The flashpoint was Amazon. The company reported solid results, then promptly announced it would spend dramatically more on AI infrastructure this year - well over 50% more. This landed as a reminder of how expensive ambition has become. The stock sank sharply.

This is the new mood. For much of last year, AI was treated less like a business investment and more like a moral imperative. Spend now, justify later. The market went along with it because it wanted to believe that scale alone would produce returns. But scale, it turns out, is not a business model. It's a bill.

Investors are now signaling that they want to see how this all turns into money. The market's tolerance for capital spending without clear monetization has worn thin..

That skepticism spilled across the tech landscape this week. Software and data-services companies - long treated as AI's natural winners - have been hit hard, as investors worry that faster, cheaper AI tools could hollow out their traditional businesses. The sector is heading for its worst week since the early days of the pandemic. 

At the same time, the supposed beneficiaries of AI spending - chipmakers and hardware suppliers - have become a kind of refuge within the storm. Their logic is easier to grasp: if everyone is building data centers, someone has to sell the shovels. But even here, the confidence feels conditional. The market is less generous than it was a month ago.

This shift helps explain the strange crosscurrents of today's session. Defensive sectors like consumer staples and telecoms are drawing money, even as risk assets more broadly are re-priced. Cryptocurrencies, once closely linked to the tech trade, are far below their recent highs. Traditional correlations are misbehaving. Gold is rising, but not quite playing its usual role as a universal hedge. Silver is swinging wildly enough to give anyone a headache. Volatility is rife.

There is, of course, a comforting phrase for moments like this: "healthy consolidation." Markets use it the way people use "detox" - to suggest that discomfort is not only temporary but virtuous. Sometimes that is true. Markets do need to correct excesses. They need to remind participants that prices can go down. The problem is that every serious sell-off in history also began as a consolidation. The difference is only clear in hindsight, which is famously unhelpful.

Small- and mid-cap stocks are holding up better than their large-cap tech counterparts. A handful of companies with clear, near-term stories - like Roblox, which raised its outlook - were rewarded. Elsewhere, the fear gauge eased slightly.

Expect more days like today: choppy, reactive, occasionally illogical. Investors praising restraint in the morning and chasing rebounds by the afternoon. The main companies reporting today are Toyota, Philip Morris, Centene Corp., CBOE, Piper Sandler and Under Armour.

Today's economic highlights:

On today's agenda: In the United States, the University of Michigan Consumer Sentiment. In Europe, the Halifax House Price Index in the United Kingdom; in Germany, exports, balance of trade, and industrial production; balance of trade in France; unemployment rate in Switzerland; the ECB Survey of Professional Forecasters; in Canada, changes in full-time and part-time employment, unemployment rate, and participation rate. See the full calendar here.

  • Dollar index: 97,805
  • Gold: $4,864
  • Crude Oil (BRENT): $68.33 (WTI) $64.19
  • United States 10 years: 4.20%
  • BITCOIN: $65,737

In corporate news:

  • Netflix faced controversy in Indonesia after police summoned comedian Pandji Pragiwaksono over public complaints about satirical political and religious content in his Netflix stand-up special.
  • CME Group raised margin requirements for gold and silver futures again, citing persistent volatility in precious metals markets.
  • Phillips 66 will lay off 277 workers as it winds down operations ahead of the planned closure of its Los Angeles-area refinery.
  • Donald Trump unveiled TrumpRx, a new website offering discounted prescription drugs through deals with major pharmaceutical companies, though consumer savings remain uncertain.
  • Chevron and other bidders are still pursuing Lukoil's global assets despite an initial agreement between Lukoil and private equity firm Carlyle, with regulatory approvals still pending.
  • MPLX priced a $1.5 billion debt offering to refinance upcoming maturities, issuing senior notes due in 2036 and 2056.
  • WeRide and Uber Technologies plan to deploy at least 1,200 robotaxis across Abu Dhabi, Dubai and Riyadh, with completion targeted as soon as next year.
  • Uber Technologies was ordered by a U.S. federal jury to pay $8.5 million in damages to a woman sexually assaulted by one of its drivers.
  • Affirm expanded its partnership with Wayfair to the UK and Canada, offering installment payment options to international shoppers.
  • Intel and AMD warned Chinese customers of server CPU supply shortages, with delivery delays stretching up to six months amid surging AI-driven demand.
  • Affirm partnered with Virgin Media O2 to provide flexible financing options to O2 customers in the UK.
  • Amazon shares fell sharply after the company forecast a more than 50% jump in capital expenditures as it accelerates spending on artificial intelligence infrastructure.
  • Hims & Hers sparks price war with low-cost GLP-1 pill, putting pressure on Novo Nordisk and Eli Lilly. Hims fell 11% after hours after the FDA threatened to take action against ‘illegal counterfeit drugs'.
  • Apple scales back plans for new AI-powered health coaching service, according to Bloomberg.
  • Nvidia is delaying the release of its new video game chip due to a shortage of memory chips, according to The Information.
  • Zscaler acquires SquareX to advance Zero Trust browser security.
  • Liftoff Mobile, part of the Blackstone stable, has reportedly postponed its IPO due to deteriorating market conditions.

