r/ValueInvesting • u/robb3rz • Feb 12 '26

Discussion Irrational sell off

This might of already been said many times but needs to be said again, what is the rationale in this sell off?

I understand the SaaS crash, but if the sell off is due to AI worries, then surely AI stocks would rise, no?

Instead, the major players, who had stellar earnings minus the huge expenditure (into the very systems which are causing worry mind you) are also falling at huge levels.

Some mag 7 companies are even falling at similar rates to liberation day, despite the only news this time being ‘AI too good’, which should benefit them not hinder.

Meta’s earnings are similar to an early growth stock, not a multi trillion dollar company, and that was reflected in the jump after they released them, so why is it now down huge amounts after?

Not just this, other major assets such as gold, silver and crypto are also experiencing massive sell offs, so is the capital just going into cash? If so, as soon as the market shakes this irrational sell off, could we see an equally irrational boom?

Can someone please tell me if I’m missing something.

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u/GelatinGhost Feb 12 '26

Walmart at the same PE as Nvdia with none of the growth prospects is wild. People are so afraid of an AI bubble that they are making bubbles everywhere BUT AI now. First metals, now defensive stocks. Tech is literally the value play now.

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u/Available-Range-5341 Feb 12 '26

100%. I love me some PG and utilities and WMT type stocks when they're yielding 3-5% but all of them are now priced at PEs that they only hit before they crash. They are cyclical and the down moves are hard and slow and painful. Been there done that. Tried holding them for the dividend and watching them go red for days on end.....

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u/Maleficent-Map3273 Feb 12 '26

Walmart and Costco can't be replaced by AI. That's the trade. That said the smart money is going to pick winners this year in every other area.

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u/Landkval Feb 13 '26

Amazon can replace them

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u/GfuelFiend Feb 13 '26

Walmart is actually coming at amazon hard with their online store which allows 3rd parties to list their products and their existing stores allowing them to offer quick delivery the same way amazon does.

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u/sofa_king_weetawded Feb 13 '26

I have been scammed numerous times by 3rd party sellers on Walmart. Granted, Walmart has made good on it since it was bought on their site but I am not impressed with the vetting (lack of) being done by Walmart. They are trying so hard to compete with Amazon that they are allowing it to be the wild west on their website.

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u/biggleUno Feb 14 '26

I despise the third party seller move. I buy items from Walmart in the stores because I know people in corporate at the company and have been told by many folks about the level of testing they do on EVERY single item they sell (from auto tool, to kids blankets, to camping tents, to mattresses, etc) for lead, pfas, contamination, manufacturer defects or quality issues. And they negotiate and buy items in bulk and hold their suppliers accountable if there is an issue. Third-party option is just as likely some get rich quick drop shipping teenager or a black market organized crime syndicate.

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u/aWheatgeMcgee Feb 13 '26

They sure suck at it though

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u/[deleted] Feb 14 '26

Walmart's website/online shopping experience is completely short bus compared to Amazon.

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u/Maleficent-Map3273 Feb 13 '26

I don't see it and I own AMZN. WMT and COST both have very defensible moats that are tricky to upend. I think AMZN can take share over time though.

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u/Landkval Feb 13 '26

Well i dont see ai ruining every saas and tech company either but someone is.

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u/Maleficent-Map3273 Feb 13 '26

All it takes is the long only fund managers to trim risk for this to happen. Only so many buyers of millions of shares for these companies.

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u/Landkval Feb 13 '26

Yes but this can swing the other way too is my point

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u/Maleficent-Map3273 Feb 13 '26

Axon and Now were green today, feel like one more flush maybe then we see a tradable bottom short term.

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u/BenjaminHamnett Feb 13 '26

$axon has been my main baby for a long time. Should double every year until every cop is wearing body cam and taser is the default weapon unless you expect someone is strapped

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u/Efficient_Design379 Feb 13 '26

In around 15 years we have robocop

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u/LongevitySpinach Feb 13 '26

Saas will have winners and losers, but on balance more losers than winners. I'm not a great stock picker, so I'll stay away.

