ listed firm – Strive - has just announced its merger with Asset Entities, creating the first publicly traded Bitcoin treasury company.

The firm will oversee $2 billion of assets.

The agreement will allow the merged company to carry out aggressive purchases of Bitcoin through new financial products, like BlackRock and Greyscale.

Strive Enterprises was co-founded in 2022 by Vivek Ramaswamy and Anson Frericks. The new firm will be led by Strive CEO Matt Cole, who previously managed a $70 billion fixed income portfolio.

Several strategies will be available under Cole’s leadership.

One strategy will be a Bitcoin for equity tax-free exchange, which will be structured under Section 351 of the IRS tax code.

Strive Enterprises will own 94.2% of the newly combined public company, while shareholders of Asset Entities will receive a 5.8% share.

It appears Strive is executing a similar playbook to Strategy and Metaplanet in terms of centralizing ownership, utilizing equity and debt financing to accumulate Bitcoin, and treating it as a treasury reserve asset.

Although it could also dilute its equity, it is taking risks to maximize long-term value by aggressively deploying capital in BTC. However, Strive’s section 351 tax-free exchange of Bitcoins for equity is different from both Metaplanet and Strategy. If successful, Strive could persuade Bitcoin holders to trade their Bitcoin for equity without having to pay a tax.

This article is only an item of interest, not a recommendation to buy any products marketed by Strive.

Cheers

Jacquie

Trade Alert - (NVDA) May 9, 2025 - TAKE PROFITS - SELL

Trade Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

Trade Alert - (QQQ) May 9, 2025 - BUY

Trade Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

Trade Alert - (TSLA) May 8, 2025 - BUY

Trade Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

Trade Alert - (MSTR) May 8, 2025 - TAKE PROFITS - SELL

Trade Alert

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more

May 8, 2025

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
May 8, 2025
Fiat Lux

Featured Trade:

(A DOUBLE HELIX OF OPPORTUNITY)

(CRSP), (NTLA)

A Double Helix Of Opportunity

Biotech Letter

I never fully appreciated the potential of gene therapy until last fall when my college friend Eric called with surprising news. His 14-year-old daughter Sophie, who'd struggled with sickle cell disease her whole life, had undergone treatment with Casgevy, a CRISPR-based gene therapy developed by CRISPR Therapeutics (CRSP) and Vertex (VRTX). Six months later, she hasn't needed a single blood transfusion or hospitalization—a transformative outcome for a girl accustomed to spending more weeks in hospital rooms than classrooms.

"The doctors keep using phrases like 'functionally cured,'" Eric told me. "I just know she's planning her first summer camp experience. That's miracle enough for me."

Eric's story prompted me to dive deeper into gene-editing therapies and the companies working on them. What struck me the most is that despite groundbreaking science, market volatility has created a disconnect between technological progress and stock valuations.

Gene therapy stocks like CRISPR Therapeutics and Intellia Therapeutics (NTLA) had a rocky first quarter of 2025, with shares dropping 2.82% and 24.19%, respectively. The broader market mirrored this instability, with the S&P 500 down nearly 3%. Yet, beneath these headline fluctuations lies an intriguing opportunity for patient long-term investors.

CRISPR is particularly interesting. It's sitting pretty with $1.9 billion in cash and equivalents as of the end of 2024. That's enough runway to keep the scientists doing what they do best for years without financial pressure.

More importantly, they're expecting their flagship product Casgevy to be accretive from late 2025, meaning actual revenue is on the horizon – not just the promise of future miracles.

Casgevy's approval for sickle cell disease and beta-thalassemia underscores CRISPR Therapeutics' tangible progress. With a cost of $2.2 million per patient, the price seems steep until compared against lifetime management costs of these conditions. Additionally, their pipeline extends beyond blood disorders into cardiovascular treatments like CTX-310 and CTX-320. These therapies aim to permanently eliminate the need for daily medications—a seismic shift in a market projected to grow from $156 billion in 2025 to nearly $215 billion by 2034.

