Gabelli Funds' Josh Belton on Large Tech Valuations Amid AI-Driven Market Volatility

This analysis is based on Josh Belton’s appearance on CNBC’s “Squawk Box” on February 6, 2026 [1], where the Gabelli Funds portfolio manager for growth equities expressed being “pretty comfortable” with current large tech firm valuations amid significant market volatility. The interview occurs against a backdrop of a $300 billion market cap wipeout in the technology sector as investors grapple with evolving narratives about artificial intelligence’s impact on software company revenues [2].

The technology sector experienced substantial volatility in early February 2026, driven primarily by concerns that artificial intelligence may compress rather than expand revenue streams for enterprise software companies. Major SaaS (Software-as-a-Service) stocks experienced sharp declines: Microsoft fell 2.87%, SAP declined 3.29%, Salesforce lost 6.85%, and ServiceNow dropped 6.97% in a single trading session [2]. This selloff reflects a fundamental reassessment of how AI capabilities might affect traditional software business models.

The NASDAQ Composite’s 3.51% decline from January 15 to February 6 (falling from 23,694 to 22,861) demonstrates the technology sector’s underperformance relative to other market segments [0]. In contrast, the Dow Jones Industrial Average gained 1.23% over the same period, suggesting a rotation from growth-oriented technology investments toward more defensive or value-oriented positions.

Mega-cap technology stocks displayed divergent performance patterns during this period. Apple (AAPL) emerged as a relative safe haven, gaining 7.75% from January 30 to February 6, closing at $279.58 [0]. However, Meta Platforms (META) experienced significant pressure, declining 8.26% from $716.50 to $657.33, while Alphabet (GOOGL) fell 4.95% to $321.26 [0]. This variation suggests investors are selectively rewarding certain technology exposures while penalizing others based on specific AI-related narratives and business model concerns.

The market is currently processing conflicting perspectives on AI’s revenue implications. Bearish concerns stem from Palantir executives’ comments suggesting AI can accelerate ERP (Enterprise Resource Planning) migrations from “years to weeks,” potentially compressing implementation revenue streams for traditional enterprise software vendors [2]. Analysts at Jefferies and Yardeni have noted similar concerns about IT services firms facing compressed migration timelines and reduced recurring revenue opportunities.

Counterbalancing this view, SAP has argued that AI will enhance rather than replace SaaS solutions, emphasizing the continued necessity for clean data infrastructure and proven business processes [2]. This fundamental disagreement about AI’s net impact on software revenues is creating uncertainty that manifests in elevated volatility—the NASDAQ’s 1.13% volatility reading represents the highest among major indices [0].

On February 6, 2026, sector performance revealed notable rotations. While the Technology sector posted a modest gain of +0.68%, the Communication Services sector—a category that includes many large technology and media companies—declined 0.35% [0]. Defensive sectors outperformed, with Real Estate gaining 1.86%, Financial Services advancing 1.04%, and Utilities rising 1.02% [0]. This pattern suggests risk-averse positioning by investors concerned about technology sector fundamentals.

Josh Belton’s expression of comfort with large tech valuations offers an important counter-narrative to the prevailing market caution [1]. As a growth equity portfolio manager at Gabelli Funds, his perspective likely reflects fundamental analysis emphasizing long-term value over short-term volatility. Morningstar’s research supports this nuanced view, noting that mega-cap and software stocks lagged in 2025 but that 2026 is expected to remain strong for AI-driven capital expenditures, particularly in infrastructure [3].

Meta and Microsoft have been noted by some analysts as trading at relatively attractive valuations—Meta at approximately 22x forward earnings represents a significant discount to historical norms for growth companies [4]. This valuation compression, combined with ongoing AI infrastructure spending by hyperscalers, may create opportunities for investors with longer time horizons who are comfortable with elevated short-term volatility.

Morningstar’s analysis indicates that market leadership is broadening beyond the “Magnificent Seven” technology mega-caps that dominated 2023-2024 [3]. Active managers have been reducing exposure to mega-cap technology as these stocks are “no longer the best conduits for AI returns” [3], suggesting a more selective approach to technology investment is emerging among professional money managers.

remains the most significant concern, with HIGH severity. The possibility that AI could fundamentally alter enterprise software implementation timelines and recurring revenue models represents a structural challenge not fully reflected in current valuations [2]. The $300 billion market cap decline in a single session demonstrates the sensitivity of software stocks to AI-related narrative shifts.

carries MODERATE severity, as high-multiple technology stocks remain vulnerable if growth expectations are not met. The elevated volatility in the NASDAQ (1.13%) indicates ongoing uncertainty about appropriate valuation levels.

also carries MODERATE severity. With annual AI-related capital expenditures estimated at $600 billion, the market is closely monitoring whether infrastructure investments will generate expected returns [3].

represents a key opportunity area. Morningstar’s expectation that 2026 will be “another strong year for AI-driven capex” [3] suggests infrastructure and hardware companies may benefit from continued spending by major technology companies.

present potential opportunities. Meta and Microsoft’s current valuations, described as relatively cheap by some analysts [4], may represent attractive entry points for investors with conviction in long-term AI adoption trajectories.

Upcoming quarterly earnings reports from Salesforce, ServiceNow, and other SaaS companies will provide concrete evidence regarding AI’s actual impact on software company revenues. These reports represent significant catalysts that could either validate or challenge current bearish narratives.

The analysis integrates market data [0], original event reporting [1], and external research [2][3][4] to provide comprehensive context for understanding technology sector dynamics in early February 2026. Josh Belton’s constructive stance on large tech valuations contrasts with significant market volatility driven by AI revenue concerns. The NASDAQ’s 3.51% decline, combined with sharp individual stock movements (Meta down 8.26%, Apple up 7.75%), highlights the selective nature of current technology market dynamics. The fundamental debate about whether AI will expand or compress software revenues remains unresolved, creating uncertainty that investors must navigate through careful stock selection and risk management.

Major metrics for monitoring include upcoming SaaS earnings reports, hyperscaler capital expenditure announcements, mega-cap tech relative valuations, and sector rotation patterns. The Communication Services sector’s continued underperformance (-0.35% on February 6) warrants particular attention as an indicator of broader technology sector sentiment.

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[0] Ginlix Analytical Database - Market Indices and Stock Price Data (February 2026)

[1] CNBC/Squawk Box - “Gabelli Funds’ John Belton: ‘Pretty comfortable’ with where large tech firms are trading currently” (February 6, 2026)
URL: https://www.youtube.com/watch?v=Ctnz70emL6s

[2] Fortune - “Tech stocks in free fall as traders realize AI has the ability to cut revenues across the board” (February 6, 2026)
URL: https://fortune.com/2026/02/04/tech-stocks-palantir-anthropic-ai-cut-reduce-revenues/

[3] Morningstar - “Why the Next AI Stock Winners Won’t Be the Magnificent Seven” (2026)
URL: https://global.morningstar.com/en-nd/funds/why-next-ai-stock-winners-wont-be-magnificent-seven

[4] The Motley Fool - “Better Dirt Cheap AI Growth Buy: Meta vs Microsoft” (February 6, 2026)
URL: https://www.fool.com/investing/2026/02/06/better-dirt-cheap-ai-growth-buy-meta-vs-microsoft/