Chapter 1: What is the main topic discussed in this episode?
Public.com presents The Rundown, your daily market update in under 10 minutes.
My name is Zaid Admani, and today is Thursday, February 5th. In today's episode, we'll explain why the market might actually be healthy despite the drop in the stock market. We'll also recap earnings from Google, Snap, and Qualcomm. Then stick around to the end of the show to learn more about Nintendo's upcoming VR headset. We got a great show for you today. Let's go.
Stocks were down for the second straight day on Wednesday, and once again, it was tech stocks doing the damage. The S&P 500 dropped 0.5% while the NASDAQ got absolutely crushed, falling 1.8%. You know, this marks the NASDAQ's worst two-day stretch since last April's tariff chaos. Overall for the year, the NASDAQ is down 1.4% while the S&P is basically flat.
But if you look at the equal weight S&P 500 index, which treats each stock equally in the S&P, that's up 4% and hit all time highs yesterday. So while tech is getting hammered right now, most of the market is doing just fine. Now we're not seeing this broad market sell-off. What we're seeing is a classic rotation out of tech and into other sectors.
So this rotation started late last year and it seems to be accelerating this year. And historically, this kind of market breath is actually a healthy sign. You know, one of the big criticisms over the last couple of years was that the stock market was too top heavy with most of the returns coming from mega cap tech stocks. But that's finally starting to change.
We'll have to see if this rotation continues. We'll see how things play out over the next few days and weeks as we move through earnings season. Amazon is reporting earnings today after the bell, which should give us a read on consumer spending and cloud growth. And the next week, we're getting major software stocks reporting earnings like Monday.com and Datadog.
So we should get some more clarity on the software sector. We're staying on top of all this stuff. So it's a great time to get subscribed to the podcast and tuning in every day to stay in the loop. Let's run through some headlines, starting with Google. Google reported earnings last night, and despite putting up monster numbers, the stock is still down this morning. Let's talk about the numbers.
Q4 revenues were up 18% to $114 billion and profits were up 30% to $34.5 billion. That is insane. And if you look at the full year of 2025, Google crossed $400 billion in revenue for the first time ever, putting them in the same club as Apple and Amazon. Google's search and advertising business continues to be a cash printing machine.
It grew 17% year over year, pulling in $63 billion last quarter.
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Chapter 2: Why are tech stocks sliding despite a healthy market?
So there's no signs that ChatGPT and other AI tools are stealing Google's users and impacting their search business. Now looking beyond the search business, the big growth story for Google continues to be Google Cloud, which is absolutely exploding. Cloud revenue hit $17.7 billion in Q4, which was up 48% year over year.
That puts the cloud business on a $71 billion annual run rate, which is insane considering that it was under $20 billion just four years ago. Google's cloud margins are also improving. They jumped to 30%, proving that the cloud business is finally a real profitable sector of the company. And there's no signs of slowing down either.
Google said that its backlog of cloud contracts more than doubled to $240 billion. And speaking of AI, Google also said that their Gemini AI app now has 750 monthly active users, which is up from the 650 million last quarter. So more and more people are using Gemini, including myself, and Google just has a lot of momentum right now.
But despite those incredible numbers and growth that I just told you, Google stock is down like 5% this morning, and it's because of what Google said about its CapEx. Google said they plan to double their CapEx spending this year to $180 billion, which is way above the $120 billion that Wall Street was expecting, and this caused investors to freak out.
Now, CEO Sundar Pichai defended all this spending, saying that the AI demand is there and that Google needs to build more capacity to meet the demand. You know, the $180 billion will go towards building AI data centers, developing AI models, and buying the chips to power everything. But investors seem to be nervous about all this spending.
I think six to 12 months ago, this would have been okay, but the vibe has completely shifted. We also saw this happen with Microsoft's earnings last week. They reported solid growth, but yet the stock had a record drop because of the massive CapEx spend. Now to put the $180 billion CapEx spend into perspective, Google generated $165 billion in cash last year.
They're literally spending all of their cash on AI infrastructure. So because of this narrative shift, Google is now gonna have to convince the market that all this CapEx spend is justified. It just goes to show you how things have changed. Even putting up monster quarterly numbers like Google just did isn't enough anymore.
Let's shift gears and talk about SpaceX, because Elon is making some pretty bold moves ahead of what could be the biggest IPO in history. SpaceX is planning to go public later this year at a valuation of over $1 trillion.
And according to the Wall Street Journal, SpaceX advisors have been quietly reaching out to major index providers, including the Nasdaq, to see if the company can get added into the major stock indices almost immediately after its IPO. See, normally, newly public companies have to wait several months, sometimes up to a year, before joining indices like the NASDAQ 100 or the S&P 500.
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