CRISPR Therapeutics' strategic advantage is further enhanced by their U.S.-based manufacturing facility, strategically positioned to mitigate risks from reshoring trends and global supply chain disruptions.

On the other hand, Intellia faces a tighter financial outlook. With $861.73 million in cash and equivalents, they project operations funding through the first half of 2027. However, this timeline feels restrictive, especially since their first products aren't anticipated until at least 2027.

Although their financial runway is limited, Intellia's therapeutic breakthroughs still command attention. Their treatments NTLA-2002 for hereditary angioedema and Nex-z for transthyretin amyloidosis have shown extraordinary results. I remember a conversation with a trial participant who shared, "I went from planning my life around my disease to barely remembering I have it." Such transformative experiences underline the real-world potential of Intellia's science.

However, Intellia must dramatically reduce its annual cash burn from $592 million to around $345 million to ensure survival until commercialization. This aggressive belt-tightening could jeopardize their momentum.

Both companies currently trade at attractive valuations given their prospects. CRISPR Therapeutics holds a price-to-book ratio below the sector median, with cash comprising 57% of its market cap. Intellia's cash reserves represent an astounding 94% of its market cap, suggesting significant market undervaluation of its intellectual property and promising pipeline.

For investors able to tolerate short-term volatility, this disconnect offers a potentially lucrative entry point, particularly with CRISPR Therapeutics’ imminent commercial revenue.

As I told Eric, the market currently undervalues these revolutionary companies despite proven science. Eventually, stock prices will reflect this reality. I'm cautiously building positions during these dips, anticipating the long-term transformative impact of these therapies.

Just ask Sophie, who’s packing for summer camp instead of preparing for another hospital stay.

Alphabet Shares Tumble 8% as Apple’s Cue Envisions AI Replacing Search Engines

Mad Hedge AI

Tech giant Alphabet (NASDAQ: GOOGL) witnessed a tumultuous day in the markets, with its shares plunging by as much as 8% after damning statements from Apple’s Senior Vice President of Services, Eddy Cue, who suggested that Artificial Intelligence is poised to supplant traditional search engines. Cue’s testimony, delivered during Google's ongoing antitrust trial, sent immediate shockwaves through Wall Street, raising profound questions about the future of Google's search dominance and its lucrative advertising empire.

The sell-off, which saw Alphabet’s stock dip sharply, wiping off tens of billions of dollars in market capitalization, underscores mounting investor anxiety regarding the disruptive potential of AI on Google's core business. Reports from the trial indicated Cue’s belief that AI assistants will inevitably make conventional search methods obsolete, a sentiment that clearly spooked investors who have long viewed Google Search as an unshakeable behemoth.

The Catalyst: Eddy Cue's Bombshell Testimony

Eddy Cue’s provocative predictions emerged during his testimony in the closely watched Google antitrust case. He stated that Apple is "actively looking at alternatives to enhance our search capabilities," a comment that directly implicates the multi-billion dollar deal Google has with Apple to be the default search engine on Safari. According to reports, Cue revealed that the number of Google searches within Safari experienced its first-ever decline last month, a startling admission considering Google has paid Apple an estimated $18 to $20 billion annually for its prime placement.

"Prior to AI, my feeling around this was, none of the others were valid choices," Cue reportedly testified, alluding to potential new entrants. "I think today there is much greater potential because there are new entrants attacking the problem in a different way." He specifically mentioned that Apple has had discussions with AI-native search companies like Perplexity about potential Safari integration, though no definitive plans were shared.

Cue didn't stop at Apple's internal considerations. He painted a broader picture of technological evolution, suggesting that AI-powered solutions are fundamentally changing how users will seek and receive information. His assertion that "AI search providers... will eventually supplant standard search engines like Google" served as a direct challenge to Alphabet's foundational business. Some reports even highlighted Cue's more radical speculation that the iPhone itself could be outdated in a decade due to AI advancements.

