Software stocks sell-off spreads, Nasdaq falls below the 100-day moving average; Google's spending guidance doubles, causing a huge shake after the rally

Wednesday, Eastern Time (February 4), U.S. stocks showed mixed gains and losses, with funds continuing to rotate from growth stocks to value stocks. The sell-off in software stocks persisted and spread to chips and AI concepts, with the Nasdaq dropping over 1.5% and falling below the 100-day moving average. The Dow closed higher, and the photovoltaic sector experienced a comprehensive surge. Google’s Q4 earnings exceeded expectations across the board, doubling its expenditure guidance and heavily betting on AI, causing significant after-hours volatility.

【U.S. Stock Indices】

At the close, the S&P 500 fell 0.51% to 6,882.72; the Dow Jones rose 0.53% to 49,501.30; the Nasdaq dropped 1.51% to 22,904.58, breaking below the 100-day moving average after two consecutive declines.

The previous day, software stocks related to a legal AI plugin continued to decline, while AMD plummeted 17% in a single day after issuing weak guidance, dragging down the semiconductor sector, with the Philadelphia Semiconductor Index falling over 4%. Software and AI-related stocks like Palantir and Snowflake remained under pressure.

Regarding this round of tech stock sell-off, several institutional investors stated that it is no longer based on short-term performance but on the re-pricing process around whether “AI will reshape or even erode traditional software business models.” JPMorgan pointed out that the current market is not waiting for good news to buy but is actively avoiding high-growth, high-valuation assets until uncertainty is digested.

As a leading AI company, NVIDIA CEO Jensen Huang expressed confusion, especially about the sharp decline in the software sector. During an event this week, he said that software products are tools, and AI will use these tools rather than reinvent them. He gave an example: “Some believe these tools are declining and being replaced by AI. Would you use a screwdriver, or invent a new one?”

In stark contrast, the overnight photovoltaic sector experienced a full-blown rally after news of Elon Musk’s team inspecting China’s photovoltaic supply chain. Microinverter manufacturer Enphase Energy surged 38.60%, SolarEdge rose 13.14%, and leading PV module maker JinkoSolar increased 8.66%.

In precious metals, volatility intensified significantly. Gold briefly rebounded above $5,000 during the day but failed to hold, falling below $5,000 as the dollar strengthened and risk assets came under pressure. It recovered above $5,000 in early Thursday trading. Silver was relatively resilient, closing slightly higher, while platinum and palladium retraced gains after an early rebound. Overall, precious metals are more influenced by the dollar and fund rebalancing, with no clear new trend emerging.

On the corporate front, in Q4 2025, Alphabet’s revenue and EPS exceeded expectations across the board. However, the company disclosed that capital expenditures would reach $175-185 billion this year, nearly double the full-year 2025 figure, shocking Wall Street. After-hours, the stock experienced significant volatility.

Additionally, several Democratic senators threatened to block WASHINGTON’s confirmation process before the U.S. Department of Justice halts investigations into Fed Chair Powell and Fed Board Member Lisa Cook. If the Senate fails to approve WASHINGTON promptly, Powell will continue as Fed Chair after his second term ends in May.

【U.S. Treasury Bonds】

U.S. Treasury yields rose, with the benchmark 10-year yield closing at 4.280%, and the 2-year yield, sensitive to Fed policy, at 3.553%.

【Popular U.S. Stocks】

Among popular stocks, NVIDIA fell 3.41%, Apple rose 2.60%, Google Class C declined 2.16%, Class A fell 1.96%, Microsoft increased 0.73%, Amazon dropped 2.36%, Meta declined 3.28%, TSMC fell 3.00%, Tesla dropped 3.78%, Super Micro Semiconductor plunged 17.31%, and Intel declined 1.32%.

Due to lackluster earnings guidance, AMD closed down 17.31% on Wednesday, its largest single-day decline since May 2017. Some analysts believe the company’s guidance was relatively weak.

Following the merger of its two major companies, Tesla founder Elon Musk’s wealth increased further, making him the world’s first individual with a net worth reaching or exceeding $800 billion.

【Global Indices】

In Europe, the FTSE 100 rose slightly by 0.85% to 10,402 points. France’s CAC 40 increased 1.01% to 8,262 points. Germany’s DAX declined slightly by 0.72% to 24,603 points.

In Asia, the Hang Seng Index rose marginally by 0.05% to 26,847 points. The China Enterprises Index fell slightly by 0.05% to 9,048 points. The Nikkei 225 declined 0.78% to 54,293 points.

【China Indices】

On February 4, overnight, the Hang Seng Tech Index futures fell 1.81%, the Nasdaq Golden Dragon Index declined 1.95%, while the FTSE China A50 Index rose 1.13%.

【Chinese Concept Stocks】

In popular Chinese concept stocks, Tencent Holdings (HK) fell 3.96%, Alibaba dropped 2.76%, Pinduoduo declined 1.15%, NetEase fell 5.42%, Baidu declined 4.77%, Ctrip fell 5.11%, Li Auto rose 1.88%, Xpeng Motors dropped 2.22%, and NIO declined 2.53%.

【Forex and Commodities】

On Wednesday, the US dollar index rose steadily but remained within recent ranges, ending up 0.18% at 97.616.

