Tech’s Capex Binge: Why AI’s Spending Spree Has Asian Markets on Edge and Wall Street Watching

If you want to know what panic looks like in 2026, look no further than the Asian equity screens after hours. The AI trade, which has been the market’s golden child since 2022, just threw a tantrum worthy of a toddler hyped on Red Bull. South Korea’s main exchange had to hit the circuit breaker as investors collectively realized that 'AI capex' is not a magic word, but a real-world line item that can torch margins and send multiples into freefall.

The facts are clear: Asian stocks took a nosedive, with South Korea leading the charge into the abyss. The catalyst? A wave of anxiety over the region’s tech giants announcing eye-watering capital expenditure plans for AI infrastructure. According to the Wall Street Journal (wsj.com, 2026-02-05), the swings were so sharp that South Korea’s regulator briefly halted trading. The move was less about a single earnings miss and more about the dawning realization that AI’s arms race is burning through cash at a rate that would make SoftBank blush.

Meanwhile, the U.S. tech sector, as measured by $XLK (currently parked at $135.6, unchanged in the latest session), is holding its breath. The software rout in the U.S. is deepening, and the debt markets are starting to sweat as credit exposure to tech balloons. The narrative that 'AI eats the world' is colliding with the reality that someone has to pay for the buffet.

This is not just an Asian story. The global tech complex is in the throes of a classic capex cycle, and the ghosts of the dot-com bubble are rattling their chains. The last time tech spent like this, we got fiber optic cables to nowhere and a Nasdaq that didn’t recover for a decade. The difference now? AI is real, but so are the costs. U.S. investors are watching for signs of contagion. If Asia’s AI giants are forced to retrench, expect the pain to ripple through supply chains, chipmakers, and the software sector.

The macro backdrop is not exactly soothing. With Kevin Warsh’s Fed nomination injecting fresh uncertainty into U.S. rates policy, the risk-off mood is spreading. The AI trade has powered global markets since October 2022, but this year’s gains are looking fragile. The software selloff is now dragging all three major U.S. indexes lower, and the debt market is flashing warning signs as tech credit risk goes mainstream.

What’s different this time? For one, the AI capex binge is not just about hype. Companies are spending real money on data centers, chips, and infrastructure. But the market is waking up to the fact that these investments have long payback periods and uncertain returns. The days of infinite multiple expansion are over. Investors want cash flows, not just promises of 'transformational' growth.

Strykr Watch

Technical levels in $XLK are now front and center. The ETF is clinging to $135.6, but the real test is the $132 support zone, which has held since the October 2023 breakout. A break below that opens the door to $125, where the 200-day moving average lurks. RSI is rolling over from overbought territory, and momentum is fading. Watch for volume spikes on any break of support, this is where the algos get nervous.

Across Asia, the KOSPI’s circuit breaker was triggered near the 2,350 level, a key psychological floor. If that cracks, look for a cascade of forced selling as margin calls hit. The Nikkei is flirting with 32,000, but the real fireworks are in the tech-heavy sub-indices.

The debt market is the wild card. Credit spreads on tech loans are widening, and any sign of funding stress could accelerate the selloff. Keep an eye on U.S. high-yield tech bonds for early warning signals.

The risk here is that the AI capex cycle turns from a virtuous circle (spending begets growth) into a vicious one (spending begets margin compression and credit risk). If companies start to miss earnings because of ballooning capex, the market will punish them. The bear case is a replay of the early 2000s, with overbuilt infrastructure and a long hangover.

But there are opportunities for traders who can read the tape. If $XLK holds $132, there’s a case for a tactical long, targeting a bounce back to $140. The pain trade is lower, but oversold conditions could trigger sharp rallies. Look for capitulation selling as a signal to step in. On the short side, fading any weak rallies into resistance has worked.

Strykr Take

The AI capex panic is real, but so is the opportunity. This is not the end of the AI trade, but a brutal repricing of expectations. The winners will be the companies that can spend wisely and show real returns. For traders, this is a volatility event, not a trend change, yet. Stay nimble, respect the tape, and don’t buy every dip. The market is reminding us that even the hottest story can burn you if you ignore the bill.

datePublished: 2026-02-06 03:45 UTC