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Stocks opened higher on strong results and guidance from a high-profile software name with big artificial intelligence plans. Momentum stalled early, though, as it appears recent success for Palantir Technologies has investors, traders and speculators wondering whether and when similar measurable growth will happen for other companies investing in AI at scale.
Tuesday’s release of the Job Openings and Labor Turnover Survey (JOLTS) for December by the Bureau of Labor Statistics (BLS) is delayed pending the resolution of the latest government shutdown. Friday’s release of the January jobs report is also delayed.
The House of Representatives is voting today on legislation to end the partial shutdown and free the economic calendar from further imposition, at least for now. And information continues to flow from the earnings calendar.
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Indeed, Palantir Technologies (PLTR, +6.8%) gapped up by 11.7% at the opening bell after the software maker reported expectations-beating fourth-quarter results and guided for revenue growth of more than 60% this year. But it was all downside from there for tech stocks.
International Business Machines (IBM, -6.5%) and Salesforce (CRM, -6.8%) were the two worst performers among Dow Jones stocks, with Magnificent 7 bellwethers Amazon.com (AMZN, -1.8%), Apple (AAPL, -0.2%), Microsoft (MSFT, -2.9%) and Nvidia (NVDA, -2.8%) joining Big Blue and CRM in the deep red.
Last week, Apple reported its “best-ever” quarter on strong iPhone sales. Microsoft, meanwhile, underwhelmed the market with its big capex plans but small growth to show for it so far.
Amazon represents hyperscalers on the earnings calendar this Thursday. Nvidia and CEO Jensen Huang will add data and color to the debate about whether we’re in an AI boom or an AI bubble on Wednesday, February 25.
At the closing bell, the tech-heavy Nasdaq Composite was down 336 points to 23,255, the broader S&P 500 had lost 1.3% at 6,885, and the blue-chip Dow Jones Industrial Average was off 0.8% to 49,033.
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WMT is a trillion-dollar stock
It’s a positive development early in the tenure for new CEO John Furner, who just took the job on Sunday. But WMT’s recent rally has two Wall Street firms assessing prospects for more upside from here for the stock.
Evercore ISI analyst Greg Melich removed Walmart from his “Fab Five” portfolio following a gain of 140% since May 2023. Melich still has an Outperform (Buy) rating on the big-box retailer, and he raised his 12-month target price from $125 to $130.
Goldman Sachs took WMT off its “conviction list” on Monday without comment. The firm maintains a Buy rating on Walmart, which will report fiscal 2026 fourth-quarter results before the opening bell on Thursday, February 19.
PayPal seeks leadership
PayPal, which was co-founded by Elon Musk in 1999, also fired its CEO. Enrique Lores, currently the CEO of HP (HPQ, -4.0%), will replace Alex Chriss as president and CEO of PayPal on March 1. Lores is also the chair of PYPL’s board of directors.
“While some progress has been made in a number of areas over the last two years,” PayPal said in a statement (pdf), “the pace of change and execution was not in line with the board’s expectations.”
The payments processor reported earnings of $1.23 per share on revenue of $8.68 billion, short of Wall Street’s forecast for EPS of $1.29 on revenue of $8.79 billion. Management sees a “low-single-digit decline to slightly positive” EPS growth, while analysts forecast high-single-digit growth.
Orbital data centers, dude
Musk, meanwhile, announced in a blog post that SpaceX has acquired xAI in a deal that values the combined company at $1.25 trillion. An initial public offering of SpaceX stock is one of the hottest upcoming IPOs of the year. The richest man in the world has “space-based AI” on his mind, which will include orbital data centers.
“SpaceX has acquired xAI to form the most ambitious, vertically-integrated innovation engine on (and off) Earth,” Musk writes, “with AI, rockets, space-based internet, direct-to-mobile device communications and the world’s foremost real-time information and free speech platform.”
Noting the dependence of AI on “large terrestrial data centers” that “require immense amounts of power and cooling,” Musk says global electricity demand for AI can’t be met with Earth-based solutions without harming communities and the environment.
“In the long term,” he concludes, “space-based AI is obviously the only way to scale.”
