Alphabet's Google edges ahead of OpenAI; A possible $1.5 trillion valuation for SpaceX is 'good news for Google'; Problems at Tesla with Optimus robots and fully autonomous driving; Palantir is still highly overvalued
Catching up on lots of news about stocks and topics I've been writing about...
1) First, a Wall Street Journal article from last week highlights why I'm bullish on Google parent Alphabet (GOOGL) and bearish on OpenAI.
As it notes, Google's Gemini AI app became the most downloaded app in Apple's (AAPL) app store this past September.
In November, Google launched its next Gemini model – the most powerful yet. And as the WSJ puts it, that meant Google "leapfrogged OpenAI to the front of the AI pack." Here's more from the article:
Google's deep roots in science and research, willingness to pour billions of dollars into developing custom hardware, and leadership changes in recent years that cleared the way for faster experimentation are now paying off. It also has managed to protect its all-important search business – at least for now – from the surging popularity of chatbots, which are changing how consumers use the internet.
Google's AI work has begun generating substantial revenue through search ads, paid versions of Gemini for consumers and business and sales of new computer chips developed in-house.
2) And a recent MarketWatch article captures a nice little bonus embedded in Alphabet...
As it says, a possible $1.5 trillion valuation for SpaceX would be "good news for Google":
Google parent Alphabet has been an investor in SpaceX since January 2015, when it joined the financial services firm Fidelity to invest $1 billion in the company. SpaceX said at the time that the two firms would own 10% of the company, which was estimated to be worth at least $10 billion at the time.
Don Harrison, who is now Google's head of global partnerships, also joined SpaceX's board. At the time, Google told the New York Times that its investment was due to its interest in imaging satellites and other technologies.
And as the article continues, Alphabet's investment seems to have paid off:
In its first-quarter earnings report, Alphabet said its profit included $8 billion in unrealized gains on non-marketable securities related to an investment in a private company.
That company was SpaceX, Bloomberg reported in April.
Again, I'm still bullish on Alphabet.
3) On the other hand, I can't keep track of all the reasons why Tesla (TSLA) is on my "Stinky Six" list of top stocks to avoid in 2026...
Let's start with the valuation. As of Friday's close, the stock trades for about 273 times 2025 earnings estimates and 204 times this year's. That's absurd.
This recent WSJ article about Elon Musk's Optimus robot project captures another reason – here's an excerpt:
The future of Tesla is an army of humanoid robots that Elon Musk says could eliminate poverty and the need for work. He has told investors the robots could generate "infinite" revenue for Tesla and have potential to be "the biggest product of all time."
Musk has bet the company and his personal fortune on this vision of the world in which Optimus, as it is known, works in factories, handles domestic chores, performs surgeries and travels to Mars to help humans colonize the planet. Though today each robot is made by hand, Musk has proposed manufacturing millions of robots a year.
But as the article continues:
Optimus still has a lot to learn about the world before it is capable of replacing its human creators in the type of full-scale societal shift that Musk has in mind. In public appearances, the robot is often remotely operated by human engineers. On the engineering side, it has proven difficult for Tesla to create a hand for the bot with both the sensitivity and dexterity of a human. Inside Musk's companies, some employees have questioned the usefulness of the bots for routine business operations like manufacturing.
Here's more from the WSJ about a 2024 October demonstration featuring Optimus robots in which Tesla appears to be deceiving investors:
In a disco-ball-decorated rotunda, five Optimus bots performed a dance routine to Haddaway's "What Is Love." Elsewhere on the lot, the bots served drinks while outfitted in cowboy hats and bow ties.
Behind the scenes, Tesla engineers worked overtime to troubleshoot technical issues, according to people on the ground. While robots in the rotunda were programmed to dance, other robots at the event were teleoperated by engineers who wore body suits and virtual-reality headsets. They guided the bots' interactions with guests, including while serving drinks behind the bar.
