Chapter 1: Why are software stocks experiencing a significant selloff?
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Thursday, January 29th, and I'm your host, Kim Kahn. Our top story so far. Software struggles are getting hardcore. The sector is selling off sharply, taking tech and the broader market down with it.
The iShares Expanded Tech Software ETF, ticker symbol IGV, is down more than 5%, a drop we haven't seen since Tariff Liberation Day. That's dragged down the NASDAQ, while Bitcoin, gold, and silver also saw simultaneous selling. All those asset classes are now off their lows, though.
At the coalface of the software slump is Microsoft, which you heard on Wall Street Breakfast was sinking despite solid, if unspectacular, quarterly results. Selling has ramped up through the session, with the stock off about 12%, on track for the seventh worst decline in its history. Today's plunge has wiped out nearly $400 billion in Microsoft's market cap.
Chapter 2: How did Caterpillar's earnings reflect AI-driven demand?
If it holds, it would be the second largest single-day loss for a U.S. company behind last January's NVIDIA drop, when a 17% slide erased nearly $600 billion. Evercore analyst Kirk Materne says the debate is no longer about demand, it is about capacity, timing, and perhaps allocation.
While Azure growth at these levels remains impressive and continues to suggest market share gains, CapEx rose 66% year over year, and investors are increasingly looking for clearer evidence that this elevated investment is translating into incremental Azure acceleration. he added. The real trigger, though, may have been ServiceNow, down more than 10% despite strong results.
Chapter 3: What impact did ServiceNow's performance have on the software market?
Analysts noted that 21.5% subscription revenue growth did not quite represent acceleration, but were broadly positive. Citizens reiterated its market outperform rating, pointing to revenue growth, free cash flow margin, and a strong leadership team. Even so, the stock has now shed about 50% of its value over the past year. Also heavily in the red are Atlassian, Salesforce, Workday, and Datadog.
Among other active stocks, Caterpillar continues to benefit from AI, specifically data center demand, with Q4 results meeting expectations. Cat said fourth quarter sales rose to $19.1 billion, above the $17.76 billion consensus. Adjusted EPS came in at $5.16, easily topping the $4.71 expected. Power and energy sales climbed 23% to $9.4 billion.
Within that segment, power generation revenue jumped 44% to $3.24 billion, driven by higher sales of large reciprocating engines that the company said were primarily tied to data center applications, as the AI build-out keeps echoing through demand. Altria is under pressure after slightly missing profit estimates in Q4.
The tobacco giant said it's targeting mid-single-digit annual dividend per share growth through 2028. And Joby Aviation is sinking after pricing and offering.
Chapter 4: What are the implications of Barry Diller's interest in CNN?
The electric vertical takeoff and landing company will issue $600 million of 0.75% convertible senior notes due 2032 and sell about 52.9 million shares of common stock at $11.35 per share. And in other news of note, Barry Diller has expressed interest in buying CNN and approached Warner Bros. Discovery about a deal last year.
The Wall Street Journal reports that Diller inquired about CNN before Warner announced this plan to split into two distinct businesses, and before WBD formally put itself up for sale.
Sources close to Warner told the Journal that no serious action was taken on Diller's approach and it wasn't brought to the board, but Diller is still said to be interested in CNN and is eyeing a deal in a personal capacity.
That's all for today's Wall Street Lunch.
Chapter 5: How is Altria's dividend strategy evolving amidst market pressures?
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