Nov 2, 2026 · 10 min · 7 segments
This week in the markets: correction or rotation? Volatility in the tech sector has so far not translated into a broader based market fall. But it sets up a nervous backdrop to a crucial week in the…
Certainly, last week marked a dramatic shift in sentiment towards the US's dominant tech stocks.
Alphabet unveiled disappointing advertising numbers, and it was punished for still heavy AI investment.
Likewise, Amazon suffered at the hands of increasing skepticism about whether high infrastructure spending will ever generate a satisfactory return.
That AI boom is demonstrating many of the characteristics that saw internet stocks soar and then plunge 25 years ago.
Clearly, AI is economically significant, but there are growing doubts about where profits will accrue.
The technology can be transformative without necessarily rewarding its pioneers.
Investors are no longer in doubt about where the growth is coming, but they are questioning whether they've already paid too much for it.
Increasingly, the investment boom is running up against a rising cost of capital because companies are burning through even the massive cash flows of America's tech giants and relying increasingly on equity and bond funding for their huge capex plans.
These become much harder to justify to investors at today's higher cost of borrowing.
Certainly, last week marked a dramatic shift in sentiment towards the US's dominant tech stocks.
Alphabet unveiled disappointing advertising numbers, and it was punished for still heavy AI investment.
Likewise, Amazon suffered at the hands of increasing skepticism about whether high infrastructure spending will ever generate a satisfactory return.
That AI boom is demonstrating many of the characteristics that saw internet stocks soar and then plunge 25 years ago.
Clearly, AI is economically significant, but there are growing doubts about where profits will accrue.
The technology can be transformative without necessarily rewarding its pioneers.
Investors are no longer in doubt about where the growth is coming, but they are questioning whether they've already paid too much for it.
Increasingly, the investment boom is running up against a rising cost of capital because companies are burning through even the massive cash flows of America's tech giants and relying increasingly on equity and bond funding for their huge capex plans.
These become much harder to justify to investors at today's higher cost of borrowing.
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