Investor Reckoning: AI Optimism Wipes $2 Trillion from Software Market Caps

Investors reassessed AI's industry-wide disruption last week, with repricing expected to continue through February 16, 2026. Deutsche Bank attributes the correction to overly optimistic assumptions that nearly every tech company would benefit. Software stocks led the decline amid concerns large language models could displace existing services. Legal, IT, consulting, and logistics firms also suffered. JP Morgan estimates $2 trillion has been erased from software market caps since early February. Senior analysts warn of uneven winners and losers. JPM CEO Jamie Dimon differentiates between AI and generative AI, noting some asset valuations are elevated. Jeremy Siegel urges scrutiny of $200 billion capex plans, payback periods, and competitive moats. Ed Yardeni likens AI to "speed skating on ice," with self-reinforcing obsolescence accelerating hardware and LLM turnover and spooking markets.