Breakfast News: The 2-Day Tech Sell-Off Explained

Breakfast News: The 2-Day Tech Sell-Off Explained

February 5, 2026

Source: Image created by Jester AI.

1. Nasdaq Slides as AI Angst Grows

The tech-heavy Nasdaq index fell 1.5% yesterday as fears of AI disruption picked up pace, although futures indicate a modest rebound. Software-as-a-Service (SaaS) stocks were particularly hard hit again, with the S&P 500 software and services index now down nearly 13% over ‌the past six sessions.

• **New legal tool from Anthropic’s Claude large language model triggers concern: **The plug-in can review contracts, compliance workflows, legal briefings and more, potentially acting to disrupt legal and professional services industries. Both Oracle (ORCL +1.18%) and AppLovin (APP +3.39%) fell over 5% yesterday.
• “There are a lot of SaaS and software companies right now that could be almost entirely replaced in a couple of weeks”: In December’s Quarterly Call, Motley Fool CEO and co-founder Tom Gardner spoke about the ongoing AI transformation, saying although he doesn’t think “we’re at a point where the Mag 7 is going to collapse and be replaced,” we’re “going to see some companies get devastated.”

2. Earnings Weigh on GOOG, QCOM, and CCI

• Alphabet (GOOG 0.97%) fell as much as 7% after the closing bell but mostly recovered the losses ahead of the market open after results showed capex spend for 2026 could be roughly double the $91 billion from last year.
• **Qualcomm **(QCOM 0.10%) dropped almost 10% before the opening bell, with CEO Cristiano Amon warning the “industry will be constrained by the availability and pricing of memory” as part of the quarterly earnings release.
• **Crown Castle **(CCI 1.64%) was down 7% in pre-market trading. The Dividend Investor recommendation experienced lower revenue and higher costs in the latest quarter, with management guiding for revenue pressure to continue this year.

3. Quantum Stocks Fall on IonQ Report

IonQ (IONQ 4.55%) fell 8.14% yesterday and led quantum stocks lower due to a short-seller report claiming most of IonQ’s revenue has come from acquired businesses outside of quantum computing.

• **“These Pentagon contracts have been handouts from friendly politicians”: **Wolfpack Research also noted recent Pentagon-awarded contracts weren’t actually funded in the last two federal budgets, with IonQ insiders selling around $400 million in stock just before the news became public.
• Commercial potential of the sector called into question: Competitors including D-Wave Quantum (QBTS 6.83%) and Rigetti Computing (RGTI 9.18%) closed over 5% lower, as the report questions the broader fundamentals of the companies.

4. Post-Market Focus for Foolish Favorites

• Amazon (AMZN 0.20%) is beating the S&P 500 by 69% since the January 2023 Hidden Gem rec. After a strong showing last quarter, the focus will be on holiday season performance and continued cloud growth.
• **Roblox **(RBLX 0.30%), a Rule Breakers rec, posted a surge in user growth in the previous quarter, but investors will want reassurance over concerns of AI disruption and child-safety measures with results today.
• **Fortinet **(FTNT +0.64%) should provide an update on new strategic partnerships and product launches as part of earnings today. Recommended by Team Rule Breakers in Stock Advisor, the company delivered record profitability last quarter.

5. Your Take

TMF’s Head of AI Donato Riccio yesterday wrote “I think there’s some truth to the broader concern [that agentic AI is going to ‘kill’ software], but I also think the narrative is significantly overblown, and the market is overreacting.”

Today we’re asking simply, how are you reacting to the current sell-off?

Discuss with friends and family, or become a member to hear what your fellow Fools are saying!