Will Google become Yahoo?

Re-allocating my portfolio out of Google

I worked at Google for several years, on key projects like Google Pay. In that time, I racked up a healthy stack of restricted stock units, or RSUs given to employees.

That allocation has contributed tremendously to the growth in my net worth. Even as late as a few months ago, I still had around 33% of my portfolio in Google.

Here’s why I’m rebalancing my portfolio out of Google.

Diversification

While doing my monthly investment portfolio review in Peek, I’ve realized that despite reducing my original holdings, I’m still too over-exposed to Google, which makes up about 18% of my portfolio today.

This is still about twice the recommended allocation of 10% or less to any one individual holding for most retail investors.

Diversification not only smoothens out volatility in your portfolio, but it also forces you to think about better avenues to deploy your money.

My 10x10 Rule for Picking Stocks

Betting on individual horses, rather than the entire stable means that I have to believe that the horse that I pick has to have a decent chance of outperforming the rest.

I’ve previously explained my “10x10” rule for picking individual stocks instead of passively investing in an index fund instead. It’s how I decided to buy Tesla back in 2015, and why I doubled down on Palantir this year.

Put simply, I have to believe that an individual stock can deliver a 10x return in 10 years for it to be better than simply buying the index.

But Google didn’t even beat the S&P500 over the last year. If I had sold all my Google RSUs last year, and put it in the S&P500 instead, my money would have grown 34% instead of 18.6% with Google.

I would not have realized how bad this was, without the ability to easily benchmark individual holdings to the index return in Peek.

Is Google Becoming Yahoo?

I admit, I find myself still emotionally attached to Google in many ways. I still have amazing ex-colleagues at Google, and I owe so much of who I am today to the experience I had shipping products like Google Pay (which was one of the fastest-growing consumer fintech products in history).

Additionally, I owe a lot of my wealth accumulation in the earlier stages of my career to the RSUs I received from Google.

But Google today is not the company I joined. In fact, it feels increasingly more like Yahoo!

To be clear, Google is far from going to zero, but it might just become a #3 player that can no longer deliver the desired level of growth I need to see in holding individual stocks.

Here are what I see as the biggest threats to Google:

1) Google’s Golden Goose, Search, is Declining

Search is no longer the central gateway to information as it once was. Users are now discovering content through social platforms, short-form video (e.g. TikTok), and AI-driven assistants, reducing reliance on traditional search engines like Google.

Google’s advertising business is still largely powered by search ads, which are highly profitable because of intent-based targeting. However, with declining search volume and user interactions shifting to new platforms and AI interfaces (like ChatGPT and voice assistants), the future growth of search ad revenue is uncertain.

The less people type stuff into Google and click around, the less willing brands are to pay to show up that way.

2) AI

Google, once a leader in AI, is starting to fall behind competitors like OpenAI and Anthropic. While Google has been heavily invested in AI for years through DeepMind, Bard, and Gemini, the public mindshare seems to be shifting toward OpenAI’s products, like ChatGPT, which have captured consumer attention and imagination.

Google hasn’t launched a clear consumer-facing product that demonstrates its AI prowess to the same level as OpenAI’s ChatGPT or Microsoft’s integration of GPT into its products. NotebookLM is an exception, but it hasn’t captured widespread recognition.

Google’s most promising AI bet could be Waymo, the autonomous driving company which is farther ahead to market than rivals like Telsa. The global push toward self-driving cars and mobility services could redefine transportation and urban living.

I’m Getting Out of Google (Mostly)

Google is still one of the world’s largest companies, and its decline will be slower than most doomsayers fear.

And if it can capture even just market leadership in self-driving technology, it would stand to gain tremendously.

But given the risks, and the lethargy the company has shown so far in the face of rapid AI innovations, I will be reducing my position in Google to 5-10% of my portfolio, and reallocating it to other opportunities.