Focus on U.S. Stock Q4 2025 Earnings Reports
The market showed no mercy on Wednesday as a massive wave of corporate stock selling continued into 2026. Two companies, Unity Software and Shopify, saw their shares dragged significantly lower even after reporting solid December quarter earnings.
The most surprising case was e-commerce software platform Shopify. The company forecast first-quarter revenue growth to be just over 30% year-over-year, roughly in line with the fourth quarter's growth rate. Upon this announcement, the stock plummeted by as much as 12%. Even for Wall Street veterans accustomed to calmly explaining market fluctuations, this reaction was puzzling. Research firm William Blair directly stated in the title of its report on Shopify's earnings: "Strong Results, Steady Growth, But Stock Falls for No Apparent Reason."
Shopify is already one of the most aggressive companies in the software industry regarding AI deployment, having partnered with OpenAI to launch an instant checkout shopping feature and collaborated with Alphabet to develop AI-powered shopping products. However, as New Street Research noted on Wednesday: Shopify's "AI story is compelling, but panic in the SaaS sector has overshadowed everything." It seems Wall Street truly needs some "psychological counseling," or at least some anti-anxiety medication. Shopify's stock recovered slightly later in the day but still closed down 6.7%.
The situation for Unity was less clear-cut, yet its 26% plunge also appeared to be an overreaction. Earlier on Wednesday, Unity reported a 10% year-over-year revenue increase—its strongest quarter of the year—and projected a slight acceleration in growth for the first quarter of 2026. While these growth rates are certainly not high, the market was already aware of the challenges Unity faces from AI. One of its core businesses is providing development tools for game creators. Last month, when Alphabet released its Genie AI tool, which allows users to easily create video games, Unity's stock fell 27% over several days. Unity's largest business is mobile game ad technology, a segment where it has lost significant market share to AppLovin in recent years, though the company now claims progress with a new generation of AI advertising products. While investors have reason for skepticism, Wednesday's earnings report contained no new negative information substantial enough to justify a one-quarter drop in the stock price. Year-to-date, Unity's stock has fallen by more than half.
We are currently in a phase of "sell first, think later—or don't think at all." For example, earlier this week, when OpenAI's ChatGPT listed two insurance applications, Tuio and Insurify, in its app store, enabling users to access them through the chatbot, insurance stocks were immediately sold off. These applications had already been available in mobile app stores, merely providing consumers with insurance quotes—hardly a revolutionary innovation. Yet, some interpreted this as the end for the existing insurance industry, an absurd overreaction. Similarly, stocks of brokers and wealth management firms came under pressure this week after wealth management company Altruist announced a new AI tool. Investment manager Ross Gerber, an investor in Altruist, stated on TITV by The Information that the market's selling reaction to the new tool was "way over the top," adding, "Everyone is in a panic... but there is a ton of work to be done before these systems are truly deployed at scale."
Lyft's Plight In contrast, the sell-off in Lyft's stock might be somewhat justified. After reporting fourth-quarter earnings on Tuesday evening, its shares plunged 17% on Wednesday. Superficially, the numbers weren't bad: revenue grew only 3%, but this was due to some unusual regulatory adjustments that suppressed reported revenue. Excluding this factor, revenue grew by 13.5%, consistent with previous quarters. However, a report from research firm MoffettNathanson on Wednesday morning may explain the market's pessimism. The firm calculated that Lyft's U.S. ride-sharing growth rate halved to just 7% in 2025 because Lyft raised prices more than Uber. The report noted: "As a result, we expect Uber is taking significant market share from Lyft." As MoffettNathanson suggested, Lyft cannot let this situation continue and must take aggressive measures to win back riders, which could hurt its profit margins. In this context, the sharp stock decline becomes understandable.
Other News Hedge fund manager Bill Ackman's Pershing Square Capital increased its holdings in Meta and Amazon last year. Its portfolio was already heavily weighted towards large tech stocks like Alphabet and Uber. EssilorLuxottica announced on Wednesday that sales of its smart glasses developed in partnership with Meta surpassed 7 million units in 2025, a significant increase from 2024. A year ago, the company had stated that only 2 million units had been sold since the product's launch in 2023. Target announced this week that it will be one of the first advertisers to participate in OpenAI's new advertising service within ChatGPT. Additionally, brands advertising through Target's retail media platform, Roundel, will also participate in this advertising pilot.
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