06.02.26 - Capex Shock - Mini-Crash

Big Tech earnings took center stage this week. After Google on Wednesday, Amazon reported solid results after market close yesterday. However, the real flashpoint came during Amazon’s earnings call, when management announced a dramatic step-up in AI-related capital expenditures of around USD 200bn for 2026 – more than 60% higher than last year.

Google, in parallel, signaled AI-related capex of around USD 180bn (+97% YoY). Taken together, Microsoft, Google, Amazon, and Meta are now guiding toward roughly USD 650bn of AI-related investments for 2026 alone.

Investors did not applaud. Google and Amazon shares sold off sharply after the announcements. Skepticism spilled across the broader tech complex, amplifying an already fragile sentiment backdrop driven by recent crypto turmoil.

Markets:

• Equities: tentative rebound after recent sell-off, tech leading

• Bonds: yields moved higher again after a brief dip - US 10-year yield back at ~4.21%

• Commodities: broad-based rebound

• Cryptos: stabilization after heavy selling - Bitcoin around USD 68k after dipping close to USD 60k

• Volatility: VIX slipped back below 20 after the recent spike

• Currencies: USD moving lower again

My View: After weeks of markets rewarding anything linked to “AI,” investors are finally starting to ask the uncomfortable but necessary question:
How does all this investment actually turn into profits?

For a long time, the market rewarded sheer ambition and the scale of spending, especially when wrapped in the AI narrative. That tolerance is now wearing thin. Capital expenditures are exploding, while the path to sustainable returns and monetization remains blurry. The market reaction to Amazon shows that even strong operational results are no longer enough when the future growth bill keeps rising faster than confidence in future cash flows.

This dynamic raises the risk of a broader rerating of AI-related valuations. The current rebound in tech stocks therefore looks more technical in nature than fundamentally driven — and may prove limited in scope.

A large share of the announced spending will flow into AI infrastructure and the broader supply chain. In theory, this should support selected beneficiaries. However, two risks dominate at current levels:

1. Valuations are already stretched, with much of the AI capex story priced in.

2. Should doubts about the commercial success of AI intensify, these investment plans can be scaled back quickly, removing an important pillar of the bull case.

In both scenarios, the asymmetry looks unfavorable: downside risks appear larger than the remaining upside potential from here.

Therefore, I keep my allocation unchanged and maintain the existing short positions. At the same time, I continue to favor precious metals. I expect investor focus to shift back toward safe-haven assets as uncertainties remain elevated and confidence in high-valuation growth stories is increasingly challenged.

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