Wall Street’s 60/40 formula was born in 1952 — the same year as the first credit card. A lot has changed since.
That’s why we created a new approach — The H.E.A.T. Formula — to empower investors to spot opportunities, think independently, make smarter (often contrarian) moves, and build real wealth.
Table of Contents
🔥 Here’s What’s Happening Now
Yesterday was all about the Google antitrust ruling and then Apple’s announcement they would revitalize Siri using AI, most likely using Google. Yields also came down, with the 10 year back to the 4.2% support that I talked about yesterday. Keep an eye on this.
Foreign central banks now own more gold than Treasuries for the first time since 1996. It is extremely interesting to see what seems to be a shift away from paper assets that can be printed and manipulated towards hard assets like Gold and then whatever you call crypto. This is the reason our Permanent Portfolio 2.0 contains precious metals and crypto and doesn’t have Treasuries. Expect some more filings from us around this theme like BEGS…..
JOLTs came in softer than expected, which could hint at some softness in Friday’s jobs number. Perhaps we are in a bad news is good news environment again, we will see on Friday.
I will be on Schwab Network at 9:45AM EST this morning to preview AVGO earnings. Bottom line I think it’s a must own along with NVDA in semi’s but think that after NVDA and MRVL earnings it will be hard to live up to expectations. Would be a buyer on any dip if we are lucky enough to get one.
Chinese stocks got crushed overnight. These are the perils of investing in China, I will probably be a buyer of this dip, but light ahead of Jobs tomorrow……
Great conversation with Market Wizard Larry Benedict about all things options trading……
🔎 Google vs. Chatbots: Existential Threat or Monetization Upgrade?
In honor of Google “winning” it’s anti-trust case I though we would take a deep dive into TD Cowen’s recent report on Google and AI chatbots……
Big Picture
TD Cowen frames this as Google Search’s biggest secular threat: AI chatbots (led by OpenAI’s ChatGPT) reshaping how people query the internet. The “textbook case” says disruptors gain first-mover advantage and incumbents falter. But Cowen’s call is contrarian: Google has the tech DNA and scale to bend this risk into opportunity .
4 Reasons Cowen Thinks Google Survives the Innovator’s Dilemma
DNA advantage: Google’s own researchers birthed much of today’s LLM tech.
Product pivot: Google Search has rolled out AI Overviews (AIO) and AI Mode—already live inside Search.
More queries = more monetization: Chat-based search yields higher query counts, opening new ad inventory.
Battle-tested: Google faced existential threats before (Amazon e-commerce siphoning product searches, social commerce) and still delivered growth.
Survey Data – Google Is Holding Its Ground
51% of users say Search usage is up since AIO launched.
67% say AIO improved the experience (only slight negativity among younger cohorts).
45% of users who tried both ChatGPT and Google AI Mode prefer Google’s version .
Gemini forecast: ~22% share of chatbot prompts in 2025, vs. ChatGPT’s 60%. Usage among younger users still skews to ChatGPT, but Cowen sees room for Google to close the gap .
Market Forecasts
Chatbot prompts grow 30% CAGR 2025–2031 (see chart on p.8). By 2031, combined chatbot queries rival traditional search.
Google Search revenue still grows ~8% annually 2026–2031, even as chatbots expand .
ChatGPT momentum: 36% of U.S. adults used it monthly in July 2025, up from 25% in January—implies ~122M U.S. MAUs.
Work adoption: 17% of adults now use ChatGPT for work tasks, steadily climbing since 2023.
Investment Implications
Winners
Alphabet (GOOG, rated Buy): Google retains core search dominance, embeds AI into its moat, monetizes higher query volumes, and leverages Gemini as a hedge .
Ad tech middlemen: If Google stabilizes its dominance, names like TTD (The Trade Desk) benefit from a more predictable ad auction ecosystem.
