AI Mania or Capex Trap? Why Tech’s Spending Surge Could Reshape the Next Bull Market

Wall Street’s love affair with AI is starting to look less like a romance and more like a codependent relationship. The market narrative for 2026 is that innovation is driving a new golden age for tech, but the numbers tell a messier story. Capex is exploding, balance sheets are ballooning, and the sector’s risk profile is mutating in real time. If you are still playing the “buy every dip” game in tech, it is time to ask whether you are buying growth or underwriting a new kind of bubble.

Let’s start with the facts. The latest round of earnings calls reads like a Capex arms race. Sandisk, Micron, and a parade of second-tier chipmakers are guiding for double-digit revenue growth, according to MarketWatch. The AI buildout is eating everything: data centers, GPUs, power grids, even the companies themselves. Elon Musk is now merging his AI startup with his rocket company, because apparently, the only thing better than one moonshot is two glued together.

The sector rotation is real. Industrials and utilities are suddenly the belle of the ball, as Seeking Alpha’s “Capex-geddon” piece points out. Tech is still the engine, but it is sputtering. XLK, the tech sector ETF, is stuck at $141.06, flatlining for days. This is not the price action of a sector in the grip of euphoria. It is the price action of a market that is starting to ask hard questions about what all this spending is actually buying.

Context matters. The last time tech capex went vertical was the dot-com bubble. Back then, it was fiber optic cables and Pets.com. Now it is AI chips and data centers. The difference is that the balance sheets are bigger, the stakes are higher, and the feedback loops are faster. The “AI bubble” risk is not just about overvaluation. It is about the entire market’s dependency on a handful of companies delivering on promises that get more ambitious every quarter.

Volatility is creeping in. The “Tech Selloff: Reset, Not Rupture” headline from Seeking Alpha says it all. The market is not panicking, but it is not buying the dip with the same blind faith. Anthropic’s latest AI model upgrade spooked traders, not because it failed, but because it worked too well. The faster AI improves, the faster the competitive landscape shifts, and the more capital everyone has to throw at the problem just to keep up.

The macro backdrop is not helping. Inflation is refusing to die, and the Fed’s rate-cut narrative is hanging by a thread. If the next round of data prints comes in hot, the entire risk asset complex will have to reprice. Tech is especially vulnerable, because so much of the future growth is already priced in. The “Everything Pullback” in commodities is a warning shot. When the market starts selling winners and losers alike, you know liquidity is getting tight.

Strykr Watch

Technically, XLK is boxed in at $141.06. The 50-day moving average is at $140.80, and the 200-day is at $142.00. RSI is stuck at 49, which is neither overbought nor oversold. The first real support is $139.50. If that breaks, the next stop is $137.00. Resistance is $142.50, and a close above that would signal a return to risk-on. Option open interest is skewed to the downside, with put/call ratios creeping higher. Volatility is still subdued, but the skew is starting to steepen, especially in the back months. That is a sign that traders are hedging against a bigger move, even if spot is not moving yet.

The risk is that the AI capex boom turns into a capex trap. If the promised growth does not materialize, the sector could see a rerating that makes the recent selloff look like a warmup. If inflation surprises to the upside, the Fed will have to stay hawkish, and the entire tech complex will have to reprice. If the Musk conglomerate experiment blows up, sentiment could sour in a hurry.

The opportunity is in picking winners and losers. The market is no longer rewarding “AI exposure” as a blanket trade. It is rewarding execution, cash flow, and real growth. If you can identify the companies that are turning capex into revenue, there is still money to be made. If XLK breaks above $142.50, the next leg higher is in play. If it breaks below $139.50, it is time to get defensive.

Strykr Take

The AI capex boom is not going away, but the easy money phase is over. Tech is now a market of haves and have-nots. If you are still buying every dip, you are not trading, you are praying. The next bull market will be built on execution, not hype. Position accordingly.

datePublished: 2026-02-07 12:15 UTC