Market Isn't Being Rational Right Now: Qu

Why It Matters

The disconnect signals heightened volatility for AI‑linked equities and underscores the need for investors to differentiate between truly resilient businesses and speculative hype.

Key Takeaways

• NVIDIA shares dip despite massive AI capex announcements
• Investors fear AI race will produce many losers
• Verticalized software firms show greater resilience to AI disruption
• Safety and regulation concerns shift AI investment toward Asia
• MAG 7 earnings softness fuels market skepticism on AI spending

Pulse Analysis

The recent interview with Momei Qu reveals a growing disconnect between headline‑grabbing AI spending and market pricing. While the “MAG 7” tech giants have pledged unprecedented capital expenditures to embed artificial intelligence across their product lines, NVIDIA’s share price has softened for two consecutive weeks. This paradox reflects a broader investor anxiety: the fear that lofty AI budgets may not translate into proportional earnings growth, especially as software firms grapple with potential displacement by large‑language models. The resulting sentiment volatility is prompting traders to reassess the risk‑reward profile of AI‑centric stocks.

Sector nuance is emerging as a critical lens for evaluating AI impact. Companies with deep vertical expertise—such as Autodesk in construction or niche legal‑tech providers—are perceived as more insulated from wholesale disruption because their workflows rely on specialized knowledge that AI cannot easily replace. Conversely, firms with commoditized, data‑driven processes face heightened exposure to rapid AI adoption. This differentiation is reshaping portfolio allocations, with investors favoring businesses that combine AI augmentation with defensible moats over pure play AI bets.

Geography adds another layer of complexity. Heightened safety and regulatory scrutiny in the United States and Europe is nudging capital toward Asian markets, where growth‑focused AI investment remains vigorous and regulatory constraints are comparatively lighter. This shift underscores a strategic pivot: firms that can demonstrate robust safety protocols while maintaining aggressive AI development may capture cross‑regional funding streams. For market participants, the key takeaway is to balance enthusiasm for AI’s transformative promise with disciplined analysis of sector resilience, regulatory environments, and realistic return expectations.

Market Isn't Being Rational Right Now: Qu

February 17 2026 · Interview with PSP Growth Managing Director Momei Qu (Bloomberg Surveillance)

JONATHAN: Let’s just take it from the top and think about what has been announced – a massive amount of capex and tensions across four companies – and yet NVIDIA is starting to trade softer over the past two consecutive weeks. Why are we seeing a decoupling from one of the biggest picks and shovels and the biggest capex intentions of some of the biggest companies on the planet?

MOMEI: Good morning. There are definitely a lot of fears that not everything is rational. If you look at the main reasons for the sell‑offs last week and weeks prior, I think some of them are at odds with one another. You are seeing softness in the “MAG 7” to the massive spending, and the concern that maybe those investments will not make a return. At the same time, software stocks are being hit because of the AI disruption happening that might threaten them. So, in my head, those two are at odds with one another, making me think there is a broad fear in the market.

When you look at NVIDIA with the other bigger companies, there is probably a lot of irrationality in those and that people might think NVIDIA has been over‑priced and are already thinking the promises have been made too high. As of now, NVIDIA can beat earnings and do everything right and yet the expectations are so high that the market is not being rational.

JONATHAN: Let us take the two extremes – it is going to crush everything or it is a waste of money. Do you pick one or the other or something in between?

MOMEI: Something in between.

One of the fears causing all of the fear in the market is that I think there will be quite a few losers in the AI race. You will not have every company become the next big giant. But I do think that painting everything with a broad brush is not rational. If you look at sectors with more verticalized knowledge and processes, they will not be disrupted the same way. We see that Autodesk has been hit very hard in the construction and software stock. We own two tech companies. They are doing quite well and they are very resilient. We are seeing customers with general contractors on the job sites. Those are working every day and this will not as all the up and find a way to find engineering contract – talent to work with Anthropic to build their own AI tools.

For those industries we will be more shielded than the rest of the market and painting them with a broad brush is not rational.

LISA: How do you know what is rational and not rational? If you have a lot of people talking about what you are saying and who has a moat where they can be protected and then you have an AI safety researcher quitting and saying the world is in peril and going to write poetry. Which is it?

MOMEI: That is the million‑dollar question and it will shake out differently in different parts of the sector. Some centers will be more resilient and others with more simpler workflows where you see a higher disruption in the legal space because that is more structured data and more prone to disruption with large language models.

On the safety side that is an interesting trend. In my head it is a maturity of the market and it thinks that AI will be more mainstream than before. If something is simply experimental you will not have AI researchers at the companies, never mind safety researchers ringing alarm bells that something needs to be done. I think it is good that we are paying more attention to safety and security and regulation. I think those of the public and private markets and the companies that will show more resilience.

LISA: We are seeing more of a focus on safety in the United States and Europe. How much is this a reason people are going to Asia tech where there is more focus on growth rather than the potential constraints?

MOMEI: That is a large part of the region and we are definitely seeing more activity in Asia and more activity within India, investing all of these dollars in AI. Safety is one reason but it is also momentum. We see a lot of activity from the U.S. and Europe market, investing in mainstream AI, and Asia is now all of a sudden announcing that they are investing heavily in mainstream AI. It is both a safety piece as well as the momentum piece that we’re seeing.