Workflow SaaS (NOW, CRM, WDAY): If applied AI models capture budgets earlier than AGI moonshots, Google’s dual strategy supports enterprise adoption rather than cannibalizes it.
Losers / Risks
OpenAI/Anthropic/xAI (private, but MSFT-backed): burn-heavy, ROI unclear, ChatGPT satisfaction gap vs. Google AI Mode is a red flag.
Meta (META): pouring billions into Llama scale-ups, with monetization still lagging.
Datacenter REITs with hyperscale bias: If inference dominates (cheaper, distributed), hyperscale buildouts may underdeliver vs. expectations.
Google multiple risk: If Street discounts chatbot dominance to OpenAI, Search may not sustain historical valuation bands. That said, Cowen sees resilience in ~8% top-line CAGR.
Key Questions Ahead
Can Google concede first-mover status to OpenAI yet still preserve Search’s dominance via AIO/AI Mode?
Will Alphabet maintain a dual-surface strategy (Search + Gemini app) or converge?
What’s the “right” long-term multiple for Search, given reduced certainty in a chatbot-heavy world?
Could chatbot traction ironically help Google’s DOJ appeal by proving it faces real competition?
Ratings
GOOG (Buy, 8.5/10): Search remains sticky; AI Mode uptake is real. Risk is valuation compression if market doubts durability, but Cowen’s 8% CAGR forecast looks achievable.
MSFT (7/10): Still levered to OpenAI, but risk that ChatGPT cedes satisfaction to Google’s AI Mode.
META (5.5/10): Spending hard, unclear monetization path.
Applied SaaS (NOW/CRM/WDAY, 7/10): Secondary winners if applied AI budgets shift faster than AGI.
Datacenter REITs (6/10): Vulnerable if distributed inference nodes displace hyperscale assumptions.
The Street has been bracing for Google’s obituary at the hands of ChatGPT. But Cowen’s work suggests the opposite: AI Overviews and AI Mode are lifting usage, not killing it. For investors, GOOG still screens as the core “must-own” in search/AI monetization—while high-burn AGI moonshots and hyperscale REIT assumptions look like the crowded short side of the ledger.
📊 Google vs. Chatbots — Scenario Map (2025–2031)
Anchor facts from the report
AIO/AI Mode lift: 51% of users say their Google Search usage is up since AI Overviews launched; 67% say it improved the experience.
Preference: Among users of both, 45% prefer Google’s AI Mode to ChatGPT.
Shares / growth: 2025 chatbot prompts: ChatGPT ~60%, Gemini ~22%; chatbot prompts grow ~30% CAGR through 2031.
Base case: Google still grows Search revenue ~8% annually (2026–2031).
1) Chatbot-Dominant World (bear-for-Google)
What happens
Chatbot interfaces become the default surface for many queries; traditional blue-link pages lose share faster than expected.
OpenAI’s lead sticks with younger cohorts; enterprise usage further normalizes ChatGPT at work.
Winners
OpenAI ecosystem / MSFT exposure (usage shifts to ChatGPT)
Applied AI infra vendors enabling agentic experiences (vector DBs, eval, guardrails)
Creators of native chatbot ad formats (whoever cracks intent + attribution inside LLM chats)
Losers
GOOG multiple compresses if Search decelerates faster than Cowen’s ~8% CAGR path
Legacy search ad formats reliant on SERP real estate
Hyperscale REITs geared to training-heavy demand if inference moves to smaller, distributed surfaces
Positioning
Overweight MSFT-OpenAI optionality, underweight pure Search beta. Hedge GOOG with put spreads. Tighten exposure to hyperscale REITs.
2) Hybrid Adoption (Cowen’s implied “most-likely”)
What happens
Chatbots expand total query volume (more follow-ups); Google integrates AIO/AI Mode inside Search and keeps the default surface for most users.
Gemini scales but trails ChatGPT (Gemini ~22% share in ’25); chat prompts grow ~30% CAGR while Search still compounds ~8% (’26–’31).
