8 Key Items Shaping the Stock Market Thursday

These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures have rolled over from being modestly positive to indicating another move lower is what we’re in for later on Thursday morning.

1. Alphabet Inc. topped projections for quarterly revenue and outlined an ambitious capital spending plan, far surpassing predictions, leveraging its growth to build out the data centers and infrastructure needed to lead in the AI age. Google’s parent company said capital expenditures will reach as much as $185 billion this year, compared with the $119.5 billion analysts expected… Expected spending for 2026 will total more than what the internet search giant spent in the three prior years combined. (Bloomberg)

Far bigger than expected, and like other hyperscalers, the company is adding capacity to reinvent its business for the “AI age” as it looks to fend off competitors. In short, the AI arms race is heating up further this year. We’ll have more on this in a standalone note later on Thursday morning, but on the topic of custom chips, we have the following from last night’s earnings call: “Nearly 75% of Google Cloud customers have used our vertically optimized AI from chips to models to AI platforms and enterprise AI agents…”

We see a nice one-two punch of confirmation points for our Broadcom (AVGO) and Marvell (MRVL) positions.

2. Qualcomm logged higher revenue in its fiscal first quarter, but said the memory-supply shortage will put a damper on its performance in the current quarter… Suppliers will likely continue to redirect manufacturing capacity to meet demand from artificial intelligence data centers, which will put a strain on the availability and pricing of memory for handsets… (WSJ)

"The miss in licensing revenue (led) to the fall in shares, and smartphones will have to deal with high cost of memory which will be a headwind for Arm," said Kinngai Chan, senior research analyst at Summit Insights. "A weak licensing revenue today will likely result in weaker future royalties revenue. (Reuters)

Confirmation of our concerns about the mix shift in memory capacity and shipments to meet higher margin AI and datacenter demand from smartphones, PCs, and other devices. Fortunately, we closed the Portfolio’s position in Qualcomm (QCOM) in mid-January as the tea leaves became evident.

3. Wall Street's "Software-mageddon" has been snowballing. Now investors are debating whether it is time to warm up to the beaten-down stocks. (Reuters)

Arm boss Rene Haas has said fears about AI hurting software companies, which triggered a market sell-off this week, are a “micro-hysteria” that exceeds the reality of how businesses are using the tools. (FT)

We shared our view on this with you on Wednesday, and to those sobering comments from the leadership at Nvidia (NVDA) and AMD (AMD) , we can add ones from Arm (ARM) . As we shared in Wednesday's comments, we agree with the sharp overreaction we are seeing, and we are biding our time to make our next move.

4. President Donald Trump sent a fresh warning to Iran’s leaders as U.S. military forces amass in the region, even as diplomatic talks between Washington and Tehran were set for later this week. “I would say he should be very worried, yeah. He should be.” (Bloomberg)

While we can understand the need to keep a hard line heading into diplomatic talks, following recent developments, rhetoric like that is likely to keep the market on edge until some initial word on the outcome of those talks is had. Could we get a sigh of relief led rally late Friday or early next week? Possible.

5. The global crypto market has lost nearly $1.9 trillion in value since hitting a peak of $4.379 trillion in early October, based on data from CoinGecko, with some $800 billion wiped out in the last month alone. To be sure, cryptocurrencies have struggled for months since a record crash last October sent bitcoin tumbling from a peak as leveraged positions got washed out. (Reuters)

A new controversy over President Donald Trump’s ties to the cryptocurrency industry is sharpening Democratic demands that a sweeping digital assets bill include a provision reining in the first family’s crypto empire. (Politico)

We’ve stayed on the sidelines with crypto given bouts of extreme volatility, and at least for now, we’re inclined to remain there. If we were to do something in the space, we’d favor an ETF over an individual holding.

6. Democrats’ drive to reach a deal to put new restrictions on immigration-enforcement agents is running into a Republican brick wall, with lawmakers in both parties saying an agreement looks increasingly unlikely by a Feb. 13 deadline. (WSJ)

We’ll want to keep an eye on this, but we could very well see an agreement get hammered out in the coming days. While we may be wrong, our thinking is that the White House is smarting from recent developments and will look to put this behind it. Our focus when it comes to DHS is the rollout of body cameras and related services nationwide, a potential catalyst for Axon (AXON) shares.

7. Economic data today per TipRanks: Challenger Job Cuts Report – (January), Initial & Continuing Jobless Claims – (Weekly), EIA Natural Gas Inventories – (Weekly).

8. Companies reporting today per TipRanks: AGCO (AGCO) , Bristol-Myers (BMY) , Construction Partners (ROAD) , Cummins (CMI) , Estee Lauder (EL) , Hershey Foods (HSY) , Ralph Lauren (RL) , Tapestry (TPR) ; Affirm (AFRM) , Amazon AMZN, Coty (COTY) , Digital Realty Trust (DLR) , Fortinet (FTNT) , Synaptics (SYNA) , USA Rare Earth (USAR) .

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At the time of publication, TheStreet Pro Portfolio was long AVGO, MRVL, NVDA, AXON and AMZN.