Market Overview - US stocks experienced their worst week since November, with major tech companies losing a combined market cap of one trillion dollars since their earnings results [4] - Dow futures indicate a drop of about 72 points, while S&P futures suggest a decline of a third of a percent, and NASDAQ futures are under the most pressure, pointing to a drop of about 0.7% at the open [2][3] Technology Sector Insights - The technology sector, particularly software stocks, has seen hundreds of billions of dollars wiped off their value, leading to discussions about a potential "SAS apocalypse" [5][6] - Historical transitions in technology have shown that while many companies fail, others emerge stronger, suggesting a similar outcome may occur in the current AI-driven market [8][10] AI Disruption - AI is viewed as a significant disruptor across various industries, including finance, with expectations of increased productivity and efficiency [12][15] - Companies that effectively integrate AI into their operations are likely to thrive, while those that resist change may struggle [19][20] Investment Opportunities - Software stocks are currently trading at approximately three times revenue, down from historical highs, indicating potential investment opportunities, though not all companies will succeed [40][41] - Specific companies like Oracle and Digital Ocean are highlighted as potential beneficiaries of AI advancements [41] IPO Market Outlook - The IPO market is expected to see more activity in 2026 than in 2025, with a broader range of opportunities beyond just tech [53][55] - Proper pricing and understanding of market demands are crucial for successful IPOs, as evidenced by recent cancellations and postponements [55] Company-Specific Developments - Warner Brothers Discovery is in discussions with Paramount regarding a potential deal, which may reignite a bidding war [58] - Trip Advisor is facing pressure from activist investor Starboard, which is pushing for a majority slate on the board [59] - Masimo's shares surged following news of a nearly $10 billion acquisition by Daher, despite facing challenges in recent years [61]

Economic Indicators - December capital goods new orders (nondefense ex-aircraft and parts) are expected to increase by +0.4% month-over-month, indicating potential growth in capital spending [1] - January manufacturing production is anticipated to rise by +0.4% month-over-month [1] - Initial weekly unemployment claims are projected to decline by -2,000 to 225,000 [1] - The December trade deficit is expected to widen to -$86.0 billion [1] - Q4 GDP is expected to expand by +3.0% quarter-over-quarter annualized [1] - The December core PCE price index is expected to rise by +0.3% month-over-month and +2.9% year-over-year [1] Corporate Earnings - Nearly three-quarters of S&P 500 companies have reported Q4 earnings, with 76% beating expectations [7] - S&P earnings growth is projected to climb by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth [7] - Excluding the Magnificent Seven megacap technology stocks, Q4 earnings are expected to increase by +4.6% [7] Stock Market Movements - Major stock indexes, including the Dow Jones, reversed earlier losses to trade higher, with the S&P 500 Index up +0.29%, Dow Jones up +0.18%, and Nasdaq 100 Index up +0.38% [6] - Software stocks are experiencing declines amid speculation of AI disruption, with Crowdstrike Holdings down more than -6% and Intuit down more than -5% [12] - Silver and gold mining stocks are falling, with gold prices down more than 3% and silver prices down more than 6% [13] Company-Specific News - Genuine Parts Co is down more than -12% after reporting Q4 net sales of $6.01 billion, weaker than the consensus of $6.06 billion [15] - General Mills is down more than -8% after lowering guidance on its full-year organic net sales forecast [15] - Vulcan Materials is down more than -7% after forecasting full-year adjusted EBITDA below consensus [16] - Danaher is down more than -2% after reports of a nearly $10 billion acquisition deal for Masimo [17] - ZIM Integrated Shipping Services is up more than +30% after Hapag-Lloyd AG announced a cash deal to buy the company [18]

Group 1 - The majority of gains in the S&P 500 Index have been driven by a few stocks, leading to a misconception that all AI-themed stocks are similar [1] - The market is now facing the reality that AI could disrupt profitable business models, challenging the notion that certain software is irreplaceable [2] - Historical examples show that technology sectors have undergone significant transformations, with previous leaders being replaced by new innovations [3] Group 2 - Current market dynamics indicate that sector-driven corrections are occurring, with specific sub-sectors impacting broader market indexes [4] - The S&P 500 Index is technically in a weak position, having broken below the 50-day moving average, which is now acting as resistance [5]

