The market staged a comeback on Friday, with technology stocks spearheading the advance after a challenging week. While the Nasdaq and S&P 500 ended the week in the red, the tech sector’s resilience was evident, even as some behemoths like Amazon experienced pullbacks post-earnings. The recent sell-off in enterprise software, fueled by concerns that artificial intelligence could disrupt existing business models, has seen significant drops for companies such as Salesforce, CrowdStrike, and Palo Alto Networks. Despite the headwinds affecting these tech giants and the “Magnificent Seven,” a diversified portfolio held steady, bolstered by gains in other sectors.
Consumer staples emerged as the week’s top-performing sector, marking its strongest year in decades with a 13% surge in 2026. This dramatic shift in sentiment towards this traditionally stable, lower-growth category prompted a strategic adjustment, with Procter & Gamble being downgraded to a hold-equivalent rating.
A consistent theme emerging from the earnings calls of hyperscale cloud providers is the imperative to significantly increase capital expenditure to build out AI infrastructure and meet burgeoning demand. Meta Platforms, for instance, reported a staggering $22.14 billion investment in the fourth quarter and a full-year 2025 outlay of $72.22 billion, with projections for 2026 ranging between $115 billion and $135 billion. Microsoft’s capital expenditures reached $37.5 billion, with analysts forecasting an additional $148 billion over the company’s fiscal year. Alphabet reported $27.5 billion in capital expenditures for the fourth quarter and $91.4 billion for the year, with expectations for this figure to climb to $175 billion to $185 billion in 2026. Amazon, demonstrating the most aggressive expansion plans, invested approximately $39.5 billion in the fourth quarter and $128 billion in 2025, signaling a planned investment of $200 billion in 2026.
This substantial year-over-year doubling of capital expenditure is poised to benefit a wide array of companies across the portfolio, impacting earnings and order backlogs. On the semiconductor front, this translates to robust demand for advanced GPUs, particularly those from Nvidia. In the industrial sector, companies like Eaton are supplying essential electrical equipment for data centers, while GE Vernova’s natural gas turbines are crucial for powering these facilities, complemented by their grid management solutions. Dover is contributing specialized heat exchangers for server cooling, and Corning’s fiber optic cabling is indispensable for high-speed AI data center connectivity. Cisco Systems and Qnity Electronics are also playing pivotal roles in the AI infrastructure buildout.
A key focus is Broadcom, a semiconductor and infrastructure software firm whose shares have seen a year-to-date decline of approximately 4% and a 20% drop from its December 10th all-time high. Given the substantial capital expenditure plans announced by major Broadcom custom chip clients such as Alphabet and Meta, there is a compelling case for an upgrade. Alphabet’s projected doubling of capital expenditure instills greater confidence in Broadcom’s ability to surpass earnings estimates this year, and the stock’s recent pullback presents an attractive entry point. Broadcom is scheduled to report its earnings early next month.
Looking ahead to next week, the pace of earnings season will slow, though approximately 15% of S&P 500 companies are still slated to report. Within the portfolio, DuPont and Cisco are set to release their quarterly results. Other notable earnings reports include those from Marriott, Coca-Cola, McDonald’s, Dutch Bros, Applied Materials, and CVS Health.
The economic data calendar for next week is more substantial, featuring December retail sales figures and the January consumer price index. The most critical economic release will be the January employment report, originally scheduled for this past week but delayed due to a brief government shutdown. The market reacted negatively to news of a decline in December job openings to a five-year low and a rise in layoff data to January’s highest levels since 2009. Current economist projections anticipate nonfarm job gains of around 70,000 for January, with the unemployment rate expected to remain steady at 4.4%.
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