Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off • Hacker News Board

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#41

Post by softwaredoug » Fri, Feb 06, 2026, 3:29 PM UTC

symfrog wrote: post #37

softwaredoug wrote: post #20

Earlier quoted context omitted.

Every tech company assumed they would be the benefactors, not victims, of AI. And investors now see that without the alleged AI growth, these companies at best look like stable utilities, not high growth stocks. At worse companies look like they make highly replaceable software as software stops being a moat. Moreover they look like large, inefficient organizations with a lot of human veto points that prevent innovat…

Was software ever a moat? Software typically only gave companies a small window of opportunity to turn a fleeting software advantage into a more resilient moat (network effects, switching costs etc.)

Yes, I would argue good (stable, fast, easy to use) software was somewhat of a moat and much harder before coding agents.

Stripe, Square, Shopify, Google, all thrived in some part because their services take a hard problem and make it easier to use. Now more people can take a hard problem and make it easier to use.

All you have to do is look around (esp 5+ years ago) and see the many many BAD, unstable, hard to use, slow, etc versions of these companies

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#42

Post by dd8601fn » Fri, Feb 06, 2026, 3:30 PM UTC

symfrog wrote: post #26

pfisherman wrote: post #14

Earlier quoted context omitted.

Oh boy, are you going to be in for a rude awakening. Might I ask what is your exposure? Because this does not line up with what I am witnessing day to day at all. This type of commentary reminds me of the people during the dot com boom who were adamant that e-commerce was all film flam and would never take off. Consider that it is possible that both (1) we are in an investment bubble and (2) we are underestimating th…

In what way is the long term impact of LLMs being underestimated? If anything, it seems that it has been overestimated in the past years and that something other than LLMs will be needed to reach the original scaled LLM hope of AGI.

They were replying to this particular underestimation:

> AI is limited to probabilistic and annoying chatbots that are for entertainment and for looking up trivia questions.

That is not a rational assessment of the utility that the technology provides, even today.

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#43

Post by mark_l_watson » Fri, Feb 06, 2026, 3:31 PM UTC

zlkanter wrote: post #3

Amazon missed earnings and promptly doubled down on AI spending: https://finance.yahoo.com/news/amazon-plans-200b-ai-spending... It is encouraging to see that investors are punishing what is the greatest misallocation of capital since the dotcom bubble. Investors have figured out that AI is limited to probabilistic and annoying chatbots that are for entertainment and for looking up trivia questions.

I was disagreeing with just your last statement, but then I did a little research: about 80% of revenue is from chatbots and 20% from APIs. So +1 on your comment.

Bear with me here, I actually do have a point to make: I took my stepdaughter out for breakfast this morning. She is a financial wizard specializing in running large cities, and to explain to her the current craziness of overspending on AI infrastructure, I described "exponential spending increases for linear economic value increases." I may be wrong about this, but I am all for targeting the sweet spot of more efficient smaller AI models that are fit to purpose for specific use cases.

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#44

Post by tonyedgecombe » Fri, Feb 06, 2026, 3:32 PM UTC

ecshafer wrote: post #19

blinding-streak wrote: post #7

Question: does Amazon's retail business matter for analysts at all? It drives the majority of revenue for the company but a much, much smaller amount of profit. Does Wall Street care about Amazon's core business one iota?

The margins on tech/cloud are just so astronomically higher than retail. Places like Walmart or Costco are fighting for IMO AWS should be spun out as a separate company.

If they were separate businesses it would make no sense to merge them. It would be like Microsoft buying Walmart.

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#45

Post by DaedalusII » Fri, Feb 06, 2026, 3:33 PM UTC

dotandgtfo wrote: post #16

DaedalusII wrote: post #6

Earlier quoted context omitted.

wall street analysts are starting to realise that software companies shouldnt trade on a P/E of 300. DocuSign is currently valued at 30 times its annual earnings. Adobe is currently 16. Amazon is 28 -- has been as high as 50 recently. NVDA is 44. Investors are basically starting to realise that enterprise are not going to subscribe to software like DocuSign for 50 years. They'll probably just move to odoo or zohosign…

I've always found it confusing how run of the mill SaaS trades at multiples assuming decades of doing business. The amount of change in software businesses has been massive and being able to run a successful software business even for 15 years from 2010-2025 requires a great deal of strategy and foresight and more likely than not that's not enough. Considering how these dynamics have been accelerating as technology a…

Investor analyst looks at earnings growth and determines Customer Acquisition Cost (CAC) and Customer Acquisition Cost Payback Period (CACPP). They determine that ABC Software Corporation has no marginal manufacturing cost because it makes software that it sells online, so if it invested 90% of its profit margin into marketing it could grow its ARR by 140% a year. Then they extrapolate that for 30 years and say ok the NPV of 30 years of 140% ARR on current CAC, etc etc...

