Stocks Slip as Software Selloff Sparks AI Concerns | The Close 2/23/2026

Watch on YouTube ↗  |  February 24, 2026 at 00:28  |  1:30:22  |  Bloomberg Markets
Speakers

Summary

  • Market Sentiment: Risk-off sentiment dominates as "AI Fear" rattles software and tech stocks. The narrative has shifted from AI as a productivity booster to AI as a deflationary force that will replace traditional SaaS (System of Record) and gig-economy business models.
  • Tariff Confusion: The Supreme Court ruling against reciprocal tariffs created initial relief, but the Trump administration's pivot to a flat 10-15% global tariff has reintroduced uncertainty. However, for apparel retailers, a 15% flat rate may actually be margin accretive compared to the previous ~20% effective rates.
  • Cyclical Rotation: Asset allocators are strongly advocating for a rotation out of Mega-Cap Tech/Growth and into Cyclicals (Financials, Industrials, Materials) and Small/Mid-Cap Value, citing stretched tech valuations and a "Goldilocks" economic scenario (growth rising, inflation stabilizing).
  • Trucking Turnaround: The freight recession appears to be ending due to a supply-side correction. 20-25% of trucking capacity is exiting the market, which will drive rates higher despite sluggish retail demand.
  • Private Equity Dynamics: A divergence is noted where Middle Market PE is outperforming Large Cap PE because the latter is overly reliant on a frozen IPO window, whereas the middle market can exit via sponsor-to-sponsor sales.
Trade Ideas
Brian Tanquilut Reporter, Bloomberg News 15:55
HIMS is facing a lawsuit from Novo Nordisk regarding compounded GLP-1s and heightened FDA scrutiny/investigations. While the business is growing, government investigations and patent lawsuits create a "valuation cap." Investors will not award a premium multiple to a company facing existential regulatory threats, regardless of revenue growth. WATCH / AVOID. The stock is "dead money" or a short candidate until the legal overhang clears. If HIMS settles favorably or the FDA clarifies compounding rules positively, the stock could rip higher on short covering.
HIMS
Drew Wilkerson Chairman and CEO, RXO 22:23
RXO data shows truckload rejections rising from 5% to >10%. The CEO notes that 20-25% of capacity is leaving the market due to regulatory changes and driver exits. In a commodity market like freight, a 25% reduction in supply guarantees rate increases even if demand remains flat. This structural shift creates pricing power for brokers and carriers who remain. LONG. The "freight recession" bottom is in; pricing leverage is returning to the carriers. If the broader economy enters a recession, demand could collapse faster than supply exits.
RXO CHRW JBHT
Mary Ross Gilbert 25:43
The shift from the complex IEEPA tariffs (effective ~20%+) to Trump's proposed flat 15% tariff is mathematically a *reduction* in duties for many apparel/retail importers. The market sold off retail stocks on "tariff fear," but the actual math suggests margin *relief* relative to the status quo. This disconnect offers a contrarian entry point. WATCH. Look for a relief rally as earnings calls clarify the actual margin impact. Trump could raise the 15% number arbitrarily, or consumer demand could crater due to broader inflation.
URBN HD LOW TJX
Romaine Bostick Anchor, Bloomberg 32:06
A new report posits a scenario where "Agentic AI" collapses barriers to entry for apps (threatening UBER/DASH) and supplants traditional software suites (threatening CRM/ADBE). IBM fell 13% on news that Anthropic's tools can modernize code, bypassing legacy maintenance. The market is pricing in a "terminal value risk" for legacy SaaS and gig-economy platforms. If AI agents can code a delivery app or manage customer data autonomously, the "seat-based" pricing power of these incumbents evaporates. SHORT / AVOID. The narrative has shifted from "AI benefits Tech" to "AI eats Software." Momentum is negative. The report is a hypothetical scenario for 2028; these companies may successfully integrate AI to defend moats (as argued later by Paul from Sagard).
IBM CRM UBER DASH ADBE NOW
Alessio de Longis Senior Portfolio Manager, Invesco
Invesco notes a "rebound in traditional industries" and argues that Mid/Small-Cap Value is the best way to participate in the "broad rotation." Citizens Private Wealth is "Overweight Value" and constructive on the macro backdrop (growth rising, no recession). With Tech valuations stretched and facing AI disruption fears, capital is rotating into "Real Economy" sectors (Financials, Industrials, Materials) that benefit from a steepening yield curve and steady GDP growth. LONG. This is a classic late-cycle rotation trade supported by "Goldilocks" economic data. A resurgence of inflation or a hard landing would hurt cyclicals.
XLF XLB IWM MDY XLI
Todd Kahn CEO & Brand President, Coach (Tapestry)
Coach grew 25% last quarter, explicitly stating they are "growing the category" and taking share from European luxury brands. They operate in the $200-$500 "sweet spot." As European luxury brands (LVMH, Kering) raise prices aggressively, they are pricing out the aspirational Gen Z consumer. Coach is capturing this abandoned demographic with high-quality leather goods at accessible price points. LONG. Tapestry (TPR) is winning the "trade-down" effect in luxury. A severe pullback in Chinese consumer spending (a key growth market for Coach).
TPR
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This Bloomberg Markets video, published February 24, 2026, features Brian Tanquilut, Drew Wilkerson, Mary Ross Gilbert, Romaine Bostick, Alessio de Longis, Todd Kahn discussing HIMS, RXO, CHRW, JBHT, URBN, HD, LOW, TJX, IBM, CRM, UBER, DASH, ADBE, NOW, XLF, XLB, IWM, MDY, XLI, TPR. 6 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Brian Tanquilut, Drew Wilkerson, Mary Ross Gilbert, Romaine Bostick, Alessio de Longis, Todd Kahn  · Tickers: HIMS, RXO, CHRW, JBHT, URBN, HD, LOW, TJX, IBM, CRM, UBER, DASH, ADBE, NOW, XLF, XLB, IWM, MDY, XLI, TPR