The Bar Just Moved Higher

Nvidia's results were, by any normal standard, extraordinary. Revenue keeps climbing at a pace that would have seemed absurd just a few years ago. The company's sales curve, once flat and predictable, now looks like a cliff face. Orders remain deep. Demand for high-powered AI chips is still intense. Competition is rising, but Nvidia continues to sit at the narrowest part of the hourglass, where money flows in before it spreads across the rest of the tech world. And yet, the stock barely budged.

As trading gets underway today, futures are slightly lower. Nvidia is up only modestly in premarket action. Salesforce, by contrast, is down after offering revenue guidance that didn't calm fears about slowing corporate software spending. Trade Desk and C3.ai plunged after disappointing forecasts. Energy stocks are softer as oil prices wobble ahead of another round of U.S.-Iran nuclear talks. Treasury yields are easing. The dollar has slipped a bit. Gold remains elevated, a quiet reminder that geopolitical tension never really clocks out.

In short: the market is not in a celebratory mood. This week will test something bigger than a single earnings report: it will test the story. For two years, artificial intelligence has been the dominant narrative in markets. Companies promised vast spending on data centers, chips, and infrastructure. Investors, eager not to miss the next industrial revolution, pushed technology stocks to repeated highs. The S&P 500 and Nasdaq just closed at two-week highs yesterday, powered largely by megacap tech.

But now the questions are sharper. It's no longer enough for Nvidia to print eye-popping results. Investors want proof that all this spending on AI infrastructure will translate into durable profits for everyone else.

The skepticism is visible in sector performance. The S&P 500 software and services index has dropped nearly 21% this year. Financial brokerage firms, legal services, real estate services, trucking, and data analytics companies have all taken hits as investors worry that AI won't just create winners, it will also disrupt incumbents. Salesforce's softer guidance reinforced that anxiety. When a giant in enterprise software struggles to persuade investors that AI is a tailwind rather than a threat, people notice.

Markets are moving from believing in potential to demanding monetization. That shift explains why money has gravitated toward the tangible side of the AI boom: chipmakers, data-center equipment suppliers, power infrastructure companies, utilities, and even basic materials producers. If AI requires massive physical buildouts, then concrete, copper, and electricity look safer than speculative software promises.

Meanwhile, today's session won't revolve around tech alone. Weekly jobless claims came roughly in line with expectations today. Producer price data arrives tomorrow, shaping expectations for the Federal Reserve. Atlanta Fed President Raphael Bostic has already warned that tensions between the White House and the Fed risk eroding trust in the central bank's independence, which is not exactly the sort of comment that calms nerves.

Talks between the U.S. and Iran in Geneva are drawing attention, especially after Donald Trump deployed combat jets to Israel as a precaution. Oil markets are trying to balance diplomatic hope against supply risks. Gold traders are watching closely; the metal remains above $5,100 a troy ounce, a level that suggests investors still value insurance against shocks.

The broader mood this February has been choppy. Indexes have swung sharply between gains and losses as investors oscillate between excitement about AI's potential and anxiety about its side effects. Bitcoin dipped despite Nvidia's strong report, underscoring how closely speculative assets remain tied to tech sentiment.

Today's economic highlights:

On today's agenda: ECB President Lagarde's speech and economic sentiment in the Euro Area; in Italy, business and consumer confidence; in Spain, business confidence; in China, YTD FDI YoY; in the United States, initial jobless claims followed by Bowman's speech; in Canada, the current account. See the full calendar here.

• Dollar index: 97,627
• Gold: $5,181
• Crude Oil (BRENT): $69.52 (WTI) $63.99
• United States 10 years: 4.04%
• BITCOIN: $68,045

In corporate news:

