After a bruising, tech-led selloff rattled global markets, Wall Street is taking a cautious breath.
US stock futures leaned higher early Wednesday, signaling a tentative rebound as investors await Alphabet’s earnings — a report widely viewed as the next major stress test for AI spending and the broader tech trade.
Futures tied to the Dow Jones Industrial Average rose about 0.3%, while S&P 500 futures also climbed roughly 0.3% after wobbling between gains and losses. Nasdaq 100 futures, which bore the brunt of Tuesday’s pain, just managed to creep into positive territory.
The mood remains fragile — but for now, the selling has paused.
🤖 From AI Euphoria to AI Anxiety
Tuesday’s session marked a turning point.
Fears that artificial intelligence could disrupt existing software models faster than companies can adapt triggered a rush out of high-growth tech stocks, setting off a selloff that spilled across European and Asian markets.
Big names weren’t spared. Nvidia and Microsoft both slid more than 2%, while AI infrastructure heavyweights Broadcom, Oracle, and Micron also closed in the red. The technology sector was the worst performer in the S&P 500, tumbling more than 2%.
JPMorgan summed up the new mood bluntly:
Strong earnings alone are no longer enough. Companies now need to prove that AI will boost profits — not erode them.
⚠️ AMD Stumbles, Alphabet Takes Center Stage
That warning hit home quickly.
Shares of Advanced Micro Devices plunged as much as 9% in premarket trading after the chipmaker issued a weaker-than-expected sales outlook, raising doubts about its ability to challenge Nvidia’s dominance in AI chips.
Now, all eyes turn to Alphabet and Arm Holdings, both set to report results Wednesday. Investors will be scrutinizing everything from cloud growth to AI monetization — and, crucially, whether spending levels are delivering tangible returns.
After Alphabet, attention will shift rapidly to Amazon’s earnings on Thursday, which could further shape sentiment around AI-driven capital expenditure.
🌯 Earnings Elsewhere Send Mixed Signals
Beyond tech, earnings painted a more complicated picture.
Chipotle shares slid after the burrito chain reported another quarter of declining customer traffic and warned that same-store sales growth could stall in 2026.
Novo Nordisk rattled markets after pre-releasing a gloomy 2026 outlook, sending its US-listed shares down and dragging sentiment across the healthcare sector. CEO Mike Doustdar cautioned investors to expect things to “go down before they come back up.”
Investors are now bracing for Eli Lilly’s results, especially after Novo’s shock forecast reignited concerns around the weight-loss drug boom.
🔄 Rotation, Not Capitulation — Yet
Tuesday’s selloff saw investors rotate away from high-flying growth stocks and into more defensive and cyclical names like Walmart, even as the broader market stumbled.
The S&P 500 fell about 0.8%, the Nasdaq Composite dropped 1.4%, and the Dow slipped nearly 167 points, despite touching a fresh record earlier in the day.
According to Jim Reid of Deutsche Bank, the shift has been stark: the nine worst-performing stocks in the S&P 500 year-to-date are all software or related services companies, each down more than 25%.
Markets, he said, are moving away from blind AI enthusiasm toward sharper differentiation — and growing concern over who the true winners will be.
🧠 “Markets Are Getting Picky”
Strategists caution this may not be a breakdown — but a reset.
“There are a number of cross-currents hitting markets all at once,” said Joe Tanious, chief investment strategist at Northern Trust Asset Management. While fundamentals remain intact, he noted that after three years of double-digit returns, valuations had become stretched.
“Markets are starting to be more particular and nuanced about which companies they want exposure to,” Tanious said. “It doesn’t take much to poke the bear — and that’s what we’re seeing now.”
📅 What’s Next: Jobs Data and Big Tech
Investors will also be watching ADP’s private payrolls report later Wednesday, with economists expecting 45,000 new jobs in January, slightly above December’s tally. The data carries added weight this week, as the official government jobs report has been delayed by a partial shutdown.
But make no mistake — the real catalyst remains earnings.
Alphabet’s numbers could either calm AI fears or reignite them. And with Amazon up next, Wall Street’s uneasy truce with tech may not last long.
For now, futures are higher.
But conviction? That’s still very much up in the air.