NYSE’s AI Trade Jitters: Why Wall Street Is Suddenly Second-Guessing the Tech Boom

If you want to know how much the AI trade has warped Wall Street’s collective psyche, just look at the way traders are treating anything with a whiff of software exposure. The same names that could do no wrong in 2025 are now getting the side-eye as investors try to figure out if the $650 billion AI spending binge is a moonshot or a money pit. The real kicker? The NYSE’s own Michael Reinking is on YouTube, calmly noting that the S&P 500 Equal Weight Index just hit an all-time high, while the tech-heavy crowd is busy sweating out every tick in the XLK ETF, which, for the record, is frozen at $141.06 like a deer in the headlights.

This isn’t just a case of “rotation.” It’s a full-blown market identity crisis. The narrative has flipped: AI is no longer the magic bullet, it’s a capital drain. The hyperscalers are burning through cash at a rate that would make SoftBank blush, and suddenly the old-economy stocks, those “Dow dinosaurs”, are the belle of the ball. Meanwhile, XLK is stuck, refusing to budge even as the broader market grinds higher. The question isn’t whether AI is the future. It’s whether the future is priced in, or if Wall Street just paid a decade’s worth of returns up front.

Let’s get specific. The S&P 500 Equal Weight Index, that much-maligned stepchild of the cap-weighted behemoth, is quietly outperforming. Breadth is back. The “Magnificent Seven” are looking less magnificent, and more like a cautionary tale about buying hype at any price. The AI trade, once a one-way street, is now littered with potholes: earnings misses, margin compression, and a growing sense that the easy money has already left the building.

Marketwatch’s coverage of the “growing divide within markets” nails it: there are two realities now. In one, value stocks and industrials are grinding higher on solid fundamentals. In the other, the AI narrative is eating itself, with every new dollar of capex greeted by a yawn or a sell order. The rotation is real, and it’s not just a blip. The Dow is above 50,000. The XLK ETF is flatlining. The S&P 500 Equal Weight is at all-time highs. If you’re still all-in on the AI dream, you’re not just late to the party, you might be the only one left dancing.

The macro backdrop isn’t helping. Fed officials are still talking tough on inflation, and the January CPI print is looming like a bad hangover. The market’s tolerance for “growth at any price” is gone. Now it’s about cash flow, not clickbait. The hyperscalers’ $650 billion capex orgy is starting to look less like visionary investment and more like a desperate attempt to justify nosebleed multiples. And the market is calling their bluff.

Strykr Watch

Technically, XLK is locked in a holding pattern at $141.06. Support sits at $138.50, with resistance at $143.20, but the real story is the lack of momentum. RSI is stuck in neutral, and the 50-day moving average is flattening out. The S&P 500 Equal Weight Index, meanwhile, is in breakout mode, with breadth indicators at multi-year highs. If you’re trading the spread between tech and value, this is your moment.

The risk here is a snapback rally in tech if earnings surprises come in hot, but the tape doesn’t lie: money is flowing out of the AI darlings and into the old-economy names. Keep an eye on volume. If XLK breaks below $138.50, the next stop is $135. On the upside, a close above $143.20 could trigger a short-covering rally, but don’t bet on it unless you see real buying.

The bear case is simple: AI spending is a black hole, margins are compressing, and the market is tired of waiting for profits that never materialize. The bull case? Maybe, just maybe, the hyperscalers pull a rabbit out of the hat and show that all this spending actually moves the needle. But until then, the path of least resistance is lower.

For traders, the opportunity is in the rotation. Long value, short tech. Play the spread. If you’re nimble, there’s money to be made fading the AI hype and riding the wave into old-economy sectors. Just don’t get caught chasing yesterday’s winners.

Strykr Take

The AI trade isn’t dead, but it’s definitely on life support. The market has moved on, and so should you. If you’re still clinging to the hope that another round of earnings will reignite the tech boom, you’re missing the bigger picture. The rotation is real, the breadth is broadening, and the easy money is gone. Adapt or get left behind.

datePublished: 2026-02-07 22:15 UTC