Core Viewpoint - Wall Street is experiencing a defensive reaction to AI developments, leading to a broad market decline, particularly affecting technology stocks [1][2]. Group 1: Market Reaction - The Nasdaq Composite fell nearly 1%, while the S&P 500 and Dow Jones Industrial Average decreased by 0.8% and 0.4%, respectively [1]. - There is widespread weakness across the AI sector, impacting companies from chipmakers to platforms as investors assess the beneficiaries of AI advancements [2]. - Major companies like Nvidia, Microsoft, Palantir Technologies, and Advanced Micro Devices saw declines in their stock prices, indicating investor concerns about AI's impact on revenue [3]. Group 2: AI's Impact on Business Models - The market is increasingly focused on businesses that rely on expensive human processes, as AI capabilities threaten traditional revenue models [4]. - Recent product launches, such as AI-enabled tax planning and comparison tools, have intensified fears regarding the future of fee-based services in various sectors, including fintech [5]. - The "AI scare trade" has expanded beyond software to affect private credit, financial intermediaries, real estate services, and logistics, indicating a broader market behavior shift [6]. Group 3: Financial Implications - The S&P software and services sector has lost approximately $2 trillion since its peak in October, with significant losses occurring recently [7]. - Analysts estimate that around 20% of private credit exposure is linked to software, contributing to the turbulence faced by alternative asset managers [7]. Group 4: Strategic Perspectives - Strategists are divided on future market movements, with some viewing the current situation as a rotation of capital rather than a complete exit from equities [8]. - There are suggestions that markets may be overreacting to potential disruptions, creating opportunities for rebounds in higher-quality software [8]. - The phenomenon of "disruption hysteria" is being noted, indicating a potential bull market in this narrative [8].

Market Outlook - The market is expected to trend towards a range of 4 to 4.5, with concerns about mortgage affordability likely prompting discussions from the administration regarding yield curve control [1][2] - Current market conditions are characterized by volatility and dispersion, moving away from the previous enthusiasm for AI [3][6] Investment Strategy - A bottom-up approach to stock picking is recommended, focusing on companies with strong balance sheets, robust business models, and effective leadership [5][6] - There is a significant opportunity for stock picks, particularly in sectors influenced by AI, despite the overall market volatility [5][6] Geopolitical and Economic Factors - Future market volatility will be influenced by both AI market dynamics and geopolitical factors, particularly U.S.-Iran relations and broader geoeconomic considerations [6][7] - The previous themes of globalization and the Washington consensus are no longer dominant, leading to increased market volatility [7][8]

Core Viewpoint - The software sector, particularly companies like Wix.com, is experiencing significant stock price declines due to investor fears that AI will disrupt traditional software vendor relationships. However, Wix is positioned to benefit from AI advancements rather than suffer from them [1][4]. Company Overview - Wix.com is a low-code website-building platform that enables non-technical users to create online presences easily. It generates revenue through subscription fees and additional products like email marketing and payment processing [2][3]. Financial Performance - Wix's revenue increased by 14% year-over-year to $500 million in the last quarter, with projections of generating $600 million in free cash flow by 2025 [6]. Market Position and Strategy - The market perception that AI will allow individuals to build websites easily overlooks Wix's existing capabilities, which already incorporate AI tools for users. Wix is enhancing its offerings by leveraging AI advancements [4][5]. - The acquisition of Base44, a prompt-based mobile app builder, is expected to significantly boost Wix's annual recurring revenue, projected to reach $50 million by 2025, compared to under $1 million at the time of acquisition [5]. Investment Potential - Wix's stock is currently trading at a low price, presenting a potential investment opportunity due to its durable growth in website and app development [8].

