AI Stocks Turn Choppy. Hyperscaler Capex Explodes.

• Four major hyperscalers (Google, Amazon, Meta, Microsoft) projected to spend $645 billion in 2026, up 56% or $230 billion year-over-year, raising concerns about debt financing and infrastructure depreciation
• Software stocks faced significant selloffs following Anthropic's launch of AI automation tools for coding, legal, and financial work, with investors worried about disruption to 'per seat' licensing models and potential job elimination
• Performance diverged sharply among AI stocks: Lumentum up 49% YTD 2026 and Ciena up 16%, while Oracle down 26%, Salesforce down 28%, and Palantir down 23%

Market Summary: AI Stocks Face Volatility Amid Surging Hyperscaler Spending

Key Developments:

AI stocks have experienced increased volatility in early 2026 as investors scrutinize massive capital expenditure increases by major tech companies. Four hyperscalers—Google, Amazon, Meta, and Microsoft—are now projected to spend $645 billion in 2026, representing 56% growth or $230 billion increase year-over-year.

Market Performance:

Software stocks have been particularly hard hit, while optical networking companies Lumentum (+49% YTD) and Ciena (+16% YTD) remain bright spots. Notable 2026 declines include Oracle (-26%), Salesforce (-28%), Palantir (-23%), and Snowflake (-23%). AMD shares declined after higher-than-expected operating expense guidance. Nvidia, Cisco, Cloudflare, and Arista Networks report earnings this week, with Nvidia's February 25 report expected to drive further volatility.

Primary Concerns:

1. Debt financing: Companies like Oracle borrowing heavily to fund data center buildouts have fallen out of favor
2. AI disruption of software: Anthropic's "Cowork" AI coding tools and automated assistants (launched January) triggered significant software stock selloffs on February 3, raising concerns about traditional software business models and "per seat" licensing
3. Infrastructure worries: Massive power requirements for AI data centers, U.S. electrical grid capacity concerns versus China, and rising consumer electricity costs
4. Accounting impacts: AI infrastructure depreciation affecting earnings
5. OpenAI concerns: Worries about ChatGPT builder's ability to deliver on promises

Analysts expect continued idiosyncratic performance within the sector as markets price in potential margin degradation and lower terminal values for software companies facing AI disruption.