LONDON, Feb 5, 2026, 07:20 GMT
- Alphabet aims for capital spending between $175 billion and $185 billion by 2026, significantly exceeding earlier estimates
- Asian stocks dropped, while U.S. index futures held steady following a two-day sell-off driven by tech shares
- Traders kept a close eye on ECB and Bank of England policy moves amid rising skepticism over AI-driven gains
Asian stocks slipped Thursday after Alphabet, Google’s parent company, announced a steep rise in capital spending — targeting long-term assets like data centres and chips. The move intensified the tech sell-off that has already weighed on Wall Street this week. MSCI’s broad Asia-Pacific index excluding Japan dropped 1.8%, while South Korea’s KOSPI plunged 3.9% as investors fled tech-heavy markets. Reuters
The market mood shifted sharply. Investors piled into major U.S. tech stocks ahead of earnings, expecting strong sales and optimistic guidance. But the soaring costs tied to artificial intelligence (AI) are now prompting closer scrutiny of cash flow and returns. “That increase in (Alphabet) capex was absolutely enormous,” noted Tony Sycamore, an analyst at IG.
Europe was gearing up for a busy day. Futures suggested a weaker start before the European Central Bank and the Bank of England unveiled their latest policy moves. Investors mostly expect both banks to hold rates steady, shifting the spotlight to their forward guidance. The ECB looks set to signal patience despite the euro’s recent climb sparking debate over inflation falling short of target. Meanwhile, the BoE is likely to keep its options open on when to cut rates next. Reuters
Alphabet announced plans to boost capital spending sharply to between $175 billion and $185 billion in 2026, a big jump from $91.45 billion in 2025 and well above the roughly $115 billion that analysts had expected, according to LSEG data. CEO Sundar Pichai told analysts, “We are seeing our AI investments and infrastructure drive revenue and growth across the board,” as the company reported quarterly revenue of $113.83 billion and adjusted EPS of $2.82, both beating forecasts. D.A. Davidson analyst Gil Luria highlighted Alphabet’s 48% surge in cloud revenue to $17.7 billion, noting it reflects “importantly higher growth than Microsoft Azure.” Investing
During the last U.S. session, the Nasdaq and S&P 500 fell 1.5% and 0.5%, dragged down by tech stocks, even as the Dow gained 0.5%. Advanced Micro Devices plunged 17%, while Tesla and Nvidia saw declines of 3.8% and 3.4%, respectively. Stephen Parker, co-head of global investment strategy at JPMorgan Private Bank, commented, “I actually think what we’re seeing in markets so far this year is very healthy,” noting that leadership is expanding beyond just a handful of big tech favorites. Investopedia
Pressure spread across risk assets. Bitcoin dropped 3.4% to $70,160, hitting its lowest since November 2024. Silver plunged 13% to $75.50 an ounce, and gold slid 2% to $4,862.
U.S. stock futures showed tentative signs of steadying in early Asian trading, though buying interest remained muted. The 10-year Treasury yield slipped roughly 1 basis point, hovering near 4.27%. Meanwhile, the January U.S. non-farm payrolls report has been pushed back to Feb. 11, following a brief partial government shutdown that recently concluded.
Oil prices slipped roughly 2% following news that the United States and Iran will meet for talks in Oman on Friday, reducing fears of a military conflict disrupting supply. Brent crude slid about 2.1% to around $68 a barrel, with U.S. crude dropping close to 2% as well, settling near $63.76.
Some investors remain convinced the hardware angle of the AI play adds up. Alphabet’s spending hints at a boost in demand for servers and networking gear. Chipmakers like Nvidia are viewed as clear winners, despite recent sell-offs in parts of the tech supply chain.
The next steps likely depend on whether earnings back up the recent spending spree and if central banks maintain loose financial conditions to support lofty valuations. A disappointing forecast from other tech giants — Amazon is up next — might push investors further into defensives, turning the current pullback from a mere pause into a full reset.
