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Stock Market Today: Tech Sell-Off Deepens on Fears Over AI Spending and AMD’s Miss

By CA News Staff | February 5, 2026

The Canadian investment community has its eyes firmly fixed on Wall Street today as a wave of anxiety regarding Artificial Intelligence (AI) profitability sweeps through global markets. Following a turbulent session on Wednesday, February 4, North American markets are grappling with a stark divergence: while the Dow Jones Industrial Average managed to hold its ground, the tech-heavy Nasdaq Composite has been dragged down by a renewed sell-off in semiconductor and software stocks.

For Canadian investors watching the TSX, the message is clear: the "AI trade" is undergoing a stress test. The catalyst? A disappointing outlook from Advanced Micro Devices (AMD), which has sent shockwaves through the sector, raising questions about the speed at which AI infrastructure spending will translate into revenue.

The Main Narrative: A Reality Check for AI Optimism

The prevailing narrative on Bay Street and Wall Street this week is one of recalibration. For months, markets have been buoyed by euphoric expectations surrounding AI. However, the verified reports from BNN Bloomberg and CTV News highlight a sharp pivot on February 4, where investors began demanding proof of returns rather than just promises of innovation.

The focal point of this market anxiety is AMD. Despite beating fourth-quarter expectations, the chipmaker’s projection of $9.8 billion in first-quarter revenue fell short of the loftier hopes that had driven the stock to record highs. As reported by The Globe and Mail, this "AI stumble" has forced investors to shift their focus from earnings strength to the timeline of data center AI revenue scaling.

The significance of this event cannot be overstated. The Nasdaq’s slide, noted in reports from Barron's and MarketWatch, suggests that the market’s tolerance for high-growth tech stocks is shrinking as interest rates remain a persistent concern. For Canadian portfolios, which often hold heavy weights in financials and energy but have increasing exposure to tech, this volatility represents a critical inflection point. The question is no longer if AI will change the world, but when the massive capital expenditures will pay off.

Recent Updates: A Chronological Look at the Turbulence

To understand the current market landscape, it is essential to look at the verified timeline of events over the last 48 hours. The sell-off was not an isolated incident but the culmination of several data points.

Wednesday, February 4, 2026: The Tech Unwinding Begins The day began with a mix of optimism and caution. Early reports indicated that U.S. futures were flat, and global shares were mixed following a retreat on Wall Street. However, the mood soured rapidly as trading commenced. According to BNN Bloomberg, software stocks came under intense pressure, signaling that the market’s enthusiasm for software-as-a-service (SaaS) models was waning.

The defining moment of the day was AMD’s earnings call. While the company reported solid results for the previous quarter, its forward guidance was the headline. The company projected Q1 revenue of $9.8 billion, a figure that, while substantial, did not meet the "super-cycle" expectations priced into the stock by speculative investors.

The Aftermath: Market Reaction By the closing bell, the divergence was evident. CTV News reported that Wall Street slipped as tech stocks sank again, with the Nasdaq bearing the brunt of the decline. In contrast, the Dow Jones managed to avoid the worst of the selling. This rotation is a classic defensive maneuver; investors moved capital out of high-valuation tech names and into "value" sectors like healthcare, energy, and industrials—areas less dependent on the volatile AI spending cycle.

Thursday, February 5, 2026: Searching for a Floor As of this morning, the fallout continues. Market data indicates that the Nasdaq is attempting to find a bottom after the brutal tech selloff. The focus has shifted to other major tech bellwethers. Investors are now scrutinizing every piece of data regarding cloud spending and AI infrastructure costs.

Contextual Background: The High Stakes of the AI Trade

To appreciate why AMD’s guidance caused such a ripple effect, one must look at the broader context of the current market cycle. This is not merely a technical correction; it is a fundamental test of the "AI Super-Cycle" thesis that has dominated investment strategy since 2023.

The Nvidia Shadow The semiconductor industry has been the engine of the post-pandemic bull market, largely led by Nvidia. AMD has positioned itself as the primary competitor to Nvidia in the AI accelerator space. For the past year, investors have been willing to pay premium valuations for chip stocks based on the belief that AI spending would grow exponentially and indefinitely.

However, as noted in supplementary research from financial analysts, there is growing concern regarding the "AI bubble." When a company like AMD—despite beating current earnings—sees its stock plunge over 17% in a single day, it indicates that the market has priced in perfection. Any deviation from a flawless execution of the AI narrative is now being punished severely.

The Canadian Connection For Canadian investors, this tech volatility has a ripple effect on the TSX. While the Toronto Stock Exchange is dominated by banks, miners, and energy firms, the performance of the Canadian technology sector and the broader market sentiment are tethered to the U.S. indices. When the Nasdaq sneezes, the TSX often feels a draft, particularly in the materials and energy sectors which rely on global growth—a growth narrative that is currently being challenged by fears of a tech slowdown.

Furthermore, the "software under pressure" narrative highlighted by BNN Bloomberg suggests a shift in corporate spending. If U.S. and global corporations begin to tighten their belts on software and cloud services due to economic uncertainty, Canadian tech firms and service providers could see reduced demand.

Immediate Effects: The Market Impact and Sector Rotation

The immediate impact of the February 4 sell-off is a rapid reassessment of risk. Here is how the market landscape has shifted in just 24 hours:

1. The Nasdaq vs. The Dow The most visible effect is the split between the Nasdaq and the Dow. While the Nasdaq is sensitive to growth and momentum, the Dow is composed of established, dividend-paying companies. The fact that the Dow managed to stay afloat while the Nasdaq sank suggests a flight to safety. Investors are rotating out of "growth" and into "value."

2. Volatility in Software and Cloud Names As per BNN Bloomberg, software is under pressure. This is critical for Canadian investors holding positions in Canadian software firms. The logic is that if AI is supposed to automate and replace human labor, the demand for traditional software licenses might stagnate, or conversely, if AI implementation is slowing down due to costs, corporate IT budgets could freeze.

3. The "Magnificent Seven" Fragility Supplementary reports highlight that not all tech is created equal. While Nvidia remains the king, cracks are appearing elsewhere. AMD’s slide affects the entire supply chain, from equipment manufacturers to cloud service providers. The verified reports from The Globe and Mail emphasize that the market is no longer rewarding hype; it is demanding revenue scalability that matches the massive capital expenditures.

4. Impact on Investor Sentiment The psychological impact is profound. After a period of relative calm, the VIX (volatility index) is likely to tick upward. For retail investors in Canada, this serves as a reminder of the risks inherent in high-growth equities. The "buy the dip" mentality is being tested, as investors wonder if the dip is a buying opportunity or the beginning of a deeper correction.

Future Outlook: Navigating the Uncertainty

Looking ahead, the market faces a complex path. The verified data from the last 24 hours provides a foundation for projecting potential scenarios.

Short-Term: Continued Volatility and Earnings Focus The immediate future will be dominated by earnings reports from other major tech players. If other companies in the AI supply chain issue similarly cautious guidance, the sell-off could deepen. Investors should prepare for a "stock-picker's market," where broad index gains are unlikely, and success depends on selecting companies with strong balance sheets and realistic AI monetization strategies.

Medium-Term: The AI Reality Check The plunge in AMD stock serves as a watershed moment for the AI industry. In the coming months, we expect a bifurcation in the market: * Winners: Companies that can demonstrate clear, immediate utility of AI that reduces costs or increases revenue for their customers. * Losers: Companies that are relying on vague AI roadmaps without tangible products or revenue streams.

For Canadian investors, the strategy should be caution. Diversification remains key. While tech offers high growth, the verified reports suggest it is currently high risk