Market Tremors: Alphabet's Stock Takes a Beating

The market reaction was swift and brutal. Alphabet’s shares, which closed at $165.20 on May 6, saw a midday trading drop of 8.18% on May 7, before recovering slightly. The 8% figure represents one of the most significant single-day drops for the company in recent memory directly tied to competitive AI threats. This plunge reflects deep-seated fears that Google’s search-based revenue model, which accounts for the lion's share of its profits, is facing an existential threat.

Analysts immediately weighed in, with opinions divided on whether the drop was an overreaction or a justified recalibration of Alphabet's future earnings potential. "Cue's comments are a stark reminder that the moats around Google's search castle are not as impenetrable as once believed," commented one tech analyst. "The fear is not just about losing Apple's default status, which is a huge financial hit in itself, but about a fundamental paradigm shift in user behavior driven by AI."

This isn't the first time AI competition has rattled Alphabet investors, but the directness of Cue's statements, coupled with Apple's explicit exploration of alternatives, has lent a new sense of urgency to the threat.

The Core of the Threat: AI vs. Traditional Search

The fundamental premise behind the fear driving Alphabet’s stock down is the perceived superiority of AI in information retrieval for many types of queries. Traditional search engines, primarily Google, rely on users typing keywords and then sifting through lists of links (Search Engine Results Pages, or SERPs). While highly refined, this model can still lead to information overload and require users to do significant work to find specific answers.

AI, particularly large language models (LLMs) and generative AI, offers a conversational paradigm. Users can ask complex questions in natural language and receive direct, synthesized answers, often compiled from multiple sources. This can be faster, more intuitive, and provide a more complete understanding without needing to click through multiple websites.

The vision is a shift from "searching for documents" to "receiving solutions." AI-powered assistants, integrated into operating systems, browsers, or standalone applications, could become the primary interface for accessing information, potentially bypassing traditional search engines altogether. As one industry expert put it, "Users don't want a list of links; they want answers. AI is getting remarkably good at providing just that."

Alphabet's Achilles' Heel?: The Search Engine Empire

Google's business model is overwhelmingly reliant on its search engine. For the first quarter of 2025, Google Search revenue was reported at $50.702 billion, constituting approximately 56.2% of Alphabet's total revenue. In 2024, Google Search and other related revenues accounted for $198.1 billion, or 56.6% of Alphabet's $350 billion total revenue. This massive revenue stream is primarily generated through advertising displayed alongside search results.

If AI-driven interfaces become the norm and provide direct answers, the number of traditional SERPs displayed could plummet. Fewer SERPs mean fewer opportunities for ad impressions and clicks, directly threatening Google's cash cow. This is the "existential threat" that has investors on edge. The current model, where Google acts as the gatekeeper to information and monetizes that position through ads, could be fundamentally undermined.

Apple's Angle: A New Frontier or Strategic Maneuvering?

Apple's motivations, voiced through Cue, are likely multifaceted.

Genuine Belief in Technological Shift: Apple executives, like many in Silicon Valley, may genuinely believe AI is the next evolution of information access. Apple has been investing heavily in its own AI capabilities, dubbed "Apple Intelligence," focusing on on-device processing and privacy – core Apple tenets.
Strategic Leverage: Cue's statements during an antitrust trial against Google could be a strategic move to pressure Google or to signal to regulators that viable alternatives to Google Search are emerging, potentially lessening regulatory scrutiny on Apple's lucrative deal with Google.
Ecosystem Control & Services Revenue: Apple has a strong incentive to control the user experience on its devices. An Apple-controlled or deeply integrated AI search/answer engine within its ecosystem (iPhones, iPads, Macs) could enhance user stickiness and create new service revenue opportunities, aligning with its growing emphasis on its services division. Apple recently announced plans to spend over $500 billion in the U.S. over the next four years, with a significant focus on AI, silicon engineering, and infrastructure like data centers to support Apple Intelligence.
Reducing Dependency: The multi-billion dollar payments from Google, while profitable, also make Apple reliant on a competitor. Developing or partnering for its own AI-driven information solution could reduce this dependency in the long run.

