Prof G Markets

Episode: Why Markets Can’t Price AI

Date: February 10, 2026
Hosts: Ed Elson, Scott Galloway (Prof G)
Guests: Robert Armstrong (Financial Times, Unhedged), Tom Lee (Fundstrat Capital)

Episode Overview

In this episode, Ed Elson and guests dissect wild volatility in the tech sector—centered on Amazon's dramatic selloff after a massive AI-driven spending announcement. They tackle the existential uncertainty over how (or if) markets can value AI investments, why traditional “safe” assets are suddenly in vogue, and whether Bitcoin’s recent collapse signals a new view on digital assets as safe havens. The episode is split between a deep dive on tech stocks (especially Amazon), and an analysis of the recent shock in crypto—featuring a pointed debate on Bitcoin's role in tumultuous markets.

Key Discussion Points & Insights

1. Amazon’s Shocking Capex Announcement & Tech Market Turmoil

Start: 03:42

• Amazon’s Earnings & Capex News

  • Amazon increased its 2026 capex forecast to $200 billion—over 50% more than last year and $50 billion above Wall Street’s expectations.
  • Despite meeting earnings estimates, the stock dropped 15% in five days, contributing to a $1 trillion wipeout in tech stock market value.
  • Google and Meta made similar spending announcements, yet responses diverged: Google rebounded, Meta rose, but Amazon tanked.

• Unprecedented Scale

  • “The amounts of money these companies are now talking about, Amazon, Google, Microsoft, Meta, are unbelievable... Titanic amounts of money.”
    — Robert Armstrong (04:14)
  • Spending on AI infrastructure by big tech rivals historical mega-projects in GDP terms.

• Market Anxiety: ROI Unknowns & Structural Profitability

  • Investors question if AI spend will ever deliver comparable returns to past tech business—and whether these giants are fundamentally less profitable in the AI era.
  • “Are these companies becoming structurally less profitable in the AI era? Maybe. That is what the market is thinking.”
    — Armstrong (05:17)

2. Contradictory Market Signals & Pricing the AI Transition

Start: 05:50

• Confusion: Divergent Stock Reactions

  • Investors reward Meta for big bets, punish Amazon, and half-heartedly react to Google—the “narrative” lacks consistency.

• Core Problem: Unknowable Outcomes

  • “Nobody knows anything.” (07:05)
    — Armstrong, quoting William Golding on Hollywood economics to capture the market’s speculative fog.
  • AI's true business impact, competitive moats, and whether the technology is “commoditized” are still unpredictable.

• Volatility Reigns

  • Market swings reflect narrative whiplash: one day AI is the future, next day it’s a bubble or a threat to software incumbents.
    • “It's guesses and it's volatility and it's one narrative takes control for one day and then the next narrative.” — Armstrong (08:45)

• Back to Basics: Why “Boring” Stocks Shine

  • In times of uncertainty, investors flock to safe, durable businesses—even traditional consumer staples and gold.
  • “People are still going to use trash bags.” — Armstrong (11:03)
  • Walmart and Costco trade at higher earnings multiples than Amazon, reflecting a “certainty premium.”

3. The Shift Toward Safety, Predictability, and Old Economy Assets

Start: 11:43

• Big rotation out of high-growth tech into industrials, staples, even European stocks.
• Premiums for predictability and stability are at multiyear highs.
  • “There is a tremendous premium for predictability and certainty right now. And that's a big part of this regime change.” — Armstrong (12:40)

Notable Quotes & Memorable Moments

• On the AI Spend “Gold Rush”:

  • “It's more than was spent on the transcontinental railroad... This is like titanic amounts of money.”
    — Armstrong (04:14)

• On Market Uncertainty:

  • “Nobody knows anything.”
    — Armstrong quoting Golding (07:05)
  • “The contradictions are not going away. Over the long run, markets will price this, but it's really struggling to do it right now.”
    — Armstrong (09:05)

• On Investors' Hunger for Safety:

  • “It’s astounding the amount of money investors are willing to pay right now for certainty, for some semblance of security and safety.”
    — Ed Elson (11:08)

Segment Timestamps

• [03:42] – Amazon’s capex shock; tech market meltdown; recap of sector volatility
• [05:50] – Why varying reactions to AI investments? Market struggle to price AI’s future
• [07:05] – “Nobody knows anything”: Markets grope for narrative amid uncertainty
• [09:05] – Fundamentals vs. multiple expansion for tech and consumer staples
• [11:43] – “Regime change”: Rotation into certainty and old-economy stocks
• [12:46] – End of interview; transition to crypto/Bitcoin segment

Crypto Crisis: Is Bitcoin Still “Digital Gold”?

