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🗞️ Google Delivers in Q4
PLUS: AMD tanks 17%
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Market Performance
S&P 500: 6,882.72 ⬇️ 0.51%
Nasdaq: 22,904.58 ⬇️ 1.51%
Dow Jones: 49,501.30 ⬆️ 0.53%
Alphabet's AI Spending Spree
Alphabet just dropped a bombshell that's making investors nervous—despite beating earnings expectations.
The Google parent reported Q4 earnings of $2.82 per share on revenue of $113.83 billion, both topping Wall Street estimates.
But here's what spooked the market: Alphabet plans to spend up to $185 billion on capital expenditures in 2026—more than double its 2025 spending.
This massive investment will fund AI compute capacity for Google DeepMind and meet surging demand from cloud customers.
While Google Cloud crushed expectations with nearly 48% revenue growth and a $240 billion backlog, YouTube ads disappointed, missing estimates at $11.38 billion.
The silver lining? Gemini AI now has 750 million monthly active users, and serving costs dropped 78% through efficiency improvements.
GOOGL stock has a Ziggma score of 82, driven by profitability and financial health, but severely penalized by a valuation score of 35, thanks to a 5-year return of 220%.
Our Takeaway
Alphabet's betting big on AI infrastructure, which could pressure near-term profitability but positions them for long-term dominance.
The real question: will this spending translate to market share gains against Microsoft and Amazon, or are we witnessing an AI arms race with diminishing returns?
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Market Overview 📈
Tech stocks took a beating on Wednesday as the semiconductor selloff intensified, dragging the Nasdaq down 1.51% while the Dow managed to eke out gains on strength in value names.
AMD's disappointing Q1 forecast triggered a 17% plunge, pulling down the entire chip sector. Broadcom fell 3.8%, and Micron dropped 9.5% in sympathy.
Software stocks also stumbled, with Oracle shedding 5% and CrowdStrike losing over 1%. Even bitcoin joined the rout, falling 3% after breaking below $73,000.
Meanwhile, the Dow's 260-point gain was powered by a rotation into defensive stocks.
Amgen surged 8% on stellar earnings, while investors fled growth for value-oriented names like Honeywell, which climbed nearly 2%. Berkshire Hathaway rose 3%, turning positive for the year under new CEO Greg Abel.
The weak ADP private payroll report showed just 22,000 jobs added in January—well below the 45,000 forecast—raising concerns about economic momentum.
The ISM services index held steady at 53.8, but commentary highlighted growing tariff uncertainty affecting business planning.
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Stock Moves Deciphered 📈
☀️ Enphase Energy (ENPH)
Enphase Energy surged 39% after reporting Q4 earnings that beat analyst estimates and providing strong Q1 2026 revenue guidance.
The optimistic forecast, coupled with high short interest, likely fueled a significant rally as investors reacted positively to the company's better-than-expected performance and outlook despite a year-over-year revenue decline.
🤖 Super Micro Computer (SMCI)
Super Micro Computer's stock jumped 14% following the announcement of blowout Q2 fiscal 2026 earnings, with revenue of $12.68 billion more than doubling year-over-year.
The company also significantly raised its full-year revenue guidance to at least $40 billion (up from $36.09 billion in estimates), citing soaring demand for its AI data center solutions.
💉 Eli Lilly (LLY)
Eli Lilly's stock gained 10% after posting higher-than-expected Q4 results and issuing strong 2026 guidance.
The company projects revenue of $80-83 billion (versus $77.64 billion expected) and adjusted earnings of $33.50-$35 per share (versus $33.04 expected), driven by continued blockbuster demand for weight-loss drug Zepbound and diabetes treatment Mounjaro.
Headlines You Can't Miss 👀
📉 Silicon Laboratories shares surged 52% after reports that Texas Instruments agreed to acquire the chip designer for $7.5 billion amid ongoing semiconductor industry consolidation.
🏨 Airbnb was upgraded to market outperform by Citizens Bank, which set a $160 price target (31% upside), citing the upcoming hotel platform launch and potential advertising revenue as key catalysts.
🏰 Disney shares rose 3% after naming Josh D'Amaro as Bob Iger's successor effective March 18. Bank of America called it the "Best Succession Since HBO's," maintaining its $150 price target.
🤖 Waymo (Alphabet's self-driving unit) took a $2.1 billion stock-based compensation charge after raising funding at a $16 billion valuation. The service has now completed 15 million trips across five U.S. markets.
🏗️ Trump Homes initiative announced, with homebuilders like Lennar and Taylor Morrison jumping 3% on reports of addressing housing affordability. Wall Street remains skeptical about long-term viability.
🌍 Rare earth stocks fell as the U.S. Trade Representative announced plans to cooperate with Mexico, the EU, and Japan on price floors for critical minerals. MP Materials dropped 6%, and USA Rare Earth fell 9%.
📊 ISM Services Index came in at 53.8 for January, matching December's revised reading and slightly beating the 53.5 consensus, though respondents noted increased tariff uncertainty and geopolitical tensions.
Trending Stocks 📊
⬇️ Advanced Micro Devices (AMD)
AMD shares plummeted 17% despite beating Q4 estimates with earnings of $1.53 per share (versus $1.32 expected) and revenue of $10.27 billion (versus $9.67 billion expected).
The sell-off stemmed from investor concerns over high operating expenses—$200 million above guidance—and fears of decelerating AI revenue growth, even as Q1 guidance of $9.8 billion exceeded the $9.38 billion consensus.
🏥 Boston Scientific (BSX)
Boston Scientific shares declined after providing a mixed 2026 outlook. While full-year earnings guidance met expectations, the company's first-quarter forecast came in weaker than anticipated, creating near-term uncertainty.
This overshadowed an otherwise solid Q4 2025 performance, as investors focused on the softer short-term projections rather than the company's long-term growth trajectory.
📉 Amphenol (APH)
Amphenol's stock traded lower amid a broader market downturn affecting semiconductor and connector stocks.
The company's shares were already underperforming year-to-date and trading well below recent highs when the tech sector rout intensified.
The negative market sentiment and rotation away from growth stocks contributed to the decline, despite no company-specific negative news.
What’s Next?
Key market and macro news 👇
💰 Amazon Q4 Earnings: Tech giant expected to report record Q4 revenue near $211-212 billion with EPS around $1.97. Critical focus on AWS cloud growth and massive AI infrastructure spending guidance of up to $185 billion for 2026.
🧪 Linde plc Q4 Earnings: Chemical industry leader to report with consensus EPS of $4.15, representing 4.53% year-over-year growth.
⛽️ ConocoPhillips Q4 Earnings: Oil company reports consensus EPS of $1.08, down 45.45% year-over-year due to energy sector volatility.
📊 Chicago Fed Labor Market Indicators: The final January 2026 labor market data release provides critical insights into employment trends.
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