Market Overview for February 25: Software Stocks Make a Comeback, Nvidia Earnings Report Tonight

If Nvidia disappoints, safe-haven funds will return to gold.

Author: Deep Tide TechFlow

U.S. stocks staged a “last stand” on Tuesday (February 24).

The three major indices all closed higher:

• The Dow Jones Industrial Average rose nearly 400 points, up 0.8%, closing around 49,250
• The S&P 500 gained 0.8%, closing near 6,890
• The Nasdaq increased 1%, closing around 22,860

Software stocks led the rally — the sector that was hammered on Monday by AI panic — suddenly rebounded strongly on Tuesday.

The turning point came from Anthropic’s latest product launch event.

On Tuesday morning, Anthropic held a corporate AI tool launch event, announcing that Claude Cowork has added deep integrations with Salesforce’s Slack, Intuit, DocuSign, LegalZoom, FactSet, and Google Gmail. The key message: Anthropic emphasized that AI tools are “partners,” not “replacements.”

The market immediately exhaled in relief.

Salesforce surged 4% in a single day, DocuSign and LegalZoom rose over 2%, Thomson Reuters soared over 11% (its biggest single-day gain since November 2008), and FactSet climbed nearly 6%. Even IBM, which plummeted 13.4% on Monday, rebounded 3% on Tuesday.

Wedbush analyst in a Tuesday report bluntly stated: “The AI panic in the software sector has been exaggerated.” They believe AI models cannot “tear apart and replace” deeply embedded enterprise software ecosystems, and “the value of these AI tools depends on the data they can access, which remains firmly in the hands of existing software.”

But this rebound appears more like a technical correction after an oversell rather than a trend reversal. The iShares Software ETF (IGV) has still fallen over 27% year-to-date, at its lowest since late 2023. Most software stocks remain in double-digit declines, and Tuesday’s green did not erase the scars caused by “AI panic” since early February.

AMD: From “Chaser” to “Core Player” Overnight

If the software rebound was “stopping the bleeding,” AMD’s sharp rise was “giving blood.”

On Tuesday, AMD surged about 14% in a single day, briefly up over 15% in pre-market, with the stock breaking $220, reaching a new high for 2024.

The trigger was a jaw-dropping order: Meta struck a multi-year, multi-generation architecture partnership with AMD, deploying up to 6 gigawatts (GW) of AMD Instinct GPU compute power.

What does this mean? 6 GW is equivalent to the power consumption of 6 million households. According to Wall Street analysts, this order is valued between $60 billion and $100 billion, to be delivered over five years.

Details of the agreement include:

• The first 1 GW batch will start delivery in late 2026, based on AMD’s custom MI450 architecture GPUs and the sixth-generation EPYC “Venice” processors;
• AMD issued Meta performance-linked warrants, allowing the purchase of up to 160 million AMD common shares at a strike price of $0.01 per share;
• The warrants will be unlocked in stages: the first batch after the initial 1 GW delivery, and full unlocking after all 6 GW are delivered, contingent on AMD’s stock reaching certain price thresholds, with the highest at $600 per share (about 3 times the current price).

Wolfe analyst Chris Caso pointed out that this order size is comparable to AMD’s deal with OpenAI in October last year. Based on revenue estimates of $150-200 million per GW, after dilution from warrants, AMD could see about $3 billion profit per GW.

He emphasized that Meta was already an AMD AI customer, so most of this incremental revenue will be realized in 2027 and beyond, providing a “very significant” boost to AMD’s fundamentals.

Notably, Meta just signed a “long-term partnership” with Nvidia a week ago, increasing Nvidia chip usage. Now, it has placed a hundred-billion-dollar order with AMD. Meta’s AI chip supply chain strategy is very clear: diversify to avoid vendor lock-in. Meta’s CFO revealed at the earnings call that in 2026, Meta’s capital expenditure will reach $135 billion, with AI infrastructure taking the largest share.

This deal is significant for AMD. AMD’s AI chip market share is about 9%, far below Nvidia’s 90%. But by securing “hyperscaler” clients like Meta, AMD addresses its biggest pain point: large-scale software validation. Meta successfully migrated its Llama 4 and Llama 5 models to AMD’s ROCm software ecosystem, paving the way for other cloud giants like Microsoft and Google to follow.

Market expects AMD’s share in the AI accelerator market to grow from 9% in 2025 to over 15% by the end of 2026.

Tonight’s Main Event: Nvidia Earnings, the Whole Market Holds Its Breath

If AMD was Tuesday’s surprise, Nvidia is Wednesday’s (tonight’s) suspense.

At 2:20 a.m. Beijing time on February 26 (2:20 p.m. Eastern on February 25), Nvidia will release its fiscal Q4 2026 earnings report (for the period ending January 25, 2026). A conference call will follow at 3 p.m. (4 a.m. Beijing time).

Wall Street consensus expectations:

• Revenue of $65.56 billion, up 67% year-over-year;
• Adjusted EPS of $1.50–1.53, up 72% YoY;
• Data center revenue around $58.7 billion (including $51 billion from computing, $9 billion from networking);
• Gaming revenue about $4.3 billion, automotive about $663 million.

More critically, guidance for Q1 2027: market expects revenue of $72.4–$72.5 billion, up about 64%.

Nvidia has exceeded expectations for 13 consecutive quarters, with EPS beating estimates for 12 straight quarters. Can it continue this streak?

