Motley Fool Hidden Gems Investing - Google’s Hot Start to 2026

Starting point is 00:00:00 Google had a hot end to 2025 and is starting 2026 on fire. Motley Fool Money starts now. Welcome to Motley Fool Money. I'm Travis Hoyum, joined today by Lou Whiteman and Rachel Warren. We got to start with Google, guys. There's a lot going on with Google. but let's start with the Apple deal. Apple has chosen its partner for updating Siri. There's thoughts that maybe they would be able to do this internally, but OpenAI kind of had the

Starting point is 00:00:40 inside track, if you will, because they announced that partnership, what, a year, a year and a half ago to kind of marry the two. But it's actually Google that's going to be improving in some way Siri with Gemini. Rachel, what is going on here? Is Google not only caught up to OpenAI, but is now passing them since Apple has chosen them as the partner here? I actually think this partnership makes a lot of sense when you dig into it a bit more as opposed to what we've been talking about, which was maybe Apple and OpenAI partnering here. You've got to bear in mind why we've been looking for the next generation of Siri. This has been true for a long time. Internal testing for the so-called Siri 2.0 had showed a 33% failure rate previously.

Starting point is 00:01:23 So Apple wanted and needed to seek outside help. You could maybe call this a setback for OpenAI, but honestly, I just think there's a lot of reasons why this was a really cohesive strategy to bring Google in on this. So from what we're seeing, Apple reportedly chose Alphabet's Gemini technology because it really provides, in their view, the most capable foundation for Apple's own models. I mean, there's a really obviously significant distribution advantage for Alphabet. They could potentially reach over a billion iPhones. It's worth noting that Apple and OpenAI still maintain a relationship for very specific chat GPT integrations with iOS. OpenAI is still a primary partner for Microsoft. They're going to be just fine. Now, Apple had reportedly evaluated

Starting point is 00:02:08 Anthropic as well when they were looking to bring on a partner to upgrade Siri. But again, I think the scale and extended relationship that they already have with Alphabet was really key here. I think it's worth noting the deal could face some legal hurdles. You know, there was a federal judge recently banned Alphabet from certain exclusive default agreements. So there might be some ways in which this partnership has to be structured really carefully. I think it's also important to underscore the fact that Alphabet or Google's infrastructure includes, you know, custom TPU chips, large data centers.

Starting point is 00:02:41 This allows it to handle many iPhones at a price that startups like OpenAI would maybe struggle to match. So I think there's a lot of reasons why this makes sense. Google already pays Apple about $20 billion annually to be the default search engine. I think this is a positive for if you're a shareholder of either Apple or Alphabet. I think this is great news. Lou, the interesting thing here is exactly what Rachel touched on at the end there, is that the money has long been flowing the other direction.

Starting point is 00:03:08 So Google, the search engine, is the default on iOS devices. That's really where the money is. It's also things like Safari. But iOS is really where they're getting that traffic acquisition cost. that's the $20 billion or so that flows to Apple every year. Now, Apple's paying for help with Siri. Is this going to fundamentally be a difference in the business model? Because I think if we are going to a world where we're not using search, we're using Siri, maybe that ends up costing Apple money. But not on the same scale, at least. I mean,

Starting point is 00:03:41 right now, Apple is still a net beneficiary with the two deals together, based on what we know. you know, whether that changes, we'll see. But yeah, look, you know, it's funny, Rachel listed out all the reasons and I don't know, I'm not, I'm not a tech guy, you know, so maybe it's true. I always feel like that that justification is just written after you make the choice more than, you know, for the press release. Here's, here's what I want to know. I really hope that open AI Johnny I've a device that they keep teasing is worth it. Cause are you going to have the thing behind your ear. That was the image that came out this week. Well, but here's the deal. Everything was fine between OpenAI and Apple, seemingly,

Starting point is 00:04:24 until OpenAI goes and buddies up with Johnny Ive. And I couldn't help but notice the tone change there. I hope that was worth it, Sam. I think there's a lot of hubris here. OpenAI's two big moves are, we're going to defeat the Chrome browser. We're going to go at it alphabet and defeat the Chrome browser, and we are going to revolutionize the device and make you not want your iPhone anymore by spending billions for Johnny Ive. I hope it's worth it, guys. Because in a way, I think any of these models could have worked. I think Apple did go with what they know, and I think it might have something to do with the changing dynamics of OpenAI just picking fights. It's great to pick fights if you can win them, but good luck, Sam.

