A failed business model cannot be cured with layoffs, guidance cuts, and an “AI-first” press release.
KEY TAKEAWAYS
Gambling.com’s business depends heavily on organic search traffic, and Google’s algorithm changes damaged that traffic pipeline. The company’s weak quarter exposed how fragile an affiliate model can be when it relies on borrowed infrastructure.
Revenue was roughly flat, but profitability deteriorated sharply. Adjusted EBITDA fell 43%, earnings collapsed, the company posted a loss, and guidance was cut.
Management responded with a 25% workforce reduction and framed the restructuring as a move toward becoming an “AI-first company.” The market did not buy the medicine, and the stock fell hard.
The broader AI pivot trade is starting to mature. Markets are becoming more selective between companies genuinely building AI infrastructure and companies simply wearing AI as a costume.
CoreWeave is a real, though still risky, AI transformation. Unlike the weaker pivots, it has actual GPU infrastructure, enterprise customers, contracts, and a business tied directly to AI demand.
MY HOT TAKES
AI is real, but it is not a universal cure for every broken business model. Calling something “AI-first” does not magically rebuild revenue, restore traffic, or create a moat.
Gambling.com’s problem was not a lack of AI. The problem was that Google controlled the road, and Gambling.com was just collecting tolls on traffic it did not really own.
The market is finally getting more discriminating. That is not the AI bubble popping; that is Wall Street doing actual work for a change.
There is a major difference between a company building AI infrastructure and a company using AI language to distract from deteriorating fundamentals. One is a business model; the other is investor relations with a GPU sticker slapped on it.
Any company announcing an AI transformation alongside layoffs and a guidance cut deserves extra scrutiny. Sometimes the “pivot” is not strategy–it is triage.
You can quote me: “AI has become the corporate equivalent of aspirin.”
Gambling problem. I think, perhaps, that I am now dating myself as a person of a certain age with this, but here I go. I can recall, in the not so distant past, that aspirin was thought of as a universal fix for just about anything–second, only to a BandAid. "Take two aspirins and call me in the morning," was a common cure for just about anything when I was young. I have to be careful with this one because most of my similar-aged friends actually do take aspirin daily for heart health. I can recall when my brother, who is younger than me by a decade, was just a toddler. He was upset about something or another and my mother was able to solve his problem by wrapping a BandAid around his pinky. To be fair, BandAids, like aspirin, also serve really useful and very important purposes. Still, I am pretty confident that you could find aspirin and BandAids in just about every medicine cabinet in the developed world; they are universal fix all's. As this is not a healthcare newsletter/blog, I am going to pivot into the world of finance and business, if you don't mind. What can be prescribed–in the spirit of aspirin/BandAids–for a company whose business model is failing?
If you have been paying attention over the last couple of years, you already know the answer. AI. Two letters that have become the corporate equivalent of aspirin. Slap them on the press release, say them three times on the earnings call, and watch the medicine cabinet fly open. It does not matter what the underlying condition is. Broken revenue model? AI. Structural obsolescence? AI. Google just pulled the rug out from under your entire business? AI, obviously. The prescription pad is out, and Wall Street has been filling the script–at least for a while.
Meet Gambling.com Group, ticker GAMB, and the latest soldier to fall in what I am starting to recognize as a very familiar pattern. Let me tell you what this company actually does, because it matters. Gambling.com does not take bets. It does not run a sportsbook or operate a casino. What it does is sit between you and the companies that do, collect a referral fee every time it sends a warm body their direction, and depend almost entirely on Google to deliver that warm body in the first place. It is a toll booth on a road that Google owns. When the traffic is flowing, the toll booth prints money. When Google decides to repave the road and reroute traffic somewhere else, the toll booth is just a…well, booth.
That is precisely what happened here. The company just reported first quarter 2026 revenue of $40 million, which was essentially unchanged from a year ago. Adjusted EBITDA collapsed 43% year over year. The company swung from an $11 million profit to a $1.2 million loss. Adjusted earnings per share went from $0.46 to $0.09, an 80% cratering in a single year. And the guidance for the full year came down. So what did management announce alongside these numbers? A 25% reduction in the workforce–roughly 150 people shown the door–framed explicitly as a pivot toward becoming an, and I want to make sure I get this right, "AI-first company." Take two aspirin and call me next quarter. The stock proceeded to lose roughly 42% of its value. The medicine did not take.