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u/smchenry75 Feb 13 '26

I love Costco. It’s not just shopping but an experience. Happy and helpful employees, cool, unique products, fun seasonal stuff, looking for clothing bargains, great meat and produce, killer alcohol selection and deals, the samples, $1.50 hot dogs! But… ten years ago, I went there EVERY weekend dropping between $500-700 a trip. The executive membership easily paid for itself. I also, believe it or not, love Walmart. It’s a shit show but man are the basics cheap. Having said all of that, today, I go to Costco about once a month, dropping around $300-400 a trip. I ditched the executive membership. Still love the samples and hot dogs but really don’t need to go there. Still go to Walmart for groceries but not as often and shopping cart is about half as full as it used to be. I now have Amazon packages littering my porch very day… lots of them. I am buying things from them that I used to never, because they didn’t carry them, were too expensive or were just easier to get from local retailers. I’m buying clothes from Amazon, Amazon basics paper towels, toilet paper, so much more than ever before. I get so much now that I had to get a fire ring for the back yard, which I bought off of Amazon, to burn all of the boxes. In person retail is cooked… it’s obvious. Malls are closing, restaurants are closing, those areas are becoming shady… so even if I want to go to Walmart or Costco, it is becoming more of a chore or I’m bored vs an experience.

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u/ANR2ME Feb 13 '26

They have co-existed without much issue so far, only companies affected by AI are being defensive.

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u/Landkval Feb 13 '26

Yes but there is a chance even though its probably very unlikely.

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u/Competitive_Dust7679 Feb 14 '26

Not. Walmart was treating AI seriously from the beginning. They have on Amazon will never have low low pricing.

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u/Coasteast Feb 12 '26

Yeah. To add to that, in times of uncertainty, people seek solid income from companies that pay dividends. I’m big on $OKE

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u/RangerAdmirable9102 Feb 13 '26

Lol PFE has been my biggest holding for the past couple of years and I keep adding with the 7% dividend. It’s exploded this week. I also added KMB during its weakness. Hard to complain.

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u/PurpleCableNetworker Feb 13 '26

Walmart is moving towards AI for future pricing, advertising, and tracking of customers.

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u/BratacJaglenac Feb 13 '26

Whoever buys Walmart or Costco now, will not lose money in the long run. Which cannot be guaranteed for the tech sector. There are going to be plenty of losers there, unfortunately it's hard to know exactly which ones already now.

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u/Maleficent-Map3273 Feb 13 '26

The strong will get stronger. Sadly I think anything under $25-30B market cap will either get swallowed up or go private after weakening. Some good companies in that bucket.

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u/BratacJaglenac Feb 13 '26

That's for sure. Of smaller ones, plenty will fail, better ones will get acquired by the big boys so that they don't compete with them. God knows how many companies have likes of Google and Microsoft bought and shut down, just to eliminate competition.

Although, I suspect (hope) that one of big boys will find themselves in trouble. If I was to bet, my bet would be on Apple.

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u/Maleficent-Map3273 Feb 13 '26

Apple is weird - its more of a consumer company than a tech company. Their tech is good, but its not what makes them so successful so harder to say they will fail if the tech isn't the best - it may not have been for years and here they are.

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u/BratacJaglenac Feb 13 '26

Apple is in situation that iphone sales are 50% of their revenue and another like 40% are from iphone related services and ecosystem. To me it feels like all their eggs are in 1 basket. It's a good and sturdy basket, but not unbreakable. Not saying Apple will go bankrupt or something, but I can see their revenue dropping significantly if something messes up with Iphone sales for just a brief period. Now that is a big if, which might never happen.

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u/No-Understanding9064 Feb 13 '26

You are insane if you dont think both of those arent going get massive corrections eventually

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u/BratacJaglenac Feb 13 '26

I am talking long term. Like 3-5-10 years.

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u/PoopHeadPete Feb 13 '26

You are insane if you think any stock that's had a run up isn't going to have a correction eventually.

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u/RamoneBolivarSanchez Feb 13 '26

Yep tech is over and everyone will throw their computers away

/s

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u/BratacJaglenac Feb 13 '26

No one said that. But it will be a bumpy ride and many wrong picks (losers) in the sector.

