Markets volatile on shifting AI narrative
These areas quietly outperformed as confidence in high-growth tech has softened. A key factor is rising concern over the immense investment needed to sustain artificial intelligence growth.
During the fourth-quarter earnings season, it became clear that major tech companies are spending much more than expected. Amazon’s latest results underscored this concern.
While the company reported modest earnings miss for the December quarter, the share price reaction had little to do with near-term performance. Instead, investors focused on Amazon’s $200 billion capital expenditure plan for 2026 which marks a 50% increase from last year.
Although this can largely be funded internally, tech giants are moving away from the capital-light models that once justified their high valuations.
Debt levels are rising as firms stretch their balance sheets for rapid expansion, bringing new questions about return on capital, execution risk, and when AI investments will turn profitable.
Elon Musk’s SpaceX last week agreed to acquire his artificial intelligence venture xAI in a transaction valued at around $1.25 trillion. The deal consolidates SpaceX’s aerospace capabilities with xAI assets, including the Grok chatbot and the X platform, ahead of a potential public listing later this year.
Volatility returned to digital assets, with Bitcoin falling roughly 10% last week, briefly trading below $65,000 amid fading enthusiasm around the “Trump rally”.
Markets reacted to the nomination of Kevin Warsh as the next Federal Reserve chair, with expectations that a more hawkish approach could limit rate cuts, an environment that typically pressures speculative assets such as cryptocurrencies.
Meanwhile, Japanese equities hit record highs after the Liberal Democratic Party won 316 of 465 lower house seats, boosting prospects for fiscal stimulus. Stocks rallied, bonds fell, and the yen recovered modestly as markets priced in a more decisive economic policy.
Equities
Global stocks finished up 0.7% in euro terms and flat at 0.0% in local terms last week. Year-to-date global markets are up by 1.6% in euro terms and up by 2.3% in local terms. The US market, the largest in the world, finished up at 0.5% in euro terms and down at -0.2% in local terms.
Fixed Income & FX
The US 10-year yield finished at 4.2% last week. The German equivalent finished at 2.8%. The Irish 10-year bond yield finished at 3.1%. The Euro/US Dollar exchange rate finished at 1.18, whilst Euro/GBP finished at 0.87.
Commodities
Oil finished the week at $64 per barrel and is up 10.0% year-to date in euro terms. Gold finished the week at $4,964 per troy ounce and is up 14.3% year-to-date in euro terms. Copper finished the week at $12,923 per tonne and is up 3.2% year-to-date in euro terms.
The week ahead
Wednesday 11th February
The delayed US non-farm payrolls for January goes to print.
Thursday 12th February
The preliminary result of UK Q4 2025 GDP is published.
Friday 13th February
US Consumer Price Index data for January is released.
Warning: Past performance is not a reliable guide to future performance.
Warning: Benefits may be affected by changes in currency exchange rates.
Warning: The value of your investment may go down as well as up.
Warning: If you invest in these products you may lose some or all of the money you invest.