Microsoft added nearly $500 billion in market value ($480 billion, to be exact) in a single trading session on Thursday—a more than 17% surge—after reporting fiscal fourth-quarter results that showed Azure revenue surpassing $100 billion for the first time, with Microsoft Cloud revenue up 27% year-over-year to $59.3 billion.But blowout results, even those released within hours of Microsoft’s, haven’t been greeted with similar euphoria. Take Samsung, which posted a record $62 billion profit, a 19-fold increase, and then saw stocks sell off, or Meta, punished after another quarter of growing revenue. The Dow fell more than 1,100 points on Wednesday, before Microsoft reported its blowout quarter after the close.Three market watchers looked at the same week and came away with three different explanations for why.The leverage argumentSteve Sosnick, chief strategist at Interactive Brokers, had told Axios earlier in the week that the market narrative had flipped from “all news being good news for AI” to something like “let’s look under some rocks and see what the risks are.” After Microsoft’s earnings, he laughed as he told Fortune the story had changed “just a tad.” But he didn’t think the fundamental question was resolved. “We are in a ‘rip up the script every day’ kind of mode,” he said.To Sosnick, this week’s swings are simply too large and too fast to be explained by fundamentals alone. Microsoft jumping 17%, Micron rising 18% on unremarkable news, IBM getting cut 25% on a profit warning weeks earlier — these are the kinds of moves that make him uncomfortable. He acknowledged it was a “cliche” to go there, but then he went there: “I hate to say it, but the only time I can recall these sort of swings is the 1999, 2000 period.” That era’s dot-com bubble also saw “everybody rushing in and out of stocks,” he added.What worries him more than the historical parallel is that today’s market has far more tools to amplify those swings than it did back then: weekly options, leveraged ETFs, and other products that simply didn’t exist a generation ago. He stopped short of blaming them directly — “I’m not going to say they cause the volatility, that’s not fair” — but sees a “generational” effect running through the market’s behavior, invoking the “financial nihilism” framing that some see active in markets. That framing lines up with a growing body of research. A Harris Poll found 46% of Gen Z respondents agree that “no matter how hard I work I will never be able to afford a home I really love,” while 42% of Gen Z investors hold cryptocurrency compared to just 11% who hold a retirement account. The World Economic Forum has flagged the term, reportedly coined in 2021, as one of the most significant economic trends shaping the next decade.The specific stress point that resolved this week, in Sosnick’s view, was the forced unwind of Leopold Aschenbrenner’s hedge fund, Situational Awareness LP. The fund, founded by the 24-year-old former OpenAI researcher, had reportedly returned 439% net through June 30, according to an investor letter cited by the Financial Times, but was running gross exposure as high as four times its capital, with its top five positions making up more than three-quarters of its disclosed long book. A roughly 30%-plus decline across core holdings in July—driven by losses in AI infrastructure names like SK Hynix and a large Nebius stake, alongside soured short bets against software companies including Adobe—was enough to wipe out the fund’s equity cushion. Prime brokers Goldman Sachs, JPMorgan Chase, and Bank of America issued margin calls, and the fund ultimately sold its entire public equities book—longs and shorts alike—to a single unnamed buyer before Thursday’s open.The market’s behavior leading up to that resolution, Sosnick said, reflected a growing awareness that “some leveraged investments were going wrong.” When the Aschenbrenner fund was removed, markets seemed to exhale. “The market is reacting to this like, ‘Okay, we’re done, the leveraged trades are behind us,'” he said — but the scale of the swings in both directions still gives him pause. When SK Hynix and Samsung posted positive results and markets shrugged, he took note. “When stocks react poorly on good news, it’s telling you there’s something really wrong in the market structure.”That framing lines up with a growing body of research. A Harris Poll found 46% of Gen Z respondents agree that “no matter how hard I work I will never be able to afford a home I really love,” while 42% of Gen Z investors hold cryptocurrency compared to just 11% who hold a retirement account. The World Economic Forum has flagged financial nihilism, a term reportedly coined in 2021, as one of the most significant economic trends shaping the next decade.The fundamentals argumentMelissa Otto, who runs research for Visible Alpha at S&P Global, rejected this framing outright when it’s presented to her directly. “I don’t understand