The Week Ahead (9-13 Feb): AI agents prompt SaaS extinction fears + US job cuts

Welcome back to The Week Ahead. It’s been a volatile seven days in the market, especially for investors with exposure to software and Big Tech.

I’ve put together some charts to highlight some of the big moves and look at the stories behind them. I’ll wrap up by explaining why investors may also want to keep an eye on the real (US) economy over the coming months, in addition to monitoring the AI story.

Silver & gold lose shine

After falling sharply last week, gold and silver steadied for a few days before resuming their decline with a sharp fall on Thursday:

While many of us (including me) have some exposure to precious metals through UK-listed miners, the massive surge higher in late January had a speculative feel to it. I don’t think it’s surprising to see some of it unwinding.

Identifying whether this is a temporary blip or a turning point in the long-running gold bull market is beyond my pay grade. But for some context, the gold price is still around 70% higher than it was one year ago.

Big tech bets on $655bn AI spend

This week has also seen the AI story evolve in two separate and seemingly opposing directions.

On the one hand, four of the biggest names in tech are now collectively planning to spend c.$655bn on AI capacity during their 2026 financial years:

• Amazon.com (NSQ:AMZN) said this week that capex would rise by around 50% to $200bn in 2026, roughly 30% more than market forecasts;

• Google owner Alphabet (NSQ:GOOGL)  increased 2026 capex guidance to $175-185bn, well above consensus expectations of c.$120bn;

• Last week, @Meta Platforms (NSQ:META) said capex would double to c.$135bn in 2026, while Microsoft (NSQ:MSFT) is on track to spend around $140bn in its current financial year, which ends in June.

Markets rightly want to see evidence that these vast spending commitments will drive future profit growth and generate attractive returns. Investors’ views appear mixed, though.

While Alphabet and Meta have largely been given the benefit of the doubt after reporting good commercial progress – for example improved ad effectiveness – Amazon and Microsoft have faced greater scepticism.

Microsoft in particular appears to be under pressure – its shares have fallen by almost a quarter over the last three months:

Anthropic plugins spook SaaS market

At the same time as investors are questioning the tech giants’ spending commitments, they also appear to be betting that new AI products could inflict severe damage on leading SaaS (Software as a Service) providers.

We’ve recently commented in the Daily Report on share prices declines at Experian (LON:EXPN) and Sage (LON:SGE), despite positive earnings forecasts. This week saw that trend accelerate following the launch of Anthropic’s Cowork plugins. These are effectively AI agents that can perform a wide range of tasks in areas such as law, customer services and finance.

These plugins build on the general productivity capabilities of the Cowork service, launched on 12 January.

Although similar products already exist in some cases, Anthropic’s roll-out of these new features has triggered sudden declines in stocks formerly seen as high-quality, defensive businesses.

Notable losers in the UK included financial data specialists London Stock Exchange (LON:LSEG) and data analytics group Relx (LON:REL), which has a particularly strong presence in law. In the US, Salesforce, Intuit and Shopify have also suffered.

Using a 3-month chart makes it clear that the current sell off started on 12 January, when Cowork launched:

Here in the UK mid-cap market where I spend much of my time, similar declines have also been seen in niche consumer specialists such as MONY (LON:MONY), Autotrader (LON:AUTO), Rightmove (LON:RMV).

As a result of these big falls in tech stocks, both the main US indices have fallen sharply this week.

In contrast, the FTSE 100 has been buoyed by its broader exposure to non-tech sectors, despite the failure of the proposed Rio Tinto-Glencore mining mega-merger:

Is the SaaS meltdown being overdone?

My feeling is that AI agents (not chatbots) may well prove to be the killer app when it comes to the initial commercialisation of AI. However, I think the risks facing market-leading SaaS businesses are more nuanced than the market is currently recognising.

While these companies do need to create competitive AI tools quickly, many of them are already doing just that. In the UK, for example, LSE Group, Relx and Sage have already integrated generative AI services into their product ranges.

For companies that can stay on top of the new technology, I think customer inertia and other incumbent benefits – such as deep pools of in-house data – should be enough to keep them safe.

The real risk, in my view, is that some of these firms might not deliver competitive products quickly enough to compete with the best of a new breed of solutions from AI startups. In such a scenario, previously reliable customers might go elsewhere.

History suggests that when major new technologies are adopted, some incumbent businesses usually adapt and thrive, while others fall by the way.

In the current situation, I think it makes sense to focus on the following areas:

• Software providers whose products are sticky and deeply integrated into existing workflows, such as accounting or transactional systems;

• Companies with competitive advantages derived from proprietary data or some other hard-to-replicate asset;

• Areas where using a sub-standard product could carry high legal, commercial, or reputational risk.

Perhaps unfairly, I would suggest that writing software code rarely fits into any of these categories. In many ways, it is deeply generic. I wonder if that’s why coding has been the most successful AI application so far.

Looking ahead: beware US jobs slump

Talk of AI productivity miracles and a tech spending boom may grate on the ears of the growing number of US workers who are losing their jobs.

January saw more than 100,000 jobs cut in the world’s largest economy – the biggest January fall since 2009. Last week saw Amazon announce plans for a further 16,000 job cuts in white collar positions, taking the total since October to 30,000.

Against this backdrop, I suspect this week’s US unemployment data will be closely watched for signs that the real economy could be slowing. The unemployment rate has now been rising steadily for three years:

… although unemployment remains relatively low on a longer-term historical view:

Wall Street won’t necessarily remain immune to problems on Main Street, so corporate results from over the coming months could be worth watching for any broader signs of weakness.

Persistent inflation and rising unemployment could also create political pressure for President Trump. This chart from the US Bureau of Labour Statistics shows post-tariff job cuts in many of the industries Trump had pledged to protect:

Company news

Some of the companies affected by the trends I’ve discussed above are due to report results this week. Shopify and Relx have results scheduled on Wednesday and Thursday, respectively.

For exposure to the broader US economy, updates from Ford, McDonald’s and Coca-Cola may be of interest.

Elsewhere, luxury watchers will be looking forward to statements from Ferrari and Kering, while BP and Duke Energy are due to provide updates from the oil and gas sector.

Here in the UK, housebuilders Barratt Redrow, MJ Gleeson and Bellway are all due to issue statements, as are consumer-focused groups easyJet and Dunelm.

We’ll be covering many of these updates in the Daily Report; as always, please feel free to share your views in the comments and suggest possible topics for us to cover.

Until then, I hope you enjoy the weekend!

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Here’s a summary of what’s expected next week.

Economic Calendar

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Companies Reporting

Disclosure: Roland owned shares in Sage and Dunelm at the time of publication