U.S. stocks slide on AI capex doubts after $1T wipeout

TLDR

• Over $1 trillion erased as AI megacap tech, software valuations reset.
• Analysts saw fear, not fundamentals, echoing January 2025 ‘DeepSeek’ episode.
• Selloff framed as sentiment cycle shift rather than structural market break.

Over $1 trillion was wiped out from the U.S. stock market yesterday. Losses clustered in AI-adjacent megacap tech and software, where elevated expectations met a valuation reset.

Analysts at Bank of America and William Blair characterized the slide as driven more by fear than deteriorating fundamentals, comparing it with the January 2025 “DeepSeek” episode, as reported by AOL (https://www.aol.com/articles/why-wall-street-analysts-see-202351430.html?utm_source=openai). This framing places the drawdown within a sentiment cycle rather than a structural break.

Why it matters: AI capex cycle and software stocks selloff

The stakes are tied to an AI capex cycle among Microsoft, Alphabet, and Amazon that investors see as unusually large. Tom Hainlin of U.S. Bank Wealth Management noted that uncertainty about turning this spend into profits is pressuring valuations, according to Investing.com (https://www.investing.com/news/stock-market-news/sp-nasdaq-futures-subdued-as-markets-digest-alphabets-ai-spending-plans-4487019?utm_source=openai).

Investors are demanding clearer monetization timelines, AI revenue contribution, capex-to-sales ratios, and margin impacts from training versus inference, before re-rating software. “The most disconnected call that I’ve ever seen,” said Dan Ives, tech analyst at Wedbush, criticizing the software stocks selloff, as reported by Business Insider (https://www.businessinsider.com/dan-ives-software-selloff-most-disconnected-tech-bull-2026-2?utm_source=openai).

Key drivers: sentiment reset on AI spending and monetization timelines

Key drivers now include a sentiment reset on spending and timing, with markets prioritizing utilization, bookings, and payback visibility. Melissa Brown observed that last year’s AI accelerant has become an extinguisher for some firms, as reported by The Spokesman-Review (https://www.spokesman.com/stories/2026/feb/05/wall-street-ends-sharply-down-as-ai-worries-weigh/?utm_source=openai).

At the time of this writing, the SPDR S&P 500 ETF Trust (SPY) closed at 681.27 on February 12, down 1.54% on the day, based on data from State Street SPDR S&P 500 ETF Trust. This situates the session’s selloff within a still-positive one-year performance backdrop noted for the fund.