Dear Reader,
Good morning.
This is Dylan Jovine with Behind the Markets.
Happy Monday.
Today is Monday, February 9th.
On Friday, I talked about how AI has been hammering certain software stocks — especially SaaS models tied to legal and financial data, companies like S&P.
Today, I want to talk about another force putting pressure on the market right now:
AI spending from the Magnificent Seven.
I've spent a lot of time thinking about this, listening to earnings calls, and trying to understand what's really going on beneath the surface.
Here's what's interesting — and honestly, a little strange.
Every single Mag Seven company has announced massive increases in AI-related capital spending. We're talking 60%, 70%, even 80% increases.
But the market's reaction has not been uniform.
Some companies are being rewarded.
Others are getting punished.
For example, Google and Meta both announced major increases in AI spending — and their stocks went higher.
Meanwhile, Microsoft, Amazon, and Oracle have all been hit.
And here's a statistic that really puts this into perspective.
Collectively, the Mag Seven plans to spend more than $700 billion in 2026 based on their own projections.
To give you a sense of scale, that's roughly in line with Japan's entire government budget — and it exceeds the budgets of Germany and Mexico.
Think about that.
A handful of corporations are spending more on AI than major world governments.
So why is the market rewarding some companies and punishing others?
It comes down to one thing: return on investment.
Take Meta as an example — a stock we own in the model portfolio, and one I own personally.
A couple of quarters ago, Meta was punished for increasing AI spending.
But the issue wasn't the spending itself.
It was that Wall Street didn't see the return.
Investors were basically saying: Great — you're spending billions. But where's the payoff?
Fast forward to the most recent earnings report.
Meta didn't just talk about higher spending — they showed results.
They demonstrated that AI is helping them better monetize their massive advertising platform.
And once investors could see the return, the stock rallied — even though spending actually increased further.
The same thing is happening with Google.
Google is clearly showing how AI is improving the efficiency and monetization of its core ad business.
That tells Wall Street: Yes, we're spending aggressively — but here's how it turns into profits.
Now contrast that with Microsoft — another company I own.
Microsoft has increased AI spending significantly, but investors are asking a harder question now.
They're saying: Okay, you were early. Copilot was a strong first move.
But what happens in round two?
And round three?
Is the AI game moving beyond simply integrating OpenAI into Word and Excel?
Where's the next leg of monetization?
And because those answers aren't as clear yet, the stock gets punished.
So what we're seeing right now is very simple — and very brutal.
Companies that can clearly demonstrate a return on AI investment get rewarded.
Companies that can't — even if they're spending just as much — get hit.
This is exactly why we've been so selective inside Breakthrough Wealth.
We're not chasing companies just because they're "spending on AI."
We focus on the ones already turning AI into cash flow and durable advantage — the businesses Wall Street eventually have no choice but to reward.
That distinction is going to matter a lot more over the next 12–24 months as some companies spend themselves right into the ground.
We recently highlighted a company that designs "the brain inside the chip," who we think is poised to be the next big leader as AI moves to its next major phase.
Make sure to read all about this amazing company, and our system for finding others like it HERE.
This dynamic is driving a lot of the volatility we're seeing right now.
And it's not going away.
Anyway, that's all I wanted to cover today.
A shorter video, but an important one.
Have a wonderful day.
I'll see you tomorrow.
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