2026-02-04 22:16
publication
2026-02-04 22:16
On Monday, the S&P500 was close to the level of 7,000 points. But on Tuesday and Wednesday it will decline, falling away from the historic peak. For the second day in a row, shares of technology giants were under selling pressure. AMD's values were particularly overestimated.
That must have hurt. AMD shares fell more than 17% after the quarterly results were released. Reportedly, investors were disappointed with the sales forecasts presented by the processor manufacturer's management. AMD announced that it expects $9.8 billion (+/- $300 million) in revenue for the current quarter, which is even slightly higher than the average analyst forecast of $9.67 billion. But this is less than the USD 10.27 billion recorded in the previous quarter. Yet we are talking about a “growth” company from which investors expected to achieve astronomical results on the wave of demand for infrastructure built for AI.
The news from AMD is part of the doubts that have been growing for many weeks about the reality of expectations related to generative artificial intelligence. Skeptics have long hypothesized that the trillions of dollars spent on data centers may never be recouped. Especially since they may not justify the astronomical valuations of companies such as Nvidia, Broadcom or… AMD. The latter, before the publication of quarterly results, was valued at 75 times earnings for the previous four quarters.
As a result, on Wednesday the market experienced a second consecutive day of strong declines in companies related to the AI industry. Shares of Nvidia fell by 3.4%, Broadcom by 3.8%, and Micron Technology by as much as 9.5%. The discount of heavyweight bitches decided the matter and had an impact on the main indices. The Nasdaq fell 1.51% after losing 1.43% the day before.
The S&P500 went down by 0.51% and stopped at 6,882.72 points. This benchmark also recorded a second declining session in a row and moved away from the 7,000-point level that it tested twice at the turn of January and February. One more such downward session and the technical situation will become interesting from the point of view of the stock market bears.
However, the Dow Jones industrial average gained 0.53% and finished with a score of 49,501.30 points. Free from the influence of technological giants, the old DJIA benefited from the growth of such stocks as Amgen (8.2%), Dow (6.3%) and Nike (5.4%). Overall, it was a day in which valuations of traditional businesses (such as financial, consumer and healthcare companies) performed quite well despite a marked sell-off in the technology sector. The S&500 sub-index, which brings together value companies, ended in positive territory for the fourth session in a row.
– The scale of infrastructure expansion is unprecedented, as is the pace of adoption of AI technology by business and consumers. The stock market has a really difficult task to value these securities and what the future will look like. The market suddenly became skeptical and concerned, said Jed Ellerbroek, manager at Argent Capital, quoted by Reuters.
Shares of Eli Lilly, increasing by over 10%, supported the stock indices. The manufacturer of slimming drugs, contrary to previous concerns, showed better-than-expected quarterly results and – more importantly – expects strong business growth in 2026 (the forecast sales increase is expected to be as much as 25%). A day earlier, Eli Lilly shares fell 4% after Novo Nordisk warned of another sharp drop in sales.
On the macroeconomic front, another weak data from the labor market (the ADP report showed only 22,000 new jobs in the private sector) was accompanied by satisfactory economic results in the service sector. The “services” ISM remained at 53.8 points in January, signaling a solid recovery (as well as still strong price pressure) in US non-manufacturing sectors.
K.K
