🦹 M-AI-n character energy

Something has shifted around the AI trade. Can you feel it?

All the bullish oxygen is being sucked out of the room and squarely into the memory chip shortage, which is offering bumper profits for a handful of firms. On a related note, semicap equipment stocks have been an upstream beneficiary of this dynamic. The underlying message is that near-term scarcity is being rewarded by the market.

• That the big capex spenders will generate a high return on investment from their outlays is not something traders are willing to take for granted. Big budgets are not necessarily getting applauded.

• The big “consumers” of memory chips are getting squeezed. This includes the hyperscalers, obviously, but even more so the likes of Qualcomm, which has to wait behind these giants in line for supplies.

• For public markets, the theme is more of a net negative than a positive. Firms seen as the most likely to be disrupted by AI (basically, the entire software industry) are getting indiscriminately clobbered, regardless of how good their quarterly results and guidance are.

And this isn’t really a 2026 dynamic, strictly speaking, but the two biggest chip companies have been dead money for months. Since the end of Q3, Nvidia and Broadcom are both negative, with the S&P 500 up about 2% over this span.

The Takeaway

Perhaps the biggest driver of these trends is that in some of these zero-sum shifts in value, the companies that are benefiting? They ain’t public. SpaceX/xAI, OpenAI, and Anthropic? The facilitators of disruption, in many cases, have not yet arrived on public markets but plan to do so this year. 

So if the AI theme has seemed a little “negative sum” in this year, that might be about the room that investment firms know they’re going to need in their portfolios to add these stocks once they’re able to (or, in some cases, ahead of time).

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Amazon’s shares slid after the company missed Wall Street’s expectations for fourth-quarter earnings, gave downbeat first-quarter profit guidance, and forecast a whopping $200 billion of capital expenditure this year.

• Sales grew 14% to $213.4 billion, ahead of analysts’ expectations of $211.43 billion.

• Amazon’s AWS cloud business saw revenue jump 24% year on year to $35.6 billion, powered by huge demand for AI. Wall Street was expecting $34.9 billion.

• The guidance is rough: the tech giant also forecast first-quarter operating income of $16.5 billion to $21.5 billion, well below the Street’s consensus estimate of $22.18 billion.

• The company’s capital expenditure — a number that’s been watched closely in recent quarters as tech giants spend vast sums of money to build the infrastructure to power AI — totaled $39.5 billion, topping analysts’ forecasts of $34.37 billion.

Amazon continued a trend of Big Tech companies laying out plans for monster capital spending, saying it expects to invest about $200 billion of capital expenditure in 2026.

Two hundred billion dollars. 

The Takeaway

Like many tech companies, Amazon has a lot going on. The Trainium and Gravitron custom AI chips have a combined annual revenue of over $10 billion, it posted physical-store sales of $5.85 billion, advertising revenue was $21.37 billion, up 23% year on year, and subscription revenue (Amazon Prime, audiobooks, etc.) was up 14% year on year, at $13.1 billion for the quarter.

But again: $200 billion. That’s the kind of number a supervillain asks for when he’s captured James Bond. It’s more money than what’s in Russia’s sovereign wealth funds. They’re going to need to spend it at an average of ~$550 million per day. Hope it’s worth it!

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In this exclusive interview, e.l.f. Beauty CFO Mandy Fields discusses last year’s balmy, billion-dollar rhode acquisition, the company’s marketing engine and high-profile collabs, and its three key areas of growth for the future.

e.l.f.’s glow-up, charted

• 🏆 Super Bowl: The Seattle Seahawks are solid favorites going into the Super Bowl, with a 68% chance* of winning compared to a 32% chance for the AFC’s New England Patriots. 

• 🎵 Halftime Show: Bad Bunny’s halftime show promises to be good just days after the artist racked up the wins at the Grammy Awards. Markets think there’s a 55% chance he opens with the hit “Tití Me Preguntó.”

• 🏈 Game Time: Markets are pricing in a 42% chance of at least six touchdowns, a 9% chance of overtime, a 24% chance of a close game decided by 3 or fewer points, a 26% chance of a touchdown in the first five minutes, and an 18% chance of a comeback win by 10 or more points. 

*Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.

Earnings expected from Canopy Growth, Centene, Philip Morris, Biogen, Cboe, Under Armour, and Toyota