Megacap tech stocks sells off as AI spending outpaces revenue growth

• Big Tech's capital expenditures for AI are rattling the market, with over $600 billion expected to be spent this year by the four largest hyperscalers.
• The market exhibits contradictions: software stocks are 'crushed' by AI's disruptive potential, while megacaps investing heavily in AI infrastructure are punished for high spending.
• Meta is a key example, with expected AI CAPEX reaching 50% of 2026 revenue, impacting margins and free cash flow.
• Nvidia CEO Jensen Huang remains bullish, calling it a 'once-in-a-generation infrastructure buildout' driven by AI, while Vercel CEO Guillermo Rauch foresees 'one-person billion-dollar companies' due to rapid AI progress.

Big Tech's substantial AI capital expenditures, projected to exceed $600 billion this year, are causing market jitters and sell-offs in megacap and software stocks. Despite Nvidia CEO Jensen Huang's bullish long-term outlook on AI demand, the market is grappling with contradictions, punishing companies for high spending while also fearing AI's disruptive potential for existing software firms. This has led to confusion and a 'broken' AI trade.