Spot gold surged after opening, briefly exceeding $5,080, but failed to hold, retracing most gains during the U.S. session, with a daily range of $240. London gold closed up 0.3% at $4,961 per ounce. Spot silver spiked 8% during the day, returning above $92, but quickly gave back some gains, with a daily range of $9. London silver closed up 4.28% at $88.13 per ounce.

Due to ongoing reversals in US-Iran nuclear talks, WTI crude oil surged straight up during the U.S. session, reaching above $65, and closed up 1.9% at $64.41 per barrel. Brent crude rose 2.41% to $68.95 per barrel.

【Headlines】

Musk’s team inspects photovoltaic supply chain; listed companies respond intensively

According to Shanghai Securities News, recently Musk’s team has been extensively inspecting China’s photovoltaic supply chain, engaging with companies like GCL, JinkoSolar, TCL Zhonghuan (002129), and Gaoce Co., Ltd. Several companies subsequently issued clarifications, stating that no formal agreements or orders have been signed yet, and that “space photovoltaics” remains in early exploration stages with uncertainties.

SpaceX and xAI merger pushes Musk’s net worth over $800 billion

According to Forbes, after the merger, the new company’s valuation reached $1.25 trillion, increasing Musk’s personal wealth by $84 billion to a record $852 billion. Specifically, post-merger, SpaceX is valued at $1 trillion, and xAI at $250 billion. Forbes estimates Musk currently holds about 43% of the combined company, worth approximately $542 billion.

Nvidia CEO Jensen Huang refutes “AI replacing software”: “It’s the most illogical thing in the world”

Nvidia CEO Jensen Huang explicitly rejected the idea that “AI will replace software tools,” calling it “completely illogical.” He emphasized that whether human or AI, the core is “using tools,” not “re-inventing tools,” and urged companies to focus on core processes and actively deploy AI. Recently, AI startup Anthropic launched legal automation tools, triggering a panic sell-off in software stocks amid fears that AI will disrupt traditional software business models.

Google All-in AI: Q4 cloud revenue surges 48%, expenditure guidance nearly doubled, huge after-hours volatility

In Q4, Alphabet’s total revenue increased 18% YoY to a new high, with R&D expenses soaring 42% due to AI investments. After accounting for a $2.1 billion one-time Waymo compensation expense, operating profit margin remained over 30%. Google Cloud revenue beat analyst expectations by over 9%. Search revenue exceeded expectations with a 17% increase. Other bets like Waymo declined 7.5%, far below expectations. The 2026 expenditure guidance median is $180 billion, over 50% higher than expected. The CEO said that spending will help meet customer needs and seize growth opportunities. The stock initially fell 7.5% after hours, then rose over 4%, before turning lower again.

Significant slowdown in employment: US January ADP employment increased by 22,000, below expectations of 45,000

US January ADP employment data fell significantly short of expectations, with only 22,000 new jobs added, indicating weakening momentum in the early-year labor market. Growth was driven entirely by education and healthcare, while key sectors like professional services and manufacturing saw job declines, showing structural weakness. Despite stable wage growth at 4.5%, the overall soft data may reinforce the Fed’s cautious outlook on the economy. Meanwhile, due to the government shutdown, the official non-farm employment report has been delayed again.

Kevin WASHINGTON faces opposition: Democratic senators oppose advancing Fed Chair nomination

Kevin WASHINGTON, nominated by President Trump as Fed Chair, faces a tough fight in the Senate. Several senators threatened to block WASHINGTON’s confirmation until the Department of Justice halts investigations into Fed Chair Powell and Fed Board Member Lisa Cook.

U.S. resumes Iran talks scheduled for the 6th; previous negotiations nearly collapsed

After urgent lobbying by Middle Eastern leaders to abandon withdrawal threats, the scheduled US-Iran nuclear talks on the 6th have been restored, to be held in Oman. Earlier, the US rejected Iran’s proposal to move the meeting from Istanbul to Oman.

Nasdaq proposes “Fast Entry” rule to handle large IPOs like SpaceX

The proposed “Fast Entry” revision would allow newly listed companies to join the Nasdaq 100 index within 15 trading days after listing, significantly shorter than the current minimum three-month waiting period. This proposal comes as several tech giants, including potentially $1.3 trillion valued SpaceX, are expected to go public this year.

Weight-loss drug sales explode: Eli Lilly Q4 revenue up 43% YoY, net profit up 50%

2026 revenue guidance is $80-83 billion. Thanks to explosive sales of GLP-1 weight-loss drugs, Eli Lilly’s Q4 revenue, profit, and full-year guidance all exceeded market expectations. In the fierce competition among weight-loss drug giants, Lilly appears to have the upper hand. Novo Nordisk previously warned that due to intensified price wars, sales might decline by 13% this year, while Lilly expects up to 27% growth.

“Big Short” Burry warns: Already down 40%, another 10% drop could trigger “disaster consequences”

Burry warned that Bitcoin has already fallen 40%, and a further 10% decline could cause lasting damage to the treasury, potentially spreading to the broader market, leading to a “collateral death spiral” in tokenized metal futures. Speculators might need to sell profitable positions in tokenized gold and silver futures to reduce risks.