Stock Market PANIC After AI Companies Report WORRYING Earnings

[00:00:00] Speaker 1: All right, guys, bad news, the AI bubble is about to blow, and Google, it might be the first casualty. Their stock just suffered its worst day on record, erasing $500 billion from its market value. But it's actually worse than that, because I believe this news is the straw that breaks the camel's back. And I'm going to guarantee you, unfortunately, a massive, catastrophic economic crash. I'm going to explain why after John tells you the story. [00:00:31] Speaker 2: Exactly, yeah, why don't we jump into this? And there's a lot of numbers, but they're scary and they're important. So Google, you probably don't need to be told, has been known for a long time to be a reliable investment with solid sort of continuous growth. But now investors are starting to get nervous, not only because of what happened today, but what has been happening. So Google services unit, which includes search advertising, obviously very important for Google. YouTube and subscriptions generated $96.3 billion, missing Wall Street expectations of $98.5 billion, signaling that Google's biggest revenue engine is slowing as AI reshapes how consumers search for information and products. Their search engine revenue growth, by the way, has decreased each quarter in 2026. I think there are two interesting things about that in particular. One, don't you love our economic system when you can make $96.3 billion, but because you didn't make $98 billion, maybe that's not how things should work. Kind of seems like you did fine. But also, I love the idea that AI is reshaping how our search works. No, no, no, Google is reshaping how our search works. I didn't ask Google's front page to default to showing me the AI responses before any of the links, they did. And if I could turn it off, if I would, they don't let me. So if this is an issue for Google, it's only Google's fault that it's happening. They're the ones shoving AI search results down our throats. But that's not the only problem they have, admittedly. Google also reported greater than expected operating expenses and negative free cash flow, highlighting the staggering costs the company is incurring as it races to secure data center capacity and develop new AI models. So all of this is bad and the investors saw it. So Google stock dropped 13% the following day, and there are reasons to believe that it could continue to drop. The tumble in Google share price was so stark just on Thursday that the stock completed a so-called death cross, which is my favorite finishing move from the Attitude Era. When the 50-day moving average of a share price drops below the 200-day moving average, some analysts view that severe loss of momentum as a signal that the price has further to fall. And overall, their stock has seen negative growth since June. You can actually see a chart going back to June of this year, and that's not generally how they want it to look. That said, Google is still an absolutely massive company, or at least Alphabet is who owns Google. They are worth supposedly $3.41 trillion. So they're still doing okay, Cenk, [00:03:01] Speaker 1: but these are some worrying signs. No, it's much worse than that. Okay, so first guys, what they're doing is they're investing a ton of money into AI. So all these, the giant tech companies, except Microsoft right now, are at a point where for the first time in a long, long time, they're spending more money than they're getting in. And that's not because the core of their businesses are in any kind of trouble. No, the core of their businesses are relatively healthy, except Google search business, people are worried about what might happen to it, mainly in the future, right? So that's a little bit of a core issue, but most of it is not related to that. Most of it is related to their investments in AI. But the reason why I'm saying this is the straw that'll break the camel's back is because there's so many companies that are investing into AI that are gigantic companies. And if you think about it, they can't all win. This is to basically create an AI, what they call agent program, to create an AI agent that rules them all. And it's a race to see who has the best one and who can capture the biggest market share. But that by definition means that some will win and some will lose. But since these are not new companies, these are gigantic companies, now multi trillion dollar companies. When one or two or three of them fail and that is inevitable, that's how competition works. Well, that is going to be a gigantic problem for the economy. Because once one of these stars collapses and becomes an economic black hole, the problem is that the banks have lent them an enormous amount of money to do these investments. That then pulls the banks down with them, which then creates a problem for all other corporations. Because the banks are the ones that do short term loans to every company. So that's the problem we had in 2008. A lot of people misunderstood what happened there. The housing market was the trigger, it was not the gun. It was the over leveraged banks that were the gun that caused the worldwide economic collapse. The same gun has been loaded. But in this case, the trigger is going to be one of two things. This is one of the giant bogeys on the board, the other one is the war. So we've talked a lot about the war and why it also, it will very likely lead to an economic crash. But at this point, even if Trump doesn't reignite the war after the midterm elections, which he almost certainly will, doesn't really matter. Because this AI phenomenon is going to drag the economy into a collapse anyway. So these are not small companies. These are literally the largest companies in the world. And if one of them fails, it's probably a systemic risk. But almost certainly several of them will fail. And when that happens, I don't think that there's anything we can do to prevent a collapse. So I need you guys to get prepared. Look, whenever you get into economic advice, you have to be super careful. And I'm not the expert to give you advice on what to do specifically with your money and when. The timing is always super important. But my sense of it is that we're not perilously close to the edge. And so I know that if one of these companies starts to spiral downwards. And by the way, I just found this just broke and I wanted to share it with you guys. One of our members actually wrote it in and then our team found it as well. Anthropic is now expected to receive