US Stock Rally Stalls; Nvidia Shares Fluctuate After Earnings | Bloomberg Brief 2/26/2026
Speakers
Summary
- Nvidia's "Luke-warm" Beat: Despite a robust earnings beat and raise (75% growth YoY), the market reaction is muted. Analysts suggest "AI fatigue" has set in, as the narrative hasn't shifted from Hyperscaler Capex dependence to broad Enterprise adoption yet.
- Software Sector Crisis: A clear bifurcation is emerging. While hardware/infrastructure (Nvidia, Rolls-Royce, Engie) thrives, legacy software (Salesforce) is being punished due to "AI displacement" fears and lack of excitement.
- Geopolitical Supply Shock Risk: Economists view a supply-side shock (specifically an Iran/Strait of Hormuz blockage) as the primary risk to the current rally, which could spike bond yields and crush equities.
- Data Center Power Play: The AI trade is moving downstream from chips to power generation. Utilities and industrial firms (Engie, Rolls-Royce) are seeing stock boosts specifically cited on "data center power demand."
Trade Ideas
Nvidia reported a "clear beat and raise" with revenue up 70%+ YoY and strong forward guidance. HSBC maintains a Buy rating (Price Target $295). The stock pullback/fluctuation is due to a lack of *new* narrative (still Hyperscaler dependent) rather than fundamental weakness. Margins remain constructive despite rising memory costs. Fundamental strength remains intact; the valuation is supported by earnings growth, making it a buy on dips, though the "free ride" re-rating phase is over. Failure of enterprise demand to materialize after the hyperscaler build-out; geopolitical risks regarding China (though viewed as "optionality" only).
Salesforce is down ~3.7% following earnings; revenue met estimates but investors were "not very excited." Salesforce is the "poster child for software woes." The market fears AI will disintermediate legacy "System of Record" companies. They cannot transition their massive legacy platforms to AI agents overnight. Avoid or Short. The market is punishing high-valuation software companies that fail to deliver a convincing AI growth narrative. Salesforce successfully pivots to "Agentic AI" faster than expected.
US-Iran talks are resuming amidst threats of military force; US sending fighter jets to Israel. The "one big risk" to the current market rally is a supply-side shock, specifically a blockage of the Strait of Hormuz, which would make energy physically unavailable regardless of price. Watch for geopolitical escalation as a signal to hedge equities with Energy/Oil exposure. Diplomatic breakthrough in Geneva de-escalates tension.
Rolls-Royce plans a huge stock buyback and raised earnings targets; Engie rose 7% after buying a UK power network. Both moves are explicitly linked to "soaring demand" for power systems to drive Data Centers and AI infrastructure. The AI trade is rotating into "Power & Industrials" (Second-Derivative AI trade). Regulatory hurdles in energy distribution or a slowdown in data center construction.
Vonnie Quinn
Anchor, Bloomberg
Nutanix shares jumped ~22% in pre-market trading. The company announced a partnership deal with AMD, where AMD will pay $115M-$150M (cash/stock) to tie into Nutanix's infrastructure. Immediate catalyst driven by a strategic partnership with a major semi-conductor player. Deal execution risks or broader software sector sell-offs dragging it down.
Frank Lee
Analyst, HSBC
HSBC downgraded Synopsis to a "Hold" rating last week. Unlike pure software, Synopsis is semi-related, but faces a "transition year" with little growth outside of acquisitions. It has significant exposure to China and Intel Foundry (low visibility). Dead money for now due to geopolitical overhang and customer concentration risks (Intel/China). Unexpected clarity or recovery in Intel's foundry business.
Up Next
This Bloomberg Markets video, published February 26, 2026, features Frank Lee, Vonnie Quinn, Kallum Pickering discussing NVDA, CRM, WTI, XLE, ENGIE, RYCEY, NTNX, SNPS. 6 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Frank Lee, Vonnie Quinn, Kallum Pickering · Tickers: NVDA, CRM, WTI, XLE, ENGIE, RYCEY, NTNX, SNPS