• Baidu reported a 66% drop in fourth-quarter profit and a third straight quarterly revenue decline as weakness in its core advertising business persists despite AI investments.
• Synopsys forecast second-quarter revenue and earnings above expectations and beat first-quarter estimates, even as China export restrictions and debt from its Ansys acquisition weigh on shares.
• C3.ai cut its full-year outlook and plans restructuring after a sales decline, while Salesforce issued soft guidance, Pure Storage topped $1 billion in quarterly sales, and Zoom projected earnings below estimates.
• Grab aims to triple EBITDA to $1.5 billion by 2028 by expanding AI-driven services, groceries and financial products, despite weaker-than-expected 2026 guidance.
• A therapist testified in a landmark trial that a plaintiff's adolescent social media use on Meta's Instagram and Alphabet's YouTube contributed to her mental health issues, as the case tests Big Tech's liability.
• Nvidia beat quarterly revenue and profit estimates and forecast strong first-quarter sales but held off on boosting shareholder returns, keeping shares largely flat.
• South Korea's antitrust regulator fined Coupang $1.6 million for pressuring suppliers to cut prices and delaying payments, adding to its regulatory challenges.
• OpenAI hired AI researcher Ruoming Pang from Meta, escalating the Silicon Valley talent war for advanced AI expertise.
• Amazon's potential $50 billion investment in OpenAI could hinge on the AI firm achieving an AGI milestone or pursuing an IPO, according to reports.
• BlueScope Steel rejected a revised $10.7 billion takeover bid from Steel Dynamics and SGH as insufficient but said it is open to further talks.
• The Pentagon has asked contractors including Lockheed Martin and Boeing to assess reliance on Anthropic as it pressures the AI firm to loosen military-use restrictions.
• Paramount Skydance forecast first-quarter revenue below estimates due to ongoing declines in legacy TV, despite growth in its streaming business.
• Salesforce forecast annual revenue slightly below expectations and announced a $50 billion share buyback as it faces cautious enterprise spending and AI-related concerns.
• Snowflake projected fiscal 2027 product revenue above estimates as enterprise AI demand boosts growth, though shares dipped amid broader software skepticism.
• Nu Holdings posted a 50% rise in fourth-quarter profit driven by customer growth and higher revenue per user, but shares fell on cost concerns.
• The FDA approved Merck's Numelvi as the first second-generation JAK inhibitor for canine pruritus, expanding its animal health portfolio.
• The FDA said Boston Scientific removed certain Axios stents and delivery systems after reports of injuries and three deaths.
• Datadog announced a strategic partnership with Sakana AI to advance enterprise AI innovation and observability capabilities.
• Revolution Medicines filed for a common stock offering of up to $1 billion, according to an SEC filing.
• AMD will invest $150 million in Nutanix and fund up to $100 million more to jointly develop an AI infrastructure platform for enterprises.
• Omnicom priced $1.7 billion in senior notes and an additional €600 million offering through a finance unit.
• Targa Resources priced a $1.5 billion offering of senior notes.
• Amadeus acquires US company SkyLink.
• Elliott assures the UK that it will not seek to break up the London Stock Exchange or transfer its listing to New York, according to the FT.
• Corteva is targeting the fourth quarter for its planned split into two companies.

Analyst Recommendations:

• Interactive Brokers Group, Inc.: Zacks downgrades to neutral from outperform and reduces the target price from USD 87 to USD 76.
• Microchip Technology, Inc.: Zacks downgrades to neutral from outperform and reduces the target price from USD 91 to USD 80.
• Spotify Technology S.a.: Arete Research upgrades to buy from neutral and reduces the target price from USD 680 to USD 586.
• The Mosaic Company: JP Morgan downgrades to underweight from neutral with a target price of USD 24.
• Edison International: Goldman Sachs maintains its neutral recommendation and raises the target price from USD 64 to USD 77.
• Elanco Animal Health Incorporated: BNP Paribas maintains its outperform recommendation and raises the target price from USD 24 to USD 29.
• Epam Systems, Inc.: Jefferies maintains its buy recommendation and reduces the target price from USD 275 to USD 193.
• Gartner, Inc.: Zacks maintains its neutral recommendation and reduces the target price from USD 246 to USD 156.
• Godaddy Inc.: Evercore ISI maintains its in-line recommendation and reduces the target price from USD 145 to USD 95.
• Medline Inc.: Citi maintains its buy recommendation and raises the target price from USD 48 to USD 60.
• Moderna, Inc.: Zacks maintains its neutral recommendation and raises the target price from USD 44 to USD 53.
• Salesforce, Inc.: Baird maintains its outperform recommendation and reduces the target price from USD 315 to USD 250.
• The Trade Desk, Inc.: BMO Capital Markets maintains its outperform rating and reduces the target price from USD 98 to USD 55.
• Viking Holdings Ltd: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 62 to USD 77.