Chapter 1: What triggered the recent software sell-off and Amazon's earnings report?
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Chapter 2: How is AI impacting the tech market and investor sentiment?
I'm Ed Elson. It is February 10th. Let's check in on yesterday's market vitals. The S&P 500 and Nasdaq climbed as the Dow hit its second consecutive record close. Meanwhile, the dollar fell. Gold climbed back above $5,000 and Bitcoin was roughly flat after its drawdown last week. More on that in a moment. Okay, what else is happening? It's been a harrowing week for the tech sector.
Amazon is down 15% over the past five days after spooking investors with a nearly 60% jump in its 2026 CapEx outlook. The announcement came amid a brutal tech sell-off as new tools from Anthropic ignited fears that AI could kill the software industry. All told... The sell-off wiped out over $1 trillion in market value of tech stocks.
However, markets rallied on Friday as some traders bought the dip. Stocks continued their rally yesterday as Google raised $20 billion in a bond offering to fund its AI spending.
Chapter 3: What factors contributed to Bitcoin's recent price drop?
Still, Amazon fell deeper into the red. Okay, here to discuss what's happening with Amazon and the tech markets at large, we're speaking with pod favorite Robert Armstrong, U.S. financial commentator for the Financial Times, author of the Unhedged newsletter and co-host of the Unhedged podcast. Rob, welcome back to Property Markets. Great to be here. Let's get right to it. Yeah.
We'll start with Amazon. Amazon reported earnings, they... Basically met revenue expectations, basically met on earnings. It was a little bit of a mess.
Yes.
But the big news was they decided to increase their CapEx to $200 billion in 2026, up more than 50% from last year, $50 billion more than Wall Street expected. And now Amazon is essentially in free fall. Let's just start with your reactions to what happened to Amazon and the market's reaction.
Chapter 4: How does geopolitical tension affect Bitcoin and gold prices?
Well, let's just be clear. The amounts of money these companies are now talking about, Amazon, Google, Microsoft, Meta, are unbelievable, right? I mean, there's numbers being thrown around like you know, the amount of spending as a percentage of GDP somebody was taking today is more than was spent on the transcontinental railroads.
You know, it's like, I mean, I don't know what percentage of GDP the Great Pyramid of Giza was, but like, this is like titanic amounts of money. And I think the anxiety we've seen building for a number of months here is,
What is the ROI on these sums, hundreds of billions of dollars, the amount of revenue you're going to have to generate to make that a project comparable in profitability to the historical business of an Amazon or a Meta or a Google or a Microsoft are just staggering. Yeah. And so like, are these companies becoming structurally less profitable in the AI era? Maybe.
And I think that's what, you know, Amazon is down, you know, 15% lower than it was a few days ago. I think that is what the market is thinking. Yeah. You know, these may not be as, you know, they may be great AI companies in their next iteration, but AI might not be as good a business as their old business was. And there's no way of going back.
Chapter 5: What are the implications of Bitcoin's performance compared to gold?
You can't just sit by the sideline either.
Talk a bit about why has the market decided that? Because I look at what's happened with Amazon here. I also look at the reaction to Google, where Google announced that they were going to double their spending, and then the shares fell a little bit, but not really, and then again rebounded. It was a very different reaction. And even weirdly, metas went up. Metas went up, exactly. Yeah.
And so there are different reactions. I mean, it feels like we're trying to, or at least I'm trying to understand, which is an impossible task, what is the market really thinking? But there are a lot of contradictions happening here. As you say, Meta announces this gigantic spending plan, shares go up. Amazon does the similar thing. They basically all do the same thing. Amazon shares go down.
Chapter 6: How does Ethereum's market activity differ from Bitcoin's?
Meanwhile, there's this story happening in AI, which is anthropic, comes out with these incredible tools, and then everyone decides that's the future. Yeah. It's not going to be the legacy software companies like Salesforce and ServiceNow and the rest of them, which again seems to be a little bit of a contradiction because it's like, is AI going to be massively transformative?
Then, okay, maybe the spending is a good thing, or maybe it isn't going to be transformative. And in which case, the spending is a waste of money. Where does the market stand here?
Okay, I think this is... A quote jumps to mind, which is what William Golding, who was a novelist and screenwriter, said about Hollywood. You probably know this one. He said, nobody knows anything.
And what he meant by that was that you don't know, you make movies, and you don't know if you've made a good movie or not until an audience sits in front of it and likes it or doesn't like it and tells their friends and people start buying the tickets. It's just a crapshoot until you're in front of the audience. You don't know. And there is a flavor of that here.
we know this is a powerful technology, but we don't know what the business structure is going to look like.
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Chapter 7: What narrative challenges does Bitcoin face in the current market?
We don't know how deep the competitive moats around good, uh, AI businesses are. And of course, competitive moats are what determines the size of your returns. Yeah. Uh, we don't know how commoditized is going to be. And so it feels like the market is kind of, uh, flapping around looking for some kind of narrative it can cling to because we just can't know at this point. Do you know what I mean?
So like software companies, this route in business software companies was a perfect example. All those business software companies are not going to get crushed by AI. Some will incorporate it. Some will get crushed. Some will adopt. There's a lot more to running a business software company than just writing code. There's distribution and customer relationships and all of this stuff.
So do we know who's going to be steamrolled and who's going to adopt?
Chapter 8: What does the future hold for Bitcoin and Ethereum amid market volatility?
No. Yes. And we're just it's guesses and it's volatility and it's one narrative takes control for one day and then the next narrative. So I think, you know, the contradictions are not going to go away. Over the long run, markets will price this, but it's really struggling to do it right now.
100%. I would just add, I mean, I think that's exactly right. No one really knows what's going on, hence why we're seeing all of this volatility. And in those moments, it does seem that the best thing you could do as an investor is just go back to square one and go back to fundamentals. Yeah. Go back to the fundamentals of valuation.
And, you know, I'm just looking at the multiple on Amazon right now, trading at... It was 29 times earnings earlier in the day. We've bounced back up a little bit to 30 times earnings. But let's compare that to Walmart. Walmart is trading at 47 times earnings. Let's compare this to Costco. Costco is trading at 54 times earnings.
Unbelievable disparity here between Amazon, the future of retail, and then Walmart, the past.
Past the retail, but you know, and first of all, Walmart, we should just say, and Costco are brilliantly managed companies. Like it's, to say those are boring old grocers really misses it.
You know, I think Walmart, Walmart's management has been courageous about kind of grasping the online nettle and making hard decisions about accepting lower margins in return for, you know, uh, higher revenues and all this stuff. But the point is you just know more about Walmart's future than you do know about Amazon's future. Right. Right. It is, it is easier to predict.
And that's why, that's the difference in multiple right there. It's an uncertainty, it's a certainty premium for the Walmarts and the Costcos and an uncertainty premium for the Amazons. And look, all of these staple stocks, even the, those are the two best staples companies in the world, but like all these, like the crappy staple stocks like Campbell's Soup, those are doing well too.
And those aren't growing at all. Like there's all these kind of old school consumer goods companies companies that, you know, they can't get any price and they're not growing at all, but they're rallying this year because at least, you know, they'll be around. Right. I mean, you know, people are still going to use trash bags. Exactly.
It seems that that is, I mean, it's astounding the amount of money investors are willing to pay right now for certainty.
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