Market sentiment is complex. On one hand, demand is strong: Meta, Microsoft, Google, Amazon’s AI infrastructure spending in 2026 will reach $650 billion, up 58% from $410 billion in 2025. Jensen Huang said last quarter: “Compute demand continues to significantly outpace supply, prompting cloud giants to accelerate investments in an attempt to catch up someday.”

On the other hand, the market is no longer satisfied with “beating expectations” alone but demands “beating expectations + guidance + Huang’s optimistic outlook.”

UBS analyst Timothy Arcuri noted that implied expectations for Q1 2027 are $74–$75 billion, not the consensus $72.4 billion. In other words, even if Nvidia guides at $72.4 billion, the market might interpret it as “conservative,” triggering a sell-off.

Options market pricing indicates traders expect Nvidia’s stock to fluctuate by ±6% this week. But Jay Woods, chief market strategist at Freedom Capital Markets, warned: “Even if Nvidia reports perfectly, the stock reaction might just be a ‘market psychology shift,’ not purely numbers-driven.”

D.A. Davidson analyst Gil Luria bluntly said: “Nvidia may no longer be the market’s bellwether.” Investors are shifting focus to Google, Broadcom, memory chips, and optical chips, as competition from custom chips like Google TPU intensifies. He believes Nvidia’s implied valuation “already prices in a peak in AI demand in 2026.”

Key points to watch:

1. Shipment volume and revenue contribution of Blackwell chips — last quarter about $7.1 billion, how much this quarter?
2. Orders from China — Beijing has suspended H200 orders; reports say Chinese customs are blocking H200 entry.
3. Customer diversification — besides the four cloud giants, are enterprise, sovereign AI projects, and vertical industry demands growing?
4. Can gross margin sustain at 73–74% — with rising HBM memory costs, can long-term contracts lock in prices?

Nvidia’s stock closed Monday up 0.91% at $191.55, within a 52-week range of $86.63–$212.19. Slightly down YTD, but up 143% from the April 2025 low. Tonight’s earnings will determine whether this AI boom is a “halftime” or “end of the party.”

Crypto Market: Bitcoin Falls Below $63,000, February’s Worst Record Approaching

While U.S. stocks rebounded, the crypto market continued to sink.

Bitcoin briefly dropped below $62,858 on Tuesday, hitting a recent low intraday, ultimately struggling around $63,000. Ethereum hovered around $1,870, Solana fell to about $78.

February is nearly over, and Bitcoin’s monthly decline exceeds 25%, likely to mark its worst month since June 2022, when Luna, Three Arrows Capital, Celsius, and others collapsed, plunging the crypto market into “nuclear winter.”

Bloomberg data shows Bitcoin has halved from its October 2022 high of $126,198, down over 50%. Technical analysts warn that if it breaks below $60,000, the next support is at $52,500.

Market sentiment has hit rock bottom. The fear and greed index remains at 5 (extreme fear), with 24-hour liquidations exceeding $470 million, including $112 million in Bitcoin.

Worse, capital flows are negative. On-chain data shows demand signals for Bitcoin from the U.S. market have been negative for 40 consecutive days — the last positive was on January 15. After a brief rebound on February 5, it turned negative again, indicating U.S. demand is not just paused but structurally missing.

Hedge funds continue to withdraw from Bitcoin spot ETFs, retail interest remains low. The shadow of Wu Jihan liquidating Bitcoin and Vitalik selling ETH persists.

XS.com senior market analyst Linh Tran predicts that Bitcoin will likely oscillate between $65,000 support and $70,000 resistance in the medium term, but if current pressures persist, there’s a risk of retesting $60,000 or even deeper declines.

For most crypto investors, February has been a disaster.

Gold: Safe-Haven Retreats, Falls from $5,240

Gold hit a three-week high of $5,240 per ounce on Monday but retreated on Tuesday, closing around $5,160–$5,180, down about 1.2% for the day.

The reasons for the pullback are twofold:

1. U.S. stocks rebounded, risk sentiment improved, reducing safe-haven demand;
2. The U.S. dollar index strengthened slightly, pressuring dollar-denominated gold.

But the decline is modest, indicating the safe-haven logic has not fully dissipated. Trump’s 15% global tariffs are still in effect (10% implemented Tuesday, with the White House preparing to raise it to 15%), trade tensions between the EU and U.S. remain unresolved, and Middle East tensions persist.

Silver also retreated, around $85–$86 per ounce.

The market is waiting for Nvidia’s earnings tonight. If Nvidia beats expectations and provides strong guidance, risk appetite may further improve, pressuring gold; if Nvidia disappoints, safe-haven funds will flock back to gold.

Summary

Tuesday was an “interlude,” with software stocks temporarily halting bleeding after Anthropic’s reassurance, AMD soaring on Meta’s billion-dollar order, and the U.S. stock market catching a technical breath.

But the real answer awaits tonight.

Nvidia’s earnings will set the tone for the AI frenzy: will it be “demand continues to accelerate, exploding in 2027,” or “peaks in 2026 and begins to slow”? Will Blackwell chips be “in short supply,” or will “Chinese orders change”?

The whole market is holding its breath. Bitcoin struggles at $63,000, gold retreated from $5,240 but remains close.

At 5:20 a.m. Beijing time tonight, Jensen Huang will give the answer.