Stocks Drop as Nvidia-Led Chip Selloff Weighs on Market | The Close 2/26/2026
Speakers
**Michael Contopoulos**
— Deputy Chief Investment Officer, Richard Bernstein Advisors
**Andy Florance**
— CEO, CoStar Group (CSGP)
**Ryan Petersen**
— CEO, Flexport
**Harvey Schwartz**
— CEO, Carlyle Group (CG) (via reporting by Nora Mulinda)
**Chris Palmeri**
— Bureau Chief, Bloomberg (Los Angeles)
**Jason Hunter**
— Head of Technical Strategy, JPMorgan
**Mehdi Hosseini**
— Senior Equity Research Analyst, Susquehanna
**Gautam Mukunda**
— Lecturer, Yale / Bloomberg Opinion
**Jack Dorsey**
— CEO, Block (SQ) (via reporting by Emily Mason)
**Stephen Yalof**
— CEO, Tanger (SKT)
**Yelena Shulyatyeva**
— Senior US Economist, The Conference Board
Summary
- The "AI Derangement" Shift: Sentiment is shifting from "AI is productivity-enhancing" to "AI is a capex black hole." While infrastructure spend remains robust (benefiting hardware like Dell), the broader market is questioning the ROI for software and models, leading to a rotation out of US Tech.
- International Rotation: A strong consensus is building for non-US equities. With US growth decelerating (tech earnings slowing), investors are pivoting to accelerating earnings growth in Europe, Japan, and Emerging Markets (excluding China).
- The "Old Economy" Renaissance: Technicals confirm a pro-cyclical rotation. Money is flowing into Materials, Industrials, and Energy, while the S&P 500 remains range-bound.
- Corporate Efficiency via AI: The "AI trade" is evolving from buying the builders (NVDA) to buying the users who cut costs. Block (SQ) cutting 40% of staff citing AI efficiency is the new template for margin expansion.
- Media Consolidation: The WBD/PARA/NFLX saga indicates the final capitulation of legacy media, with boards favoring consolidation (PARA/Skydance) over fragmentation.
Trade Ideas
Dell raised fiscal year revenue guidance by 12% and EPS guidance by 12%. They generated "$50 billion in AI server revenue." Despite fears of margin pressure from rising component costs (memory), Dell's volume in AI infrastructure is overwhelming the cost headwinds. The market underestimated the longevity of the hardware build-out cycle. LONG DELL. Rising memory costs (DRAM) eventually compressing margins if pricing power erodes.
"This is unique... movement from the growth sector dominating the market... into cyclicals." Even on days when the S&P is weak, "Materials and Industrials were up." Technical analysis shows no "distribution pattern" (selling pressure) in cyclical sectors. The rotation is pro-cyclical, suggesting the broader economy is strengthening even if the S&P 500 (weighted by tech) stalls. LONG Cyclicals (Materials, Industrials, Energy). A breakdown in the S&P 500 below range support could drag down high-beta cyclical sectors.
"Stay away from China, in the bucket of excessive access with poor earnings growth." Despite the rotation into Emerging Markets, China remains uninvestable due to structural issues ("excessive access") and lack of profit growth compared to peers like Korea or India. AVOID China. Major fiscal stimulus from the Chinese government sparking a short squeeze.
Warner Bros. Discovery board declared the Paramount/Skydance offer "superior." Netflix has 4 days to match. WBD is effectively in play or forcing a deal. The "superior" designation puts pressure on Netflix, but the market skepticism around Netflix doing M&A (stock up on inaction) suggests Skydance/Paramount is the likely victor. This consolidation is necessary for survival given WBD's shrinking studio/TV revenues. WATCH PARA and WBD (Arbitrage/Event-Driven). Regulatory hurdles or deal financing falling through.
Block is cutting "40% of its workforce" and explicitly stated that "intelligent tools [AI] have changed what it means to build and run a company." This is the "AI Efficiency" trade realized. Companies that use AI to drastically reduce headcount (opex) will see immediate margin expansion, regardless of top-line growth. Investors are rewarding this aggressive cost management (stock up 20%). LONG SQ. Such deep cuts could damage product innovation or operational stability.
Michael Contopoulos
Director of Fixed Income, Richard Bernstein Advisors
"Profit growth throughout the world is quite strong... I'd rather own an area of the market that is growing earnings from 2% to 5% to 10% than own something with 12% steady state [US Tech]." The US market is priced for perfection with declining growth rates. International markets (Europe, Japan, EM ex-China) are seeing *accelerating* earnings growth and trade at cheaper valuations. The "Great Rotation" is driven by a search for accelerating fundamentals, not just value. LONG International Equities (specifically Europe, Japan, and EM ex-China). A sudden resurgence in US Tech earnings growth or a global recession dampening cyclical recovery.
Stephen Yalof
CEO, Prologis
"Gen Z don't see channels... sometimes the outlet store is the best mall in their neighborhood." Brands like Coach are seeing younger consumers flock to physical outlet locations. Physical retail (specifically open-air outlets) is experiencing a renaissance driven by younger demographics and the "treasure hunt" experience that online shopping cannot replicate. High occupancy and brand investment validate the asset class. LONG SKT (Tanger). A consumer recession curbing discretionary spending on apparel.
Norah Mulinda
Bloomberg Market Reporter
Carlyle is raising "$200 billion" and targeting "$2 billion of fee-related earnings." The firm is successfully pivoting under new leadership (Harvey Schwartz) to capture the private credit and wealth channel boom. The ambitious targets are being viewed as a "credibility test" that the market is currently buying into. LONG CG. Failure to meet fundraising targets or a credit event in the private markets.
Up Next
This Bloomberg Markets video, published February 26, 2026, features Mehdi Hosseini, Jason Hunter, Michael Contopoulos, Chris Palmeri, Emily Mason, Stephen Yalof, Norah Mulinda discussing DELL, XLB, XLE, XLI, FXI, PSKY, WBD, XYZ, EWG, EWJ, SKT, CG. 8 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Mehdi Hosseini, Jason Hunter, Michael Contopoulos, Chris Palmeri, Emily Mason, Stephen Yalof, Norah Mulinda · Tickers: DELL, XLB, XLE, XLI, FXI, PSKY, WBD, XYZ, EWG, EWJ, SKT, CG