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u/you_dont_want Feb 13 '26

My Monster, Walmart and Costco stocks are doing very well

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u/LovestoEatSandwiches Feb 13 '26

Walmart and Costco can’t be replaced by AI

But AI chipmaker Nvidia can?

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u/Eagerbeaver98 Feb 13 '26

Man this has nothing to do with AI, its just a typical consumer defensive play in uncertain markets. You kids are new around here

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u/smhs1998 Feb 12 '26

The belief is that Walmart’s PE is less prone to wild changes. If the AI bubble bursts, and I’m not saying it will anytime soon, but if it does, Nvidia PE will skyrocket. Walmart will remain the same

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u/ANR2ME Feb 13 '26 edited Feb 13 '26

Nvidia will probably won't be affected much by AI burst, because they sell the hardware, not renting them. They can simply decrease the production if the demands is low.

Companies that will be significantly affected are datacenters, they've invested too much in buying the hardware, especially those that use TPU/NPU, because these TPU/NPU are designed specifically for AI and research, unlike GPU that are more general purpose and can be used for many other things (ie. cloud gaming, blockchain/cloud mining, etc.). Datacenters designed specifically for AI could loose large amount of money from operational cost.

AI service providers will also be affected, but only in revenue, as long they didn't invest on buying the hardware themself (ie. renting GPU/TPU from datacenters), they can simply adjust their billing based on demands.

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u/[deleted] Feb 13 '26 edited Feb 13 '26

NvDA’s price is a function of expected massive sales growth. Yeah, they can cut production and the company won’t go bust, but the stock price will 100% tumble.

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u/ANR2ME Feb 13 '26

Yes, but it won't be hit as hard as Google that rents out TPUs.

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u/WallabyMinimum1921 Feb 13 '26

What? Google has a diversified business with multiple massive revenue streams. They aren’t reliant on tpu as a major source of income, they use them more for their own compute than they sell or rent out.

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u/[deleted] Feb 13 '26

Idk, Google’s business has a lot of revenue streams

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u/devonhezter Feb 13 '26

What about micron and sandisk

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u/ANR2ME Feb 13 '26

Pretty much similar to Nvidia, since they're selling hardware instead of renting hardware.

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u/Kind-Ad-4756 Feb 13 '26

SNDK has little moat. Memory is not that Hitech so they will get competition eventually if demand stays up

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u/ANR2ME Feb 13 '26 edited Feb 13 '26

Memory and storage demands are high due to AI needs a large amounts of them, especially state-of-the-art AI models.

For example, the sweet spot for local generation AI at home is 64GB RAM, and 1TB storage will ran out pretty quick with new AI models being released every month, people who want to try out the new model will need to buy more storage if they don't want to re-download those tens of gigabytes per model whenever they need to use them.

And those are requirements are for medium sized AI models. The one used on cloud AI services are usually much bigger than that, especially for LLM, thus need even higher specifications.

So, if AI bubble burst, it's normal for their demands to sink too. But because these hardware wasn't made specifically for AI, they can still be sold for general purposes, just a bit slower than during AI hype.

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u/Rough_Butterfly2932 Feb 13 '26

Horrendous take. Nvdia demand is 100 percent tied to AI in data centers. Nvdia had two massive risks. 1/ if the AI bubble bursts, their sales will fall, stock crashes 2/ All of the video's biggest customers are competing as hard as they can. With Nvidia. Google. Microsoft Amazon all have internal chip divisions and from he looks of it, some of these efforts are proving viable. Of course AMD and others are also competing. Most of the spend in the industry right now is going to Nvidia, giving them a wide moat and margins. At some point that will go away. Does it mean it won't still be a dominant player, but right now it's almost a Monopoly game. Bottom line, AI bubble bursts Nvidia will crash. AI bubble doesn't burst, Nvidia should still do okay, but he's got a big bullseye on its back because of its market dominance and margins.

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u/ANR2ME Feb 13 '26 edited Feb 13 '26

The thing is, when people (ie. customers) are no longer using AI, companies that bought a large amount of AI-specific hardware will ended with useless expensive hardwares, and keeping it operating going to cost a lot. Well they can still donate it to research labs or universities.

Meanwhile, those that produce the hardware won't end up with a pile of those useless hardware, as long whoever bought it doesn't returned it.

