The glow around artificial intelligence has started to fade as liquidity shifts back toward shares of major oil companies, marking a notable change in investor risk appetite. Despite announcements by technology giants that they plan to spend hundreds of billions of dollars on AI this year, markets have responded with a wave of stock selling, as traders grow more skeptical about the near-term payoff of the AI story.

As investors search for safer havens, capital has rotated into the energy sector, particularly large oil and gas companies, which are viewed as less risky and more capable of generating immediate cash flows.

Concerns Weigh on Technology Stocks

Last week saw a sharp decline in major technology stocks, as investors reduced their holdings amid fears that artificial intelligence could displace the traditional software sector. However, Nvidia CEO Jensen Huang rejected these concerns, calling them illogical.

Huang said that the idea the software tools industry is in decline and will be replaced by AI — reflected in heavy pressure on software stocks — makes little sense, adding that time will prove otherwise.

Heavy Spending Raises Worries

The core concern is not only AI substitution, but also the enormous spending plans of technology companies, which exceed $660 billion this year alone. Amazon, for example, announced capital spending of $200 billion in 2026, about $50 billion above market expectations.

Meta has also revealed plans to spend $135 billion this year, nearly double its 2025 spending, with most of that directed toward AI projects.

Oil Keeps Delivering Profits

While technology firms are consuming liquidity on data centers, chips, and power infrastructure, major oil and gas companies continue to focus on their core business of oil and gas production — itself a critical input for expanding AI infrastructure.

Investor interest in energy stocks has also been supported by reduced warnings about peak oil demand, after the International Energy Agency acknowledged that oil will likely remain in use beyond 2030.

Strong Gains for Energy Shares

According to a Financial Times report citing Bloomberg data, US oil and gas stocks have risen about 17% since the start of the year. These gains have helped lift the market value of ExxonMobil, Chevron, and ConocoPhillips by roughly 25% over the past twelve months.

European oil companies have also recorded share price gains, though at a slower pace than their US counterparts.

The Paradox of Lower Oil Prices

The Financial Times noted that these gains came despite a decline in global oil prices, which is typically unusual. However, major oil companies remain profitable even at lower prices, while massive AI investments have yet to translate into clear financial returns.

Although last year’s oil price drop affected profits for both large and smaller producers, the sector has remained profitable, supported in part by IEA projections that oil demand could continue growing through at least 2050.

Debt and Dividends Favor Oil

Another factor boosting the appeal of oil companies is their relatively moderate debt levels compared with technology firms, which are increasingly turning to borrowing to finance large investment programs.

Oil companies also continue to reward shareholders through dividends and share buybacks, even if that sometimes requires additional borrowing, according to some analyst expectations.

Technology Cash Flows Under Pressure

By contrast, technology companies are expected to see a sharp decline in cash flows this year due to heavy AI spending. Morgan Stanley expects Amazon to post negative cash flow of about $17 billion, while Bank of America forecasts a deficit of up to $28 billion.

Alphabet has quadrupled its long-term debt over the past year, and analysts expect its free cash flow to fall by about 90% this year. A similar pattern is expected for Meta, according to Barclays estimates.

Investor Caution Is Rising

Although banks still recommend buying major technology stocks and do not express deep concern about the sector or hyperscalers, traders have become more cautious in allocating capital.

Promises of future returns are no longer enough for everyone, especially when another sector is offering returns today rather than tomorrow — a role currently filled by major oil companies.

US stock indices rose during Tuesday’s trading, supported by a rebound in the technology sector, as investors awaited the release of jobs data.

This week will see the release of the US January employment report, which had been scheduled for last Friday, in addition to upcoming consumer price data.

According to CME Group’s FedWatch tool, markets are pricing in a 15.8% probability of a 25 basis point rate cut at the Federal Reserve’s next meeting on March 18, down from 18.4% last Friday.

In trading, as of 15:59 GMT, the Dow Jones Industrial Average rose 0.5%, or 250 points, to 50,383. The S&P 500 gained 0.2%, or 13 points, to 6,978, while the Nasdaq Composite advanced 0.1%, or 21 points, to 23,260.