Starting point is 00:05:09 we've been talking a lot about disruption and is there going to be disruption to search, but is the better analogy, just the tortoise and the hare? I mean, open AI announces Sora that gets a ton of attention, but now it's, I think number 60 or something like that in the, in the app store, nobody's really using that. They announce, you know, the browser, like you mentioned, Lou, that doesn't seem to be winning a whole lot of business against Google and Chrome. And here you get Google just slowly, but surely increasing their capabilities from an AI standpoint, building out infrastructure, improving their TPUs. It's not sexy, but it's slowly what seems to be winning. Is that the right way to think about it,

Starting point is 00:05:51 Lou? From the beginning, it was worth noting who needed the press releases, right? You know, we get so caught up in the hype and the excitement. OpenAI doesn't have the revenue that, you know, Amazon, Alphabet, Microsoft, all these other companies have, they needed the press releases because they needed the hype. And it is easy as a consumer or an investor to get caught up with that and kind of not realize what the tortoise is doing. I do think, I mean, I don't know if it's a tortoise in the hair, because I don't think OpenAI is cooked. I don't think anything is decided. But I also don't think we were right when, you know, like, just like all the, the, the Google eyes about open AI were just as foolish as probably declaring them dead now,

Starting point is 00:06:38 but they are just one company among many who are trying to sell the same product and they have structural disadvantages to their competitors. And it's, it's, you know, that that's just what, what it is for them. Speaking of there are developments in AI and shopping, We're going to get to that next. You're listening to Motley Fool Money. Total registrations for calendar year 2025 for the Cadillac definition of luxury. Welcome back to Motley Fool Money. The other big deal that was announced in the last week was Google came out with their answer to OpenAI's agentic shopping experience.

Starting point is 00:07:38 I think we talked about this a couple of months ago when OpenAI announced shopping on ChatGPT. In theory, you could search for products. It would kind of do all the work in the background. And then you could actually check out within ChatGPT with Stripe Checkout. But Google announced what seems very complicated, Rachel, but if you look at their releases, it kind of looks a little bit like a little bit of an improvement with a little AI stuck in and search. Is that right?

Starting point is 00:08:05 And is that maybe the better answer than just doing all your shopping with an agent? I think that's fair. I think as we've been hearing these announcements about agentic AI and shopping rollout, we've sort of had this idea that one day there's this AI agent that does the entire process on our behalf, right? Searching for the product, handling checkout. There's sort of that element that we're seeing, but I think the bottom line here is a lot of these rollouts, and I'm going to talk about what Alphabet just unveiled, are really designed to make merchants more efficient and to help customers shop smarter and better. So Alphabet unveiled, I think, what is probably

Starting point is 00:08:42 a very significant shift towards more agentic commerce at the National Retail Federation or NRF Conference. And basically, this new system that they unveiled, it includes a protocol that allows different AI agents to communicate directly with a merchant's backend systems, like carts, inventory, and payment gateways. And it handles all of those really sticky elements, like real-time inventory checks, pricing, and checkout. And this is across some major platforms like Shopify, Spotify, Etsy, Walmart, to name a few examples. This new system and infrastructure also includes something called a Gentic checkout. So basically, purchases can be completed within Google Search or the Gemini app. It uses your saved Google Pay and Google Wallet information to complete

Starting point is 00:09:28 transactions. And then the third key component there was this new business agent that they introduced. So you've got retailers like Lowe's, for example, that have these virtual sales associates in the search results. And those agents can suggest products, loyalty rewards, they can handle returns or support. So for example, what does this look like? You can tell Google a specific price that you're willing to pay for an item. And so when the price hits your target, that agent can use Google Pay to buy it automatically from eligible merchants if you've given your prior consent. You could think about this as well for grocery shopping, right? So theoretically the agent could identify ingredients from a photo of a handwritten

Starting point is 00:10:10 receipt or recipe and add them to a digital grocery cart. I mean, the options are kind of endless. And that seemed like something that wasn't necessarily going to be within, a lot of what they showed was within the Google apps. That would maybe be more on the developer side, where I've seen the idea of like taking a picture of your fridge and being able to say, okay, do I? Come up with a meal for me. Honestly, I would love that. With three kids, I would be happy to not have to do the shopping and just know that everything that we need for dinner for the next couple of nights is going to be in the fridge. But we're not quite there yet, but it seems like this is at least their answer to OpenAI's agentic shopping. And it struck me that the two pieces that were interesting was that the identity piece was with Google, which we're very familiar with.

