Tech ETF XLK Flatlines as AI CAPEX Hype Meets Rotation Reality—Is the Growth Story Over?

If you want a snapshot of the market’s current existential crisis, look no further than the Technology Select Sector SPDR ETF, XLK, sitting at $143.84 and refusing to budge. Not up, not down, just flatlining like a patient on a monitor as traders try to figure out whether the AI gold rush is already priced in or if there’s another leg higher after last year’s melt-up. The so-called “AI CAPEX supercycle” is the latest narrative to grip Wall Street, with hyperscalers like Amazon, Google, Meta, and Microsoft collectively pledging to jack up their capital expenditures by a staggering 56% year-over-year for 2026. The numbers are huge, the headlines are breathless, and yet, XLK is dead money for now.

The facts on the ground are clear. According to Seeking Alpha (2026-02-09), Amazon and Google are leading the charge with eye-watering CAPEX guidance, promising to build out ever more data centers, GPU clusters, and whatever else it takes to keep the AI dream alive. But the market, always a step ahead, is asking the uncomfortable question: how much of this is already in the price? After years of relentless outperformance, tech is now digesting gains, with “smart money” quietly rotating into sectors that haven’t already gone parabolic. Jay Woods of Freedom Capital Markets (2026-02-09) notes that tech is “digesting gains after years of outperformance,” and you don’t need to be a quant to see the sector rotation happening in real time.

The big picture is that tech’s price-to-earnings ratio, according to MarketWatch (2026-02-09), has barely budged relative to its 10-year average, even as the S&P 500 overall looks expensive. That’s the paradox. AI is supposed to be the next industrial revolution, but the market is treating it like yesterday’s news. Cross-asset flows tell the story: money is trickling out of mega-cap tech and into everything from industrials to energy to, yes, even boring old value stocks. The AI trade is no longer the only game in town, and the crowding is starting to show.

So what’s really going on? The market is wrestling with the “AI CAPEX reality check.” On one hand, the hyperscalers’ spending plans are so aggressive that they could easily overshoot demand, leading to a classic boom-bust cycle. On the other, the actual earnings growth from all this investment is still theoretical. Investors are tired of paying up for stories, they want hard numbers, and they want them now. Meanwhile, the rotation into other sectors isn’t exactly a stampede, but it’s enough to keep tech from breaking out. The result is stasis: XLK stuck at $143.84, waiting for the next catalyst.

Strykr Watch

Technically, XLK is pinned between support at $142 and resistance at $146. The 50-day moving average is flatlining, while RSI hovers around 52, neither overbought nor oversold. The lack of volatility is almost eerie, especially given the sector’s reputation for fireworks. Options open interest is skewed toward upside calls, but the lack of follow-through suggests traders are hedging rather than betting big. If XLK can break above $146 on volume, the next stop is the all-time high near $150. A break below $142 opens the door to a quick flush down to $138, where dip buyers are likely lurking.

The risk here is that the market’s patience wears thin. If the next round of earnings doesn’t deliver on the AI hype, we could see a sharp repricing. On the flip side, any sign that CAPEX is actually translating into revenue growth could reignite the rally. The key is to watch for confirmation, don’t chase, but don’t get caught flat-footed if the narrative shifts.

The bear case is straightforward: too much optimism, too little delivery. If hyperscaler CAPEX turns out to be a giant game of chicken, with each company trying to outspend the others, the sector could be setting itself up for disappointment. Rising rates, regulatory scrutiny, and the ever-present threat of a macro shock are all lurking in the background. If XLK loses the $142 level, look out below.

But there are opportunities here, too. The rotation out of tech is creating pockets of value, especially in names that have been unfairly punished. For nimble traders, buying the dip near $142 with a tight stop makes sense. On the upside, a breakout above $146 could trigger a fast move to $150 and beyond. The key is to stay flexible and let the price action lead.

Strykr Take

The AI CAPEX supercycle is real, but the market is already looking past the headlines. XLK is stuck in a holding pattern for now, but that won’t last forever. The next big move will be driven by earnings, not narratives. Stay nimble, watch the levels, and don’t get caught chasing yesterday’s trade. This is a market for traders, not storytellers.

datePublished: 2026-02-09 20:15 UTC