Welcome to the debut of my weekly market thoughts posts. My plan is to use this as an open-air brain dump where I attempt to connect the dots between macro trends, earnings, and what’s going on in the world of tech. My goal for these posts, at least initially, is to stress-test my thoughts and predictions to keep myself honest and try to spot the opportunities before they hit the headlines.
If that ends up being interesting and helpful to others, then I’ll consider that my own personal alpha.
The Great Tech Divergence
This week was a whirlwind, to put it mildly. The technology sector is currently trapped in a fascinating paradox.
On one hand, investors are starting to get squeamish towards the hyperscalers
for their astronomical CAPEX spend on AI. In a vacuum, it’s scary to see how
much money they’re spending for the datacenters, chips, and other infrastructure
needed to build/support AI. Just this past week, Google
On the other hand, the market is battering traditional software companies under the fear that their business models face imminent obsolescence because of AI. It forces the question, how can the SaaS sector shed $300 billion in value because AI is too capable, while the market simultaneously signals that the hyperscaler’s investments building that capability won’t generate sufficient ROI?
In my opinion, we are likely are overbuilding AI capacity in the short term. But I believe this capacity will find a purpose much faster than those dark fiber lines did two decades ago. The adoption curve for AI compared to the internet’s adoption curve is really eye opening. It took the Internet >30 years to reach 68% of the population while the Fed reports that AI adoption is already at 54%.
In my opinion, the market is reacting irrationally on the build-out.
The reaction towards software however… a lot of that SaaS value isn’t coming back.
The SaaS-pocalypse
Last week Anthropic released a new legal plugin for its Claude Cowork agent which is supposedly the catalyst that set off this week’s SaaS-pocalypse.
The damage was widespread. Workday
As I noted in my deep dive on Figma, margin compression in SaaS will continue. This meltdown is not unexpected. Investors are waking up to the fact that AI can do what it’s been hyped to do, at least when it comes to coding. I don’t necessarily believe ALL the AI hype, but I do believe in its coding abilities. I still hold firm that many big SaaS companies are in trouble unless they pivot. They must switch from selling software to selling AI agents that replace that software. This includes enabling customers to build the very platforms they currently sell.
On the other hand the reaction to the Genie 3 drop is overblown. Genie 3 is a cool proof of concept. But I don’t think it will completely change how video games are built and enjoyed. It will help designers imagine and prototype different worlds. If anything I hope it can herald an explosion of new game concepts.
Was this week’s drop overblown? Probably. Markets rarely move in straight lines. We will likely see a dead-cat bounce in the short term. But I expect more red in the future. We are watching a fundamental repricing of software utility. Companies that can’t transition from tools to agents are going to be left behind.
Rapid Fire Observations
Some quick top level thoughts on other big things that happened last week:
The Triple-X Merger
Elon Musk is combining SpaceX, xAI, and X into a $1.25 trillion monster with an IPO expected later this year. I love the sci-fi ambition of space-based datacenters, but I’m skeptical about saddling a what has been a successful rocket company with the toxic volatility of social media and a capital incinerator in the thick of the AI race. As always with Elon, it will be interesting to watch.
The Crypto Crater
Bitcoin is hovering at $70,000, which is ugly when you consider it costs ~$90,000 to mine a single coin right now. Lots of interest centered on Michael Saylor’s Strategy, which announced an operating loss for the fourth quarter of 2025 at $17.4B as a result of their digital asset strategy. Yikes!
OpenAI is Chasing, Not Leading
Did you catch that OpenAI launched GPT-5.3-Codex this week? If you didn’t, you aren’t alone. The launch was incredibly muted, especially compared to the shockwaves Anthropic sent through the market. It feels like OpenAI is starting to take the back seat, especially when you couple it with the ad news storyline that came up this week. Anthropic is gaining steam.
Oracle and Debt
I recently read (and really enjoyed)
Andrew Ross Sorkin’s book 1929.
One of the things he noted in his
piece in The Atlantic
was that “Debt is the almost singular through line behind every major financial
crisis.” That context makes Oracle’s
Prediction Markets vs. The House
DraftKings
My prediction? The thin veneer of prediction markets acting as information aggregators and that being a basis of their CFTC approval will wear away eventually. Regulators are already circling reports of insider betting. That will force a regulatory hammer drop, though likely not until there’s an administrative change in Washington.
What’s Happening Next Week
Next week is shaping up to be a macro-heavy gauntlet that will test whether this correction has legs.
- The Delayed Data Dump: Usually, we get a breather between jobs and inflation data, but not this time. We get the Employment Situation report on Wednesday, Feb 11, followed almost immediately by the CPI print on Friday, Feb 13. I’m expecting that we’re going to see the unemployment rate continue its upward trend, so if those inflation numbers come in hot while hiring remains cold…Hello Stagflation, is that you?
- DraftKings: They report this week and I’m curious to see how things are going with their recent release of DraftKings Predictions, but I don’t expect it’s going to be very positive. Management needs to explain how they plan to stop the bleeding here.
- Unity: This earnings call is their chance to recoup some of that beat-down they took this week. Can they assuage investor’s concerns and prove that generative AI will actually be a boon to their business?
The Verdict
I think what we saw this week with the big tech companies is a temporary correction driven by panic over CAPEX. We are talking about the richest companies in history with massive cash reserves and reasonable P/E ratios. Fundamental mechanics are being tested, but the actual revenue from AI cloud services is real.
I’m keeping my eye on Amazon this week. It’s looking like a good entry point and I expect they’ll bounce back a bit this week as fears subside.