This week, significant economic indicators revealed mixed signals in the U.S. economy: retail sales slowed in December, existing home sales dropped 8.4% in January, and 130,000 new jobs were added in January, surpassing expectations of 55,000. However, the Consumer Price Index showed a modest price increase of 0.2% for January, leading to an annual inflation rate of 2.4%, down from 2.7% the previous month.
The recent stock market shift was primarily driven by fears surrounding AI advancements, specifically following Anthropic’s announcement of a new AI plugin on January 30. Major software companies felt the impact, with Microsoft Corporation down nearly 7%, Salesforce.com down 10%, and Intuit Inc. experiencing a nearly 20% decline. This selloff spread throughout the software sector and extended to insurance, wealth management, private credit, and logistics, as investors re-evaluated capital allocation amidst rising AI competition.
Looking ahead, major tech firms, including Amazon, Alphabet, Meta, and Microsoft, are projected to invest between $600 billion and $700 billion in AI infrastructure by 2026, indicating a significant shift in the market towards specialized AI services and infrastructure as the industry transitions from early-stage AI solutions to more complex integrations.
