Markets pushed higher Thursday as traders waded through fresh tariff threats from Trump, mixed earnings, weaker GDP, and a Fed still in wait-and-see mode.

⚡ Closing Bell:

• Dow Jones ⬆️ +0.4% › 44,882.1 › Led by IBM’s massive surge.

• S&P 500 ⬆️ +0.5% › 6,071.2 › AI optimism lifted sentiment.

• Nasdaq 100 ⬆️ +0.3% › 19,681.8 › Microsoft’s drop weighed on tech.

• Russell 2000 ⬆️ +1.1% › Small caps outperformed broad markets.

Slowing, Not Stopping:
GDP growth slowed to 2.3% in Q4, missing expectations, but with a still-strong labor market and sticky inflation, the Fed remains firmly on hold. Meanwhile, traders are questioning whether growth stocks can keep rallying without a rate cut in sight.

Sector Moves:
✅ Winners: Utilities led the charge, bouncing back strong. Consumer Staples and Communication Services also posted gains.
❌ Losers: Tech underperformed, weighed down by Microsoft’s cloud stumble. Real Estate struggled amid rate concerns.

Macro Moves:
➝ 10-Year Yield ⬇️ 4.52% › Slight dip as markets eye PCE inflation data.
➝ 2-Year Yield ⬇️ 4.20% › Dropped 2.3 bps as rate-cut bets cool.

❗ What’s next?
All eyes on the Fed’s favorite inflation metric—if PCE comes in hot, rate cut hopes could take another hit.

#TRUTH:
❗❗❗ “Every great leader was once a follower.” ~ Napoleon Hill

Will It Pay Off?

Big Tech is going all-in on AI, but Goldman Sachs analysts are throwing a little history lesson into the AI hype, questioning whether Big Tech’s $250 billion spending spree on AI infrastructure is sustainable—or if it’s déjà vu from past investment bubbles.

Lessons from the Past:
➝ First movers don’t always win: Telecoms in the ’90s built the infrastructure, but others reaped the profits.
➝ Dominance fades: Just ask Intel and AMD, who once ruled chips before Nvidia took over.

The DeepSeek disruption has raised a red flag—introducing pricing competition at a moment when AI models are already “good enough” for enterprise use. If costs keep dropping, are companies like Google, Meta, and Microsoft overbuilding?

Concentration Risk:
The Magnificent 7 have been carrying the market, but DeepSeek’s arrival is a reminder that even the biggest tech names aren’t immune to challengers. Nvidia’s stock cratered on the news, but its Big Tech peers didn’t, shielding the broader market… for now.

Goldman’s takeaway? Investors are betting big on AI, but history warns that the biggest spenders don’t always win.

All-In:

SoftBank is in talks to lead a $40 billion funding round for OpenAI, potentially valuing the ChatGPT maker at $300 billion—nearly double its last valuation. If sealed, it would be one of the largest private funding rounds in tech history.

➝ Why Now? The AI funding frenzy is heating up, especially after DeepSeek’s low-cost AI model rattled investors. With OpenAI’s rivals proving they can do more with less, this funding round is a statement: Big AI spending isn’t slowing down.

➝ The Stargate Factor: Some of SoftBank’s investment could help fund Stargate, a $500 billion AI data center push alongside Oracle and OpenAI, designed to keep the U.S. ahead of China in AI infrastructure.

➝ What’s Next? OpenAI still needs to restructure its business before closing the deal. If SoftBank follows through, it’s betting that bigger really is better in the AI race.

Old Tech, New Tricks:

IBM made history yesterday—shares surged nearly 13%, marking its best trading session this century.

➝ What fueled the rally? Wall Street scrambled to revise earnings estimates higher after IBM crushed expectations. Its software unit, powered by AI demand, delivered stronger-than-expected results.

➝ Fresh highs IBM stock, already up 38% over the past year, hit new records, proving that even century-old tech icons can thrive in the AI era.

Not as Bad as Feared:

Intel shares ticked higher after the chipmaker’s fourth-quarter results weren’t as ugly as expected.

➝ The Numbers: Intel posted a $126 million loss, but revenue of $14.26 billion topped expectations.

➝ Weak Outlook? No Problem: Despite issuing softer guidance, traders focused on the better-than-expected sales, sending shares up nearly 4% after hours.

It’s not a comeback story yet, but for a company that ousted its CEO in December, “less bad” is a win for now.

Profit Miss Offset :

Shell shares climbed over 2% despite a 16% drop in 2024 profits, as investors focused on shareholder returns instead of earnings misses.

➝ The Numbers: Adjusted earnings fell to $23.72 billion (vs. $28.25 billion in 2023), missing analyst expectations of $24.64 billion. Q4 earnings nearly halved to $3.66 billion.

➝ The Silver Lining: A 4% dividend hike and a $3.5 billion buyback—marking the 13th straight quarter of $3 billion+ in repurchases—kept investors on board.

➝ Refining Woes: The chemicals & products unit swung to a $229 million loss, hurt by weaker refining margins and reduced global demand.

➝ Strategic Shift: CEO Wael Sawan continues to double down on oil, gas, and biofuels, cutting $3.1 billion in costs—beating the 2025 target by a year.

Shell expects 2025 capital expenditures to dip below last year’s $21 billion, with more details set for March’s capital markets day.

Highlights of the Day:

① Earnings Standouts ✅

• IBM +12.9% › AI strategy finally paying off—biggest gain in decades.

• Mastercard +3.1% › Strong consumer spending pushed shares higher.

② Major Misses ❌

• Comcast -11% › Broadband subscriber losses deepened.

• Caterpillar -4.6% › Softer 2025 revenue outlook hurt sentiment.

③ More AI Moves ✅

• Broadcom +4.5% › Riding Meta’s AI investment wave.

• Meta +1.5% › More AI spending? Investors are in.

④ Tech Struggles, But Some Winners ❌

• Microsoft -6.2% › Cloud growth underwhelmed, dragging the stock.

• Alphabet +2.8% › Waymo expansion gave shares a boost.

⑤ Tariffs & Auto Stocks ❌

• Tesla +2.9% › Profits down, but investors shrugged it off.

• GM (-0.6%) & Ford (-0.4%) › Lost steam after Trump reaffirmed 25% tariffs on Canadian and Mexican imports.

Commodities Check: ✔️

• WTI Crude ⬆️ +0.3% › $72.85 per barrel › Held steady despite rising inventories.

• Gold ⬆️ +2.0% › $2,848.20 per ounce › Inflation hedge demand rises.

• Silver ⬆️ +3.9% › $32.62 per ounce › Strong performance as metals rally.

Get a Serious Trading Platform and a Sweet Bonus.
» Find out more

The stinger

Disclaimer

This letter is not offering investment, trading, or investment advice nor is based on any individual portfolio or business operation. We are not a registered investment, stock nor commodity advisor. One should consult with their own registered advisor to discuss investment strategies that are appropriate for their business or personal goals, risk tolerance and financial situation. Information in this report and on any website is derived from a variety of source believed to be reliable however no representation is made that the information is accurate, complete or correct. These lessons, newsletter and site content is not intended nor shall not constitute or be construed as an offer or recommendation to “buy”, “sell”, “trade” or invest in any securities, commodities, futures, options or other asset referred to in said lessons, reports or newsletters. Rather, this research is intended to identify situations and circumstances that those in the trading community should be aware of to better help assess and improve their own risk management skills.