Thoughts from Themes: Playing the Long Game

With the Super Bowl now behind us and Olympic competition accelerating around the world, this week offers a familiar lesson from sports: short-term outcomes rarely tell the full story. A single turnover, a missed assignment, or a controversial call can dominate the headlines, even when the broader performance points in a very different direction. Championships aren’t won on one play, they’re earned over time through execution, depth, and endurance.

That tension showed up clearly in markets following earnings from Alphabet. Operationally, the company delivered one of the strongest quarters in its history, with revenue growth, margin discipline, and accelerating performance across key segments. Yet investor focus snapped to one number — the scale of AI-related capital spending — triggering a selloff that overshadowed the results.

This week we look beyond the immediate reaction to assess what matters most: fundamentals, positioning, and the ability to sustain advantage over a full cycle. In markets, as in sports, the long game is often where winners are decided.

A Good Look at Google

The obvious standout in Alphabet's earnings report is the massive increase in capex spend, which seemed to spook investors and drive down the share price after they reported what appeared to be one of the most profitable and substantial growth reports by a company, perhaps in US history.  It is another proof point for the disdain that the market has regarding the massive amount of investment being made into AI infrastructure and its impact on share price and valuation. "Player’s gonna play" and "seller’s gonna sell," especially in this highly skeptical and nervous market.

That said, revenues, earnings, guidance and growth tell a different story about the impact of the massive investments that Alphabet, and its peers have been making all things AI.

Alphabet delivered a strong Q4 performance, beating Wall Street expectations on both revenue and earnings. The paradox of ‘great quarter, falling stock’ reflects a clear tension, with investors applauding the results but recoiling at the company’s massive step up in capital spending tied to AI infrastructure, which far exceeded expectations.

Alphabet reported Q4 revenue of $113.83 billion, surpassing analyst estimates of $111.43 billion. Google Cloud continued to shine, posting $17.66 billion in revenue, well above forecasts and reinforcing its position as a key growth engine. Search and YouTube also delivered robust performance, contributing to Alphabet’s milestone of annual revenues exceeding $400 billion for the first time. Net income rose nearly 30% year over year, underscoring strong operational leverage and free-cash flow grew substantially as well.

So why did the stock fall? Despite the beat, investor sentiment turned negative once Alphabet disclosed a dramatic increase in capital expenditures for 2026, projecting $175–$185 billion, more than double the prior year’s $91 billion. This “AI capex shock” became the defining headline of the quarter. Investors interpreted the guidance as a signal that AI infrastructure build out will pressure free cash flow and margins for years, with uncertain near term returns. Analysts described the reaction succinctly: “Investors loved the quarter but balked at the bill.”

Shares initially plunged as much as 7% before partially recovering, reflecting a volatile tug of war between strong fundamentals and

capex driven concerns. Commentary during the earnings call suggested that little new information emerged beyond the capex surprise,

contributing to fading intraday gains. Broader tech weakness also weighed on the stock, as investors rotated out of high capex, AI exposed names amid macro uncertainty.

So, while Alphabet delivered an exceptional quarter operationally, the sheer scale of its AI investment plans overshadowed the results. The stock’s decline reflects investor unease about capital intensity, margin compression, and long dated payback periods, even as Alphabet positions itself aggressively for AI leadership, with a do-it-yourself, build-it-yourself attitude that potentially positions it with a competitive moat for years to come.

Going for Gold

An old technical analyst I used to travel with always used to say "trees don't grow to the sky" when discussing parabolic rises. Gold and silver spent most of January with a constructive backdrop, supported by a combination of easing real yields, persistent geopolitical risk, and steady central bank demand that launched both precious metals straight up like a rocket.  And while all those macro-economic tailwinds still exist for continued potential long-term upside, irrational exuberance and massive speculation led to a major correction to close out January with a very serious and abrupt correction. Now, it’s possible we have seen a short-term reversal of momentum, and it may be wise to let them both find their footing before piling back in.

However, gold remains the more structurally supported of the two, benefiting from its role as a reserve asset and a hedge against fiscal deterioration. Silver, while directionally influenced by gold, is more

cyclical and sensitive to industrial demand, particularly solar, electronics, and electrification trends, all of which have also seen investors take risk-off stance. Together, the precious metals complex is

positioned for moderate upside, though the path forward will be shaped by several macro variables.

In the near term, gold’s outlook hinges on the trajectory of U.S. monetary policy. A shift toward rate cuts, continued softening in real yields, or renewed concerns about U.S. fiscal sustainability would reinforce gold’s upward momentum. Geopolitical tensions, whether in the Middle East, Eastern Europe, or Asia, remain an ongoing tailwind, as does the steady accumulation of gold by emerging market central banks seeking to diversify away from the dollar. Silver’s short term performance will depend on the balance between industrial demand and broader risk appetite; any slowdown in global manufacturing or solar panel deployment could cap gains.

Over the long term, structural forces favor gold’s resilience. Persistent fiscal deficits, rising debt service costs, and the gradual erosion of confidence in fiat currencies create a supportive multi year backdrop. Silver’s long term story is tied to the energy transition: sustained growth in photovoltaics, EVs, and high density electronics could tighten supply demand balances and drive secular appreciation.

Key developments that could alter this outlook include a reacceleration in real yields, a stronger than expected U.S. dollar, a sharp easing in geopolitical tensions, or a downturn in global industrial activity. Conversely, deeper fiscal stress, accelerated de dollarization, or faster adoption of clean energy technologies would strengthen the bullish case for both metals. Gold’s foundation is macro defensive; silver’s is macro cyclical. The interplay between the two will define the next phase of the precious metals cycle.

