Nathaniel Whittemore

Welcome back to the AI Daily Brief.

For basically the last quarter of last year, one of the big topics of conversation around AI was whether we were in a bubble.

Now, we've talked extensively on this show about why it's important to separate the market conversation about whether we are in a bubble in terms of things like valuation and capitalization for AI companies from whether it's actually significant and meaningful technology that you need to be paying attention to, and yet still these things are not disconnected.

There will, for example, be impacts to the speed at which new, better AI comes to market if additional capital and financing for companies is no longer available.

Now, so far in 2026, markets frankly just haven't had all that much time to worry about AI.

Between Venezuela and Greenland and domestic unrest and future government shutdowns, let's just say that the risk-off dance card has been a little full.

Yet, of course, this question about an AI bubble has never really gone away.

In fact, part of what makes it such a potent conversation is that it is ultimately a debate.

There is no way, at least in the short term, of knowing who is right and who is wrong.

There is only the loudness with which either side can present evidence.

Now, with all that as background, we got some of our first chance to see where markets are in a renewed version of that conversation as we got meta and Microsoft earnings.

Bloomberg host Caroline Hyde summed it up this way.

Meta wins, Microsoft loses when it comes to after-hours market reaction to earnings.

Both beat on earnings and revenue.

Both yanked up CapEx.

Both talked of the positive impact of AI spending.

But investors found it hard to see the CapEx rewards for Microsoft given the slight slowdown in Azure growth rate versus the previous quarter.

Zuckerberg and team did a better job at highlighting the strength of its AI investments are already bestowing on its recommendation system, its video impressions, and therefore its ad success and 25% revenue growth.

Zuckerberg also spoke excitedly about the coming year in terms of LLM improvements, meaning current systems are primitive compared to what will be possible soon.

That's his quote.