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EPAM Shares Fall After Weak Outlook

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EPAM Systems saw its shares decline sharply after issuing a cautious outlook despite forecasting first-quarter results in line with market expectations.

The company projected first-quarter revenue between $1.38 billion and $1.40 billion, aligning with analyst estimates. Adjusted earnings per share are expected to range from $2.70 to $2.78.

However, investors reacted negatively to EPAM’s 2026 revenue growth guidance of 3 to 6 percent, which signals slower expansion compared to the 5 percent organic growth reported in 2025.

EPAM operates across IT consulting, cloud services and AI-driven transformation projects. While demand for digital modernization remains steady, the company’s conservative projections appear to reflect ongoing economic uncertainty.

Fourth-quarter performance exceeded expectations, with revenue reaching $1.41 billion and adjusted earnings per share of $3.26.

Despite solid recent results, the tempered growth outlook weighed on market sentiment.

AI Fears Shake Multiple US Sectors

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Concerns over artificial intelligence are spreading beyond the technology sector and weighing on a wide range of industries across U.S. markets.

What began as a selloff in software stocks has now extended to areas such as financial services, real estate, insurance, and logistics. Investors are increasingly questioning which industries may be vulnerable to automation as AI tools evolve rapidly.

Software companies were hit first, with fears that new AI solutions could disrupt long-established business models. The pressure then spread to private credit firms exposed to software lending and to financial brokerages after AI-driven tax planning tools entered the market.

Data analytics companies and legal service providers also saw declines as investors assessed the potential for AI to reduce reliance on traditional advisory services. Meanwhile, real estate service firms and insurance brokers faced losses amid concerns that AI-powered platforms could streamline tasks that currently require human expertise.

Even trucking and logistics stocks declined after AI-based freight optimization tools demonstrated efficiency gains without additional staff.

Market analysts suggest that investor sentiment has shifted toward identifying both winners and losers in the AI transition. While some fear the technology could disrupt established industries, others believe certain sectors will adapt by using AI to enhance rather than replace existing operations.

US Equity Fund Inflows Slow as Tech Selloff Pressures Demand

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U.S. equity fund inflows eased in the week through February 4 as investors turned cautious amid a selloff in software stocks, according to LSEG Lipper data. Net purchases totaled $5.58 billion, down nearly 48% from the previous week’s $10.82 billion, even as strong earnings from Eli Lilly and Super Micro Computer helped offset some of the pressure.

Technology shares weakened after Anthropic introduced a legal plug-in for its generative AI chatbot, heightening concerns about disruption across the software sector. As a result, investors pulled $2.34 billion from technology funds. By contrast, industrials attracted $2.11 billion, while metals and mining funds drew $1.44 billion, reflecting a rotation toward more cyclical and defensive exposures.

Fund flows also diverged by market size. U.S. large-cap funds recorded $1.1 billion in inflows, while mid-cap and small-cap funds saw outflows of $1.59 billion and $1.67 billion, respectively. The pattern underscores investor caution toward riskier segments during periods of sector-specific volatility.

Bond funds continued to benefit from risk aversion, logging a fifth straight week of inflows totaling $11.11 billion. Short- to intermediate-term investment-grade funds led with $6.34 billion—the largest weekly intake since at least 2022—while municipal and inflation-protected funds also saw solid demand. Money market funds attracted a hefty $83.09 billion, their biggest weekly inflow since early December, highlighting a broader preference for liquidity amid market uncertainty.