US stock markets took a sharp move down on 12 February led by continued weakness in technology with the Nasdaq Composite dropping nearly 2% over the week.
Investor confidence has been shaken by the threat of AI to disrupt several sectors including software, legal, insurance and financial services.
The January non-farm payrolls report, delivered a few days late on 11 February due to the short government shutdown, showed unexpected strength in the jobs market.
The US economy added 130,000 jobs, compared with 50,000 expected by economists, while the unemployment rate dipped to 4.2%, indicating economic resilience.
The initial rise in bond yields was short-lived as investors sought the relative safety of US treasuries after the market sell off.
One bright spot continued to be strength in memory chip and storage companies with Sandisk and Micron Technology rising around 5% over the week.
Defensive sectors were also in demand with the utility sector up around 4%.
Coca-Cola
Beverage giant Coca-Cola beat analysts’ earnings estimates for the fourth quarter, but a tepid forward guidance left a sour taste and saw the shares fall 2% after the results.
Chief operating officer Henrique Braun conceded that the company needed to speed up innovation and keep pace with changing consumer preferences for low-sugar products and the boom in weight-loss drugs.
The company said it expects 2026 organic revenue growth of between 4% and 5% which was short of consensus estimates calling for 5.3% and below the 5% notched up in 2025.
Annual adjusted profit per share is projected to grow between 7% and 8%, compared with analysts’ expectations at the upper end of the range.
Coca-Cola has been raising prices to offset higher input costs, but consumers pushed back as evidenced by overall case volumes rising a mere 1% in the quarter and being unchanged year-on-year.
To target lower-income consumers the company rolled out smaller single serve cans at under $2 in US convenience stores.
One worry for investors is that the company booked a $960 million non-cash charge against the BodyArmor sports drink, which together with the prior year charge means the company has written down the brand value by around a third sine the acquisition in 2021.
McDonalds
Fast-food giant McDonald’s looks to have regained its value edge as strong promotions helped win back customers and helped deliver better than expected fourth quarter earnings.
Global same store sales increased 5.7% topping consensus analysts’ estimates of 3.7%, led by the key US market contributing 6.8% growth after seeing declining growth in the prior year.
Chair and CEO Chris Kempczinski said: “By listening to customers and taking action, we have improved traffic and strengthened our value & affordability scores.”
McDonald’s attributed its strong US performance to catchy promotions like its Grinch meal and Monopoly promotions. The Grinch promotion briefly made McDonald’s the largest seller of socks in the world with the company selling 50 million special-edition pairs in a few days.
For 2026 the company is planning to open 2,100 net new restaurants, including 750 in its home turf. The shares are up around 5% over the last year, underperforming the 15% advance in the S&P 500.
Cisco
Network equipment maker Cisco topped fiscal second quarter consensus expectations but margin pressure from rising memory chip prices took the shine off the results, with the shares falling by as much as 10% on 12 February.
The huge projected buildout of AI data centres has led to shortages and price increases for memory chips, which Cisco needs to power its switches and routers.
“Gross margin weakness seemed to validate DRAM (Dynamic Randon Access Memory) concerns and trumped an otherwise reasonable beat and raise quarter,” noted Citigroup analyst Atif Malik.
The sell off in Cisco pulled down the share prices of peers, including Dell Technologies, HPE Enterprise and Arista Networks.
Looking to sooth investor concerns, CEO Chuck Robbins said Cisco had already increased its own prices in response to chip prices and is also revising contract terms with partners and customers.
“Given the strong demand for our Silicon One systems and optics, we now expect to take AI orders in excess of $5 billion and to recognize over $3 billion in AI infrastructure revenue from hyperscalers in fiscal year 2026,” added Robbins.
Martin Gamble: Shares and Markets Writer
Martin Gamble is Shares and Markets writer at AJ Bell. He was previously the Education Editor of Shares Magazine. He has been with the business since 2019.
Martin graduated from the University of Kent in...