4. Bitcoin’s Crash & Market Disillusionment

Start: 16:08

• Bitcoin plunged 50% from October highs, wiping out much of its “Trump rally.”
• The sell-off was triggered by “price shocks,” market deleveraging, panic liquidations, and, uniquely, a social-media-triggered event (Trump's Greenland tweet).
  • “About a third of the industry's market makers went away. And crypto sentiment...has turned really negative because at least 2 million accounts got wiped out.”
    — Tom Lee (17:03)
• Gold, in contrast, soared 20% in two days, pulling global capital away from crypto.

5. Is Bitcoin Really a Safe Haven?

Start: 19:37

• Core Challenge:

  • Bitcoin fans claim it's “digital gold,” a hedge against fiat instability—but actual investor behavior proved otherwise: gold outperformed, Bitcoin floundered.
  • “Isn’t this kind of the market telling us actually Bitcoin isn't the new gold? Actually gold is the new gold.”
    — Ed Elson (19:37)

• Tom Lee’s Nuance:

  • Sometimes, when global distrust in ANY currency spikes, even “cryptos” become suspect, and only gold shines.
  • Long-term: Both gold and bitcoin can be “stores of value,” but each has cycles of outperformance.

6. Ethereum’s Contrasting Narrative

Start: 22:07

• Ethereum’s decline mirrors Bitcoin’s (down 60%), but its use case (tokenization, DeFi, Wall Street adoption) leaves Tom Lee more optimistic.
  • “Ethereum’s really benefited from Wall Street's focus on tokenization… We know just for instance, this year alone, BlackRock has announced its further support of creating a common blockchain.”
    — Tom Lee (22:50)

7. “Bitcoin’s Narrative Problem” and the Future

Start: 24:43

• Bitcoin’s inability to rally during geopolitical chaos undermines its “safe haven” story.
  • “Everything I’ve described gives Bitcoin a narrative problem... in this battle, Gold has won one. Bitcoin’s lost zero in 2026.”
    — Tom Lee (24:43, 26:08)

Ed Elson’s Final Monologue: Lessons from the Crash

Start: 26:19

• Ed reiterates his skepticism of bitcoin and “bitcoin treasury companies” (like MicroStrategy), having previously called them a “Ponzi scheme.”
• Despite the current crash, he warns against “perma-bear” or “I told you so” thinking—crypto has repeatedly crashed and rebounded.
  • “It's very easy to convince yourself during these crashes that the story is over... The crypto story is not over. There is more than enough belief to take the price higher.”
    — Ed Elson (28:57)
• “I don’t like bitcoin. I don’t think it’s valuable. But I'm not going to sit here and tell you that bitcoin is going to zero. This was just another chapter in the long story of bitcoin. There are plenty more chapters to come.”
  — Ed Elson (30:22)

Essential Quotes by Timestamp

• On AI Market Uncertainty:
  • Armstrong: “Nobody knows anything.” [07:05]
  • Armstrong: “The contradictions are not going away... it's really struggling to do it right now.” [09:05]
• On Amazon vs. Walmart/Costco Certainty Premium:
  • Armstrong: “The point is, you just know more about Walmart’s future than you do about Amazon’s future... That’s the difference in multiple... it’s a certainty premium.” [09:58]
• On Bitcoin’s Narrative Crisis:
  • Elson: “Isn’t this kind of the market telling us actually Bitcoin isn’t the new gold? Actually gold is the new gold.” [19:37]
  • Tom Lee: “Everything I’ve described gives Bitcoin a narrative problem... in this battle, Gold has won one. Bitcoin’s lost zero in 2026.” [24:43, 26:08]
• On Market Cycles and Speculation:
  • Elson: “No one really knows. And anyone who tells you they do know, either to the upside or to the downside, that person isn’t to be trusted.” [30:05]

Summary: Key Takeaways

• AI Hype Meets Market Skepticism:
  The stock market is caught between the transformative potential of AI and profound doubt about profitability and competitive moats. For now, contradictory stock reactions reflect a greater truth: “nobody knows anything.”

• Safety Over Growth:
  Investors’ money is gushing into any business perceived as stable and certain—industrials, staples, and gold—while formerly invincible tech giants are scrutinized and, sometimes, punished.

• Bitcoin’s Identity Crisis:
  Bitcoin’s failure to hold up as a “safe haven” amid global geopolitical shakiness has punctured its digital-gold narrative—at least for now. Gold’s surge reinforces the power of conventional stores of value. Ethereum has a distinct, perhaps more promising, institutional adoption story.

• The Bottom Line:
  Both the tech market and crypto world are in the throes of transition. No one can price the fallout (or the upside) of these revolutions until the dust settles. Extreme swings, confusion, and regime change are the new norms for investors.

This summary captures the core discussions, notable moments, and speaker perspectives of Prof G Markets’ “Why Markets Can’t Price AI” (Feb 10, 2026). For deeper context, see the listed timestamps and quotes.