Fresh Tech Headwind from AMD Precedes Alphabet

Published as of: February 4, 2026, 9:10 a.m. ET

(Wednesday market open) Tech turbulence persists, and the culprit this time is Advanced Micro Devices (AMD). Shares capsized 9% after the chipmaker's earnings topped consensus but guidance failed to please. AMD's skid helped push the tech-heavy Nasdaq down again after yesterday's sharp losses, but the broader market advanced slightly and direction was muted.

Tech's shellacking yesterday was attributed to pressure on software companies after release of an AI automation tool from Anthropic that services legal work. This exacerbated fears about risks to the core businesses of the software industry, shares of which were already bruised double-digits year-to-date heading into Tuesday. More AI-related results await investors after the close as Alphabet (GOOGL) reports, followed by Amazon (AMZN) late tomorrow.

Another factor Tuesday was investors rotating out of tech—including AI names—and into a mix of defensive and cyclical sectors, a trend that's flared for months. The current rotation occurred at the heart of earnings season, which is "tracking a healthy path so far," said Liz Ann Sonders, chief investment strategist, and Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research (SCFR). Blended earnings growth is around 11%. Expectations remain high, especially for AI companies, raising the bar. Investors want to see AI spending justified by showing up in revenue growth, making earnings from Alphabet and Amazon important test cases.

1. Deeper dive on jobs data: The ADP employment change report for January this morning came in light at 22,000, down from a revised 37,000 in December. Most growth was in services-providing jobs, while manufacturing payrolls fell for the 32nd straight month. The report isn't normally too noteworthy, but with Friday's nonfarm payrolls data delayed, the soft showing may affect Treasuries. Though government data isn't on tap this week thanks to the shutdown that ended yesterday, more jobs data arrive early tomorrow with the Challenger job cuts report. December featured 35,000 layoffs to cap a heavy 2025, and analysts expect more than 40,000 in January. Today brings ISM Services PMI^® soon after the open following Monday's eye-opening gains in manufacturing PMI that reinforced the Federal Reserve's more upbeat economic outlook. Analysts expect services PMI to remain in expansion above 50 at 53.7%. Prices paid are worth a look after last week's December Producer Price Index (PPI) saw most of its advance driven by services inflation.
    
2. Staring down back-to-back mega caps: Looking ahead to Alphabet's (GOOGL) earnings after today's close and Amazon (AMZN) late tomorrow, it will be critical for investors to monitor whether these "hyperscalers" remain committed to their aggressive AI infrastructure spending. That said, the spending must accompany signs of progress integrating AI and "monetizing" it, as Meta Platforms (META) appeared to in its recent earnings. Meta found ways to use AI to boost its advertising metrics, and investors will likely want to see a similar result from Alphabet in terms of search and advertising. Investors might also want an update on the company's Gemini 3 AI model, a competitor to models from OpenAI and Anthropic that was released in November. Analysts expect Alphabet to report earnings per share of $2.63 on revenue of $111.4 billion. Those would be increases of more than 22% and 15% year over year. Looking ahead to Amazon tomorrow, cloud growth might be under scrutiny after Microsoft's (MSFT) cloud business results slightly disappointed last week.
    
3. Under the hood of sector rotation: Checking sectors, the ongoing rotation away from tech was evident Tuesday with energy, consumer staples, utilities, and materials all surging while information technology sank nearly 2.5%. The energy sector was buoyed by rising oil prices after the U.S. Navy shot down an Iranian drone as it approached an aircraft carrier in the Arabian sea. Even after yesterday's Wall Street retreat, market breadth remains constructive with around 62% of S&P 500 stocks trading above their 50-day and 200-day moving averages. Materials, energy, industrials, and consumer discretionary continue displaying the most relative strength, showing a bias toward the cyclicals that tend to outperform in a growing economy. Technically, it may be constructive that the S&P 500 Index forged its way back late yesterday from an early dip below its 50-day moving average of 6,871, Briefing.com noted. The same can't be said for the Nasdaq, which finished under its 50-day. On another positive note, the number of declining stocks on the S&P 500 barely outpaced those advancing by late in Tuesday's session, and the S&P 500 Equal Weight Index (SPXEW), which weighs all components the same, fell just 0.22% Tuesday. This is more evidence that the sell off mainly took down the highest-capitalized stocks.

