Editor’s note: Today we have a special interview between Executive Editor Chris Reilly and Chris Wood, co-editor of Disruption Investor. They revisit Chris Wood’s Google (GOOGL) call from 2023, what he thinks about the company today, and most important, how he and Stephen McBride are positioning readers to profit from Phase 2 of the AI boom.
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Chris Reilly: Chris, back in January 2023, shortly after ChatGPT launched, you told our readers that Google was the stock to own if they wanted to profit from AI.
That was a contrarian call. Google stock was falling, and many said ChatGPT would destroy its cash cow of a search business. But you laid out the case: “AI is only as good as the data it has access to—and nobody has more data than Google.”
Fast-forward to today, and Google’s stock is up about 150% since you made that recommendation. Great call.
Chris Wood: Thanks, that one worked out well for our readers.
It sounds so simple, but it all comes down to data. Google has been an artificial intelligence (AI) company since Day 1—it published its first AI paper in 1998, the year it was founded. But the real edge is its dominance in data collection.
Think about it: Google processes nearly 200,000 searches every second. YouTube streams over 700,000 hours of video every minute. Its cloud infrastructure stores petabytes of information.
All that data is the raw material for training AI. It’s what separates a powerful AI model from a weak one.
CR: You’re not nearly as bullish on Google today. What’s changed?
CW: A lot. To be clear, Google is still a great business. It’s not going away. But here’s why I’m less excited now:
First, leadership. Over the last couple years, Google has been reactive instead of proactive. Microsoft (MSFT) and OpenAI forced it to scramble. Meta Platforms (META) is aggressively rolling out open-source models.
Second, advertising. That’s Google’s golden goose. But I’m skeptical it can keep pulling in the same ad revenues it’s historically enjoyed. TikTok is siphoning away eyeballs. AI web-search tools from OpenAI, Perplexity, and others are disrupting the search business. If that core revenue stream comes under pressure, funding Google’s big AI projects becomes tougher.
And third, competition. In 2023, Google had a huge lead. Today, the field is much more crowded. Microsoft, Meta, and Amazon (AMZN)—they’re all in this arms race. Google isn’t the obvious winner it was back then.
CR: Makes sense. But the bigger point here is that AI itself is still the story of this decade, right?
CW: Absolutely. Saying “invest in AI” almost feels cliché now... but when you zoom out, nothing else compares in terms of impact. AI is shaping markets, the economy, even geopolitics.
Think about this: In 2006, Google built its first serious data center in Oregon. The bill was about $600 million—a huge deal at the time.
Fast-forward to today, and OpenAI’s new “Stargate” project with Oracle Corp. (ORCL) and SoftBank is expected to cost $500 billion. Almost 100X as much! Individual sites within that project will consume more power than an entire city.
These aren’t your father’s data centers. One rack of AI servers now guzzles the same electricity as a dozen old-school racks. Meta even tore down a half-built campus in Utah to rebuild it from scratch for AI workloads.
And here’s the kicker: the bottleneck isn’t chips anymore—it’s power, networking, and cooling.
A rack of AI chips needs about 10X more electricity than a standard cloud server. That’s why companies are ripping out old air conditioners and running chilled water pipes directly through server racks. Google’s Oklahoma campus literally snakes water loops around GPUs to keep them from melting.
As Stephen and I said in our latest issue of Disruption Investor, GPUs made Phase 1 billionaires. But the next trillion dollars of AI spend will flow into pipes, power, and cooling. That’s where Phase 2 fortunes will be minted.
Phase 1 was the “land grab.” Big tech hoarded Nvidia (NVDA) GPUs, spending like drunken sailors to train the largest models possible. That alone created a $300+ billion annual spending surge and sent Nvidia stock into the stratosphere.
Next, we’ll get a completely new set of winners.
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CR: So you’re saying Nvidia—which you recommended in 2020 when it was just $13/share (split-adjusted)—was the Phase 1 king.
Phase 2 will crown a different set of winners?
CW: Exactly. Nvidia was a great ride, and we continue to hold our position after taking profits twice. But the puck is moving fast. The companies providing AI’s “pipes and power” will dominate this new era.
CR: And you and Stephen lay out a roadmap for profiting from this in the new Disruption Investor issue.
CW: Right. We decided the best way to play Phase 2 isn’t through a single stock—it’s by constructing what we call a “Build Your Own ETF.”
We zeroed in on three standout companies, each tied to one of the three big shifts happening right now:
Together, these three companies are a great way to play Phase 2. We recommend allocating one-third of a full position to each of them.
CR: Thanks again, Chris.
And reader, if you want the names, tickers, and full thesis behind Chris and Stephen’s Phase 2 AI ETF, you’ll find it in the latest Disruption Investor issue.
Go here to upgrade today if you’re not a member.
CW: Anytime. Thanks.