Winners
GOOG (core): usage up from AIO; AI Mode satisfaction competitive; dual-surface (Search + Gemini) hedges the threat
Ad-tech that benefits from stable auctions (e.g., TTD)
Workflow SaaS (NOW/CRM/WDAY)—applied AI budgets grow alongside Google’s monetization track
Losers
High-burn AGI moonshots without a monetization bridge (risk of ROI disappointment)
Single-format search advertisers slow to adapt to answer-style ads
Positioning
Overweight GOOG as the “own-the-rail” play; add applied AI software barbell. Optional calls into product cadence.
3) Chatbot Stall-Out (reflation of classic search)
What happens
Hallucination/trust/costs stall aggressive chatbot substitution; users treat chat as a niche tool.
Google’s traditional Search remains the default; AIO improves UX without cannibalizing ads.
Winners
GOOG regains multiple headroom; Search RPM optimization continues
Performance advertisers who rely on high-intent SERP formats
Losers
Model-only businesses with weak unit economics
Training-heavy infra assumptions (capex pull-forward moderates)
Positioning
Add to GOOG on any “AI fear” dislocations; rotate from AGI “arms race” stories into cash compounders.
🧭 What to watch (near-term tape)
User behavior: AIO/AI Mode daily/weekly active usage and retention cohorts—Cowen’s survey shows early strength, especially older cohorts.
Monetization: New chat/overview ad units (formats, attribution, RPM uplift).
Gemini reach: Share gains vs. ChatGPT (younger users are ChatGPT-skewed today; Google has room to close).
DOJ optics: Demonstrable chatbot competition could help Google’s appeal posture.
Cost curve: Inference cost per answer vs. SERP ad value—margin sensitivity drives the multiple.
🧩 Position map (12–24 months)
Core: GOOG — 8.5/10 (own the rail; AIO/AI Mode lift + ~8% Search rev CAGR base case)
Barbell: Applied AI workflow platforms (NOW/CRM/WDAY) — 7/10 (benefit if budgets tilt toward practical AI)
Tactical: MSFT-OpenAI optionality — 7/10 (own, but hedge if Google AI Mode keeps satisfaction lead)
Fade/hedge: High-burn AGI stories with unclear monetization; hyperscale REITs most exposed to training-only narratives
The Investment Strategy Wall Street Hopes You Never Discover
Tue, Sep 30, 2025 2:00 PM - 3:00 PM EDT |
-Why the 60/40 strategy is dead and what to do instead
- How to use AI to uncover today and tomorrow's hottest themes
- 4 unknown edges that still exist in today's market
- How to set up your portfolio for asymmetrical returns
- Little-known asset class that has limited risk and potentially unlimited returns
- 4 ways to hedge your portfolio that don't include bonds
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📈 Stock Corner
Today’s stock Salesforce (CRM)…..
I still think this ends up an AI winner, be interesting if you can get it around $230, currently $239 as I write this.
📬 In Case You Missed It
Some press on our recently filed option income ETFs and why I much prefer writing puts to writing calls……
“It’s a shiny object,” Tuttle said of the trend in income-generating ETFs. “Investors have been conditioned that you want to invest for income. I don’t think that’s accurate. I think you want to invest so you have the most money possible.” Using puts rather than covered calls can have more upside for those shiny objects, he said. “If I’m going to write options, I’m going to write puts. And nobody really seemed to be thinking about puts. So might as well do it.”
🤝 Before You Go Some Ways I Can Help
ETFs: The Antidote to Wall Street
Inside HEAT: Our Monthly Live Call on What Wall Street Doesn’t Want You To Know
Financial HEAT Podcast https://www.youtube.com/@TuttleCap Freedom from the Wall Street Hypocrisy
Tuttle Wealth Management: Your Wealth Unshackled
Advanced HEAT Insights: Matt’s Inner Circle, Your Financial Edge
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