a high junk rating for major credit rating agencies after its IPO. That's according to the Financial Times. Boy, if these gigantic multi-trillion dollar companies are already considered junk bonds, we're in a world of hurt, John. This whole thing's gonna blow. [00:07:04] Speaker 2: Yeah, it's certainly looking like it. Can I give you just a couple of the details from the other companies? Cuz you mentioned that it might not just be one that falls. So we do have some evidence about issues with other ones. Yesterday after Amazon reported its results showing heavy spending, its shares traded down two, not just Google, Amazon as well. Last week, Meta's shares fell 7% after its results showed it was using so much cash that the company was issuing new stock to raise funds. Remember, Mark Zuckerberg was enthusiastically showing screenshots of data centers bigger than Manhattan. Maybe that's how they're spending so much money would be my guess. Investors have increasingly kept an eye on a metric known as free cash flow, which looks at how much cash a company has after paying for both its day-to-day costs and for new capital expenses, which they've been doing a lot of. For every company but Microsoft, free cash flow has turned negative, a sign of just how much they are banking that their AI bets will pan out. And we have a report we jumped into about that. But they're all assuming that there is going to be this absolutely massive new demand. And so far, the only demand for any part of this has been coming from them, sending money flowing back and forth between them. And I just find it ironic, Cenk, that we are continually browbeaten about any, stick a finger in the air and say, hey, can we get a little bit of regulations or maybe a little look into the environmental impact of the data centers? They say, no, shut up. If we don't build this out, then we're done, we'll be destroyed as a country. And meanwhile, the single greatest threat to America right now is the investment in the AI and the possibility that it will fall apart and take down the rest of the stock market with it. I don't think there's any other plausible threat of any form to America on the level of that. And meanwhile, they're saying, no, no, no, we need to pour more gas on the fire. That's the only thing that can save us. It seems slightly short sighted to me. [00:08:56] Speaker 1: Yeah, again, with every one of these stories, it's worse than you think it is. Because some of the companies have in the ballpark, one company has $720 billion in debt just to build the data centers. And economically, guys, this is a really important part. Those contracts cannot be broken. They sign the kind of leases that they're responsible for the payments to those companies, no matter what happens. That means that that's something that you can't get off your books. Why did they do that? That is a disastrous decision. And I know why they did it because they were in a panic. No, they're gonna, Anthropics gonna beat us, OpenAI is gonna beat us, Meadow's gonna beat us. Okay, fine, fine, we'll do unbreakable contracts that put us on the hook for having debt of up to nearly a trillion dollars. And it lasts for like, some of these leases for 10 years. And they're making catastrophic choices. And it's not just gonna destroy their companies, it's gonna destroy our economy. Earlier, I read one of the members that wrote in saying that they've already lost their job to AI. And we reported yesterday what Microsoft's talking about laying off 25% of their workforce. Giant layoffs are coming. It's not like they don't have money, they've just taken all the money invested in into these data centers. And John, one last disaster scenario, you don't need it because the disaster is baked in at this point. That's why I'm saying it's kind of guaranteed. And it's as strong a prediction as I can make, the economy will collapse. And so, but even so, let's say I'm wrong about it. Let's hope, let's pray that I'm wrong about that. What if another country's AI wins instead? You remember how China released an AI model six months ago or something that ran laps around the American ones and cost like a fraction of the money? So what if the AI agent that rules them all is not even American, then all of them collapse? There's no way to recover from that kind of like supernova economic black hole that'll suck everything else into it and destroy everything in its past. And by the way, the bottom line is John, at the end of the day, if none of that happens, the good case scenario is about seven guys will have enormous power over all of the rest of us. And they'll lay off 10 to 25% of everyone in the country. And then they'll pay and give you a check, maybe from the government for either 2000 a month or 3000 a month. You might have had a coding job for 120,000, 150,000 a year. Now you're lucky to get 36,000 a year. You can't get any other jobs, you've got no purpose left in life. This is, I mean, why, why? And why is because our politicians don't work for us. The AI companies contributed in a massive amount of money to the Republicans, to Donald Trump, and to a lot of Democrats. And they were huge factors in Democratic primaries as well. It wasn't just the Israeli lobbies, it was the crypto guys and the AI guys. They bought all of our politicians so that our politicians would help them destroy our economy for their benefit, and literally no one else's. That's what it's feeling like, and I don't feel [00:12:39] Speaker 2: like there's nearly enough backlash. Somebody else has to be focusing on this. And I feel like some politicians are getting that this is like a salient issue in the midterms. But I'm not seeing like a massive plan being put forward. I personally think that if you are a Democrat that is planning to start your presidential race in like three months probably, this needs to be one of the core thing, maybe the core issue of the 2028 election. And they're so slow to understand that, I think. [00:13:06] Speaker 1: Yeah, 100%. I'm advising anyone that'll listen to me, which it's not a lot of Democrats. Like, you believe in being popular? No, no, no, we're gonna back the money guys. But for any Democrat that'll listen, I'm telling them exactly what you said, John. You gotta find a solution to this epic meltdown and start talking about it now. Because everyone else is rearranging the chairs on this Titanic. And if you think we can't sink, yeah, that's what they thought about the Titanic and a lot of things. No, this economy can sink and I'm worried it's going to.