Tech Selloff Hits Wall Street, Google Loses Two AI Stars

**Zaid Admani** (0:00)
Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Tuesday, June 23rd. In today's episode, we'll tell you why tech and AI stocks are selling off. We'll also break down why Google stock just had its worst day in over a year. Then stick around to the end of the show to find out why Amazon is abandoning its movie about Sam Altman. We got a great show for you today.
Let's go.
Stocks were off to a rough start this week with the S&P 500 dropping 0.4% while the NASDAQ fell 1.3%. What's interesting, though, is that the Dow was up 0.3% yesterday. Still don't care about the Dow. And the small cap Russell 2000 index actually hit a record high. So despite the major indices being the red under the surface, most of the market was actually doing just fine. But it was the tech names that dragged down the overall index. Google fell around 5%, Oracle was down 5%, Microsoft and Meta were also lower, and SpaceX got absolutely smoked, dropping about 16% for its third straight day of losses. SpaceX is now below where it finished in its first day of trading. And while SpaceX doesn't impact the overall index because it's not part of the S&P 500 or NASDAQ just yet, it is a poster child for what investors are worried about right now when it comes to the AI trade. This company just raised more than $85 billion in the biggest IPO ever. And now it's already prepping to sell more than $20 billion in bonds and load up on debt. We actually covered this in more detail on yesterday's show, so go check that out if you missed it. But yeah, I think Wall Street is starting to get nervous that the AI buildout is starting to get increasingly funded by debt, which is historically how bubbles go burst and how markets get in trouble. So things are starting to get shaky again when it comes to the AI trade. And this selloff is getting worse as of this morning with a ton of red in pre-market trading, especially across chips, memory stocks and AI related names. But look, the fact that small caps are making record highs is a good sign. It means that investors aren't just selling everything. They're rotating out of the tech names and into other parts of the market. And as I've said over the last couple of weeks, that is a healthy rotation. You don't want the entire stock market depending on a handful of AI companies and Elon Musk. We'll have to see what happens over the next couple of weeks. The market is in a weird period right now with the SpaceX IPO behind us. The Fed meeting is behind us and we're still getting daily news coming from the Iran negotiations that can move markets at any moment. We'll continue to stay on top of everything. So if you're new here, make sure you guys are locked into the podcast and tuning in every day to stay in the loop.
Let's run through some headlines starting with Google. Google had its worst day in the stock market in over a year on Monday, and it's because they keep losing AI talent. Over the past week, Google lost two of its biggest AI brains to its two biggest rivals. First was Noam Shazir. He left for OpenAI. He was the co-lead of Google's Gemini models. And then on Friday of last week, John Jumper, a Nobel Prize winner who co-created AlphaFold, which is the AI that basically cracked protein folding, he announced that he was leaving Google's DeepMind Lab for Anthropic. So Wall Street is kind of freaking out about these departures, and Google stock fell more than 5% on Monday, wiping out $225 billion in market cap. And the stock is in the red again this morning. You know, I feel like the vibe in the AI race have shifted again. If you guys remember last year, Google had a ton of momentum. Their Gemini models were the state of the art in the industry. They were getting a ton of great reviews. Their Nano Banana AI image editing was also the best out there. And that helped push Google's stock to record highs. But now it feels like Anthropic and OpenAI are back in the lead. Anthropic continues to have the best models out there when it comes to coding. And OpenAI has made a ton of progress on their AI image generation capabilities. Not to mention, OpenAI and Anthropic are leaning into AI agents, which I feel like Gemini is very far behind on. So you take all that and add in the fact that Google is losing all their top AI talent and they're spending all their free cash flow on building AI data centers. You can kind of see why investors are nervous. But to be fair, this might just be a short term overreaction. Google continues to say they can't keep up with all the AI demand, which is why they signed a deal with SpaceX for more AI computing power. Plus Google's Gemini models will power the revamped Siri when Apple rolls that out later this year. But the market is taking a more cautious approach to Google and AI in general. Shares of Google are down around 10% over the last month.