Shesa's Stock Market Weekend Updates - 2|16|26

Welcome to my weekend's update 

Last week was the worst week of 2026 for stocks, driven by the fear of AI disruption. In the whole process, technology and financial stocks were hit hardest despite good CPI inflation and solid jobs data. For the week Dow Jones was down -1.2% to 49,501, S&P 500 was down -1.4% to 6,836 and Nasdaq losing the most -2.1% to 22,547. Please note that this is the fifth straight weekly loss for Nasdaq. 

The consumer price index (CPI) for January came at 2.4% vs 2.5% expected, Year over year.

Month over month the inflation was up 0.2% vs 0.3% expected. So, from inflation perspective, it was good numbers and market should have bounced back. We saw a small spike for the indexes after CPI report was released but again the same red color - sell on the news. I will write about the current market situation later. 

Economic News last week

• Nonfarm payrolls (Jobs) increased by 130,000 for January vs. 70,000 estimated.
• The unemployment rate edged lower to 4.3%
• Existing home sales: Sales of previously owned homes in January dropped a wider-than-expected 8.4% from December. But the median price for a home sold in January was $396,800, up 0.9% year over year and the highest January price on record

What’s happening in the Market?

A few months ago, there was AI hype, then came fear about AI circular financing and now Wall Street fear about the negative side of the artificial intelligence buildout, which threatens to disrupt the business models, potentially raise unemployment. So, fundamentals and investment logic takes back seat these days. There are many conservative stocks with single digit earnings and revenue are more expensive than high growth AI stocks. So why is it happening?

A brief background: Early February, Anthropic scared investors by releasing new AI capabilities that signaled a shift from AI as a "productivity assistant" to an autonomous agent capable of replacing human workers and traditional software-as-a-service (SaaS) business models. This news triggered near trillion-dollar selloff in enterprise software, data analytics, and professional services stocks. 

Why are investors worried and selling?

• The shift of narrative from “AI = massive growth for everyone” to “AI = massive replacement threat to software companies. This may be true to some extent as lots of software companies paying huge AI CapEx will eventually commoditize software, collapsing margins for Salesforce, ServiceNow, Adobe, Workday and Many other such companies.  So, they may gradually see less/negative revenue and earnings growth. 
• Rotation out of growth stocks to value, defensive stocks, commodities etc.
• Momentum unwind: Mag7 companies and software had big run so any negative catalyst triggers huge selling
• The liquidation effect of margin calls, execution of stop losses, panic selling, short selling of stocks to profit or cut loss

All the above are causing violent swings that look “illogical” relative to fundamentals.

Note: Today Pentagon declared Claude a threat to national security since the company due to Anthropic’s refusal to remove restrictions on military use.

Key Economic News this week

FRIDAY, FEB. 20: Q4 GDP, PCE index.

EARNINGS UPDATE

Robin Hood (HOOD) 

• EPS: Actual $0.66 vs. Estimate $0.63 (beat)

• Revenue: Actual $1.28B vs. $1.33B–$1.34B (miss)

Guidance: 2026 adjusted operating expenses $2.6B–$2.725B (no revenue/EPS outlook provided) by HOOD.

My View: I will be careful owning this Stock at this time. I already trimmed some and have to be very watchful.

Nebius (NBIS)

Revenue for Q4 surged humongous 547% year-over-year to $227.7 million. However, the numbers came in below the analysts estimate  of $242.79M and net loss increased to -$173M compared to -$69M in last year.

My View: AI infrastructure companies have better opportunities in future but Wall Street is not happy only with revenue growth. Show me the money. Hence, better to wait for further bounce. 

Earnings to watch this week

Carvana (CVNA), DoorDash (DASH)

Stocks to watch

NVDA, TSLA, SOXL, APLD, GLD, SLV, CVNA, DASH

What to Expect

We are in a tough market environment. AI was promising and lucrative investment, now AI is scary and not a good investment. Wall Street is difficult to judge sometime. Hence, it's better to watch the current environment and be very selective on what we buy/hold. Particularly, better to be watchful on Technology stocks while taking any new positions until we see some positive bounce back. Honestly, these days things changes very fast, so due diligence is extremely important.

Just for your information on the Return on Investment in last 5 years (ROI)

1 Year: Gold: +72%, S&P 500: +14%, Bitcoin: -28%

3 Years: Bitcoin: +218%, Gold: +170%, S&P 500: +73%

5 Years: Gold: +171%, S&P 500: +89%, Bitcoin: +44%