Breaking up is hard to do. 2025 has been the year for so many couples, schools and coaches, or mal-merged companies to find themselves in Splitsville. Orlando Bloom must have heard Katy Perry Roar this year as that power couple of 9 years recently went their Separate Ways and are now Worlds Apart, with one of the two possibly headed back to Middle Earth1. A 19-year marriage between Keith Urban and Nicole Kidman saw The End of The Road this fall with Urban altering the lyrics of the breakup song You’ll Think of Me at a concert. He changed “take your space and take your reasons” to something perhaps a little less classy we won’t say here2.
Other notable break-ups have occurred between those roaming college football sidelines and their university bean counters. James Franklin was fired from Penn State even though he made the final four in the College Football Playoff last year. UCLA, Florida, Oregon State, Arkansas, Virginia Tech, Oklahoma State, Stanford and Colorado State have all sent pink slips to their head man this year. Those poor guys not only have to figure out how to win football games but also figure out what recruits to pay how much. In the next life I’m going to come back as a fired Power 4 football coach and make the exact same millions of dollars to sit on the couch as I did to coach. And fired I would certainly be – my 13-year-old son beat me 63-0 on College Sports 26 this weekend, which was most humbling considering he didn’t understand the defenses you can call.
On the corporate front, Warner Bros Discovery, the movie studio/streaming platform, decided to part with future discoveries of each other even though they just got hitched in April of 2022. It’s easy to see something that like one coming – others not so much. Warren Buffett and Berkshire Hathaway have seen Better Days, when The Bottom Dropped Out on Kraft Heinz this year. At the latest 13F filing, Berkshire Hathaway owned 27.4% of the stock and had back in 2015 helped engineer the merger between the two food giants. But now even Cheese and Ketchup are breaking up in 2025, all while looking so good together atop my burger. Unbelievable … The unfortunate holders of Kraft Heinz stock including Mr. Buffett have been in one Whopper of a tailspin, down an incredible 69.36% since the merger closed in 2015 in the supposedly “more stable” consumer staple food stock. Makes you think, if slow-growing food stocks can lose that, we might as well bet on AI and have some upside, right?
This week we’ve taken note of two very large possible breakups that need to be discussed. We’re all creatures of habit and have come to depend on certain services in our insatiable consumerism. But due to the rise of AI there may be two giants that are disrupted in the near to somewhat-near future. Before Google was Google, there was Yahoo. Before Yahoo was Yahoo, there was AltaVista, Netscape and AOL. Nothing lasts forever, and we both know hearts can change … (in tech). Its very nature is disruption of the status quo which greatly alters consumer preferences. That’s why you’ve seen companies like Meta Platforms (Facebook) buy out its competitors like Instagram, because if they hadn’t, they would have been left behind with nothing to compete against TikTok.
But OpenAI has emerged from the shadows in the last couple of years striking deals all over the place to grow their reach. They now own a 10% stake of AMD. They have deals with Broadcom, Nvidia and rumored deals with Korean high-bandwidth powerhouse SK Hynix. And Tuesday, OpenAI founder Sam Altman, announced ChatGPT Atlas, which is a ChatGPT-enabled browser that allows users “to complete tasks, ask questions and create summaries as they navigate across several webpages with multiple tabs open.”3 The speed at which research can be unearthed from the web and then assimilated into papers is hypersonic and makes me smile when I think about flipping through card catalogues and making notecards for each fact when I was young.
This is all certainly disruptive to education. But squarely and undeniably in the crosshairs is Alphabet, parent company of Google, which derives $46.2 Billion or 57% of its revenue from search advertising according to a slide from CNBC. Google in essence has two kids to care for: Google Chrome and Google Gemini, which powers their AI tool which currently is a search option. The more they lean into Gemini though, the less revenue comes in via the clickable sponsored links from Chrome and Google Adwords. It’s a tough spot to be in. Without a substantial reformation of their process, it’s hard to see them being able to compete with the biggest name in AI constructing a browser experience from the ground up. You can think of it as it can be easier to build a house from scratch than do a substantial renovation to an older property that wasn’t designed for the most modern advancements or fitting in modern appliances to older cabinet structures. Don’t believe me? Let me tell you how long it took to find a refrigerator for my house that was built in 1981. Nothing new fits. Even with all of this Alphabet is not going away completely, not as long as they own YouTube and invest in their quantum computing chip Willow, but if I had to forecast a major breakup, it’s between you and your internet browser …
OpenAI’s collateral damage from Atlas will likely extend to Amazon4. The product distribution/cloud business goliath hasn’t truly been threatened by anyone since obliterating every domestic manufacturer by letting foreign sellers reverse engineer domestic products and undercutting their costs. Wal-Mart has allied itself with OpenAI and will pay to be the online retail partner of ChatGPT’s Atlas browser5. If that’s the end of your analysis you might not think too much of it. But while Amazon has only 1,300 distribution centers (185 the large warehouse type), Walmart, by using their storefronts as distribution facilities, effectively has 4,6066 shipping centers between Wal-Mart Supercenters, Discount Stores and Sam’s Clubs. 90% of Americans live within 10 miles of a Walmart. As shipping times drop across all carriers, who do you think is going to get those diapers and wipes to the house faster for those Moms that are down to the last Pampers product at home? Amazon’s likely not going to fold as they’ve got AWS which powers so many different company and government websites. They better figure that part out too, though. When AWS went out this past weekend I was forced to run on the treadmill for 30 whole minutes without Hulu to distract me! I know, I know … how barbaric! Our second projected breakup then, is between you and your online shopping preference …
Our Investment Committee decided to ditch one of these stocks before much damage could be inflicted. That would be Alphabet, and we’re taking profit for you after a 45% return since last July when we entered the position. (This is gross of any fees or trading costs and is based on the close price as of July 25th, 2024, when we added it to our model. Depending on an individual client’s exact situation and execution, that client’s results may have been different. As usual, past performance is no guarantee of future results! ~The Compliance Department) We won’t abandon Amazon (for now) as its real cash cow is the aforementioned AWS (as long as we don’t see any more outages and we’re 100% entertained during future treadmill runs).
Lots of things are happening fast. Gold’s run came to a screeching halt this week, but we all know it was way overdue for a pullback. The Ukraine conflict could be intensifying with Trump spurning Putin this week. We’re staying invested in watching that tennis match and hope that we and other parties keep their seats in the stands. We’re also watching for further technological disruptions and how they might affect your portfolios. We’ll anticipate trends if we can and act on them when we believe it makes sense to do so. We’re happy to chat about those or if you have disruptions in your own lives where we can intervene with some sound financial advice or to send dollars when needed. If you listen to us, we’ll change your financial world …
Sincerely,
Scott Wright
Portfolio Manager
The Wealth Training Academy
Sources:
1The Hunt For Gollum release date, plot, cast, and more news | GamesRadar+
2Keith Urban’s ‘You’ll Think of Me’ Lyric Change Sparks Debate | Us Weekly
3ChatGPT Atlas has arrived. Here’s what to know about OpenAI’s web browser and how it uses your data.
4“Walmart’s REVOLUTIONARY Move” – How OpenAI Deal Could TRANSFORM The Amazon vs Walmart Retail War
5Walmart Partners with OpenAI to Create AI-First Shopping Experiences
