Money Moves On

U.S. stocks slipped again as investors reacted to Alphabet's earnings, strong numbers paired with a spending plan that landed like a very expensive shrug. Google's parent company made it clear that it plans to nearly double its capital expenditures this year to stay competitive in artificial intelligence. The results were good. The ambition was undeniable. The market's response was less generous.

Alphabet's shares fell, and they dragged much of the tech-heavy universe with them. The Nasdaq slid while the Dow held up better, a pattern that has become familiar lately. Investors are no longer dazzled by the promise of AI alone. They want to know when, exactly, all this spending turns into something sturdier than a hope.

This helps explain the odd split personality of today's session. Chipmakers tied to AI infrastructure saw gains. If money is going to be spent, someone has to sell the shovels. But companies closer to the application layer - software firms that once looked like easy winners - continued to bleed. The S&P software index has now erased hundreds of billions of dollars in value in just a few days. That is not a correction driven by bad earnings. It is a rethink driven by uncertainty.

The story investors are telling themselves has changed. Last year, AI was treated as a growth shortcut. This year, it is starting to look like a long, expensive construction project. Alphabet's spending plans made that clear. So did the market's reaction to Qualcomm and Arm, both of which were punished for offering guidance that hinted at limits, delays, or margins under pressure. In this environment, being merely good is no longer good enough.

Money, as it often does, has started looking for better things. Small-cap and value stocks have crept higher. Old, unfashionable sectors - consumer staples, energy, basic materials - are back in polite conversation. Europe, with its relatively modest tech sector, has emerged as a surprising beneficiary. While U.S. markets wrestle with the consequences of their own ambition, European indices have moved ahead with far less drama. Sometimes having fewer moonshots means fewer crash landings.

This rotation is not a vote against innovation. It is a vote against blind faith. Investors are still willing to fund AI. They are just asking harder questions about scale, timing, and return. The arms race is no longer about who has the most impressive model. It is about who can afford to keep running without tripping over their own balance sheet.

Amazon's results later today will be read through the same lens. Nvidia, when it reports later this month, may face the toughest audience of all. The bar is no longer “Are you building the future?” It is “Can you pay for it without breaking everything else?”

There is a risk here, and it is not limited to technology. When large, visible stocks wobble, they can pull sentiment down with them, even when the broader economy is holding up reasonably well. We are seeing flashes of that now, in commodities, in cryptocurrencies, and in markets that are simply caught in the downdraft. This kind of risk aversion can feed on itself.

Still, today's session also showed something healthier beneath the surface. Many companies outside the AI spotlight are delivering solid results. Defensive sectors are doing what they are supposed to do. Central banks, for their part, are expected to stay put, offering at least some policy stability in an otherwise jumpy environment.

Today's economic highlights:

Today's agenda includes: the balance of trade in Australia; factory orders in Germany; industrial production in France; retail sales in Italy and the Euro Area; in the United Kingdom, the S&P Global Construction PMI, the BoE interest rate decision, MPC meeting minutes, BoE monetary policy report, and MPC votes; in the Euro Area, the ECB interest rate decision, deposit facility rate, and ECB press conference; in the United States, initial jobless claims, JOLTs job openings, and Fed Bostic's speech. See the full calendar here.

• Dollar index: 97,570
• Gold: $4,851
• Crude Oil (BRENT): $68.00 (WTI) $63.72
• United States 10 years: 4.26%
• BITCOIN: $69,280

In corporate news:

