NEW YORK, Feb 7, 2026, 13:03 EST — The market has closed.
- Cloud-focused ETFs finished the day in positive territory Friday, despite Amazon’s drop after its spending forecast.
- AI tools have investors taking another look at software valuations, with fresh doubts swirling around subscription growth.
- Cloud earnings hit next week, alongside postponed U.S. jobs and inflation reports.
Cloud computing names caught a bid Friday. First Trust Cloud Computing ETF climbed 4.4%, while WisdomTree Cloud Computing Fund tacked on 3.5%. The group’s late-week rally followed a volatile run for tech. Amazon dropped 5.6%. Microsoft managed a 1.8% gain, Alphabet shed 2.5%. Cloudflare and Datadog finished higher.
This shift stands out because cloud and software names are jittery, wrestling with the same issue: is artificial intelligence a tailwind for selling more software, or does it just cheapen things, making certain products disposable? On Thursday, Reuters pointed out that the S&P 500 software and services index has chopped off roughly $1 trillion in value since Jan. 28. Bailard’s Dave Harrison Smith put it bluntly: “a sell-everything mindset.” SaaS — shorthand for software sold by subscription over the internet — won fans among investors for its predictable renewals. But that steady model starts to look shaky if the sector’s grip on pricing slips. 1
Amazon’s latest figures brought spending concerns right back to the surface. The company now expects 2026 capital expenditures — for things like data centers and chips — to hit $200 billion, up sharply from the $131 billion planned for 2025, as it ramps up its AI infrastructure. That news knocked the stock down by 11.5% in after-hours trade on Thursday, according to Reuters. CEO Andy Jassy highlighted AWS’s 24% growth on a $142 billion annualized run rate; for comparison, Google Cloud posted 48% growth and Microsoft’s Azure climbed 39% over the same stretch, Reuters noted. “The market just dislikes the substantial amount of money that keeps getting put into capex for these growth rates,” said Dave Wagner, a portfolio manager at Aptus Capital Advisors. 2
Cloud stocks are caught between two crosscurrents. There’s a lot of hope that AI-focused infrastructure will drive up demand for computing, storage, and security. But with capex budgets ballooning and the return on those investments still hazy, investors are starting to press for more immediate evidence—cash flow and margins—instead of just promises.
Worth noting: not all “cloud” ETFs point to the same part of the business. WisdomTree’s WCLD tracks an equal-weight index, zeroing in on newer public firms in the cloud software space. The fund doesn’t skew heavily toward the big platform giants. 3
Company updates lined up for next week could shake up sentiment. Cloudflare will deliver its fourth-quarter 2025 numbers after the bell on Tuesday, Feb. 10, with execs set to dial in for a call at 5 p.m. Eastern. Datadog has its own earnings call scheduled earlier the same day, 8 a.m. Eastern, per its investor page, and plans to hold an investor day on Feb. 12. 4
Macro lands squarely above it. According to the Bureau of Labor Statistics calendar, January 2026’s Employment Situation is set for Wednesday, Feb. 11 at 8:30 a.m. Eastern, with the Consumer Price Index for January lined up for Friday, Feb. 13, also at 8:30 a.m. Eastern. Release dates could shift if government services are disrupted. 5
Friday’s Reuters “Week Ahead” column pointed to a sharp shakeout in tech stocks, with that sector falling 9% since its late-October high. The S&P 500 software and services index has fared even worse—down 15% in just over a week. Investors are shifting into non-tech names, Reuters noted. “Rotation is the dominant theme this year,” said Angelo Kourkafas, senior global investment strategist at Edward Jones, who also flagged that tech had been priced for lofty expectations. 6
Still, there’s no shortage of risks on the horizon. Hotter inflation, or an unexpected pop in wage growth, could push those rate-cut bets further out and put pressure on long-duration growth stocks—the ones banking on profits well into the future. And suppose customers start trimming spending on seats, upgrades, or extra features as more AI tools hit the market; then the SaaS slowdown story isn’t so easy to brush off.
Cloud computing names will be watching for Datadog and Cloudflare earnings on Feb. 10, with the U.S. jobs report to follow Feb. 11 and CPI data on Feb. 13. U.S. stock trading picks back up Monday, Feb. 9.
