During the first week of February, the trend of generally positive earnings reports continued with roughly 75% of S&P 500 companies beating estimates. Though this is a positive signal, markets had a mixed reaction during the week with the Dow up roughly 2.5%, the S& 500 roughly even on the week after a rally early Friday morning, and the Nasdaq falling roughly 1.7% on the week. Positive earnings could not shift the Risk-off trend that the market is showing with relation to the Tech sector.
GOOGL
Alphabet shares have fallen 3.4% on the week despite a phenomenal earnings call. Revenue and EPS both topped estimates, with significant growth in Google Cloud, and Search divisions. In updated guidance the firm announced plans for $175B- $185B in 2026, nearly double 2025’s spend, and dwarfing expectations of $120B.
AMZN
Amazon printed mixed earnings with strong revenue growth, and a slight miss on EPS along with 24% growth in AWS. Updated guidance signaled $200B in Capex spend during 2026 focused on scaling data center buildout, custom silicon development to reduce reliance on third party hardware, and continued logistics automation. While AWS is accelerating and adding more absolute dollar growth than its competitors, the sheer magnitude of the $200B spend has investors worried about when they will see a return on that capital.
PLTR
Less mature, more aggressively valued (riskier) than the established tech giants, Palantir followed phenomenal earnings last quarter with an even more impressive performance. 70% YoY revenue growth, limited Capex and positive free cash flow should all be positive signs, but aggressive valuation (as high as 282 in the last twelve months) have led to a significant pull back in the last 5 months. Growth will not be enough for PLTR moving forward, they will need to continue blowing expectations away to please the market. An interesting look into the firm can be seen below, as Heineken USA COO Laurens van der Rotte sheds light onto how Palantir has transformed their supply chain.
https://www.youtube.com/watch?v=uo6y_0DG29I
Other notable Tech prints
Other notable prints included SMCI (Develops and sells server and storage solutions), with massive YoY revenue growth at 123%YoY to $12.7B, and aggressive guidance of $40B in 2026. Semi-Conductor designer ARM also outperformed on record royalty growth fueled by datacenter developments. Chip producers AMD and Qualcommd recorded record quarters at $10.3B (AMD) and $12.3B (QCOM) but released cautious guidance over concerns over memory supply constraints.
Energy, Pharma and Insurance
The earnings reports for the energy, pharmaceutical, and insurance sectors this week were defined by a stark contrast between companies leveraging strong pricing power and those grappling with shifting regulatory landscapes or operational headwinds. In the energy sector, Bloom Energy (BE) delivered a standout performance with a 50% EPS beat on $777.7 million in revenue, while ConocoPhillips (COP) missed estimates with a $1.02 adjusted EPS as realized prices fell sharply compared to the previous year. The pharmaceutical industry saw a “metabolic gold rush” drive Eli Lilly (LLY) to a significant beat with $19.3 billion in revenue, contrasting with companies like Novartis (NVS) and Cardinal Health (CAH) that fell short of EPS expectations. Meanwhile, the insurance sector benefited from lower catastrophe losses, allowing Chubb (CB) to report record core operating income of $7.52 per share and Allstate to double its net income to $3.8 billion, even as some major players like MetLife (MET) struggled to meet revenue and earnings targets.
Earnings are simply a datapoint, but the volatility seen following what has largely been a positive quarter does give us some insight into market sentiment. With the nomination of Kevin Warsh to succeed Jerome Powell has triggered a sharp de-risking phase. Markets are adjusting to his reputation for prioritizing a smaller Fed balance sheet and a more rules-based, potentially hawkish approach to inflation. This coincides with desire for AI monetization amidst a steep hike in capex. Simply put institutions are looking for monetization, or to derisk especially around frothy valuations. As such until the market has a bit more clarity over Monetary Policy, and ROI on the continued AI Capex boom, I would expect some heightened level of volatility.
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This material is provided for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any security or investment strategy. The views expressed are those of the author as of the date of publication and are subject to change without notice.
The author is a financial professional and may hold positions in, or manage client accounts that hold positions in, the securities discussed. Such holdings are subject to change at any time without notice. While the author strives to present information in a fair and balanced manner, no representation is made that this commentary is free from bias, and readers should be aware of potential conflicts of interest.
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The views expressed do not take into account the specific financial situation, risk tolerance, or investment objectives of any individual reader. Reading this material does not create an advisor-client relationship. Investors should conduct their own research or consult with a qualified financial professional before making investment decisions.
-John McKay, CFA
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