Tech ETF XLK Stalls Out: Is Wall Street’s AI Spending Binge Finally Hitting a Wall?

It’s not every day that the market’s favorite momentum trade slams on the brakes. But that’s exactly what’s happening with XLK, the Technology Select Sector SPDR Fund, which has spent the last 24 hours welded to $141.06 like a Tesla in a traffic jam. For a sector that’s been the engine of every bull run since the iPhone, this is more than a pause, it’s a warning shot.

Why should traders care about a tech ETF that’s suddenly allergic to volatility? Because when the market’s leadership stops leading, the rest of the tape gets nervous. The real story isn’t just that XLK is flat. It’s that the AI hype cycle, which has powered tech to nosebleed valuations, is colliding with the cold reality of earnings, capex blowouts, and a market that’s running out of greater fools.

Here’s the tape: As of 2026-02-08 07:15 UTC, XLK is frozen at $141.06. Not a tick higher, not a tick lower. This comes on the heels of a week where Big Tech earnings ranged from “solid” to “existential crisis.” MarketWatch is running stories about a $650 billion AI spending spiral, while YouTube analysts are dissecting every word from Alphabet, Amazon, Meta, Apple, Microsoft, Tesla, AMD, and Palantir. The verdict? Investors are getting cold feet. The AI trade, once a one-way ticket to riches, is looking a lot more like a round trip.

The context is brutal. In 2023 and 2024, tech was untouchable. Every dip was bought, every earnings miss was forgiven, and every press release with “AI” in the headline added billions in market cap. Fast-forward to 2026, and the mood has shifted. The S&P 500 is still flirting with all-time highs, but the leadership is coming from old-economy stocks, pharma, industrials, even the Dow. Meanwhile, software and AI-exposed names are getting pummeled, with the sell-off picking up steam in February as fresh fears emerge about the sustainability of the AI capex binge.

The numbers don’t lie. Big Tech’s earnings were a mixed bag. Some beat, some missed, but the common thread was ballooning capital expenditures and guidance that sounded more like a plea for patience than a victory lap. Investors are starting to ask uncomfortable questions about ROI, margins, and whether the AI arms race is creating value or just burning cash. The result? XLK is stuck in neutral, with no catalyst to break the deadlock.

Cross-asset flows tell the same story. Money is rotating out of tech and into value, defensives, and even commodities (though, as we’ve seen, that trade is also stuck in the mud). The market is bifurcated, old-economy stocks are rallying, while tech is treading water. The “two different markets” thesis isn’t just a soundbite. It’s the reality on the screen.

So what’s really going on? The AI trade has hit the law of large numbers. The easy money has been made, and now investors are demanding proof that all those billions in capex will actually generate returns. The market is no longer willing to pay any price for growth. Valuations are stretched, and the margin for error is razor-thin. If Big Tech can’t deliver, the whole sector could be in for a rude awakening.

Strykr Watch

Technically, XLK is boxed in. The $141.00 level is acting as a gravity well, with resistance at $143.50 and support at $139.20. The 50-day moving average is starting to flatten, and RSI is stuck around 51. There’s no momentum, no conviction. Option flows are muted, with implied volatility at multi-month lows. If you’re waiting for a breakout, you’ll need a catalyst, either a blowout earnings report or a macro shock that sends money rushing back into tech.

The risks are obvious. If the AI spending spree fails to deliver, or if margins compress further, tech could break down in a hurry. A hawkish Fed or a hot CPI print could accelerate the rotation out of growth and into value. On the other hand, if the market decides that the AI narrative still has legs, we could see a sharp reversal as FOMO kicks back in. The risk isn’t in the current price, it’s in the potential for a regime shift.

There are opportunities here, but they require discipline. For the patient trader, a breakout above $143.50 could signal the start of a new trend, with upside targets at $147.00 and $150.00. On the downside, a break below $139.20 opens the door to $136.00 and possibly lower. Options traders might look at calendar spreads or iron condors, betting on continued rangebound action until the next catalyst arrives.

Strykr Take

Tech isn’t dead, but the easy money is gone. XLK’s flatline is a warning sign, not a buying opportunity. The next move will be violent, up or down. Keep your stops tight and your powder dry. When the AI trade wakes up, you’ll want to be on the right side of it.

datePublished: 2026-02-08 07:15 UTC