The AI Search Landscape in 2025

The threat isn't purely theoretical. Several AI-powered search alternatives are already gaining traction. Companies like Perplexity AI, along with AI chatbots from OpenAI (ChatGPT with search capabilities) and Anthropic, are pioneering conversational search and direct answer generation. While their market share is still small compared to Google's (a recent study showed only 14% of people rely on AI-driven searches daily, though 71.5% use AI tools for search), they represent the vanguard of this potential shift.

These tools often excel at complex queries, brainstorming, and synthesizing information. However, challenges remain for AI search, including the high computational cost of AI queries, the potential for "hallucinations" (generating incorrect information), and user habits deeply ingrained around traditional keyword search for simple queries. Studies indicate that for quick facts and local business searches, traditional engines like Google still dominate.

Alphabet's Defense: The AI Counteroffensive

Alphabet is far from a passive observer in the AI revolution; it has been a pioneer. Google's DeepMind and Google AI divisions are at the forefront of AI research. The company has been aggressively integrating AI into its own search product through initiatives like "AI Overviews" (formerly Search Generative Experience or SGE) and its powerful Gemini family of models. Google reported that AI Overviews are already used by over a billion people monthly and have been upgraded with Gemini 2.0 for more complex queries.

Google is also experimenting with a new "AI Mode" in Search Labs, designed to provide AI responses for an even wider range of searches, utilizing advanced reasoning and multimodal capabilities. Furthermore, Google is trying to protect its ad revenue by testing ad placements within AI chatbot conversations and rolling out "AI Max for Search campaigns" to help advertisers leverage AI for better ad performance in this evolving landscape.

The critical challenge for Google is the classic "innovator's dilemma": how to embrace a disruptive new technology (AI search) that could cannibalize its immensely profitable existing business (traditional search advertising). It must innovate aggressively enough to lead the AI transition while carefully managing the financial impact.

Navigating the Uncharted Waters: The Future of Information Access

The potential shift from traditional search to AI-driven information access has profound implications beyond Apple and Google:

Content Creators and SEO: The traditional Search Engine Optimization (SEO) industry may need to evolve towards "Generative Engine Optimization" (GEO), focusing on making content easily digestible and citable by AI models. The value of ranking #1 on a SERP may diminish if users get answers directly from AI.
The Open Web: If AI synthesizes information and presents it directly, it could reduce traffic to original content websites, impacting publishers and the ad-supported open web.
Misinformation and Bias: AI models can inherit biases from their training data, and the potential for generating convincing but false information (hallucinations) is a significant concern. Ensuring accuracy and neutrality will be paramount.
Data Privacy: AI systems often require vast amounts of data to personalize responses, raising ongoing privacy concerns that companies like Apple, with its on-device processing focus, are trying to address.

Conclusion: The Search for a New Equilibrium

Eddy Cue's statements have ignited a firestorm, crystallizing fears that have been simmering in the tech world for the past couple of years. The 8% drop in Alphabet’s stock is a clear vote of no confidence from some investors in Google's ability to seamlessly navigate this AI-driven sea change.

While it's unlikely that traditional search will disappear overnight – user habits are sticky, and AI search still faces cost and reliability hurdles – the trajectory towards more AI-integrated information discovery seems undeniable. Alphabet faces a monumental task: to reinvent its core product and business model in the face of fierce competition and rapid technological advancement, all while its existing empire is under scrutiny.

The coming months and years will be critical. Can Google leverage its immense resources, data, and AI talent to not just defend its turf but lead the charge into the next era of information access? Or will a new generation of AI-first companies, perhaps championed by giants like Apple, redefine how the world finds answers? The tech industry, and indeed the world, watches with bated breath.