where the nihilism comes from,” she said. Her read of this week’s Microsoft rally is not psychological but mechanical: For the first time, a hyperscaler has produced a “very quantifiable metric”—Azure’s accelerating growth—that demonstrates the AI business model is actually working, rather than just promising to work eventually. Microsoft’s own numbers back up her framing: Azure revenue growth accelerated well past expectations in the most recent quarter.Otto’s framework for understanding the broader volatility centers on what she calls an “overhang” —a market thesis stuck in an unusually wide debate, which she said is directly visible in her firm’s data as a widening dispersion in analyst estimates. “When I see estimates narrow, that to me means there’s less debate in the market and you’re going to see less volatility,” she said. “But when I see the opposite… it means the debates are getting much more polarized and much more extreme.”That was what snapped back after Microsoft’s figures, she said—an overhang around AI spending that had been building for roughly six to eight weeks, driven by a market that shifted into a “show me the money” mood. After all, there is roughly $1.5 trillion in combined AI capex planned by Microsoft, Meta, Amazon, and Alphabet between this year and next, and both Otto and Sosnick noted that investors have been used to getting all of those billions of dollars in stock buybacks for decades now.Otto’s explanation for Microsoft’s specific advantage rests on enterprise entrenchment rather than model quality, which she expects will commoditize over time regardless of which AI lab wins any given benchmark. “Name me a financial analyst working on Wall Street that doesn’t use Excel,” she said. “Name me an investment banker that doesn’t use PowerPoint… it’s just in the DNA of these industries.” By her account, that ubiquity gives Microsoft a durable channel to sell Azure and Copilot into enterprises that Amazon Web Services and Google Cloud can’t easily replicate, since Azure benefits from being pre-embedded in existing enterprise software stacks.The capex skepticDerek Horstmeyer, a finance professor at George Mason University, opened with the detail that may have gotten lost in the Thursday rally: Aschenbrenner’s losing positions very likely would have turned around the very next day. “I guess the worst part of it is everything reversed today — if he had survived, he could have made it through.”That’s not coincidence to him, but a feature. The go-for-broke attitude that drove Situational Awareness LP — 4x gross leverage, concentrated positions, conviction bets — is the same attitude he sees expressed differently in retail markets. “It really is an attitude of go broke or shoot for the moon — use as much leverage as you can.” The fund and the retail crypto buyer are operating from the same psychology at different scales.But Horstmeyer’s deeper concern isn’t leverage or sentiment. It’s the structure of the AI capex race itself. Every hyperscaler is overspending, free cash flow is going negative across the board, and nobody wants to be left out. He’s watched this before. “Every company got into the streaming wars, and it’s money-losing for a lot of them, and they haven’t given up — they all still have their own platforms,” he said. There will eventually be a winner in AI infrastructure, “but I don’t want to be in the race of finding the one that’s going to win.”His clearest illustration of the market’s uneven bets: Apple, but largely because it lacks an AI strategy and so isn’t investing hundreds of billions of dollars because it missed its chance to become a hyperscaler. “Because they’re not in the AI race, they’re kind of doing okay,” he said, and indeed Apple recently hit $5 trillion in market cap, and has regained its perch above Nvidia as the world’s most valuable company.He acknowledged the long-term risk that Apple could be genuinely behind, but notes the company’s outsider status has, for now, insulated it from the volatility hitting AI-exposed peers. “It’s not a Silicon Valley mindset,” he said.Perhaps Horstmeyer’s most striking contribution is procedural: He runs a student-managed investment fund at George Mason with major portfolio votes every three to six months, and the group is four days from a vote that has split sharply. “One side wants to get out of the AI trade, and some want to double down and invest in this very niche, fiber-optic company—basically a supplier for a data center,” he said. “Some students are like, ‘this is the absolute future,’ and some don’t see it at all.”He’s noticed a pattern in who lands on which side. “There’s a definite correlation between the kids who like crypto” and greater risk tolerance toward AI infrastructure bets, he said, and others, usually by-the-book accounting students, are more “prudent” and tend to go the other way. Human nature, he said — go figure.This story was originally featured on Fortune.com