Have you ever sold a stock at what felt like the perfect moment, only to watch it soar even higher without you? It’s a gut punch that every investor knows all too well. I remember feeling that sting earlier this year when we decided to part ways with a longtime holding in one of the biggest names in tech. But sometimes, the market has a way of humbling us—and reminding us that facts change, and so should our strategies.
That’s exactly what’s happening now. After careful reconsideration, we’re stepping back into shares of this AI heavyweight, acknowledging that the landscape has shifted dramatically in its favor. It’s not about chasing regrets; it’s about recognizing real progress and opportunity.
Welcoming Back an AI Powerhouse
Let’s be honest—leaving this position behind wasn’t easy. We’d held it for years, riding through ups and downs, and ultimately booked a solid gain when we exited. Over 100% profit isn’t something to complain about, right? Yet watching the stock nearly double again afterward left a lingering “what if.”
The decision at the time made sense based on the risks we saw. There were genuine concerns about disruption in the core search business from emerging chatbots and large language models. Questions lingered about whether the company’s own AI efforts would strengthen its moat or accidentally erode it. Add in aggressive regulatory pressure that threatened key partnerships, and it felt prudent to step aside.
But investing isn’t static. New developments demand fresh analysis. And in the months since, several pivotal changes have tilted the scales back toward confidence.
The Turning Point: Breakthroughs in Generative AI
Perhaps the most exciting shift has been the rapid evolution of the company’s flagship AI model. What started as a rocky launch has transformed into something truly impressive. The latest iteration isn’t just competitive—many now consider it the benchmark that others are scrambling to match.
What’s particularly impressive is how this advancement was achieved. The entire system runs on custom-designed silicon developed in-house, with collaboration from a leading chip partner. This isn’t off-the-shelf hardware; it’s tailored optimization that delivers superior efficiency and performance.
In my view, this vertical integration could prove transformative. Lower operational costs naturally support healthier margins over time. But there’s more: growing external interest in these specialized chips suggests an entirely new revenue avenue. Companies across industries are exploring ways to leverage similar technology, and being at the forefront positions this player uniquely.
Innovation in AI isn’t just about the model—it’s about the entire stack, from silicon to software.
That kind of full-stack control has historically been a massive advantage for tech leaders. Think about how proprietary advantages have fueled dominance in other eras of computing.
Regulatory Clouds Clearing Away
Another major overhang was intense antitrust scrutiny. Regulators aggressively pursued remedies that could have forced divestitures or prohibited lucrative arrangements with device manufacturers. Specifically, there were calls to end payments ensuring default search placement on popular smartphones.
Those fears have largely dissipated. Recent court decisions affirmed that existing partnerships remain permissible and beneficial to consumers. No forced spin-offs, no mandated breakups of key assets like browsers. The ruling preserved a mutually advantageous ecosystem that’s driven innovation for years.
This resolution removes significant uncertainty. Markets hate unknowns, especially ones that could impact billions in annual revenue. With that weight lifted, investors can focus more clearly on fundamentals and growth prospects.
- Court upheld long-standing search agreements
- No requirement to divest browser assets
- Preserved ecosystem partnerships critical to user experience
- Reduced regulatory risk premium in valuation
The Apple Partnership: Stronger Than Ever?
Speaking of those device relationships—one in particular stands out. The arrangement with the world’s most valuable consumer tech company has been scrutinized heavily. Yet it endured, and for good reason.
Both sides benefit enormously. Users get seamless access to leading search capabilities. The platform owner receives substantial revenue sharing. And crucially, as voice assistants evolve, there’s natural synergy for deeper integration.
Recent developments in intelligent assistants only reinforce this. As smartphone makers seek third-party expertise to enhance their own offerings, existing trust and infrastructure make certain collaborations more logical than others. Shared history and proven reliability matter.
I’ve always believed that incumbency provides powerful advantages in tech. When you’re already the default choice for hundreds of millions of daily queries, building on that foundation is often smarter than starting from scratch.
Valuation in the AI Era
One aspect that feels increasingly compelling is relative valuation within the AI space. While some pure-play AI companies command astronomical multiples—approaching trillion-dollar territory based on rumored funding rounds—this established giant trades at a noticeable discount.
Yet it possesses vast data resources, global infrastructure, and now cutting-edge models. The market seems to undervalue these assets compared to newer entrants with narrower focus but higher hype.
Consider the broader portfolio of businesses too. Video streaming continues gaining share. Autonomous driving technology advances steadily. Cloud computing grows rapidly. These aren’t small side projects—they represent meaningful diversification beyond search advertising.
| Business Segment | Key Strength | Growth Driver |
| Search & Advertising | Dominant Market Share | AI-Enhanced Features |
| Video Platform | Massive User Base | Premium Subscriptions |
| Cloud Services | Enterprise Adoption | AI Workloads |
| Autonomous Vehicles | Leading Technology | Commercialization Path |
| Custom Silicon | Efficiency Advantage | External Demand |
This kind of breadth provides resilience. Economic cycles affect different segments variably, creating natural hedges.
Position Sizing and Forward Outlook
We’re initiating modestly—around three-quarters of a percent portfolio weighting initially. That reflects both conviction and discipline. As developments warrant, we can always add.
Looking ahead, several catalysts appear lined up. Continued AI leadership, margin expansion from efficient infrastructure, potential new chip revenue, and leveraging embedded partnerships all point toward upside.
Of course, risks remain. Competition intensifies daily. Regulatory environments can shift unexpectedly. Technology evolves rapidly. But the current risk/reward balance feels attractive after recent progress.
The best investors admit mistakes quickly and adjust accordingly.
That’s the mindset here. Past decisions were rational given available information. Today’s reality presents different conclusions. Staying flexible matters more than being stubbornly “right.”
Broader Lessons for Tech Investing
Stepping back, this situation highlights timeless principles. First, regulatory outcomes often matter more than headlines suggest. Fear peaks when cases drag on, but resolutions frequently prove less drastic than worst-case scenarios.
Second, AI disruption isn’t zero-sum. Incumbents with resources can pivot effectively. Scale advantages in data, compute, and distribution remain formidable barriers.
Third, patience pays. Great companies encounter rough patches. Differentiating temporary headwinds from permanent impairment separates long-term winners.
- Monitor core thesis evolution continuously
- Separate noise from fundamental change
- Reevaluate positions as facts shift
- Maintain discipline in sizing
- Learn from outcomes without emotional attachment
These aren’t revolutionary ideas, but applying them consistently proves challenging. Emotions creep in. Ego resists admitting misjudgments. Yet mastering this process drives superior returns over decades.
In the end, investing mirrors life in many ways. We make the best decisions possible with current knowledge, accept that conditions change, and adapt accordingly. Holding grudges against past choices—or the market—serves no one.
Today marks a fresh chapter with this name. The combination of technological leadership, resolved uncertainties, and reasonable valuation creates compelling opportunity. Time will tell whether this re-entry proves timely, but the rationale feels sound.
For those managing their own portfolios, consider whether similar dynamics apply elsewhere. Which former holdings deserve second looks? Where have fears subsided while progress accelerated? Sometimes the best ideas are familiar ones, revisited with new perspective.
That’s the beauty of markets—they reward clear thinking and adaptability. Here’s to making the most of evolving opportunities ahead.
