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Markets are struggling to make sense of what the AI revolution means across sectors and industries, and up and down the market-cap scale.
By
David Dittman
published
26 February 2026
in News
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The biggest company in the world by market capitalization beat expectations and raised guidance, but Nvidia (NVDA, -5.5%) was a major drag on the main equity indexes the day after its earnings report. Mega-cap tech names, including the leader of the AI revolution and most of the Magnificent 7, as well as every other notable chipmaker, led the way lower even as the total number of stocks that rose exceeded those that fell on Thursday.
Nvidia lost about $260 billion in market cap even after Chief Financial Officer Colette Kress confirmed the semiconductor superstar's revenue opportunity related to its Blackwell and Rubin AI data center platforms will exceed the $500 billion management forecast last fall.
You can catch up on the market's most important event on our Nvidia earnings blog.
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Sign up"The only rationale out there is that questions remain about what happens after the massive build-out of the mega data centers is largely complete," Louis Navellier of Navellier & Associates opines. "It's probably more the case of large numbers and the difficulty of maintaining high growth rates when you're the largest company in the world. It appears to be a buying opportunity."
Meanwhile, as Navellier notes, "The turmoil of AI uncertainty continues, with the only certainty being that the buildout of the data centers is well underway and will be completed and lit up ASAP."
The Roundhill Magnificent 7 ETF (MAGS) was down 1.6% on Thursday, while the iShares Semiconductor ETF (SOXX) shed 3.0%. Financial stocks were up more than 1%, led by American Express (AXP, +2.5%) and Visa (V, +1.2%). The Russell 2000, an index of small-cap stocks, turned positive late in the session in a broader sign of enduring risk appetite.
At the close, the blue-chip Dow Jones Industrial Average was up 0.03% to 49,499, but the broader S&P 500 had lost 0.5% at 6,908, and the tech-heavy Nasdaq Composite was lower by 1.2% to 22,878.
CRM stock pops on earnings beat, dividend hike, share buyback
Salesforce (CRM, 4.0%) was the best-performing Dow Jones stock after management reported expectations-beating fourth-quarter revenue and earnings and boosted its quarterly dividend by 5.8%. The software-as-a-service (SaaS) firm also boosted its existing stock buyback program by $50 billion.
Salesforce – one of 40 stocks that could rally 40% or more – guided to fiscal 2027 revenue growth of 10% to 11% to $45.8 billion to $46.2 billion, noting that it "expects organic revenue re-acceleration in the second half" of the year. Management also forecast $63 billion in revenue by fiscal 2030.
Track all markets on TradingView"We delivered a phenomenal quarter to close out a record fiscal 2026," CEO Marc Benioff said in a press release. "We've rebuilt Salesforce to become the operating system for the Agentic Enterprise, bringing humans and agents together on one trusted platform."
Morgan Stanley analyst Keith Weiss notes "an impressive Agentforce product ramp," including annual recurring revenue growth of 169% to $800 million. Weiss reiterated his "firmly" Overweight (Buy) rating and his 12-month target price of $287 for CRM, citing an attractive valuation for the stock and calling Salesforce the "right" platform.
Bull markets, bear markets and wants vs needs
As LPL Financial Chief Technical Strategist Adam Turnquist notes, relative performance between consumer discretionary stocks and consumer staples stocks "can be used to gauge economic momentum by identifying whether consumers are directing more spending toward discretionary items ('wants') or staples ('needs')."
When the ratio of the S&P 500 Equal Weight Consumer Discretionary Index vs the S&P 500 Equal Weight Consumer Staples Index is rising, discretionary stocks are outperforming staples stocks. And that's indicative of a "risk-on" environment.
The converse is true, too: a declining ratio – when staples are outperforming discretionaries – indicates a "risk-off" environment. For most of the current bull market, the consumer discretionary index has outperformed the consumer staples index.
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"In recent months, however," Turnquist explains, "staples have begun to outperform as investors rotated away from big‑tech and AI‑related disruption trades and into more value‑oriented and defensive areas of the market."
Bottom line, according to the technical analyst, the ratio of needs vs wants "now sits at a critical technical level, retesting an uptrend that has been intact since the bull market began in fall 2022."
Turnquist doesn't necessarily forecast a bear market. At the same time, he observes, "A decisive break below this trendline would not only point to continued staples leadership but may also signal a broader shift toward rising risk aversion among investors."
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David DittmanInvesting EditorDavid Dittman is the former managing editor and chief investment strategist of Utility Forecaster, which was named one of "10 investment newsletters to read besides Buffett's" in 2015. A graduate of the University of California, San Diego, and the Villanova University School of Law, and a former stockbroker, David has been working in financial media for more than 20 years.
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