By Pranav Kashyap and Twesha Dikshit
Feb 6 (Reuters) – Wall Street was poised to open higher on Friday following a bruising selloff in technology shares through the week, though optimism was tempered by Amazon’s drop after it became the latest Big Tech to ramp up spending on AI infrastructure.
Amazon slid 8% in premarket trading, after the company forecast a more than 50% jump in capital expenditures this year, intensifying the AI-driven spending spree already underway among its “Magnificent Seven” peers.
Investor skepticism around AI spending has heightened since Microsoft’s blowout capex plans late last month thrust mega-cap investment budgets into the spotlight.
Alphabet’s surge in spending plan deepened a broad tech selloff on Thursday, pushing the Nasdaq to close at its lowest in more than two months.
“We’re in that period of greater discernment. It’s not about who’s getting impacted by AI, but also punishing those that are spending a lot on AI capex,” said Kristina Hooper, chief market strategist at Man Group.
Google-parent Alphabet slipped 1%, while Microsoft gained 1.6%. Nvidia, which stands to benefit from heavier AI spend and remains the last Mag 7 company to report, rose 2.7%.
Software and data-services shares also began to find their footing after a punishing week fueled by worries that fast-improving AI tools could erode demand for traditional businesses.
ServiceNow and CrowdStrike were up 2.1% and 3.4%, respectively. Still, the S&P 500 Software and Services index was headed for a near 10% decline in the week, its worst performance since March 2020.
Chip stocks Broadcom and Micron Tech, caught in the cross-currents of the tech rout, rose 3.7% each.
The CBOE volatility index, Wall Street’s fear gauge, dropped for the first time in three days, down 1.68 points at 20.1.
At 08:26 a.m. ET, Dow E-minis were up 263 points, or 0.54%, S&P 500 E-minis were up 38.5 points, or 0.56%, and the Nasdaq 100 E-minis were up 173.25 points, or 0.7%.
The S&P 500 was set for its worst week in more than four months, while the tech-heavy Nasdaq was on track for its steepest weekly decline in more than 10 months.
The AI trade, one of the biggest engines of last year’s rally, is facing a substantial stress test as money flows into defensive havens such as consumer staples and telecoms. That rotation is unfolding just as risky assets are scaling back, with bitcoin down 50% from its October peak.
Futures of the small-cap Russell 2000 index were up 1.3%. Both the S&P 600 small-cap index and the S&P 400 mid-cap index were headed for about 1% gains this week, while the S&P 500 value index was up nearly 1% for the week.
Roughly 80% of the 270 S&P 500 companies that have reported quarterly earnings so far have beaten analyst expectations, according to LSEG data. In a typical quarter, that rate is 67%.
Molina Healthcare slumped 32% after the health insurer forecast 2026 profit at less than half of Wall Street expectations. Centene forecast annual profit above estimates, yet its shares fell 4.8%.
Roblox jumped 10.6% after the video game platform projected fiscal 2026 bookings above Wall Street expectations.
Meanwhile, recent inflation readings suggest the U.S. economy is still holding up, even as a range of labor-market indicators point to a jobs picture that remains under strain, putting more significance on next week’s delayed release of the January payrolls report.
(Reporting by Pranav Kashyap and Twesha Dikshit in Bengaluru; Editing by Shilpi Majumdar)
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