Google Historic Crash Crypto Market Update

The host said Alphabet lost $520 billion in market capitalization after a negative 29% earnings surprise, which he described as the largest market-cap loss in history. He contrasted the result with earlier negative surprises of 10%, 22%, and 16%, and argued that AI may be cannibalizing Google Search: if users begin commercial queries in chat tools instead, declining search revenue could force Google to change its business model. An unidentified speaker said Alphabet was trading at 18 or 19 times earnings, down from 30 times, and argued for breaking up the company. Waymo could be spun off, the speaker suggested, though its losses might leave it reliant on Alphabet’s cash flow. The host was uncertain about spinning off Waymo, pointed to YouTube and possibly Google Cloud as stronger businesses, and said Alphabet might need to separate products including its AI unit. He also noted Google’s announcement of a blockchain custody plan.

The host said Alphabet’s earnings trouble could mark a peak in the AI trade, with an unwind potentially affecting crypto markets. In a listener poll, more than half expected an AI-trade unwind after 2028, while about 20% expected one in 2027. The discussion also highlighted uncertainty over whether AI investment will produce profits and which companies will ultimately benefit. One speaker said many tech stocks appeared to be in a bear market, citing Coinbase down 56%, Oracle down 50%, Arm and Circle down 44%, and Robinhood down 40%. A possible Anthropic IPO could add pressure to markets, the speaker said, although the timing and market effect were uncertain.

The participants disagreed about the Federal Reserve’s next move. Tom Lee said inflation expectations were holding, there was no need to raise rates, oil and rates were diverging in a dovish direction, and capital-expenditure growth was not necessarily inflationary. The host took the opposite view, saying a December rate hike was likely and oil would remain a problem; he said the FOMC meeting left him more hawkish and bearish. He described governors as uncertain and unaligned, then suggested that their lack of alignment could speed a move toward rate cuts before correcting himself to say rate hikes. An unidentified speaker said there was no clear justification for not raising rates and expected a December increase of a quarter point or more, while acknowledging that a hike would not affect the economy within five days and could be unpopular ahead of the midterms. The speaker expected signals to become clearer after the midterms and said the Fed was monitoring financial conditions and AI’s contribution to growth. AI could be inflationary in the short term through infrastructure, energy, and electricity demand, but deflationary over time through productivity and automation.

Robinhood reported third-quarter revenue growth of 12% even as crypto revenue fell 55%; prediction markets helped support overall revenue. Vlad said prediction markets were not cannibalizing crypto, which he characterized as being in a relative winter, and described Robinhood’s chain, launched July 1, as a top-five chain. The next key test, according to the discussion, is Robinhood’s fourth-quarter earnings, expected in January, which could offer signs of an RWA surge. Separately, Backpack and SK Securities are partnering to make Korean stock-market trading available to Backpack users.

HYPE was up 17.8% and trading around $95.10 at the time of recording, near its all-time high. The speaker said it could reach around $100 and rise another 50% beyond that high, presenting those levels as a potential path rather than a certainty. Grant Cardone challenged Jason Calacanis to a $1 million bet that Bitcoin would break its $126,210 all-time high before October 28, 2028. The speaker thought Cardone might win and expected Bitcoin to get another bid, but noted that a bear market could weigh on it. Cardone was described as heavily invested in Bitcoin and Calacanis as favoring AI, so the speaker cautioned that both could be talking their own book.