• Advanced Micro Devices dropped nearly 9% ahead of the open. AMD reported a 40% year-over-year jump in earnings and a 34% year-over-year revenue surge. Data center revenues, which have been closely watched lately, rose 39% from a year ago compared to 22% last quarter. Guidance exceeded analysts' estimates but appeared to disappoint investors because AMD's current quarter revenue forecast midpoint of $9.8 billion is below the level of the fourth quarter. Weakness could also be linked to profit taking after AMD's parabolic rally since last April.
   
• Alphabet edged up 1% ahead of this afternoon's earnings. Shares have been on a parabolic rally since last April, and it hasn't been uncommon lately to see certain companies suffer profit-taking even after solid results.
   
• Amgen (AMGN) slipped 1.4% in early trading despite earnings and revenue that surpassed analysts' expectations. Guidance was as expected.
   
• Eli Lilly (LLY) jumped more than 8% after earnings per share easily surpassed the average Wall Street expectation and the pharma firm guided for fiscal 2026 EPS and revenue above analysts' consensus. In the fourth quarter revenue for Lilly's anti-diabetic drug Mounjaro increased 110% to $7.4 billion. Weight-loss drug Zepbound saw sales rise 122% from the same quarter a year earlier.
   
• Novo Nordisk (NVO), which competes with Lilly in weight loss drugs, slid 5% early Wednesday as the company guided for 2026 sales and profit to fall between 5% and 13%, worse than expected, according to CNBC.
   
• Super Micro Computer (SMCI) broke out to 10% gains early today after exceeding analysts' earnings and revenue consensus and issuing better-than-expected guidance. Shares are off sharply from last year's peaks after the company reported weak first quarter earnings and issued a mixed outlook last time out, Barron's noted.
   
• Uber (UBER) skidded 5% this morning as earnings per share for the quarter came in under analysts' consensus. Revenues did rise 19% year over year, and gross bookings climbed 22%. Guidance is for 17% to 21% year-over-year gross bookings growth in the first quarter. Revenue got boosted by Uber's delivery business last quarter.
   
• Metals resumed their climb early today with gold up more than 2% and silver up another 7%. There might be some "buy the dip" action in the metals after Friday's epic price collapse. Mining stocks took their cue from the commodities and mostly advanced.
   
• Bitcoin (/BTC) eased slightly early Wednesday after dropping yesterday to its lowest level since the November 2024 U.S. election. It is down 13% so far this year.
   
• Mortgage demand sagged in late January. Applications fell 8.9% from the previous week, according to the MBA Mortgage Applications Index released this morning.

Earnings so far: While fourth-quarter earnings have been healthy, with more than a third of the S&P 500 reporting, there has been some deterioration, which Schwab Chief Investment Strategist Liz Ann Sonders and Kevin Gordon, head of macro research and strategy, discussed in Schwab's latest analysis.

For reasons ranging from psychological tendencies to heightened options volume, major indexes often attract outsized attention when approaching or crossing significant round numbers. The S&P 500 Index (SPX—candlesticks) first closed above 6,000 (blue line) on November 11, 2024, just 190 days after its initial close above 5,000, according to Dow Jones. The index then spent several months consolidating around this round-number mark—including a sharp but brief tariff-related plunge below 5,000—before ultimately pushing decisively higher last summer. Now, the 7,000 level (yellow line) is in view. While the index briefly traded north of this mark last Wednesday, touching a new intraday record of 7,002.28, it has yet to notch a daily close north of 7,000. 

Check out the investors' calendar for a summary of the top economic events and earnings reports on tap this week.

February 5: Expected earnings from Sony (SONY), ConocoPhillips (COP), Bristol-Myers Squibb (BMY), Barrick Mining (B), Amazon (AMZN), Reddit (RDDT), and Strategy (MSTR).
February 6: February University of Michigan preliminary consumer sentiment, and expected earnings from Philip Morris (PM) and Biogen (BIIB).
February 9: Expected earnings from Cleveland-Cliffs (CLF), Becton, Dickinson & Co. (BDX), and CNA Financial (CNA).
February 10: December retail sales, November factory orders, and expected earnings from Coca-Cola (KO), CVS (CVS), AstraZeneca (AZN), Spotify (SPOT), Marriott International (MAR), BP (BP), Duke Energy (DUK), Lyft (LYFT), and Ford (F).
February 11: January CPI and core CPI and expected earnings from McDonald's (MCD), T-Mobile (TMUS), Shopify (SHOP), Cisco (CSCO), and AppLovin (APP).