The market's AI contradictions
Watch on YouTube ↗  |  February 06, 2026 at 17:39 UTC  |  3:25  |  CNBC
Speakers
Deirdre Bosa — Anchor/Reporter, CNBC Tech Check
Carl Quintanilla — Anchor, CNBC
Dean — Anchor, CNBC

Summary

  • The market is currently grappling with a massive contradiction in the AI trade: Software stocks are crashing because investors fear AI will replace them, yet Big Tech (Hyperscalers) are also being punished for spending hundreds of billions to build that very AI.
  • Four large hyperscalers have announced over $600 billion in capital expenditures (Capex) for this year alone.
  • The market is in a "wait and see" mode, looking toward potential IPOs from OpenAI (rumored $1 Trillion valuation) and Anthropic to provide hard data on margins and burn rates to validate the AI business model.
Trade Ideas
Ticker Direction Speaker Thesis Time
NEUTRAL Deirdre Bosa
Anchor/Reporter, CNBC Tech Check
Despite strong top-line growth, these stocks are being punished. Amazon is down 9% despite AWS growing at its fastest pace in three years. Investors are spooked by the massive capital expenditure required to compete in AI. While revenue is growing, spending is growing faster, compressing margins and free cash flow. The market is struggling to reconcile the cost of building AI with the future payoff. Meta is spending $0.50 of every revenue dollar on infrastructure. Meta's operating margins fell from 48% to 41% year-over-year, and free cash flow dropped 15%. Amazon has a backlog up 38% but is still seeing its stock drop. If these companies prove that the massive spend leads to immediate monetization, sentiment could reverse quickly. 1:00
WATCH Deirdre Bosa
Anchor/Reporter, CNBC Tech Check
OpenAI is preparing for a potential $1 Trillion IPO, and Anthropic is reportedly in early talks to go public. Currently, the market is guessing about the profitability of pure-play AI. When these companies file for IPOs, they will be forced to open their books. This will reveal the "hard numbers"—revenue, margins, and burn rates—finally confirming or denying if the AI business model makes economic sense. Reports of upcoming public filings. If the disclosed numbers show unsustainable burn rates or low margins, it could crash the broader AI sentiment across the entire market. 1:38
AVOID Deirdre Bosa
Anchor/Reporter, CNBC Tech Check
Software stocks are described as being in "freefall." The market believes AI technology has become so advanced that it will "eat these companies alive." If AI can automate the tasks that SaaS platforms currently perform, these companies face an existential threat of obsolescence. The segment highlights the sharp sell-off in this sector specifically due to the "AI destroys SaaS" narrative. The market may be overestimating how quickly AI can fully replace complex enterprise software suites. 0:55
LONG Deirdre Bosa
Anchor/Reporter, CNBC Tech Check
The market is selling "old winners" (SaaS) and "big spenders" (Big Tech) to make room for a new set of companies not yet priced in. New AI-native companies are being built on top of models like OpenAI and Anthropic. Because AI allows for extreme efficiency, we may soon see "one-person billion-dollar companies." Capital is likely rotating from legacy tech into these efficient, high-growth newcomers. Insight from Guillermo Rauch (CEO of Vercel) regarding the efficiency of building on top of LLMs. These companies are largely private or early-stage, making access difficult for retail investors.