Tech Stocks Brace for Alphabet and Amazon Earnings as AI Spend Takes Center Stage
February opens with a stress test for mega-cap tech. Alphabet reports Feb 4, Amazon on Feb 5, and the U.S. jobs report hits Feb 6. Advanced Micro Devices and Qualcomm are also on deck, giving a read on data-center and device demand. After a late-week slip in the Nasdaq, the market's tolerance for big AI budgets without clear payback is thin.
Why This Earnings Window Matters
Guidance will matter more than headline beats. Capex is climbing as hyperscalers build AI infrastructure, and expectations are high. Investors want proof that spend is translating into sticky revenue, better unit economics, and improving margins over the next few quarters. Companies that stretch timelines or hedge too much risk a valuation reset.
Market Check: Last Week's Moves
The Nasdaq Composite fell 0.94% Friday to 23,461.82. Microsoft slipped 0.7%, extending pressure after a prior 10% drop tied to slower cloud growth. Apple rose 0.4% on a forecast calling for up to 16% March-quarter revenue growth, but warned memory costs could pinch margins. Meta fell 3%, Tesla gained 3.3%; SanDisk jumped 6.9% on a stronger outlook while KLA Corp sank 15.2%.
Macro: Rates, the Fed, and Sticky Inflation
Markets digested news that Kevin Warsh is the pick to lead the Fed once Jerome Powell's term ends in May. At the same time, wholesale inflation surprised higher, with the Producer Price Index up 0.5% versus a 0.2% forecast, as companies pass along tariff-driven costs. Some economists doubt a quick pivot to easier policy under a Warsh-led Fed. That mix keeps yields firm and raises the bar for growth stories.
What to Watch in Reports
- Cloud growth: Pace, churn, and AI-related workloads at Alphabet and Amazon. Are usage trends broadening beyond trials and pilots?
- AI capex: Timing of GPU procurement, data center buildouts, and when spend moderates. Look for comments on utilization and payback periods.
- Margins: Gross margin impact from memory, networking, and energy costs; signs of operating leverage returning in H2.
- Ads and e-commerce: For Alphabet and Amazon, watch ad demand resilience and retail unit economics.
- Semis: AMD and Qualcomm commentary on enterprise AI servers, edge AI, and handset recovery.
- Rates risk: A hot jobs print on Feb 6 could push yields higher and pressure multiples.
Practical Positioning for Finance Pros
Favor names with visible cash returns and disciplined capex plans. Scrutinize free cash flow, capex as a percent of revenue, and any shift in depreciation schedules tied to AI builds. If the story relies on multiple expansion, trim risk into prints; if it's cash-flow backed with clear catalysts, consider adding on volatility.
- Check guidance first: revenue, operating margin, capex cadence, and buyback plans.
- Listen for "AI attach rates" and actual customer adoption, not just pipeline talk.
- Watch segment disclosure: cloud, ads, and subscription trends should tighten, not loosen.
- Compare commentary across hyperscalers for consistency on demand and pricing.
Key Dates
- Feb 4: Alphabet earnings
- Feb 5: Amazon earnings
- This week: AMD and Qualcomm
- Feb 6: U.S. nonfarm payrolls
For context on inflation data, see the Bureau of Labor Statistics pages for the Producer Price Index and the monthly Employment Situation.
Exploring where AI spend meets real workflows in finance? This curated list of AI tools for finance can help pressure-test use cases and productivity gains.
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