Starting point is 00:10:56 I mean, even my OpenAI account is actually a... I sign in with Google, which I have always thought is really interesting. And it's within sort of the products that we already know. So they have that distribution. They have billions of people who are using Google search. Also, Gemini is gaining market share. So it seems like they're kind of leaning into those and baby stepping us to these agents rather than sort of tossing us into an agent world that we're not ready for. Yeah. And I think what's interesting about that is you have the ecosystem of Google search. It is just primed for these types of agentic AI rollouts. And I think, again, it's much more about helping merchants become more efficient, helping customers shop smarter. You think about

Starting point is 00:11:37 how, for example, you know there's a specific item you want to buy for your house, but you really don't have time to go and scroll the internet and find the best price and all those things. And so you could input these instructions about whatever the item is you want to buy, the price you want to pay, and you can go about your day and whatever it is that you need to get done. And that agentic AI can handle the price comparison, the shopping on that side. It could save customers a lot of time. I guess what we still don't know is how much your customer is going to use this, or are these changes going to be so subtle over time that eventually it kind of becomes integrated into our search habits? Yeah, that's what ultimately is interesting,

Starting point is 00:12:14 Lou, is this does seem like a little bit more incremental. My question is, does this impact a company like Meta more than anybody else. The interesting thing for Meta is they are the discovery mechanism for a lot of these companies. If you bought a pair of pants or a shirt from one of these new startups, they're using that direct-to-consumer advertising because they don't have the infrastructure that a Walmart, that a Target has. Does that now move to this agentic system, which is just sitting in Google? That's a huge opportunity for Google, but does it suck business away from Meta and its family of apps? Maybe, but there's a big thing you're missing in that equation. Meta has the eyeballs. Not that

Starting point is 00:12:55 Google doesn't, but as long as people are on Meta's platforms and Meta can serve ads that are seen by a large number of people, I don't think that they're impacted. The question is, like Rachel said, do habits shift, do patterns shift towards this style and we somehow, ads are less effective. I want to just, I mean, look, I think this is great for Google, but the universal commerce protocol I think is so interesting because, you know, universally they're basing it on the UPC, the universal product code, right? That is sort of the inspiration here from the sixties, that barcode on every product. Travis, what was the tech company behind that? And did they dominate the world of commerce because of it? Ooh, I don't know. It was IBM and they spun

Starting point is 00:13:45 of NCR. So, you know, kind of the cash register. But look, this is back office. This is trying to make sense of the chaos, which I think could help all of these companies develop if it is a standard that is, I think it pushes the ball forward for everyone. It might give, I don't think this really adds to Google's advantage. I think Google's advantage is in all the ways we've already talked about it. The Chrome browser, their reach into now iPhones and Android phones, All of these things are working for it. I don't think setting up sort of the organizing the back office, I think they're doing the hard work that everyone's going to use. And I don't think it means gloom and doom for anyone. It just kind of puts the paint on the field so we can play,

Starting point is 00:14:30 if that makes sense. Yeah. Interesting. We'll see how this plays out, but it does seem like the winners of the past just seem like they're going to be the winners of the future because the disruption angle just has not played out the way that you might think in some of these huge partnerships apple working with google again google working with walmart this is kind of what we've seen for the last 20 years when we come back we're going to get an update on earnings from delta you're listening to motley fool money new from nespresso blend wellness into your coffee routine with a coffee plus range infused with functional benefits choose the coffee you love with added b vitamins like coffee plus b12 to help support immune function and coffee plus b6

Starting point is 00:15:12 to keep your day moving or go with the flow and choose ginseng delight our new double espresso with ginseng extract whatever lies ahead don't change your morning let your morning change you discover coffee plus on espresso.com welcome back to motley fool money we are starting to get a little bit of earnings news banks and airlines are kind of the first things that we're going to hear from lou delta reported earnings i want to get your your thoughts on what they reported and kind of what it means for the economy overall. Yeah. Okay. So, this is very well discussed on what it means for the economy. So, let's talk about it. They beat. They also, margins were a little light. A lot of that was the government shutdown, I think, because fuel expenses were

Starting point is 00:15:53 down. So, I think people are mostly dismissive of the margin. It's about 50 basis point loss. I think they'll make that up. The guidance was pretty strong, too. I mean, the stock kind of went nowhere, but it was a sell the news thing because the stock had been up going into it. The big thing everyone's talking about is, and actually Delta Management leaned into this, they said they are at the top of the K. This idea that the K-shaped economy where there's have and have-nots, and the haves continue to spend, the have-nots haven't. We actually saw main cabin revenue fall 7%, but that was more than offset by non-main cabin revenue up 9%. And actually, in the quarter, that non-main cabin, the everybody other than the just base fare,

