A screen shows the Dow Jones Industrial Average and other trading numbers after the closing bell on the New York Stock Exchange (NYSE) in New York City, USA, February 5, 2026. | Photo credit: REUTERS/Brendan McDermid
Alphabet shares fell 0.55% after Google’s parent company said it plans as much as $185 billion in capital investments by 2026. The company and its Big Tech rivals are expected to collectively spend more than $500 billion on AI this year.
In addition to the recent losses, Microsoft fell 5%, Palantir lost 6.8% and Oracle fell 7%.
Amazon lost 4.4% in regular trading and then tumbled another 10% after the closing bell, joining its Big Tech peers in predicting massive capital spending through 2026. It was the latest sign that technology companies will not be putting on the brakes on major AI investments anytime soon.
Shares of chipmaker Nvidia, which could benefit from higher industrial spending on AI, fell 1.4%.
Investors have become more wary of high spending on AI in recent months, awaiting stronger signals that these investments will actually increase sales and profits.
“This is the first time we’re seeing the big tech companies — the Microsofts and the Alphabets and the Amazons — going through a really big capital investment cycle… and we’re seeing this volatility about whether this investment will ultimately translate into results,” said Tom Hainlin, investment strategist at US Bank Wealth Management in Minneapolis.
Investors also worried this week that rapidly improving AI tools could erode demand for traditional software, squeezing profit margins across the industry. Software and data services stocks contributed to the recent losses, with ServiceNow down 7.6% and Salesforce losing almost 5%.
The S&P 500 software and services index fell 4.6% for the seventh straight session.
“The AI trade that was the accelerator last year may be the extinguisher this year as people realize that AI is going to help but also hurt certain types of businesses, especially software,” said Melissa Brown, SimCorp’s Managing Director of Investment Decision Research.
Qualcomm fell 8.5% after forecasting second-quarter revenue and profit below expectations.
The CBOE volatility index, Wall Street’s “fear gauge,” briefly hit its highest point in more than two months.
As traders cut back on exposure to expensive AI stocks, the market’s rotation into relatively cheaper stocks has gained momentum in recent days.
The S&P 500 value index fell 0.9% but remained positive throughout the week. The S&P 500 growth index fell more than 4% this week.
The S&P 500 fell 1.23% to end the session at 6,798.40. The Nasdaq fell 1.59% to 22,540.59 points, while the Dow Jones Industrial Average fell 1.20% to 48,908.72 points.
Nine of the S&P 500’s 11 sector indexes fell, led by Materials, down 2.75%, followed by a 2.59% loss in Consumer Discretionary.
Snap topped fourth-quarter revenue estimates, but shares fell more than 13%.
Shares of Estee Lauder fell 19% as the owner of Clinique forecast annual results below expectations. Fashion company Tapestry rose 10% after raising its annual profit forecast, while Hershey rose 9% on a better-than-expected annual profit forecast.
The number of Americans filing new unemployment claims rose more than expected for the week ending Jan. 31, while job openings fell to the lowest level in more than five years in December.
Within the S&P 500, declining stocks outnumbered rising stocks by a ratio of 1.8 to one.
The S&P 500 recorded 44 new highs and 10 new lows; the Nasdaq recorded 113 new highs and 425 new lows.
Published on February 6, 2026
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