If everyone in the industry benchmarks on more or less the same multiples, it becomes a good idea to buy any b2b crud saas trading at 10x earnings because if the big boys see it they'll probably bid it up to 30x

the other classic move is to take a business which really isn't even a new technology, like revolut, and call it a tech business. now suddenly a bank can trade on a 50x earnings multiple instead of 15x like say a bank. many such cases~

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#46

Post by DaedalusII » Fri, Feb 06, 2026, 3:36 PM UTC

bhouston wrote: post #9

DaedalusII wrote: post #6

Earlier quoted context omitted.

wall street analysts are starting to realise that software companies shouldnt trade on a P/E of 300. DocuSign is currently valued at 30 times its annual earnings. Adobe is currently 16. Amazon is 28 -- has been as high as 50 recently. NVDA is 44. Investors are basically starting to realise that enterprise are not going to subscribe to software like DocuSign for 50 years. They'll probably just move to odoo or zohosign…

> software companies shouldnt trade on a P/E of 300 You are playing pretty fast and loose with your definition of a "software company" when you include Amazon and NVIDIA in your list. Amazon is many things but it is not a "software company" and neither is "NVIDIA".

youre right, i should say tech company. but at least my flawed epistemology reveals my humanity

although one could argue disingenuously that nvda is a software company because the product they ultimately manufacture is a bunch of blueprints they email to tsmc or samsung who then actually make the chips

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#47

Post by tonyedgecombe » Fri, Feb 06, 2026, 3:36 PM UTC

symfrog wrote: post #37

softwaredoug wrote: post #20

Earlier quoted context omitted.

Every tech company assumed they would be the benefactors, not victims, of AI. And investors now see that without the alleged AI growth, these companies at best look like stable utilities, not high growth stocks. At worse companies look like they make highly replaceable software as software stops being a moat. Moreover they look like large, inefficient organizations with a lot of human veto points that prevent innovat…

Was software ever a moat? Software typically only gave companies a small window of opportunity to turn a fleeting software advantage into a more resilient moat (network effects, switching costs etc.)

Windows was a moat but it looks more like an anchor now.

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#48

Post by chucksta » Fri, Feb 06, 2026, 3:38 PM UTC

bpodgursky wrote: post #8

zlkanter wrote: post #3

Amazon missed earnings and promptly doubled down on AI spending: https://finance.yahoo.com/news/amazon-plans-200b-ai-spending... It is encouraging to see that investors are punishing what is the greatest misallocation of capital since the dotcom bubble. Investors have figured out that AI is limited to probabilistic and annoying chatbots that are for entertainment and for looking up trivia questions.

I know it feels comforting to say this, but deep down you have to realize that saying things confidently does not cause them to become true.

Was that comforting? At least the commentator came with a source

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#49

Post by surgical_fire » Fri, Feb 06, 2026, 3:41 PM UTC

dd8601fn wrote: post #36

ecshafer wrote: post #22

Earlier quoted context omitted.

50% of amazon operating profit is from AWS. NVIDIA's GPUs aren't really that much better than AMD if it weren't for CUDA. Software company is a pretty good description for both.

I’ve heard the same about Nvidia, quite a few times, but have never really understood it. I don’t suppose you know a good “for dummies” explanation of why CUDA is such an insurmountable moat for them? Like, what is it about that software that AMD can’t produce for their own hardware, or for a most important subset, with these $1T market stakes?

My understanding on this may be spotty (and I appreciate it if someone corrects me), but CUDA is not the software layer that allows you to use NVIDIA GPUs for AI processing?

AMD may develop their own software layer, but a lot of things already work on CUDA, and the job to port this to a different platform may be non-trivial (or even possible depending on the level of feature parity).

Re: Amazon plunge continues $1T wipeout as AI bubble fears ignite sell-off

#50

Post by throwup238 » Fri, Feb 06, 2026, 3:43 PM UTC

dd8601fn wrote: post #36

ecshafer wrote: post #22

Earlier quoted context omitted.

50% of amazon operating profit is from AWS. NVIDIA's GPUs aren't really that much better than AMD if it weren't for CUDA. Software company is a pretty good description for both.

I’ve heard the same about Nvidia, quite a few times, but have never really understood it. I don’t suppose you know a good “for dummies” explanation of why CUDA is such an insurmountable moat for them? Like, what is it about that software that AMD can’t produce for their own hardware, or for a most important subset, with these $1T market stakes?

> I don’t suppose you know a good “for dummies” explanation of why CUDA is such an insurmountable moat for them?

Theoretically the moat isn’t insurmountable and AMD has made some inroads thanks to the open source community but in practice a generic CUDA layer requires a ton of R&D that AMD hasn’t been able to afford since the ATI acquisition. It’s been fighting for its existence for most of that time and just never had the money to invest in catching up to NVIDIA beyond the hardware. Even something as seemingly simple as porting the BLAS library to CUDA is a significant undertaking that has to validate numerical codes while dealing with floating point subtleties. The CPU versions of these libraries are so foundational and hard to get right that they’re still written in FORTRAN and haven’t changed much in decades. Everything built on top of those libraries then requires having customers who can help you test and profile real code in use. When people say that software isn’t a moat they’re talking about basic CRUD over a business domain where all it takes is a competent developer and someone with experience in the industry to replicate. CUDA is about as far from that as you can get in software without stepping on Mentor Graphics’ or Dassault’s toes.

There’s a second factor which is that hardware companies tend to have horrible software cultures, especially when silicon is the center of gravity. The hardware guys in leadership discount the value of software and that philosophy works itself down the hierarchy. In this respect NVIDIA is very much an outlier and it shows in CUDA. Their moat isn’t just the software but the organization that allowed it to flourish in a hardware company, which predates their success in AI (NVIDIA has worked with game developers for decades to optimize individual games).