Wall Street Splits Big Tech Into Winners and Losers on AI Returns

February 4, 2026

By: Wiss Team

Wiss Team

Big Tech’s earnings season exposed a sharp divide in market performance as investors demand concrete evidence that billions in AI investments are generating returns, not just spending commitments. The divergence, described by Wedbush Securities’ Dan Ives as “the haves and the have-nots,” is reshaping tech stock valuations based on clarity of monetization rather than investment scale.

The Winners and Losers

Meta stock jumped over 10% in a single day as investors rewarded productivity gains and AI integration across the company’s social media platforms, advertising tools, and internal operations. The market response reflected confidence that Meta is extracting value from AI investments rather than simply deploying capital.

Microsoft faced the opposite reaction. Shares dropped following earnings amid concerns about slowing cloud growth amid massive AI-related spending. The market punished what it perceived as spending without proportional returns, according to Yahoo Finance reporting.

Cloud software leaders Salesforce and ServiceNow also tumbled amid concerns that AI could disrupt the software-as-a-service business model—an ironic outcome in which AI investment simultaneously threatens existing revenue streams.

Tesla shares rebounded Friday after an initial sell-off following Elon Musk’s presentation on the company’s transition from an electric vehicle manufacturer to an autonomous driving and robotics company. The mixed response illustrated investor uncertainty about capital-intensive pivots without near-term revenue visibility.

The Monetization Question

“It comes down to monetization. That’s what the Street wants to see here,” Ives told Yahoo Finance. “I think what you’re seeing is really a bifurcation in tech. It’s kind of the haves and the have-nots, and that’s really what’s playing out across tech earnings.”

The market has grown wary of an AI bubble in recent quarters, demanding that companies demonstrate their billions in AI investments are producing measurable returns. Companies that can’t articulate clear paths from spending to revenue face valuation pressure regardless of investment scale or technological sophistication.

This represents a maturation in how markets evaluate AI investments. Initial enthusiasm for any AI initiative has given way to ROI scrutiny more typical of established technology categories. The shift disadvantages companies with longer monetization timelines, even if their technical approaches may prove superior in the long term.

The Software Sector Correction

Wolfe Research managing director Alex Zukin observed that “investors are voting with their feet, and they’re going into sectors where the growth is more obvious to see, and they feel like there is durability.”

Despite recent software stock weakness, Zukin argues the sell-off is overdone, given that AI benefits in enterprise environments take longer to materialize than consumer applications. “There’s a lot more complexity associated with enterprise, data, governance, security, compliance, risk, and we think that some of these trends and themes can play out over a longer period of time,” he said, noting “we’re still in phase zero of adoption.”

Zukin identifies buying opportunities in data platform companies like MongoDB, data warehouse providers including Snowflake, observability vendors such as Datadog, and communications platforms like Twilio—all of which declined in sympathy with broader software weakness despite differentiated business models.

The analyst’s perspective suggests the market may be conflating distinct software categories, penalizing companies with defensible positions alongside those genuinely threatened by AI disruption.

The Clear Winner: Memory and Storage

One unambiguous theme emerged from earnings: strong demand for memory and storage supporting AI infrastructure.

Sandisk stock surged to an all-time highs Friday following blockbuster quarterly results and forward guidance. Shares are up over 150% year-to-date as market focus shifts beyond chips to other AI infrastructure components. Peer Micron gained 52% after triple-digit percentage increases in 2025.

“It’s a super cycle of memory. That’s the reality,” Ives said.

Apple CEO Tim Cook acknowledged on the iPhone maker’s earnings call that rising memory prices would have “a bit more of an impact” on second-quarter gross margins, though first-quarter margins weren’t materially affected. “We don’t obviously provide outlooks beyond the current quarter, but we do continue to see market pricing for memory increasing significantly,” Cook noted.

The memory sector represents the infrastructure layer where AI demand translates most directly into revenue, without the uncertainty of monetization. Companies producing memory and storage capture value from AI investments regardless of whether end-user applications generate returns.

Sector Rotation Implications

Despite tech bifurcation, Wall Street maintains that AI and technology underpin broader market strength, even as other sectors begin outperforming. After the S&P 500 pulled back from a record high of 7,000, UBS strategists recommended maintaining equity exposure while broadening allocations.

“Investors with excessive exposure to technology should look to diversify across the expanding U.S. sector opportunity set, including financials,” UBS strategists advised, noting healthcare and consumer discretionary could benefit from administration affordability initiatives.

Energy, materials, and consumer staples have been the strongest-performing sectors year to date, suggesting a rotation away from tech toward broader market participation. This rotation doesn’t necessarily indicate bearishness on technology, but rather normalization after years of extreme tech outperformance.

What This Means for Investors

The earnings season bifurcation establishes clear criteria for tech stock outperformance: demonstrable AI monetization trumps investment scale, spending announcements, or technological capability claims.

Companies that can quantify AI’s contribution to revenue growth, margin expansion, or cost reduction outperform those presenting AI as a future opportunity without current financial impact. This dynamic disadvantages companies pursuing longer-term AI strategies requiring sustained investment before monetization, even if those strategies may prove more defensible.

The shift also reveals market impatience with capital intensity. Microsoft’s cloud business remains highly profitable and growing, yet the market penalizes AI spending that hasn’t yet generated proportional returns. This creates pressure for companies to demonstrate near-term ROI or face valuation compression.

For CFOs and finance leaders, the message is unambiguous: AI investment proposals must include concrete monetization timelines and measurable financial impacts. Strategic value and competitive necessity arguments that sufficed in 2023-2024 no longer satisfy investor demands for return visibility.

The memory sector’s outperformance offers a template: companies that capture AI value through infrastructure provision rather than application monetization face less scrutiny because their revenue relationship to AI investment is direct and immediate.

Strategic CFO Advisory for Technology Investments

Major technology investment decisions require rigorous financial modeling, ROI analysis, and strategic positioning that satisfy both operational requirements and investor expectations. Wiss’s Technology and CFO Advisory Services help companies evaluate AI and technology investments, develop monetization strategies, structure financial reporting that demonstrates returns, and communicate value creation to stakeholders.

Whether you’re planning significant technology investments, evaluating strategic initiatives, or managing investor communications related to capital deployment, our team provides strategic financial advisory services.

Contact Wiss CFO Advisory Services to discuss technology investment strategy and financial planning.

Source: Yahoo Finance – “‘The haves and the have-nots’: Wall Street sees divide in tech stock performance after earnings reports” by Ines Ferré, February 2, 2026

Editorial Note: This article provides general information about technology sector trends and market dynamics. It does not constitute investment advice or recommendations to buy or sell securities. Companies evaluating technology investments should consult qualified financial and strategic advisors. Wiss & Company LLP provides accounting, tax, and advisory services to technology companies and businesses evaluating strategic investments.