{"id":430277,"date":"2026-02-17T11:02:20","date_gmt":"2026-02-17T11:02:20","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/430277\/"},"modified":"2026-02-17T11:02:20","modified_gmt":"2026-02-17T11:02:20","slug":"trillion-dollar-ai-market-wipeout-happened-because-investors-banked-that-almost-every-tech-company-would-come-out-a-winner","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/430277\/","title":{"rendered":"Trillion-dollar AI market wipeout happened because investors banked that \u2018almost every tech company would come out a winner\u2019"},"content":{"rendered":"\n

Investors wobbled last week as they worked through the disruption AI is likely to cause across global industries, with further hiccups potentially bubbling through this week. But the reckoning should have been expected, argued Deutsche Bank<\/a> in a note to clients this morning, because it is a readjustment of perhaps overly optimistic expectations.<\/p>\n

Software stocks in particular suffered a wipeout amid mounting concerns that large language models may replace current service offerings. Companies in the legal, IT, consulting and logistics sectors were also impacted. JP Morgan wrote last week that some $2 trillion<\/a> had been wiped off software market caps alone as a result, a reality that prior to a fortnight ago, Deutsche\u2019s Jim Reid argued had been purely academic. <\/p>\n

A 13-figure sell-off is something Reid has speculated over for some time, telling clients: \u201cFor months, my published view has been that nobody truly knows who the long term winners and losers of this extraordinary technology will be. Yet as recently as October, markets were implicitly pricing in a world where almost every tech company would come out a winner.<\/p>\n<\/p>\n

\u201cOver recent weeks we\u2019ve seen a more realistic differentiation emerge within tech\u2014but that repricing is now rippling into the broader economy with surprising speed.\u201d<\/p>\n

Reid hasn\u2019t been alone in his suspicion that investors had perhaps been painting over the entire stock market (and indeed wider economy) with the same, optimistic brush. Some speculators have made broad-stroke arguments that the efficiencies offered by AI will result in wins for the vast majority of companies, while others have argued that while AI is not in a bubble, there are pockets of overoptimism that may burst. <\/p>\n

JPMorgan\u2019s CEO Jamie Dimon is of such an opinion<\/a>, explaining at the Fortune Most Powerful Women Summit<\/a> last year: \u201cYou should be using it,\u201d (speaking to any business that was listening). But he added a caveat, saying that back in 1996, \u201cthe internet was real,\u201d and \u201cyou could look at the whole thing like it was a bubble.\u201d Then he broke down the real difference that he sees\u2014between AI, on the one hand, and generative AI, on the other. It\u2019s an important distinction, Dimon said, while adding that \u201csome asset prices are high, in some form of bubble territory.\u201d<\/p>\n

Indeed, Jeremy Siegel, Emeritus Professor of Finance at The Wharton School of the University of Pennsylvania, argued that such shifts demonstrate investors are \u201casking the right questions.\u201d Writing for WisdomTree <\/a>a week ago, where he serves as senior economist, Siegel said: \u201cWhen companies talk about $200 billion in capital expenditures, markets should scrutinize payback periods, competitive dynamics, and whether durable moats can be built in an environment where technology is evolving at breakneck speed. That tension explains why leadership will continue to rotate even as the secular story remains intact.\u201d <\/p>\n

That said, Reid suggested that the market may be repricing overzealously, arguing the disruption in \u201cold economy\u201d sectors feels overdone: \u201cThe real challenge is that even by the end of this year, we still won\u2019t have enough evidence to identify the structural winners and losers with confidence. That leaves plenty of room for investors\u2019 imaginations\u2014both optimistic and pessimistic\u2014to run wild. As such big sentiment swings will continue to be the order of the day.\u201d<\/p>\n

Disruptions provoked by investors\u2019 caution around AI sits at odds to other market adjustments, argues Ed Yardeni, because it is a cycle which feeds itself.<\/p>\n

Yardeni, the president of the well-regarded economic research shop after his own name, wrote over the weekend<\/a> that AI is \u201cspeed skating on ice.\u201d While it is typical for technological revolutions to be disruptive, the top economist argued, AI has the potential to unseat its own creators. He argued AI has the \u201cability to write software code, including AI code. So it can feed on itself, with the new code eating the old, making it obsolete very quickly. The pace of obsolescence seems to be moving at warp speed for both AI hardware and software, particularly the LLMs. That pace has recently spooked investors who\u2019ve been selling the stocks of any company that might be negatively disrupted by AI.\u201d<\/p>\n

This story was originally featured on Fortune.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Investors wobbled last week as they worked through the disruption AI is likely to cause across global industries,…\n","protected":false},"author":2,"featured_media":430278,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[554,733,4308,11466,157568,4214,5499,86188,19148,157567,4767,86,56,54,55],"class_list":{"0":"post-430277","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-deutsche-bank","12":"tag-global-industries","13":"tag-investors","14":"tag-jamie-dimon","15":"tag-jeremy-siegel","16":"tag-jim-reid","17":"tag-optimistic-expectations","18":"tag-stock-market","19":"tag-technology","20":"tag-uk","21":"tag-united-kingdom","22":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/430277","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=430277"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/430277\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/430278"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=430277"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=430277"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=430277"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}