Until very recently, the narrative around AI was that the $600 billion of annual corporate capital expenditure (“capex”) fueling it was good for stocks in the short term. The companies receiving that money as new revenue (AI model makers, data center constructors, and the energy companies supplying them) would be the immediate beneficiaries. The efficiencies delivered by AI would be good for tech and non-tech companies alike. The Big Tech hyperscalers have always argued that the demand from their revenue-paying clients far exceeded their ability to supply AI services. That narrative was turned on its head in the past 24 hours as it dawned on traders that AI also has the ability to reduce the revenues of a vast range of adjacent tech companies. The argument—advanced by Palantir CEO Alex Karp and CTO Shyam Sankar on their recent earnings call—is that AI is now so good at writing or managing enterprise software that it threatens to make irrelevant a range of tech companies that have, for years, enjoyed recurring revenues by providing enterprise apps to companies on a software-as-a-service (SaaS) basis.
That led to a widespread selloff of tech stocks, wiping away $300 billion in market cap in a single session.