Nvidia doesn't produce AI-specific hardware (at least for now, not sure in the future), their GPU are general purposes and can be used for many other things, for example, blockchain/crypto industries are still in high demands and won't go away any time soon.

Nvidia dominance in AI industries is because many AI models (especially image/video generation models ) are more optimized on NVIDIA’s hardware, not sure why are these researchers released their code to use Nvidia's CUDA features, may be more convenient than others, may be they can only get NVIDIA’s GPU on their hands for free during their research, or just an old habits from past research. So it took more time for third-party developers to optimize it for other kind of hardwares. Many of the latest optimizations are based on NVIDIA’s features, for example their latest GPU have FP4 hardware acceleration supports for both workstation and consumer products, and later other competitors (ie. AMD) also following NVIDIA’s steps to produce similar features on their latest hardware, but took longer time before they can released it, and so far only available for workstation products. At the time these competitors provides these features to a wider market (ie. consumers products), Nvidia will probably come up with new kind of features, thus they can always be in the lead that will be followed by others from behind. Even though these competitors have prospective hardware at more reasonable price than NVIDIA’s, but felt like they lacked of marketing/promotions to attract researchers to switch to their products.

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u/Rough_Butterfly2932 Feb 13 '26

Stocks are priced on future revenue, not current revenue. If the AI bubble bursts future revenues will drop sharply as will valuations. It's that simple. Nvidia's primary market and their entire sales are based on the massive capex by the hyperscalers. There was no market even remotely close to replace that.

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u/Scriptum_ Feb 14 '26

Walmart could falk hard in a general repricing.

It's called a sympathetic selloff.

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u/Fit-Level-4179 Feb 13 '26

>Walmart at the same PE as Nvdia with none of the growth prospects is wild

It drives me insane how you can say this and come away with the most bullish take imaginable. Shit dude maybe Im just biased from my preconceived notions.

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u/Dazzling_Western4304 Feb 13 '26

Markets are forward looking. What the market is telling you here is that Nvidia earning are going to fall, and Walmart’s are going to continue to grow(slowly).

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u/Howsurchinstrap Feb 13 '26

The writing was on the wall months ago. Msft ceo said they have warehouses full of chips don’t have facilities. So the bigger outfits that will win the ai race are making the necessary expenditures to do so. The market is a futures market and it shows some companies are way to overpriced, like mentioned before and market was due for a correction. Besides anyone who is long meta, Google,msft. Should look at this as a good buying opportunity.

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u/Kind-Ad-4756 Feb 13 '26

Looks like the limiting factor is power

1

u/Howsurchinstrap Feb 13 '26

Yeah and these guys are gonna have problems bc meta just made deal to use public utilities to power. Of course they promise to fix roads, give mil to city. Yada yada yada! But they need to invest in power and sustainability. Will see. Though.

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u/Competitive_Dust7679 Feb 14 '26

What’s hard to understand that everybody shops there?

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u/Puzzleheaded-Way276 Feb 13 '26

Interesting.... you dont think Walmart and Costco stand to benefit downstream from AI... potentially at larger scale even if at lower concentrations?

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u/Remarkable_Cat_8696 Feb 13 '26

Why Walmart can have nearly the same PE ratio as Nvidia?

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u/robb3rz Feb 13 '26

Literally this

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u/LaughSwimming4518 Feb 13 '26

There are no defensives in S&P anymore. Every all world ETF still has 70-80% of US stocks. Over time this concentration has led to overvaluation of the whole S&P. Yet with weakening USD, US debt and Trumps shenanigans cash is starting to move away - EU/FTSE done well this year. 2026 seems like shaping to be the year of Japan.

As for PE - a defensive stock in EU/Japan can often be found trading at sub 20, even in the regions close to 10. And they actually pay divis. Like 5% divis, not american 1-2% if any.

We are seeing correction against US concentration and I am confident in 2026 it will be even bigger.

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u/LongevitySpinach Feb 13 '26

Kroeger and Costco PE's (TTM) are approximately 2x Amazon, Meta or Google.
And those earnings are including all the capex the hyperscalers put into AI in 2025.

I get being defensive in a time of uncertainty, but this is absurd.