Palladium prices rose during Tuesday’s trading as demand returned to metals, particularly industrial ones, alongside a weaker US dollar against most major currencies and softer risk appetite across markets.

Last month, UBS said in a client note that it raised its palladium price forecast by $300 per ounce to $1,800, citing a sharp increase in investment flows into the metal.

Analyst Giovanni Staunovo said the revision was driven by strong investment demand in recent months, noting that the relatively small size of the palladium market often leads to sharp price swings.

The bank explained that the latest price momentum was not driven by traditional industrial usage, but rather by investor positioning in anticipation of lower US interest rates, a weaker dollar, and rising geopolitical uncertainty.

Staunovo added that if investment demand remains strong, prices could move higher, but warned that in the absence of investment flows the market would likely be broadly balanced, which helps explain UBS’s preference for gold exposure.

Palladium demand has shifted in recent years after its use in auto catalytic converters peaked in 2019 — the same year prices surged above platinum — prompting substitution toward other metals.

The spread of electric vehicles, which do not use catalytic converters, has also weighed on palladium demand.

However, the bank noted that palladium has rallied alongside platinum and silver since mid-2025. With palladium now much cheaper than platinum, UBS expects catalytic converter manufacturers to switch back to using palladium over time.

Investment activity in palladium has increased notably, with UBS pointing to rising ETF holdings since mid-2025, along with a significant build-up in speculative futures positions after being net short for most of last year.

China could also support demand, as Staunovo said the launch of yuan-denominated platinum futures contracts in Guangzhou likely supported palladium demand as part of broader trading activity across platinum group metals.

Elsewhere, the US dollar index was down less than 0.1% at 96.7 points as of 15:37 GMT, recording a high of 97.01 and a low of 96.6.

In trading, March palladium futures were up 0.6% at $1,755.5 per ounce as of 15:38 GMT.

Bitcoin traded below the $70,000 level during Tuesday’s Asian session after once again failing to hold onto its recent gains following a rebound from lows near $60,000, as investors remained cautious ahead of key US jobs and inflation data releases.

The world’s largest cryptocurrency was down 2.2% at $69,392.7 as of 05:58 GMT.

Bitcoin stuck between $68,000 and $72,000 ahead of US data

The market has moved within a $68,000–$72,000 range in recent sessions after a volatile week that saw Bitcoin fall to around $60,000 — levels not seen since October 2024 — before a recovery wave pushed the token back above $70,000.

The pullback came amid liquidation-driven selling, with investors unwinding leveraged positions during the sharp declines.

Investors are now focused on US macroeconomic data that could shape Federal Reserve monetary policy expectations.

Monthly US jobs data — delayed due to a brief government shutdown — is scheduled for release on Wednesday.

Later in the week, Consumer Price Index (CPI) data is due on Friday, a key inflation gauge that could influence rate-cut expectations.

Markets also remain cautious about the upcoming leadership change at the Federal Reserve after US President Donald Trump nominated Kevin Warsh to lead the central bank.

Traders are assessing how a potentially more hawkish stance under Warsh could affect liquidity conditions and speculative assets such as Bitcoin.

South Korean platform mistakenly sends $44 billion in Bitcoin to users

South Korean crypto exchange Bithumb mistakenly sent about $44 billion worth of Bitcoin to users during a promotional rewards event, prompting calls for tighter regulatory oversight by the country’s financial watchdog.

The error occurred on Friday when the platform accidentally credited 620,000 Bitcoin to user accounts instead of small cash rewards, triggering heavy selling before the issue was discovered. About 99.7% of the coins were later recovered.

Financial Supervisory Service Governor Lee Chan-jin said the incident exposed structural weaknesses in virtual asset electronic systems and highlighted the need for stronger oversight mechanisms and stricter regulatory frameworks for digital assets.

Crypto prices today: altcoins remain under pressure

Most alternative cryptocurrencies also declined on Tuesday.

Ethereum, the second-largest cryptocurrency, fell 2% to $2,052.92.

XRP, the third-largest cryptocurrency, dropped 1% to $1.43.