Advanced Micro Devices (AMD) reported fourth-quarter earnings that surpassed Wall Street’s revenue and profit expectations. However, the chipmaker’s shares experienced a significant downturn, falling over 8% in extended trading due to guidance that did not fully align with certain analyst projections. This performance highlights the intense competition and evolving market dynamics within the semiconductor industry.
Meanwhile, Nvidia, a key competitor to AMD, is also navigating its own set of challenges. CEO Jensen Huang addressed speculation surrounding Nvidia’s relationship with OpenAI, assuring the public that there is “no drama involved” and that all collaborations are proceeding as planned. This statement comes after a widely reported $100 billion investment in OpenAI, initially agreed upon in September, which has reportedly been put on hold, according to The Wall Street Journal. Nvidia’s stock saw a decline of more than 3.4% following these developments.
The broader market sentiment also turned negative, with major U.S. indexes closing lower. The S&P 500 shed 0.84%, and the Dow Jones Industrial Average ended down 0.34%, failing to sustain earlier gains that had pushed it to a new intraday record. The tech-heavy Nasdaq Composite experienced a more pronounced slump, declining 1.43%. This downturn was particularly influenced by software stocks such as ServiceNow and Salesforce, both of which plummeted nearly 7%. Investors appear to be reassessing the long-term value of these companies in the face of accelerating advancements in artificial intelligence, which could potentially disrupt their business models and reduce their market dominance.
This AI-driven disruption is also casting a shadow over the private credit market. Asset firms with substantial holdings in this sector, including Blue Owl, Ares Management, and KKR, also saw their stock prices fall. According to iCapital, an alternative investment firm, the software industry constitutes approximately 20% of private loans provided by direct lenders. A significant downturn in software valuations could therefore have a ripple effect across these credit portfolios.
On a more positive note, the federal government averted a shutdown with President Donald Trump signing legislation to fund its operations. This development comes after a brief period of closure that began on Saturday morning.
Looking ahead, market participants will be closely monitoring Purchasing Managers’ Index (PMI) releases from Japan, China, and India for further economic insights.
**Key Developments to Watch:**
* **Musk’s Ambitious Merger:** The proposed merger between Elon Musk’s artificial intelligence venture, xAI, and SpaceX has been valued at a staggering $1.25 trillion, with SpaceX contributing $1 trillion and xAI $250 billion. This monumental deal, if finalized, would represent the largest merger in history and underscores the immense potential investors see in the combined entities, particularly within the AI and aerospace sectors. The scale of this valuation signals a significant shift in investment priorities and a bet on future technological paradigms.
* **Disney Appoints New Leadership:** Disney has named Josh D’Amaro, currently chairman of Disney Experiences, as its next CEO. He is set to succeed Bob Iger on March 18th at the company’s annual meeting. This leadership transition at one of the world’s largest media and entertainment conglomerates will be closely watched for its impact on the company’s strategic direction, especially in its ongoing efforts to adapt to the evolving media landscape and compete with streaming giants.
* **White House Economic Advisor Resigns:** Stephen Miran has resigned from his position as chair of the Council of Economic Advisers. Miran had been on leave from this role since September 2025, when he joined the Federal Reserve Board of Governors. His departure removes a key figure from economic policy-making, and his dual role previously offered a unique perspective linking monetary and fiscal policy considerations.
* **Market Volatility Continues:** U.S. software and asset management stocks experienced a sharp decline, dragging down major indexes. This sector-specific weakness reflects broader investor concerns about the impact of AI. In the cryptocurrency space, Bitcoin continued its downward trend, though spot gold and silver showed some recovery. European markets, as indicated by the Stoxx 600, saw a modest uptick.
* **JPMorgan’s February Stock Picks:** JPMorgan has updated its list of favored stocks for February, notably adding an industrial real estate owner while removing certain retail stocks. This selective approach from a major financial institution highlights specific sector trends and investment theses being favored by Wall Street analysts, focusing on growth, income, value, and short investment strategies.
**Market Commentary:**
Legendary investor Ray Dalio issued a stark warning, stating that the world is “on the brink” of a capital war. Amidst escalating geopolitical tensions and volatile financial markets, Dalio emphasized the potential weaponization of money through measures like trade embargoes and capital market restrictions. He cited the recent diplomatic tensions surrounding Greenland as an example of how economic leverage can be employed in international relations, painting a picture of a complex and potentially volatile global economic environment.
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