Before the Bell: The Chemistry of AI and Alphabet

Profit-taking in chip stocks. Chemical shares suddenly get picked up. Flash crash in silver. Are software stocks due for a rebound?

Merely uttering the acronym AI is no longer enough for listed companies to send share prices soaring instantly. At times, the opposite even seems to be the case. The Nasdaq fell another 1.5% yesterday—also its loss for 2026 so far. The year is still young, but the new trends of 2025 are carrying over. Wall Street is no longer the emperor, and the dollar certainly isn’t. Gold is doing well, but silver fell victim to a flash crash this morning. European and Japanese equities are performing strongly. Within the AI space, a heavyweight like Nvidia (-3.7%) had to give up some ground. A “follower” such as AMD plunged 17% after the chipmaker issued a weaker-than-expected outlook for the current quarter.

Asian markets are slightly in the red this morning. After the close, the sister company of Melexis (-5.4%), X-Fab (-6.7%), will also report results. In anticipation, the share has already fallen more than Melexis. Also on the agenda: results from ArcelorMittal, Shell, Estée Lauder, and Linde, and after the close on Wall Street: Amazon, Reddit, and gold miner Barrick. An industrial summit takes place today and tomorrow in Antwerp and Limburg. Investors are already counting on relief in emissions costs and/or other support measures.

A “Microsoft” feeling at Alphabet

Like Microsoft last week, Alphabet delivered exceptionally strong and better-than-expected fourth-quarter results after the close yesterday. Revenue grew 18% quarter on quarter. For the full year, it rose 15% to an impressive 402.8 billion dollar. The operating margin came in at an impressive 32%, albeit “only” matching 2024. Google Cloud revenue jumped 48% in the fourth quarter to 17.7 billion dollar. But just like Microsoft, Alphabet most exceeded expectations with its planned investments for this year: a hefty 175 to 185 billion dollar, compared with analysts’ already ambitious estimate of 114 billion dollar. Net cash fell by 5 billion dollar over 2025. More cash will be “burned” this year, but with 80 billion dollar on hand there is still ample liquidity. In after-hours trading, the share price slipped by a few percent.

Software takes a beating

AI stocks may be facing some headwinds, but price declines in software companies have been steep for some time. Investors fear that the broad availability of AI will render the (software) services of companies such as Adobe (-35% over 12 months), Salesforce (-40%), Constellation Software (-48%), or in Europe SAP (-39%) and Wolters Kluwer (-60%) obsolete. In their place come so-called AI agents. Or at the very least, increased competition from AI tools that can autonomously perform specialized tasks such as legal advice, as well as accounting or asset management. The American company Anthropic, a spin-off from OpenAI, has launched several products. There are also voices who believe it won’t be that simple and that existing providers, thanks to their expertise and data, will actually become much stronger through AI. Those who believe the latter have plenty of shares to choose from on the road to an impressive recovery. According to Nvidia founder Jensen Huang, software companies will not be replaced by AI and investors’ fears are unfounded.

Did you know…

That US software companies have already lost 2,100 billion dollar in market value from their peaks due to fears of greater competition via AI? The provisional low point of that sell-off occurred on Tuesday with a loss of nearly 300 billion dollar. Yesterday saw a rebound.