The S&P 500 Is Back Below 6800. Software Names Keep Falling.CONCLUDED[Nasdaq Ends Higher to Snap a 4-Session Losing Streak]Last Updated:---6 hours ago# The S&P 500 Is Back Below 6800. Software Names Keep Falling.By[Connor Smith]Not much was working on Wall Street in the return from the long Presidents Day weekend.The Nasdaq Composite fell 0.8%. The S&P 500 dropped 0.6%, and was back below 6800. The Dow dropped 230 points, or 0.5%.Tech, small-caps, momentum, and growth stocks were the biggest laggards, but v ...

Core Insights - Zacks Premium offers tools for investors to enhance their stock market engagement and confidence through daily updates, research reports, and stock screens [1] Zacks Style Scores - Zacks Style Scores provide a rating system for stocks based on value, growth, and momentum, aiding investors in selecting securities likely to outperform the market in the short term [2] - Stocks are rated from A to F, with A indicating the highest potential for outperformance [3] Value Score - The Value Score identifies attractive stocks using financial ratios such as P/E, PEG, and Price/Sales, focusing on undervalued stocks [3] Growth Score - The Growth Score emphasizes a company's financial health and future outlook, analyzing projected and historical earnings, sales, and cash flow to find sustainable growth opportunities [4] Momentum Score - The Momentum Score helps investors capitalize on price trends, utilizing metrics like weekly price changes and monthly earnings estimate shifts to identify optimal entry points [5] VGM Score - The VGM Score combines the three Style Scores, providing a comprehensive rating that highlights stocks with strong value, growth potential, and positive momentum [6] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks achieving an average annual return of +23.86% since 1988, significantly outperforming the S&P 500 [7] - There are over 800 stocks rated 1 or 2, making it essential for investors to utilize Style Scores to narrow down choices [8] Stock Example: HubSpot (HUBS) - HubSpot Inc. is a cloud-based SaaS provider focused on inbound marketing and sales applications, currently rated 3 (Hold) with a VGM Score of A [11] - The company is appealing to growth investors, with a Growth Style Score of A and a projected year-over-year earnings growth of 19% for the current fiscal year [12] - Recent upward revisions in earnings estimates and a Zacks Consensus Estimate increase to $11.54 per share further enhance HubSpot's investment appeal [12]

Core Viewpoint - SS&C Technologies (SSNC) has experienced significant selling pressure, resulting in a 16% decline in stock price over the past four weeks, but analysts anticipate better earnings than previously expected, indicating a potential rebound for the stock [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is utilized to determine if SSNC is oversold, with a current RSI reading of 28.14, suggesting that the stock may soon reverse its downward trend [2][5]. - Stocks oscillate between overbought and oversold conditions, and the RSI helps identify potential price reversals, indicating that SSNC may present an entry opportunity for investors [3]. Group 2: Fundamental Indicators - Analysts have raised earnings estimates for SSNC by 2.7% over the last 30 days, reflecting a strong consensus among sell-side analysts, which typically correlates with price appreciation in the near term [7]. - SSNC holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, further supporting the potential for a turnaround in the stock's performance [8].

Core Insights - The article discusses the current state of the stock market, highlighting notable companies that have experienced significant movements during a volatile earnings season [2]. Group 1: Company Performances - Robinhood Markets (HOOD) faced a Q4 revenue miss and four price-target cuts, with the lowest target set at $113 by J.P. Morgan Securities, leading to five consecutive weekly losses [3]. - Cisco Systems (CSCO) reported a top-line beat but was negatively impacted by rising memory chip prices and AI hardware demand, resulting in four straight losses and testing its 126-day moving average [6]. - Carvana (CVNA) is heading for a 14.5% weekly loss without reporting earnings, following accusations of hiding $1 billion in expenses, despite a previous three-year gain of 3,000% [8]. - DraftKings (DKNG) experienced a classic top-line beat overshadowed by a poor fiscal year revenue forecast, leading to six consecutive weekly losses, with a consensus 12-month price target of $43.61 representing a 96% premium from its current price [10][11]. - NuScale Power (SMR) received a downgrade from TD Cowen to "hold" from "buy," bringing it close to its lows of $11.09, despite a strategic partnership with Oak Ridge National Laboratory [12].