Alphabet enters the Dow Jones but loses $250 billion in market capitalization: the paradox of the AI race
This week marked a landmark event for the stock market: Google's parent company, Alphabet (GOOGL), officially joined the prestigious Dow Jones Industrial Average index. Starting June 29, it will replace Verizon Communications, whose share in the index was only 0.5% due to its low stock price. Alphabet's inclusion is not just a formality but a recognition of the tech giant's dominance in the era of artificial intelligence.
Personnel crisis amid historic inclusion
However, the joy of joining the "elite club" was short-lived. On the same day, Alphabet's shares plummeted by 6% — the sharpest drop since February and the worst trading session in nearly a year. The company's market capitalization shrank by nearly $250 billion in a single session. The reason is not market conditions but a systemic personnel crisis in Google's artificial intelligence division.
Within just a few days, the company lost two key figures. On June 18, Noam Shazeer — co-author of the groundbreaking 2017 paper "Attention Is All You Need" and one of the leaders of the Gemini project — announced his move to OpenAI. Recall that less than two years ago, Google paid about $2.7 billion to bring Shazeer back from Character.AI. And on June 23, it became known that 2024 Nobel Prize winner in Chemistry John Jumper, creator of AlphaFold, is leaving Google DeepMind to work at Anthropic after nearly nine years at the company.
Symbolism of the Dow Jones reshuffle
S&P Dow Jones Indices explained that the decision to replace Verizon with Alphabet was driven by the latter's strong positions in technology, digital advertising, cloud services, and, of course, AI. With Verizon's exit, the index lost its last company from the telecommunications sector, becoming even more tied to the AI-driven economy. Earlier, in 2024, Amazon joined the index, while Apple and Microsoft were already there. Now Alphabet has joined them.
My analysis: Inclusion in the Dow Jones is undoubtedly a mark of prestige and recognition of Alphabet's scale. But the market looks deeper: the departure of key minds to competitors OpenAI and Anthropic is a worrying signal. Google approaches June 29 with a serious personnel crisis that no place in the ranking can resolve. For investors, this is a reminder: in the AI race, talent is worth more than a spot in the index.