Big Tech Turmoil Casts Doubt on A.I.’s Payoff Potential

“The Nasdaq 100 is flirting with correction territory as investors brace for earnings reports from Meta, Microsoft and Amazon.

 

Ari Emanuel walked out of International Creative Management in the middle of the night with a stack of client files to build Endeavor, proving even Hollywood’s top agencies weren’t untouchable. Now, Big Law may be having its Ari Emanuel moment.

 

On Tuesday, Wachtell, Lipton, Rosen & Katz’s top litigation chief, Bill Savitt, led five partners to Gibson Dunn in a stunning raid. The defections have Wall Street debating whether the legal industry’s historically staid, loyalty-driven partnership model is undergoing a permanent shift.

 

A tech stock sell-off. Investors are being whipsawed by the boldfaced headlines.

 

That’s amping up market volatility ahead of earnings reports from artificial intelligence bellwethers Microsoft and Meta later on Wednesday. Amazon goes on Thursday.

 

    The sell-off on South Korea’s Kospi index continues, with SK Hynix again taking a big hit.

 

Investors are in a show-me-the-money mood. SK Hynix, whose memory chips are key to the build-out of A.I. infrastructure (as well as cars, tech gadgets and more), reported a record quarterly operating profit margin on Wednesday. But it still fell short of calming demanding investors; its shares have halved in the past month.

 

It’s a tough crowd in the U.S., too. The Nasdaq 100 grouping of tech heavyweights is flirting with correction territory, or a drop of 10 percent from its June high. Shares in Microsoft and Meta have fallen even further in the past year as investors grow anxious about when their huge A.I. capital expenditure commitments will pay off. (The outlier: Apple, whose valuation briefly surpassed $5 trillion on Tuesday.)

 

Wall Street isn’t just interested in return on investment. Silicon Valley is divided over the open-versus-closed A.I. model debate. Investors will want to know whether this could shake up the economics of A.I., too, and even determine which frontier labs win out.

 

Mark Zuckerberg has made clear where he stands. The Meta C.E.O. is firmly in the “open” camp, and is growing increasingly suspicious of labs like Anthropic and OpenAI that have argued that as the technology grows more powerful it would be safer to keep A.I. models limited to controlled environments like theirs. He told The Times on Tuesday that such an approach would be bad for innovation and even dangerous.

 

“So much of the discourse from a lot of the other labs that are developing this is overwhelmingly filled with doom,” Zuckerberg said. “There needs to be a voice or several voices that are bringing realism to this debate.”

 

Zuckerberg also told The Financial Times that the U.S. should not seek to block Chinese A.I. models. The Chinese competitive threat is also likely to be a hot topic on Big Tech earnings calls.” [1]

 

1. Big Tech Turmoil Casts Doubt on A.I.’s Payoff Potential: DealBook Newsletter. Andrew Ross Sorkin; Warner, Bernhard; Kessler, Sarah; Michael J. de la Merced; Gallogly, Niko; et al.  New York Times (Online) New York Times Company. Jul 29, 2026.