AI Profit Worries Come Roaring Back as Selling Pressure Bites

Selling pressure built early and flipped the mood fast, according to The Kobeissi Letter. The account posted on X that worries about AI profitability, capital spending and free cash flow — already simmering in the market — sharpened as the selling picked up.

Those concerns were not new. The Kobeissi Letter noted that the market had already been uneasy about how AI profits stack up against the money being poured into capex, and what that spending does to free cash flow. Once the selling got heavier, that unease turned into a bigger problem.

There was a brief lift after the election results, driven by a crush in the VIX, per the account. The rally was short-lived as sellers took control and sentiment swung the other way.

Now the three themes — AI profitability, capex and free cash flow — are back in focus, and the account's take is that they were quickly amplified once the pressure hit.