The Economic Times·2026-02-07 06:59Core Viewpoint - The market is experiencing a cautious sentiment towards big tech firms due to their increasing capital expenditure plans, particularly in AI, which is raising concerns about profitability and potential risks to software firms [10][11]. Company Performance - Amazon announced a $200 billion capital expenditure, resulting in a 7% decline in its shares [10]. - Alphabet's shares fell 3% after the company indicated that its capital spending could double this year [10][11]. - Meta Platforms experienced a 1.3% drop in its stock price [10]. - In contrast, Nvidia shares rose by 7%, Microsoft gained 1%, and Tesla increased by 4% [10]. Market Trends - The S&P 500 index increased by 1.6% and the Nasdaq rose by 2%, although both indexes are expected to finish the week lower [10]. - The S&P 500 software and services index has decreased by almost 8% this week, with approximately $1 trillion in market value lost since January 28 [5][11]. - Global shares are projected to decline by 0.33% for the week, with significant losses in India, where software exporters lost $22.5 billion in market value [7][11]. Investor Sentiment - Investors are interpreting news related to AI spending more cautiously, reflecting a shift from previous optimism [6][11]. - Concerns are growing over narrow market leadership, with fears that it may not broaden beyond a few mega-cap companies [6][11]. - The selloff in software and data analytics firms was exacerbated by new AI developments, indicating potential existential threats to these companies [6][11]. Future Outlook - A planned $600 billion AI spending by big tech firms in 2026 is contributing to investor unease regarding profitability and market dynamics [10]. - Despite strong underlying business performance from companies like Alphabet and Amazon, their increasing capital investment plans are overshadowing positive growth indicators [9][11].