Here is the diagnosis they did not give you on the earnings call, and it is the one that actually matters. The problem at Gambling.com was never a shortage of artificial intelligence. The problem was Google. Search algorithm changes systematically reduced organic traffic to exactly the kind of comparison and review sites that form the backbone of the affiliate marketing business. When that traffic dried up, there was nothing underneath to catch the company. No proprietary product, no loyal customer base, and no technology moat that competitors could not replicate. The business was built on borrowed infrastructure, namely Google's search index, and Google took it back. Firing 150 people and calling the survivors an AI team does not rebuild what was lost. It just costs less money while the same structural problem continues to compound. My friends, in short, the diagnosis was a “fatally damaged business model.”
The truly uncomfortable part is that Gambling.com is not even close to being alone in the waiting room. I wrote recently about a company that I think represents the most clarifying example of this phenomenon–Allbirds, the wool sneaker brand beloved by a certain generation of Silicon Valley optimists, which sold its entire shoe business for $39 million and reinvented itself overnight as NewBird AI, a GPU-as-a-Service infrastructure provider. The stock went up 700% in a single trading session. Within 24 hours, a substantial portion of those gains had evaporated as investors apparently paused to ask whether a team that spent twenty years selling comfortable footwear was actually qualified to compete with Amazon and Google in AI cloud infrastructure. The aspirin wore off fast.
None of this is new behavior, by the way. In 2017, a beverage company called Long Island Iced Tea Corporation changed its name to Long Blockchain Corp, announced it was pivoting to distributed ledger technology, and watched its stock jump nearly 400% in a day. It never became an operational blockchain company. Nasdaq eventually delisted it. The SEC got involved. The beverage pivot did not pan out either, as it turned out. Each of these cycles–dot-com, crypto, blockchain, and now AI–produces two distinct populations. There are the companies genuinely doing the thing, and there are the companies wearing the thing as a costume. Markets eventually learn to tell the difference, but not before many casualties.
To be fair, and I think fairness matters here, there are real pivots. CoreWeave started life as an Ethereum mining operation, exited that business entirely, built actual GPU infrastructure with real enterprise customers and real contracts, went public in 2025 at a $23 billion valuation, and has rewarded investors handsomely since. That is what a genuine transformation looks like. I will note, for the record, that I have my own questions about CoreWeave's longer-term durability– a debt-heavy model built on the assumption that hyperscalers will keep outsourcing their compute needs is not without risk. But the point stands. The AI trade itself is not wrong. The technology is real, the demand is real, and the companies genuinely building in this space deserve the premium the market assigns them.
What we are watching right now is the trade maturing. And maturation, on Wall Street, looks like discrimination. GAMB got punished. NewBird's euphoria lasted less than a trading session before gravity reasserted itself. The market is slowly, imperfectly, but unmistakably beginning to sort the companies doing AI from the companies that took two aspirin and called their investor relations firm in the morning. That sorting process is not a bubble popping. It is the market doing its job.
So the next time you see a company announce a dramatic AI-first transformation alongside a guidance cut and a round of layoffs, I want you to ask one question before you do anything else. What was the actual diagnosis? Because aspirin is real medicine. It works for what it works for. But nobody ever healed a broken leg by raiding the medicine cabinet. AI is the most powerful technological shift of our generation. That does not mean every company that swallows the pill needed it–or that the pill fixes what is actually wrong. Be careful out there–don’t let the froth that is starting to form fool you. The prescription for that is–as always–do your due diligence. 😉
YESTERDAY’S MARKETS
Monday's session delivered a split decision, with the Dow adding 0.32% to close at 49,686 while the S&P 500 slipped 0.07%, and the Nasdaq fell 0.51%, as a selloff in memory chips dragged technology lower for a second consecutive session. Seagate tumbled nearly 7% after its CEO warned that building new factories would "take too long," pulling Micron down roughly 6% on concerns the chip industry cannot keep pace with AI-driven demand. Brent crude topped $110 per barrel before retreating after President Trump announced he was holding off on a planned military strike on Iran following requests from regional Gulf leaders, with serious negotiations now underway. The 10-year Treasury yield climbed above 4.60%, its highest level in a year, as back-to-back inflation reports stoked fears of a return to rate hikes under incoming Fed Chair and maybe-hawk Kevin Warsh.
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