Episode summary
Magnificent 7 Lose $767 Billion as AI Skeptics Dump Tech Stocks | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 40 min · Hosts: Carol Massar, Tim Stenovec · Guests: Ed Ludlow, Tony Hemmlegarn, Andrew Sek Hwan Hong, Nina Trentmann, Zach Wasserman, David Kocieniewski
Summary
The episode centered on the sharp selloff in megacap tech, with the Bloomberg Magnificent 7 index sliding on renewed skepticism about whether massive AI spending will earn acceptable returns. A guest argued that Alphabet’s post-earnings drop reflected a major shift in market psychology: investors now want to know not just whether AI demand exists, but how much it will cost to capture it. The discussion pointed to Alphabet’s raised capex outlook, its large backlog, and strong Google Cloud growth as evidence of traction, while also noting concerns that the company is still behind on its newest models.
A separate segment focused on Siemens and HD Hyundai’s deal to build a digital shipyard to modernize U.S. shipbuilding. The guests said digital twins, 3D simulation, and workflow integration can help offset skilled labor shortages and improve on-time, on-budget delivery, though the full program will take years and is expected to start with design work in 2028.
Later, Huntington Bancshares’ CFO said the consumer remains resilient, loan demand is strengthening, and the bank is planning for a higher-for-longer rate backdrop. He also said Huntington is increasing technology investment while cutting costs more aggressively. The episode ended with an investigative report on how Trump insiders helped shape the Genius Act in ways that benefited Tether, the dominant stablecoin issuer.
Key takeaways
- The guest said Alphabet’s selloff shows investors now care more about the cost of AI than the existence of AI demand.
- The guest said Google Cloud grew 82% year over year and Alphabet’s backlog was $514 billion, but questions remain about monetizing that pipeline.
- The guest said Apple’s lack of a capex arms race helped its stock because it is not a hyperscaler.
- The guests on shipbuilding said digital tools can help the U.S. industry work faster and around labor shortages, but the new program starts in 2028.
- Huntington’s CFO said loan pipelines are stronger than three months ago and the bank expects a higher-for-longer rate environment.
- The investigative segment said the Genius Act created loopholes that benefited Tether and detailed contacts with Howard Lutnick and Bo Hines.
Notable quotes
“this is a big move lower in Alphabet in particular. Um you know, we're on track for literally the biggest drop since May of last year”
“there was the evidence that the AI spend is paying off yesterday. Now it's much like how high is the cost going to be”
“Google Cloud continues to grow at a at an astonishing rate, 82% year on year in the quarter gone”
“we believe with this digital tool uh on time and on budget delivery will be you know will be possible”
“Our view is that we're going to have a higher for longer rate environment for at least the foreseeable future”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Business Week Daily. Reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenbec on Bloomberg Radio.
The surge in oil sparked by the escalating war sending stocks and bonds lower. It's certainly part of today's story. The other part is what Charlie was just talking about with these tech stocks, Wall Street being rattled by these renewed concerns over these AI investments, these massive AI investments and if they're going to pay off.
Yeah, I think that's such a huge question. The Bloomberg Mag 7, you've been talking about this, the total return index gauge of — I keep mentioning this because It's such a It's such a superlative. — It is. Um — Given that given how crazy things have been over the last 14 months.
Yeah. — I'm shocked that today's route is on par with what we saw post liberation day. — Yeah. You're talking about April 2025, the tariff fueled meltdown. So, um a little bit of perspective right in context. — Alphabet down about 7% after raising its capex forecast. Tesla down 14% as profit fell even after strong EV deliveries. Ed Lello has been following this all. He's the host of Bloomberg Tech. He joins us from our San Francisco bureau. Ed, I'm going to leave it to you on on where to start here because both of these huge stories today and they're driving certainly the mega cap tech trade.
So So I think that the way you frame it in how markets have react against history is completely right.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- magnificent 7 selloff
- ai capex skepticism
- big tech earnings
- regional bank earnings
- crypto regulation
Companies and tickers mentioned
- GOOGL
- GOOG
- TSLA
- SIEGY
- HBAN
- Alphabet Inc.
- Tesla Inc.
- Siemens
- HD Hyundai
- Huntington Bancshares
- Tether
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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