Before the bell: High-flyers continue to correct, but that is preferable to a deep bear market. X-Fab is moving just as slowly as Melexis.

Amazon does a Microsoft-and-Alphabet move

On Thursday, the growth- and technology-heavy Nasdaq once again lost 1.6%. With one trading day left, nearly 5% has already been wiped off prices this week. We are heading for a sharply negative stock market week across the board, but technology stocks were clearly among the biggest losers. When even exceptionally strong results lead to share price punishment, it becomes difficult to keep believing in these stocks. Over a slightly longer horizon, however, this increases the chances of healthier markets: better an occasional small correction than a severe bear market that could trigger a major sell-off and much more damage.

The rebound in European software stocks was not followed in the US. Salesforce lost another 4.75% and Microsoft fell by 5%. Remarkably, defense company Rheinmetall (-6.4%) prompted analysts to tone down their forecasts somewhat. If investors do not cause a correction, companies will do it themselves. ArcelorMittal gained 3.1% as the steelmaker expects to gain market share thanks to new European import tariffs on steel.

It came as no surprise that X-Fab, after the market closed yesterday, published no spectacular results, just like sister company Melexis. Revenue grew by 13% in the fourth quarter, but margins were slightly lower than expected due to a write-down on several products. After market close on Wall Street, Amazon followed in the footsteps of Microsoft and Alphabet by announcing investments of USD 200 billion in AI capacity. The after-hours verdict: -10%, after the stock had already fallen 4%.

Asia

On this final day of the week, Lotus Bakeries and Aperam will publish results before the market opens. Internationally, we are watching Orsted, Société Générale and Toyota. On the macroeconomic front, we will receive figures on January unemployment and consumer confidence.

Investing until the price falls

After market close on Wall Street yesterday, Amazon followed Microsoft and Alphabet by announcing massive investments of no less than USD 200 billion in AI capacity. Unlike its two big tech peers, however, Amazon failed to significantly beat expectations with its results. The after-hours verdict: -10%, after the stock had already fallen 4% ahead of the earnings release.

Notably, while Amazon has historically always been extremely expensive in terms of price versus earnings, the stock is now trading at around 30 times expected earnings. That is as expensive as Microsoft and Alphabet, and slightly cheaper than Apple at 32 times earnings. And while we’re at it: Nvidia trades at 42 times earnings over the past 12 months, but only about 25 times the expected earnings for the next 12 months. Profits are still expected to grow by 50–60%. Investors seem sensible: top stocks are expensive, but not excessively so.

Sister company of Melexis delivers a colorless report

A day after weaker-than-expected results and outlook, Melexis suffered an additional blow of 8.5% as several analysts lowered their forecasts and recommendations. It was no surprise that sister company X-Fab, a bit later yesterday after market close, also reported rather unspectacular results. Revenue increased by 13% in the fourth quarter across the three core activities: automotive chips (+3%), industrial applications (+40%) and medical applications (+28%). Margins were slightly lower than forecast due to a fairly substantial impairment on certain products.

The very heavy three-year investment cycle has been completed, and in 2026 investments will be halved compared with 2025. A reaction opposite to what followed the much higher investment plans at Microsoft, Alphabet and Amazon is therefore unlikely. It will still take until the end of this year before the new factory in Malaysia is operating at full capacity. X-Fab is testing investors’ patience.

Did you know…

Half of all home purchases in Flanders are made by people under the age of 36? They also pay more than other age groups, with a median price of €375,000, according to data from notaries.