February 25th Market Overview

Happy Wednesday

Big Index rally today but breadth was ugly underneath, more names down than up on the NYSE despite the green tape. The whole market is a waiting room until Nvidia reports after the bell.

I think we find out tonight whether this AI spending cycle is real or if everyone has been front-running hope.

Let’s dig in...

Today's Big Picture

1. Nvidia's Biggest Earnings Night of the Year
   
   Wall Street expects roughly $66 billion in quarterly revenue. Every major cloud company already told us they're spending more on AI, so the bar is high and Jensen Huang needs to clear it again. I'm watching his guidance on whether this spending continues into 2027 more than the actual numbers.
   

2. Axon Proves AI Can Actually Help Software Companies Axon 
   
   $AXON posted $797 million in revenue against $755 million expected. Software grew 40 percent year over year and AI-powered bookings hit $750 million. Best performer in the S&P 500 today, recovering most of its 2026 losses in one session. This punches a hole in the "AI kills all software" panic from Monday.
   

3. The Premium Booze Boom Is Over Diageo 
   
   $DEO slashed its dividend and cut guidance after Don Julio tequila sales fell hard in the U.S. during the back half of 2025. Consumers are trading down to cheaper brands across spirits, not just tequila, with North America and China both soft. The squeezed consumer is rejecting luxury markups.

Market Overview

Index Performance

Stock Spotlight

First Solar $FSLR ( ▼ 13.43% )  
missed Q4 estimates and guided full-year revenue well below expectations. Goldman says buy the dip. Baird downgraded to neutral. The Street can't agree on how trade policy shakes out for domestic solar.

Oracle $ORC ( ▲ 0.13% )  
L got upgraded to outperform at Oppenheimer with a $185 target. The stock's valuation has been cut by more than half since September and the firm sees a clean entry point.

Netflix $NFLX ( ▲ 5.64% )  
rallied after Warner Bros. Discovery $WBD said it would consider a rival bid from Paramount Skydance $PSKY.

Big Name Updates

Lowe's $LOW ( ▼ 5.4% )  
beat on Q4 but issued a weak forward outlook. Housing market is frozen and it is showing up in project spending.

Workday $WDAY ( ▲ 1.37% )  
warned subscription revenue growth is slowing. Stock dropped nearly 10 percent early then fought all the way back. CEO Bhusri pushed back, saying no amount of coding can replicate their system.

PayPal $PYPL ( ▲ 0.72% )  
is rallying on Bloomberg reports that Stripe is weighing a buyout of all or part of the company. Stripe declined to comment.

Blue Owl Capital $OWL ( ▲ 5.5% )  
is selling $1.4 billion in loans at 99.7 cents on the dollar to meet redemptions from older funds. They hosted a call with thousands of advisers after headlines sparked panic. I think this is a real stress test for private credit.

Other Notable Company News

Lucid Group $LCID ( ▲ 3.68% )  
posted a wider loss than expected and is cutting 12 percent of its U.S. workforce.

GoDaddy $GDDY ( ▼ 14.2% )  
guided revenue below estimates, blaming slow AI adoption.

Enphase Energy $ENPH ( ▼ 2.39% )  
upgraded to buy at Jefferies on improving demand and the IQ9 ramp.

Lumen Technologies $LUMN ( ▼ 3.62% )  
says its turnaround is complete with $13 billion in fiber contracts locked in. Anthropic picked them to expand across North America.

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Sector Watch

Bond Market

10-year yield flat at 4.05 percent. VIX dropped hard into Nvidia earnings. Dollar slipped to 94.72. Everything feels calm on the surface but breadth tells a different story, with more NYSE names down than up despite the green indexes.

Policy Watch

Fed

Atlanta Fed President Bostic used his farewell message to warn that White House pressure on the central bank is eroding public trust. This is not getting enough attention. An independent Fed is what keeps inflation expectations anchored.

State Of The Union

Trump's record-length address focused on the economy. Three proposals worth tracking:

• Government-backed retirement accounts for workers without employer plans

• A ban on institutional investors buying single-family homes

• Tax cuts jammed through reconciliation

Wolfe Research noted he ducked affordability concerns entirely, blaming Democrats instead. Full-year GDP came in at 2.2 percent, the slowest since the pandemic year.

Trade

Trade Rep Greer said the 15 percent global tariff will only apply "where appropriate," not across the board. That is legally shaky since the authority it relies on requires nondiscriminatory application. He also confirmed no escalation on China ahead of a Trump-Xi meeting. Current Chinese tariffs sit at 35 to 50 percent depending on the product.

International

• Zimbabwe banned raw lithium exports to force local processing

• Mexico approved a shift to a 40-hour workweek over four years

• Shanghai cut its homebuying residency requirement from 3 years to 1

• OPEC+ expected to resume modest supply hikes

What to Watch

Salesforce And Snowflake Earnings Tonight
Two more reads on whether enterprise software spending is holding up. Salesforce $CRM was up heading into the print. If both beat, the "software is dead" trade loses steam fast.

Memory Chip Supply Crisis 
A Dallas Fed survey respondent flagged pandemic-like constraints in memory chips with prices up sharply in just two weeks. HP already blamed rising memory costs in its guidance. This could hit the entire hardware chain if it sticks.

Fannie Mae And Freddie Mac 
White House adviser Pulte said an IPO this year is "very likely." That would be a major event for housing and mortgage markets.

Optical Fiber Conference March 17-19
Citi raised targets on Corning $GLW and Lumentum $LITE ahead of this event and added upside catalyst watches on both. Fiber is the picks-and-shovels play for AI infrastructure.

Thanks for reading - you are now the more informed 🙂

- John

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