Macro Minute

Last week’s U.S. macroeconomic data reinforced a picture of a cooling but still fundamentally resilient economy, with labor-market signals and investor commentary sharpening the debate over how quickly growth could potentially decelerate in the months ahead. Employment data showed continued moderation: job creation slowed from the prior month, wage gains eased further, and labor-force participation held steady. While none of these indicators point to an imminent downturn, they collectively suggest that the post pandemic labor tightness is normalizing, reducing inflationary pressure but also tempering the momentum that supported consumer spending through 2025.

Initial and continuing jobless claims edged higher, consistent with a gradual loosening in labor demand. For markets, this dynamic keeps the Federal Reserve’s easing path in focus. Softer wage growth and stable participation give policymakers more confidence that inflation can continue drifting toward target without risking an overheating cycle.

Comments from Scott Bessent added sharper macro framing. He argued that the U.S. economy is entering a more fragile phase, warning that fiscal imbalances, rising refinancing costs, and a maturing business cycle could leave growth vulnerable to external shocks. His view aligns with the recent steepening in Treasury curves and renewed scrutiny of U.S. debt sustainability, themes that have increasingly influenced global capital flows.

Investors should interpret this week’s data as a signal to stay selective. The economy is not rolling over, but the margin for policy error is narrowing. Duration sensitivity, quality balance sheets, and sectors tied to structural rather than cyclical demand may offer the most resilient positioning as macro volatility enters the narrative. Or perhaps, we are

seeing a much-needed correction that will provide an entry point with those that have the courage to "buy when there is blood in the streets."

This Week’s Major US Economic Reports & Speakers

Monday, February 9

10:50 AM Atlanta Fed President Raphael Bostic speaks

1:30 PM Fed governor Christopher Waller speaks

2:30 PM Fed Governor Stephen Miran speaks

5:00 PM Fed Governor Stephen Miran podcast interview

Tuesday, February 10

6:00 AM NFIB optimism index

8:30 AM Employment cost index

8:30 AM Import price index (delayed report)

8:30 AM Import price index minus fuel

8:30 AM US retail sales (delayed report)

8:30 AM Retail sales minus autos

10:00 AM Business inventories (delayed report)

12:00 PM Cleveland Fed President Beth Hammack speaks

1:00 PM Dallas Fed President Lorie Logan speaks

Wednesday, February 11

8:30 AM US employment report

8:30 AM US unemployment rate

8:30 AM US hourly wages

8:30 AM Hourly wages year over year

10:10 AM Kansas City Fed President Jeff Schmid speaks

2:00 PM Monthly US federal budget

Thursday, February 12

8:30 AM Initial jobless claims

10:00 Existing home sales

7:05 PM Fed governor Stephen Miran speaks

Friday, February 13

8:30 AM Consumer price index

8:30 AM CPI year over year

8:30 AM Core CPI

8:30 AM Core CPI year over year

Disclosures:

All data sourced from Bloomberg as of February 6, 2026, unless otherwise cited.

Views expressed in this newsletter are the current opinion of the author (Paul Marino). The author’s opinions are subject to change without notice. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Past performance is not indicative of future results.

Investing always involves risk, and you may incur a profit or loss. No investment strategy can guarantee success.

Themes Management Company LLC serves as an adviser to the Themes ETFs Trust. The funds are distributed by ALPS Distributors, Inc (1290 Broadway, Suite 1000, Denver, Colorado 80203). Themes ETFs are not sponsored, endorsed, issued, sold, or promoted by these entities, nor do these entities make any representations regarding the advisability of investing in the Themes ETFs. Neither

ALPS Distributors, Inc, Themes Management Company LLC nor Themes ETFs are affiliated with these entities.

This report is provided for informational purposes only and is not intended to be, and should not be construed as, an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment

advice or tax advice. Recipients should not rely upon this information as a substitute for obtaining specific legal or tax advice from their own professional legal or tax advisors. References to specific securities and their issuers are for

illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Indices and trademarks are

the property of their respective owners. Information is subject to change based on the market or other conditions.

Certain information contained herein has been obtained from third party sources and such information has not been independently verified by Themes. No representation, warranty, or undertaking, expressed or implied, is given to the accuracy or completeness of such information by Themes or any other person. While such sources are believed to be reliable, Themes does not assume any responsibility for the accuracy or completeness of such information. Themes does not undertake any obligation to update the information contained herein as of any future date.

Certain information contained herein constitutes “forward-looking statements,” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events, results or actual

performance may differ materially from those reflected or contemplated in such forward-looking statements. Nothing contained herein may be relied upon as a guarantee, promise, assurance or a representation as to the future.

Past Performance: There is no guarantee that the investment objectives will be achieved. Moreover, the past performance is not a guarantee or indicator of future results. Benchmarks: Any indices and other financial benchmarks shown are provided for illustrative purposes only, are unmanaged, reflect reinvestment of

income and dividends and do not reflect the impact of advisory fees. Investors cannot invest directly in an index. Comparisons to indexes have limitations because indexes have volatility and other material characteristics that may differ

from a particular hedge fund. For example, a hedge fund may typically hold substantially fewer securities than are contained in an index.

The S&P 500® index includes 500 leading companies and covers approximately 80% of available market capitalization.