There Is Still Upside for GOOG Stock
Many people have forgotten that Alphabet Inc (NASDAQ:GOOG) started the craze over self-driving cars. In doing so, the company formerly known as Google was stepping way outside its core business. But taking those risks is what makes Google stock so special.
The company isn’t afraid to disrupt a pattern, even if it’s been successful for them. A fear of complacency is hardwired in Google’s DNA. That’s why the company is always at the frontier of innovation.
Consider the name change from Google to Alphabet, for example. Why would a company shed a valuable brand name and replace it with an unknown name? What could possibly explain such lunacy?
The simple answer: restlessness. Google’s founders, Larry Page and Sergey Brin, felt the company had outgrown its brand. It couldn’t tie everything back to the search engine, so maybe it was better to not even try. Why not make Google into something more? Why not give it the full range of Alphabet? (Source: “Larry Page: Alphabet Is About ‘Representing Reality’ Of How Google Operated,” Forbes, November 3, 2015.)
Alphabet Trumps Google
The “Google Car” was probably the earliest sign that Google was more a conglomerate than anything else. Think about it: a search engine firm suddenly decided to pursue self-driving cars. It’s utterly insane. You just can’t make this stuff up.
Google had thousands of driverless miles logged before major carmakers even had working prototypes. It also went more extreme in its design, completely removing the steering wheel, brakes, and accelerator pedal.
The move was strategic. After all, no one knows for sure how driverless cars will affect the industry. Ride-sharing apps like Uber and Lyft are pouring money into research, hoping people will abandon car ownership altogether.
In that case, why put in a steering wheel? If you’re going to build an autonomous taxi cab, then make use of the interior space. Google’s current design looks like a futuristic little pod with a decent amount of legroom.
However, regulators could kill the self-driving car ambition with a single blow. If the Department of Transportation (DoT) outlawed driverless cars, that would be the end of the story. But they didn’t and they won’t. The DoT sent Google a letter that effectively legalizes driverless cars across the entire country. It is a big moment.
The DoT Says Google Car Qualifies as a Driver
Google had submitted a note to the DoT asking for clarifications on several laws. They were venturing into unknown territory with the driverless car, so it was important to create some “rules of the road.”
The DoT’s response was amazing:
“If no human occupant of the vehicle can actually drive the vehicle, it is more reasonable to identify the driver as whatever (as opposed to whoever) is doing the driving,” read the letter. “In this instance, an item of motor vehicle equipment, the SDS, is actually driving the vehicle.” (Source: “Letter to Google Inc.,” The Verge, February 9, 2016.)
So the artificial intelligence software running the Google Car is now effectively equal to a person when it comes to driving. Some people find may find that scary, but there’s no denying it has huge implications for Google stock. Holders of GOOG stock are grinning.