Alphabet’s Bold Spending Raises Eyebrows
Investors were brimming with confidence ahead of the U.S. tech earnings season, expecting Alphabet and its peers to post strong sales and robust outlooks. That optimism quickly turned costly. Alphabet, Google’s parent company, released solid quarterly results after the bell but surprised analysts by signalling capital expenditures of $175 billion to $185 billion this year — far above Wall Street’s expectations.
The announcement stoked fears about runaway artificial intelligence investment, particularly as some jobs in data analytics and software are already showing signs of AI substitution. Following the news, Alphabet shares swung sharply after hours, falling over 6% at one point before settling slightly lower.
Tech and Asian Equities Feel the Strain
While Nvidia (NVDA.O) saw a modest 2% rise after the bell, reflecting potential gains from increased AI spending, other equipment providers in Asia were deep in the red. South Korea’s benchmark index (.KS11) slid 3.5% and Taiwan (.TWII) declined 1%, highlighting investor concern over the broader implications of heavy AI investment for the semiconductor supply chain.
Wall Street futures initially attempted to recover but quickly lost momentum. Selling spread to precious metals, with silver plunging 14% and gold falling well below $5,000 per ounce. The global selloff reflects unease about elevated valuations amid growing AI expenditure.
Markets Eye European Central Banks
European futures point to a lower open as investors await policy signals from the European Central Bank and the Bank of England. Both central banks are expected to hold interest rates steady.
The ECB is likely to signal no imminent policy move, even as the euro’s recent strength against the dollar raises concerns about potential inflation undershooting targets. Meanwhile, the BoE is expected to maintain flexibility, carefully monitoring the weakening jobs market before deciding on future rate cuts.
Other key data for Thursday includes January PMI releases for the euro zone, Germany, and France, which could influence short-term market sentiment amid the global tech volatility.