Starting point is 00:16:39 that revenue total was higher. There's a lot of people reading into this as far as what we can read about the economy. I personally would hesitate there, because I think this more show, Delta tried to reinvent pricing 15 years ago. And what they tried to do was figure out a way, that back then, I mean, this is so old, Travis, they called it machine learning. That's how old it was, but just to kind of price per seat the way when you have a fixed inventory you try and do. This shows me that it's working. I don't think this really tells us anything about the economy. What this tells us is Delta is very effective at maximizing per seat revenue to the point where less and less of it is just the generic ticket, and more and more of it is whether or not you

Starting point is 00:17:23 want to sit together, you want a little extra leg room, all of these perks. That's what's being reflected. I think it's more of a story of what Delta is doing right than it is what's going on in the economy. I get that. I subscribe to the K-shaped thing. I just think people are overreading the tea leaves when they attribute all of what Delta did to macro factors. So I want to understand this a little bit better because, yeah, there was a 9% increase in what they call premium products for tickets. Does that include both the higher price and the fact that, like for example, I traveled a couple of months ago with my wife. If we wanted to sit together, we had to pay extra. Does that make us now premium customers? And now maybe instead of

Starting point is 00:18:08 having, you know, as a kid, you would think of first-class there was, I don't know, 20 seats on a plane that were first-class. And then there were a hundred seats that were not first-class. So your ticketing was, you know, 80, 20, but now it seems like a larger percentage of the tickets are falling into premium, even if they're not the old school premium first class, it's comfort or whatever the multiple tiers are. We're not only having higher prices on those tickets, but also that there's more of those premium tickets. Right. That's it exactly. And I do think, look, to the bull case for this year, the upside is that main cabin. I think it could bounce back. What we're seeing is just that baseline ticket is falling in a share in terms of the total

Starting point is 00:18:54 share of tickets. It's all of those things you're talking about. It's just pricing for what consumers want or what are willing to pay for. That's a great thing for the airlines. You can get into whether or not it's a great thing for the consumer, but Delta and United are very, very good at this. I think that's what's showing through more than it is some dramatic statement about the economy or where we're headed. Rachel, you're maybe our travel expert here on the Wednesday show. Is that what you're seeing? Is that maybe it's not about people traveling less, but they're just maximizing the amount of dollars that they can get out of each of these seats? I think that's part of it, but I do think we are seeing a split in consumer

Starting point is 00:19:36 behavior. I don't necessarily think, I agree with Lou, we shouldn't necessarily read the tea leaves through Delta's results, but I do think they reflect the broader trends that we are seeing. Just generally speaking, high-income travelers are spending more freely on premium travel. Price-sensitive consumers are showing fatigue where that's concerned. Delta has been investing in its premium cabins, in new aircraft. They've really signaled their focus on these higher-margin offerings to drive future growth. I think we see that bear out in their results as well. A lot of the consumer spending growth is driven by the wealthier households who are purchasing those higher-ticket discretionary items. Of course, Delta is the first of the

Starting point is 00:20:16 airlines to report. We've got throughout the rest of January, you've got United Airlines, American Airlines, JetBlue. It'll be really interesting to see. But Delta, again, they had record revenue year for their full year, 2025. And that 7% increase in premium revenue was really key as well. So I think if anything, we're seeing the results of the current macro environment bearing out in their financials. The good news is if it is macro, there's a lot of affluent people, because if you look at the TSA numbers, they're up year over year. So it's a, I mean, it isn't that, I mean, if it was, it's always a shocking, shockingly small number of people that actually fly though, when you look at, well, right, right. Travis, but if it was just premium that was

Starting point is 00:20:59 driving this, if it was just that the, the haves are flying and the have nots or aren't, which is kind of the K shape story, there's a lot of halves because across, across the domestic industry travel is up again. I, I, I hear the K-shaped stuff. I believe the K-shaped stuff. I just think that this is a poor, I, I, I, I don't think that's what we're seeing here. I think the, the knee jerk yesterday on that was a little bit overstated. So looking for signal and noise, this is maybe a little bit more on the noise he's making. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based

Starting point is 00:21:42 solely on what you hear. All personal finance content follows The Motley Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Lou Whiteman, Rachel Warren, and Dan Boyd behind the glass, I'm Travis William. Thanks for listening to Motley Fool Money. We'll see you here tomorrow. Thank you.

Motley Fool Hidden Gems Investing - Google’s Hot Start to 2026

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.