Each robot on the ground required constant monitoring from several engineers: one in a suit teleoperating its movements, one with a laptop, and others standing nearby to keep track of the bot's physical performance.
Musk says Optimus represents 80% of the value of Tesla. If so, the stock is going down 80%...
Meanwhile, as my old friend Michael Burry of The Big Short fame said in a recent post on social platform X, "humanoid robots are a vanity project, an inexplicably stupid idea."
4) Another reason I'm bearish on Tesla is because the company still looks years away from fully autonomous (i.e., no safety driver) robotaxis Musk has been promising for nearly a decade.
Recall that Musk has made a bold bet that Tesla can achieve full autonomy with cars that lack radar and lidar – that rely on vision (cameras) only.
Yes, Musk and his team have indeed achieved one engineering and technological miracle after another...
But I don't think a vision-only car will ever be able to achieve the level of safety that Alphabet subsidiary Waymo has reached with its cars, which are loaded with cameras, radar, and lidar. As such, Tesla will likely have to go back to the drawing board – delaying its robotaxi service by years.
My view was reinforced last week when Musk moved the goalposts yet again in this post on X:
This means a delay until at least July for more data... after Musk ludicrously promised last July that fully autonomous robotaxis would be serving half of the American population by the end of last year.
As Electrek's Fred Lambert notes in a new article:
Elon previously claimed that Tesla would need 6 billion miles. Now, it's 10 billion miles.
Did he come to this realization before or after early December, when he said that Tesla would go unsupervised in Austin by the end of the month?
Then, instead of achieving that, why did Musk and [Ashok Elluswamy] post videos of themselves driving in what they claimed to be unsupervised robotaxis in Austin at the end of the month? To make it seem like they achieved their goal? Then why does Musk just now admit that much more data is needed.
If we look at Musk's history of timelines, they are consistently wrong, usually by years. If the data is ready in July, and we factor in the necessary training, testing, and regulatory hurdles, plus the usual "Elon fudge factor", it is highly probable that "safe unsupervised self-driving" is still at least a full year away, if not much more.
5) I always try to learn as much as I can about the companies and stocks I write about – especially the ones I'm bearish on – to overcome the natural human tendency toward "confirmation bias."
To that end, over the holidays I listened to this audiobook: The Philosopher in the Valley: Alex Karp, Palantir, and the Rise of the Surveillance State. As the title implies, it's about Palantir Technologies (PLTR) – another one of my Stinky Six stocks.
I came away impressed with Karp and the company he's built... so much so that I'm even willing to say Palantir is worth 10 times 2025 revenues.
Heck, I'm feeling generous – let's say 20 times! (For perspective, Tesla is trading at roughly 15 times revenues.)
The problem is that Palantir is trading at 96 times revenues. In other words, if the stock dropped by 80% and nothing else changed, I would still say that the stock is fully/richly valued...
That makes it even more overvalued than Tesla... and that's saying something!
Avoid both of these stocks.
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.
P.P.S. Continuing my series on my recent trip to South Africa with my parents...
After flying from Johannesburg to Durban, spending the night, and walking along the beach the next day... we drove three hours to spend two days in the magnificent Drakensberg mountain range.
On the first day there, we did a fairly difficult 4.5-mile, four-hour hike out and back to the lovely Nandi Falls. Here's a picture on the way there:
The weather was hot and sunny for most of the hike. But on the way back, we got hit with a sudden, violent thunderstorm that lasted 45 minutes (which you sort of see in this video I took).
We were completely unprepared, as only my mom brought a light rain jacket (a dumb mistake on my part)... so we got totally drenched and chilled. And we were worried about getting hit by lightning, as it was all around us – accompanied by deafening thunder for about 20 minutes.
And then, just as quickly, it got hot and sunny again. Here's a picture (you can't really tell in it, but we were like drowned rats):
As we got back to our guesthouse, we encountered a bunch of wildlife. The highlight was a herd of giraffes:
I took a short video of them here, and I posted a dozen more pictures on Facebook here.