Analyst Recommendations:

  • Crown Holdings, Inc.: JP Morgan downgrades to neutral from overweight and raises the target price from USD 112 to USD 115.
  • Doximity, Inc.: JP Morgan upgrades to neutral from underweight and reduces the target price from USD 62 to USD 40.
  • Jpmorgan Chase & Co.: HSBC upgrades to hold from reduce and raises the target price from USD 296 to USD 319.
  • Meta Platforms, Inc.: China Securities Co., Ltd. upgrades to buy from dropped coverage with a price target raised from USD 361 to USD 805.
  • O'reilly Automotive, Inc: Baird initiates coverage with a neutral rating and a target price of USD 96.
  • Old Dominion Freight Line, Inc.: Deutsche Bank downgrades to hold from buy and raises the target price from USD 167 to USD 205.
  • Roku, Inc.: Oppenheimer upgrades to outperform from market perform with a target price of USD 105.
  • Vistra Corp.: Goldman Sachs upgrades to buy from neutral with a price target raised from USD 200 to USD 205.
  • Alphabet Inc.: CICC maintains its outperform rating and raises the target price from USD 303 to USD 388.
  • Applied Materials, Inc.: Rothschild & Co Redburn maintains its neutral recommendation and raises the target price from USD 190 to USD 310.
  • Atlassian Corporation: Barclays maintains its overweight recommendation and reduces the target price from USD 215 to USD 165.
  • Bloom Energy Corporation: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 95 to USD 130.
  • Blue Owl Capital Inc.: Piper Sandler & Co maintains its overweight recommendation and reduces the target price from USD 21 to USD 15.
  • Boston Scientific Corporation: CICC maintains its outperform rating and reduces the target price from USD 134 to USD 105.
  • Datadog, Inc.: Cantor Fitzgerald maintains its overweight recommendation and reduces the target price from USD 220 to USD 150.
  • Enphase Energy, Inc.: Zacks maintains its neutral recommendation and raises the target price from USD 39 to USD 54.
  • Gartner, Inc.: Truist Securities maintains its buy recommendation and reduces the target price from USD 300 to USD 170.
  • Hubspot, Inc.: KeyBanc Capital Markets maintains its overweight recommendation and reduces the target price from USD 650 to USD 400.
  • Macom Technology Solutions Holdings, Inc.: Craig-Hallum maintains its buy recommendation and raises the target price from USD 195 to USD 280.
  • Madison Square Garden Sports Corp.: JP Morgan maintains its overweight recommendation and raises the target price from USD 240 to USD 305.
  • Microchip Technology, Inc.: Rosenblatt Securities Inc. maintains its buy recommendation and raises the target price from USD 80 to USD 115.
  • Nextpower Inc.: Daiwa Securities maintains its outperform recommendation and raises the target price from USD 100 to USD 128.
  • Nov Inc.: Evercore ISI maintains its in-line recommendation and raises the target price from USD 15 to USD 19.
  • Paylocity Holding Corporation: Citizens maintains its market outperform recommendation and reduces the target price from USD 245 to USD 170.
  • Qualcomm, Inc.: CTBC Securities Investment Service Co LTD maintains its neutral recommendation and reduces the target price from USD 180 to USD 142.
  • Ralliant Corporation: RBC Capital maintains its sector perform recommendation and reduces the target price from USD 52 to USD 41.
  • Reddit, Inc.: Cantor Fitzgerald maintains its neutral recommendation and reduces the target price from USD 240 to USD 170.
  • Roblox Corporation: JP Morgan maintains its neutral recommendation and reduces the target price from USD 100 to USD 75.
  • Samsara Inc.: Piper Sandler & Co maintains its overweight recommendation and reduces the target price from USD 49 to USD 37.
  • Silicon Laboratories Inc.: Citi maintains its neutral recommendation and raises the target price from USD 135 to USD 231.
  • The Hershey Company: Bernstein maintains its market perform recommendation and raises the target price from USD 192 to USD 250.