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Editor’s Note: We released June’s AI Upside Rankings last week and we have a new #1 pick.
THE BRRR’s BOTTOM LINE
Two strong labor reports.
SpaceX priced at $1.75 trillion and finalized its IPO for Friday, June 12th.
Google announced $84.5B in stock dilution to fund its AI buildout.
Meta kicked the tires on its own dilution plan.
OpenAI and the Trump admin admit they’re in talks to give OpenAI equity to the American people, potentially nationalizing/ providing a backstop to the cash-burning beheamoth.
Predictably, last week’s news flow drove stocks lower - breaking a nine week win streak that started in late March.
The week culminated in the worst one-day performance for the indexes since 2025’s tariff tantrum.
We can’t ignore the move given the brut strength and the volume of the selling, but are not convinced that we just witnessed a definitive market-topping shift in momentum.
However in moments of uncertainty like this, it’s reasonable to reduce ownership in individual names that may have run too far (or names that you’ve lost conviction in), in favor of broad index exposure.
Why remain so bullish despite the unprecedented run?
We have a few key points.
The labor market isn’t actually that strong
Most of the new jobs added have been in healthcare which is not indicative of a strong labor market or a growing economy.
Let recent layoffs at Google, Meta, Uber, Cisco and Wix serve as the canary in the coal mine for what’s to come. Layoffs.fyi reports that tech layoffs tripled in Q1 2026 vs Q4 2025, marking the largest single quarter of tech layoffs since the post-covid reset.
As the weakening labor market starts to show up in the data, the Fed will have increased cover to maintain or cut interest rates into the 2027.
Google and Meta’s fundraising is actually bullish
The market is misreading the fundraising announcements, treating them as a reason to sell all tech, fearing that they companies are overspending.
In reality, the fundraising by Google and potentially Meta indicates that they have more conviction than ever in the AI buildout.
The money they’re raising will be directly spent to boost the key companies responsible for the AI boom.
The OpenAI/ Trump talks are actually bullish
A potential deal would indicate that the Trump admin views the AI race as existential to US hegemony, positioning the government as a potential buyer of last resort, which would de-risk the distribution of potential outcomes for the company.
A distressed OpenAI failing to hit its financial obligations would be deeply problematic and indicative of serious problems for the entire AI supply chain.
An equity stake negotiated by the Trump admin would be presented as a huge win for the taxpayer - and would pigeon-hole the government into backstopping OpenAI’s obligations - in order to save face.
AI Deep Cuts
Here’s the part of the AI trade that last week made impossible to ignore: AI is no longer just a software story. It is becoming a financing market.
The old bull case was simple: models get better, adoption rises, revenue follows, margins expand. That still matters. But the new bull case is bigger and stranger. The companies at the center of the boom are now trying to secure enough capital, power, chips, land, cooling, networking, and political protection to keep the machine running.
That is why Google’s financing matters. That is why Meta exploring its own version matters. That is why OpenAI talking to the government matters. The AI race is moving from “who has the best model?” to “who can fund and control the bottlenecks?”
One example: Google’s reported SpaceX compute lease. If the terms hold, Google would pay roughly $920 million per month from late 2026 through mid-2029 for access to about 110,000 NVIDIA GPUs and related components.
That is not a normal cloud contract. That is a bridge loan for compute scarcity. It tells us the largest tech companies are not merely buying chips when available; they are pre-committing balance sheets years in advance to make sure they do not fall behind.
That is why the selloff is so interesting. The market looked at Google and Meta raising capital and said, “AI is getting too expensive.” The better read may be: AI is becoming so strategically important that companies are willing to dilute shareholders rather than risk losing capacity. In normal cycles, dilution is bearish. In infrastructure wars, the ability to raise cheap capital can become a competitive advantage.
The next AI winners may not be the most obvious “AI app” companies. They may be the companies solving the ugly constraint layers underneath the boom.
Look at where the pressure is showing up. AirTrunk is reportedly planning a $30 billion / 5GW India data-center buildout. Meta has been linked to temporary data-center structures and modular gas turbines.
SemiAnalysis is now writing seriously about orbital compute and space data centers. Even if some of this sounds insane, that is the point: the industry is searching everywhere for power, land, cooling, latency, and regulatory arbitrage. AI demand is no longer bounded by model quality. It is bounded by physics, grids, permitting, and financing.
There is also a quieter software-side bottleneck emerging: token economics. The first phase of enterprise AI adoption was “what can this tool do?” The next phase is “why did our AI coding budget disappear by April?”
Uber reportedly blew through its 2026 AI coding budget early. Microsoft revoked some Claude Code licenses. Cursor renewal pricing has reportedly shocked customers. The punchline is not that AI tools do not work. It is that the productivity gains are real enough to use constantly, but expensive enough that companies now need AI cost controls, auditability, routing, and efficiency layers.
That gives us a cleaner investment framework. Do not just ask which company has the flashiest chatbot. Ask who benefits when AI becomes a capital allocation problem, a power procurement problem, a token-budget problem, and a national security problem.
The answer points toward the picks-and-shovels layer: semis, networking, data centers, power systems, cloud platforms, model-routing tools, AI FinOps, and the hyperscalers with enough distribution and balance-sheet access to survive the arms race.
So yes, last week exposed real risk. But it also clarified the opportunity. The market is starting to separate AI tourists from AI infrastructure.
That is exactly the kind of messy repricing you expect before the next leg of a real capex cycle — not after the theme is over.
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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.
