Motley Fool Money

Episode: When AI Starts Building the Game

Date: February 3, 2026
Host: Emily Flippen
Analysts: Jason Hall, Lauren Hurst

Episode Overview

This episode dives into two hot-button issues in the investing world:

1. The surprising shakeup at PayPal, including a disappointing earnings report and sudden CEO change, and its implications for investors.
2. The impact of emerging AI technologies—specifically Google's "Project Genie"—on gaming stocks and the broader gaming industry. The Motley Fool analysts break down whether AI-driven changes are threats or opportunities for established gaming companies and platforms such as Roblox, Nintendo, and Unity.

1. PayPal’s CEO Shake-Up and Stock Plunge

Segment Start: 00:05

Key Discussion Points

• Earnings Aftermath:
  • PayPal shares tanked nearly 20% on weaker-than-expected earnings and, more importantly, a leadership shake-up.
  • CEO Alex Chriss is out after just two years; HP's Enrique Lores named successor.
  • The board’s dissatisfaction centers on "branded checkout" performance and lagging transactions per user.
• Market and Analyst Reaction:
  • Emily Flippen and Jason Hall found the move surprising and somewhat unsettling.
  • Jason questions whether the new CEO represents a true upgrade, noting HP’s middling performance under Lores.
  • The decision to fire Chriss is interpreted as "palace intrigue" rather than a sound long-term strategic move.

Notable Quotes

• Jason Hall (01:39):

  "This doesn't feel like a leadership upgrade. Like I said, it feels like palace intrigue."

• Emily Flippen (04:15):

  “If we're starting to fire CEOs over something like one or two year stock performance, we're now incentivizing leadership teams to make short term decision making for fear of their jobs.”

Insights

• There’s concern over incentivizing short-term thinking in management.
• PayPal’s valuation is now historically cheap, trading at a P/E of ~8.5, but sentiment remains split on whether this is a value opportunity or a value trap.

Analyst Perspectives

Lauren Hurst (05:51)

• Sees value in beaten-down PayPal shares:

  “If our manic depressive friend Mr. Market is going to offer shares of PayPal at an earnings multiple typically reserved for the likes of a Peruvian fax machine reseller, I'm not going to spend too much time overthinking it...I've owned shares for years and I, I think I'm still a buyer here.”

Emily Flippen (07:07)

• Cautiously optimistic but wants time to assess new leadership.

2. Google's Project Genie vs. Gaming Industry

Segment Start: 08:32

Key Discussion Points

• Project Genie Announcement:

  • Alphabet (Google) launches a game design tool leveraging its Genie 3 and Gemini AI models to build mini interactive game worlds from prompts.
  • Stocks across the gaming sector (Roblox, Nintendo, Unity, Take-Two Interactive) sold off sharply.

• Market Interpretation:

  • Widespread fear that if game creation becomes easier, gaming platforms and engines may be less valuable.
  • Analysts caution that the impact is likely more nuanced.

Jason Hall’s Take (09:17)

• Industry already being disrupted by AI, but “video game industry is not necessarily a great place to invest.”
• Market size is enormous (bigger than film, music, pro sports), but growth is sluggish.
• Fewer than half of all gamers ever pay money.
• The sector is bifurcated into major immersive franchises vs. fast-moving mobile games.

Lauren Hurst’s Take (11:39)

• Immediate threat to industry is "just plain wrong."
• Project Genie can assemble limited interactive environments, but not “games” as industry understands them—no objectives, no narrative progression, no rewards.
• Major game studios remain insulated; procedural generation isn't new, and the human touch remains critical in high-quality console games.
• The technology might threaten asset creation jobs (e.g. 3D modeling), but “artists, not algorithms,” are still needed for polish.

Notable Quotes

• Lauren Hurst (11:39):

  “If I were a 3D modeler or an animator in a video game studios art department, I might be a little wary right now that the process of creating the visual assets that go into game might no longer need a human in between concept art and the early rendering. But as a gamer, I want artists, not algorithms, to be polishing the final visuals of any console video game.”

• Jason Hall (09:17):

  “AI writing code is definitely going to lead to losers and some winners...What we're going to see though, is that the existing platforms that end up being the winners are going to leverage AI internally to speed up product development, eventually drive out development cost.”

Insights

• Major platforms (Nintendo, Microsoft/Xbox, Sony/PlayStation) retain moats—control over hardware and distribution keeps them strong.
• The threat is more pronounced for mobile and PC platforms, where competitive barriers are lower.
• Roblox may actually benefit, as more, easily-created games drive higher user engagement and ad inventory.

3. AI, Advertising, and Game Platforms

Segment Start: 15:01

Key Discussion Points

• Roblox and AI-powered Advertising:
  • Launched new "Homepage feature" ad format, letting advertisers scale campaigns to 100 million+ daily users.
  • AI not just disrupts game creation, but multiplies monetization and ad targeting opportunities.

Lauren Hurst (15:44)

• Roblox’s immersive ads (e.g., branded content inside games) are more appealing than traditional video interruptions.
• Increase in AI-generated games expands the in-game advertising “real estate.”
• New tech like Project Genie is likely to increase—not decrease—the value of the Roblox platform.

Jason Hall (17:05)

• Freemium game producers will ramp up game output to chase the next viral hit; platforms as gatekeepers become increasingly valuable.
• The biggest winners will be distribution platforms (e.g., Valve/Steam—if it were public), Nintendo, Sony, Microsoft.
• Key for platforms: quality control as AI floodgates open. Human and AI moderation become crucial to avoid content bloat and poor user experience.

Notable Quotes

• Jason Hall (17:05):

  “Those platforms, I think they're going to be the ones that are in the best position, the ones that—they're really the gatekeepers for content.”

• Lauren Hurst (15:44):

  “As long as Roblox is the platform where users already are, millions, millions of them every month, any development like Google's Project Genie are only going to increase the content on Roblox's platform. So I think there's more upside here than any new risks.”

4. Summary & Closing Thoughts

Segment Start: 19:12

• The panel agrees: while AI-driven disruption is real, fears around instant displacement of game studios are overblown.
• For PayPal, value looks exceptional but uncertainty remains over new management and strategic direction.
• For gaming, companies that control platforms and distribution (Nintendo, Roblox, Microsoft, Sony) are positioned well to leverage AI, while pure game development studios face more uncertainty.

Memorable Moments

• Lauren Hurst’s dry wit comparing PayPal’s valuation to a “Peruvian fax machine reseller” (05:51)
• The “palace intrigue” framing of PayPal’s sudden CEO change (Jason Hall, 01:39)
• The panel’s consensus that great games still require human artistry, not just algorithms (Lauren Hurst, 11:39)

Recommended Listening Segments & Timestamps

• 00:05–07:07: PayPal’s earnings, CEO change, and valuation discussion
• 08:32–14:02: Alphabet’s Project Genie, AI’s impact on gaming stocks and studios
• 15:01–16:51: Roblox, AI, and the evolution of in-game advertising
• 17:05–19:12: Which parts of the gaming value chain are most resilient? Future outlook

For investors:

• Follow ongoing developments at PayPal—leadership clarity is critical before buying the dip.
• Watch for how major gaming platforms integrate AI, and whether they can maintain quality control and user engagement as AI-generated content explodes.
• Platforms with network effects, user loyalty, and control over curation (Nintendo, Roblox) look best positioned to surf the AI wave.