Tech Bubble? How $1.5 Trillion just vanished from the stock market
Tech Crashes while the TSX Rises: Surviving the $1.5 Trillion Reset
The first week of February is officially in the books, and it was a rocky one. If you were heavily exposed to high-flying US tech, you definitely felt the brunt of it. But as I often say, there is more to the market than just Silicon Valley.
While US markets spent the week in a "Software-mageddon" sell-off, the Canadian market showed surprising resilience. The TSX didn't just survive; it proved that being "Old School" (Energy, Banks, and Industrials), and staying diversified is a winning strategy when tech gets turbulent.
Here is exactly what you need to know from last week’s headlines: 👇
📈 The "Great Rotation" Begins
While tech dominated the headlines, the real story was a massive Sector Rotation. Investors began pulling capital out of "expensive" AI software and rotating into "Old Economy" value stocks and defensive havens.
The Safe Havens: While the Nasdaq suffered its deepest 3-day slide since last April, the Dow Jones hit a record 50,000 for the first time on Friday. Giants like Coca-Cola ($KO), Costco ($COST), Berkshire ($BRK), Johnson & Johnson ($JNJ), and Walmart ($WMT) all jumped by at least 5% each this week.
TSX Resilience: Canada’s stock market finished the week up +1.7%, closing at 32,470.98. Because the TSX is heavy on resources and banks rather than speculative software, it acted as a global stabilizer. While US Tech is being punished for $600B AI spending sprees, our dividend-paying titans are suddenly back in style.
📉 "SaaSpocalypse": Why US Tech Took a Hit
Over $1.5 Trillion in market value vanished from Big Tech in a matter of days this week. Here is why the "AI Honeymoon" hit a wall:
1. The $600 Billion "CapEx" Shock
Amazon stunned the market by revealing a planned $200 Billion capital expenditure for 2026. Investors are now terrified that these companies are building "digital ghost towns"… spending hundreds of billions on data centers before they have enough paying customers to justify the cost.
2. The "Claude Crash" (AI Eating Software)
On Tuesday, the AI startup Anthropic released new "Agentic" tools (Claude Code).
The Fear: This triggered a massive sell-off in "Legacy" software. Investors are panicking because we are moving from Software-for-Humans to Service-as-a-Software.
The 'Death of the Seat': In 2026, companies are no longer buying "tools" for employees; they are buying "outcomes" from AI agents. If an AI agent can do the job of 10 people, the old model of charging $50/month per human "seat" is officially broken.
The Victims: Enterprise giants like Salesforce (CRM), ServiceNow, and Adobe saw sharp pullbacks as AI shifted from being a helpful "tool" to a direct "competitor" for those monthly subscription dollars.
3. The Valuation "Reality Check"
After a massive January, many software & AI-related stocks were trading at a premium. When AMD gave muted guidance on Tuesday, hedge funds used it as the perfect excuse to take profits and rotate into ignored parts of the market like Industrials and Financials.
🇨🇦 Friday Jobs Report: A Tale of Two Realities
Canada’s labour market kicked off 2026 on a "soft" note, but the details weren't as scary as the headline.
The Number: Canada lost 25,000 jobs in January, mostly in Ontario manufacturing; a sector that has been battered by 10 months of U.S. tariffs.
The Twist: Despite the job losses, the Unemployment Rate fell to 6.5% (down from 6.8%) because fewer people are actively looking for work as population growth slows.
The Takeaway: BMO Chief Economist Douglas Porter noted the report was "both good and bad," reflecting an economy adjusting to tariffs, a rising 65+ population, and a pivot toward more full-time work.
🇨🇦 Canadian News: Fines & Housing Drags
Canadian Tire’s $1.3M Fine: On Friday, Canadian Tire was ordered to pay nearly $1.3 Million after pleading guilty to 74 counts of false advertising in Quebec. The court found they artificially inflated "regular prices" to make their discounts look deeper.It’s a hit to consumer trust just as they head into earnings season.
The Canadian Housing Report: A new TD Economics report revealed a stark regional divide. While the Prairies and Atlantic Canada are building at record paces, Ontario remains the "weakest link." High construction costs and a pullback in the GTA condo market are currently dragging down our national housing recovery.
📅 Looking Ahead: Stocks to Watch
This "dip" isn't a sign that AI is failing; it’s a sign that the market is becoming picky. We are moving from the "everything goes up" phase to the "winners and losers" phase.
P.S. Keep an eye on your inbox tomorrow morning. Today was about the global tech "SaaSpocalypse," but tomorrow I’m dropping a special "Canadian Earnings Playbook." I’ll be breaking down 6 major Canadian stocks to watch, that are reporting earnings this week and exactly how to position your portfolio for the home-grown volatility ahead.