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Welcome Back: A New Perspective on Web Tool Platform Names
Generative AI has been a significant tailwind for some of the well-known big Tech names. However, our next guest sees potential for the technology in a different, less-talked-about group of stocks: web tool platform names. He’s initiating coverage on Yelp, and resuming coverage on several other names, including GoDaddy, which is his topic. Let’s bring in Raymond James analyst Josh Beck, along with our own Did Drosa, for today’s Tech Check.
Josh Beck: AI as a Strong Factor for Web Tool Names
When you peel back the web-building space, you’ll find that AI is a strong factor for these web tool names. We don’t think it’s easy to replicate a web presence. Instead, we think these web Builder tools are well-positioned to embed these generative tools into their own web stack, making it easier for small businesses to create a web presence.
The knee-jerk reaction is that with these new tools, it’s easy to create images and text. However, this is not the case. It’security aspects, inventory management, payments, and more, make hosting a website complex. I think it’s easier for these web development platforms to embed AI versus the opposite.
That’s why we’re constructive on the group, and we see upside to about $150 at GoDaddy.
Did Drosa: The View in Silicon Valley
There’s a very different view in Silicon Valley. A new generation of kids will be using AI-native companies, like Builder AI, to build websites, instead of going to GoDaddy. These generative AI companies were built in a different era, whereas GoDaddy is an internet company. So, Josh, how do you think this rolls out?
Josh Beck: The Learnings from the Foundational Model Layer
The learnings from the foundational model layer show that there are real advantages to scale. If you own the data about your customers and can incorporate some of these tools, there’s a large advantage. Additionally, web Builder platforms have a consumer element to them, and they lean into that with marketing spending around $1 billion annually. So, if you want a web presence, GoDaddy and other platforms are the gatekeeper.
They’re making it easy to create a website idea, logo, and even build the tone of the website. So, while there will be new tools competing for this space, owning the domain makes it very strategic for them.
Did Drosa: The New Era of Web Building
If someone wants to build a new website, but in the new era of coding and AI, would you go to the Chat GPT store, Microsoft AI tools, or Google AI tools? Are there smaller startups focusing specifically on website building?
Josh Beck: The Rise of AI Companies
There are certainly smaller startups emerging. I mentioned one, Builder AI, which says you can make a website or app as easily as ordering a pizza. It’s not mainstream yet, but it’s hard to imagine a world without AI companies that are native to this space. This reminds us of the rise of new companies during the mobile era, like Uber, Lyft, and Airbnb, which were built specifically for a mobile era.
