The Week Ahead: 4 Big Market Movers On Deck
The market has been on uncertain footing over the last week since news that Chinese startup, DeepSeek, has built a better AI solution (than US leaders) on a tiny fraction of the budget. This week, uncertainty will continue with big earnings announcements (from Palantir, Google and Amazon) and of course the huge impacts of new tariffs from the Trump Administration. These news items could set the market’s direction for months and quarters ahead, especially considering an increasing chorus of investors believes the market is ahead of itself as per over-stretched valuation metrics due for a snapback.
Palantir (PLTR): On Monday, we get quarterly earnings from big-data AI up-and-comer Palantir Technologies. Investors cannot seem to get enough of colorful CEO Alex Karp, and the company has been backing it up with growth in both government and commercial software segments. Although Palantir valuations are increasingly very overstretched, and an earnings miss could send the shares (and the overall market) lower in a hurry.
Trump Tariffs are a very big deal. Specifically, the announcement of tariffs on imports from Canada, Mexico, and China are set to be implemented this weekend, and they could lead to significant market reactions. Investors will be watching closely for any signs of escalation or de-escalation in trade relations, as this could affect global trade dynamics, currency values, and sector-specific stocks, particularly in manufacturing, agriculture, and technology.
Google (GOOGL) earnings report (on Tues Feb 4th) has the potential to significantly influence market sentiment. especially in the tech sector. Investors will be watching revenue growth closely, particularly from Google's advertising business, cloud services, and any updates on AI and other technological advancements.
Amazon announces earnings on Thursday, February 6th, and investors will be keen on Amazon Web Services growth rate (AWS is still the largest cloud services provider, although Google and Microsoft especially have been gaining ground). Noteworthy, Amazon's operating income has surged in recent quarters as newer CEO Andy Jassy creates efficiencies. Any signs of growth plateauing could set the tone for the stock and the overall market, especially with regards to Amazon’s aggressive spending on AI and logistics.
Bottom Line:
Many investors believe the market is increasingly stretched (for example, see historical forward P/E ratios and subsequent market returns in the chart above). However, the good news is the economy has arguably become more durable in recent decades considering a lower reliance on international trade for food and energy, as well as being less cyclical as revenue steams (often recurring) are more stable.