• SpaceX plans to expand its Starlink business into new markets such as a potential Starlink phone, direct-to-device internet and space-tracking services as it prepares for a possible IPO.
• Linde beat fourth-quarter earnings expectations on higher pricing and forecast 5%–8% EPS growth in 2026, excluding currency effects.
• Syngenta Group is targeting a Hong Kong IPO that could raise up to $10 billion, potentially making it one of the largest listings of 2026.
• ASE Technology said a subsidiary acquired machinery and equipment from KLA Corp for about T$1.14 billion.
• Qualcomm and Arm Holdings warned that a global memory shortage is weighing on smartphone chip sales and could pressure revenues through 2027.
• Exxon Mobil reported a unit upset at its Joliet, Illinois refinery, which has a capacity of 264,000 barrels per day.
• Coupang confirmed that personal data from an additional 165,000 South Korean users was affected by a breach first disclosed last year.
• Britain will work with Microsoft to develop standards and systems to detect harmful deepfake content online.
• Anduril Industries, Shield AI and other U.S. drone makers are pushing into Asian markets as regional security concerns over China drive demand.
• Winbond Electronics said it will buy semiconductor manufacturing machinery from Applied Materials and Tokyo Electron for a combined T$11.2 billion.
• Global software stocks including Microsoft, Oracle and ServiceNow have sold off sharply as investors reassess AI disruption risks, sparking debate over whether valuations now offer value.
• Ciena will join the S&P 500, taking the place left vacant by Dayforce, which was acquired by the Thoma Bravo fund.
• Trump announces he will stay out of the conflict between Netflix and Paramount over Warner Bros, according to NBC.
• Boeing will cut about 300 jobs in the supply chain of its defense division, Bloomberg reveals.
• FMC Corp is evaluating its strategy and may be looking for a buyer.
• Roblox unveils generative AI capable of creating interactive models in natural language.

Analyst recommendations:

• Corteva, Inc.: JP Morgan downgrades to neutral from overweight and raises the target price from USD 75 to USD 77.
• Emerson Electric Co.: Deutsche Bank downgrades to hold from buy and raises the target price from USD 164 to USD 170.
• Fox Corporation: Wells Fargo downgrades to market weight from overweight and reduces the target price from USD 80 to USD 75.
• Old Dominion Freight Line, Inc.: Baird downgrades to underperform from neutral with a price target raised from USD 166 to USD 204.
• Snap Inc.: B Riley Securities Inc. upgrades to buy from neutral with a target price of USD 10.
• The Timken Company: Oxcap Analytics upgrades to overweight from market weight and raises the target price from USD 85 to USD 114.
• Webster Financial Corporation: Barclays downgrades to market weight from overweight and reduces the target price from USD 80 to USD 75.
• Zoom Communications, Inc.: Wolfe Research upgrades to outperform from peerperform with a target price of USD 115.
• Alphabet Inc.: Evercore ISI maintains its outperform rating and raises the target price from USD 325 to USD 400.
• Amcor Plc: Truist Securities maintains its buy recommendation and raises the target price from USD 12 to USD 60.
• Boston Scientific Corporation: Citi maintains its buy recommendation and reduces the target price from USD 130 to USD 102.
• Bunge Global Sa: UBS maintains its buy recommendation and raises the target price from USD 108 to USD 145.
• Coherent Corp.: KGI Securities Co Ltd maintains its outperform rating and raises the target price from USD 180 to USD 325.
• Davita Inc.: Truist Securities maintains its hold recommendation and raises the target price from USD 128 to USD 158.
• Eli Lilly And Company: Cantor Fitzgerald maintains its overweight recommendation and raises the target price from USD 985 to USD 1205.
• Gartner, Inc.: Barclays maintains its equalweight recommendation and reduces the target price from USD 260 to USD 180.
• Graphic Packaging Holding Company: Jefferies maintains its hold recommendation and reduces the target price from USD 17 to USD 13.
• Idex Corporation: Citi maintains its buy recommendation and raises the target price from USD 202 to USD 243.
• Lumentum Holdings Inc.: Barclays maintains its equalweight recommendation and raises the target price from USD 365 to USD 475.
• Merck & Co., Inc.: DZ Bank AG Research maintains its buy recommendation and raises the target price from USD 105 to USD 131.
• Paypal Holdings, Inc.: DZ Bank AG Research maintains its buy recommendation and reduces the target price from USD 80 to USD 62.
• Qualcomm, Inc.: Citi maintains its neutral recommendation and reduces the target price from USD 180 to USD 140.
• Silicon Laboratories Inc.: Barclays maintains its equalweight recommendation and raises the target price from USD 130 to USD 231.
• Teradyne, Inc.: GF Securities Co. Ltd. maintains its buy recommendation and raises the target price from USD 255 to USD 341.