Europe’s software companies are set for slower earnings growth than their hardware counterparts this year, compounding fears in global markets that AI will reshape software firms’ business models https://t.co/Dm87XY0CUr ...

Core Insights - Zebra Technologies will present at the Citi Global Industrial Tech & Mobility Conference on February 17, 2026, at 8:00 a.m. U.S. Eastern Time [1] - The company is recognized as a leader in digitizing and automating workflows, providing solutions across various industries including retail, manufacturing, transportation, logistics, and healthcare [1] Financial Announcements - Zebra Technologies is set to report its fourth quarter and full year 2025 financial results on February 12, 2026, with a conference call scheduled for 7:30 a.m. CT (8:30 a.m. ET) [1] - The company announced strong third-quarter results for the period ending September 27, 2025, attributing success to solid demand, lower-than-expected tariffs, and effective operational execution [1]

Market Overview - The current leadership rotation in the market is seen as healthy, with over 68% of the S&P 500 above its 200-day moving average, indicating a strong market condition [2] - The S&P 500 has 17% of its components making new highs, while only 3% are making new lows, suggesting positive market momentum [3] Sector Performance - The technology sector, particularly software stocks like Salesforce and Adobe, is experiencing significant challenges, with Salesforce being highlighted as a major laggard [3][8] - The Dow Jones Industrial Average reached a milestone of 50,000, with a third of its components making new highs, reinforcing the notion of a strong secular bull market [4][5] Earnings Insights - Earnings growth remains a key narrative, but the market reaction to earnings reports has been mixed, with companies like Meta and Microsoft facing sell-offs despite solid earnings [6][7] - Upcoming earnings reports from companies such as Apploven, Unity Software, and Data Dog are anticipated to provide further insights into the software sector's performance [11] Investment Strategies - There is a shift towards more stable, dividend-paying stocks in the current market environment, with companies like Coca-Cola and Exxon Mobil being recommended for long-term investment [18][20] - The focus is on identifying individual companies within the software sector that can differentiate themselves and provide guidance to alleviate market fears [12][14] Future Outlook - The market is expected to remain volatile, with attention on upcoming economic indicators such as unemployment numbers and CPI inflation data [8] - The potential for recovery in the software sector is contingent on individual company performance and market sentiment towards technology stocks [10][12]

Core Viewpoint - The global storage chip industry is experiencing an unprecedented "super cycle" driven by the explosive demand for AI infrastructure, leading to significant price increases in core categories such as DRAM, NAND, and HBM. This situation has made the profitability of end-device and infrastructure manufacturers a focal point for capital markets [1]. Group 1: Lenovo's Financial Performance - Lenovo Group is set to release its Q3 financial report for the fiscal year 2025/26, which is considered a critical indicator of how well end-device manufacturers can withstand cost pressures amid soaring global storage chip prices [1]. - Bloomberg forecasts Lenovo's Q3 revenue to reach approximately $20.76 billion, reflecting a year-on-year growth of about 10.4% from $18.8 billion [1]. - Despite achieving an adjusted net profit of $512 million in Q2 (a 25% year-on-year increase), analysts have lowered the average net profit expectation for Q3 to about $463 million due to significant fluctuations in storage chip costs [2]. Group 2: Supply Chain and Inventory Strategy - Lenovo's unique supply chain strategy has garnered significant market attention, as the company has strategically accumulated storage chips, with inventory levels approximately 50% higher than normal, potentially supporting production until the end of 2026 [3]. - The operational profit margin for Lenovo's Intelligent Devices Group (IDG), which includes personal computers and related businesses, was reported at 7.3% in Q2, and the market is keenly observing whether this performance can be sustained in Q3 [2]. - IDC has warned that hardware inflation caused by storage shortages could lead to a decline in global PC shipments by as much as 8.9% in 2026, highlighting the potential risks in the market [3].

Core Insights - The Shanghai Putuo District Urban Operation Management Center has announced a tender for the construction of a comprehensive management service platform for government models, with a total budget of 18,990,000 yuan [1][3]. Procurement Requirements - **Item One: Software Development** - Quantity: 2 - Budget: 5,730,000 yuan - The project includes the development of application software, which encompasses a government model capability service platform, a gateway service platform, a document indexing and annotation service platform, a technical service portal, and general intelligent application development [2][4]. - **Item Two: Hardware Procurement** - Quantity: 2 - Budget: 13,260,000 yuan - This includes the procurement and installation of AI servers and switch equipment [3][5][6].

Core Viewpoint - The introduction of a new AI automation tool by Anthropic has triggered a significant sell-off in software stocks, leading to a substantial decline in the Goldman Sachs software index, with approximately $2 trillion wiped off since its peak [1]. Group 1: Market Reaction - The sell-off in software stocks has been extensive and is now affecting hardware stocks as well, with notable declines in companies like NVIDIA and Google, while Microsoft has shown a slight rebound [3]. - The negative sentiment surrounding software stocks has become a global phenomenon, indicating a broad market reaction to the current state of the software industry [2]. Group 2: Investor Sentiment - Some investors are beginning to consider this sell-off as a potential buying opportunity, suggesting that a rally could occur if software stocks decline too much, as many are currently in oversold territory [4]. - There is a growing discussion among investors about whether it is wise to attempt to "catch a falling knife" in the current market environment [4].

Core Insights - Square has launched the second generation of its Square Register, enhancing speed, power, and reliability for businesses [1] - The new Square Register is 40% faster than its predecessor, designed for high-volume commerce and improved customer experiences [1] Product Improvements - The second generation features a more powerful processor, expanded memory, and upgraded Wi-Fi antenna, resulting in quicker launching, loading, and navigation [1] - The device is built for durability with an IP54 rating and a reinforced card dip slot to withstand spills and dust [1] Market Adoption - In the U.S., 62% of Food and Beverage sellers generating $500k or more in annual GPV utilized the original Square Register last year [1] - The new Square Register is available for purchase starting at $899, compatible with existing Square accessories and the broader Square ecosystem [1] Customer Feedback - Businesses like Kona Coffee Roasters have reported that the enhanced speed and responsiveness of the new Square Register improve service quality and customer satisfaction [1] Strategic Partnerships - Square has partnered with 7 Leaves Cafe to support its expansion across 44 locations in the U.S. using Square's commerce platform [2] - The company has renewed its Corner Store lease in San Francisco's Mission District, launching new programming to support local businesses [2] - Square has expanded its partnership with Thrive to simplify multi-channel inventory management for retailers, integrating with platforms like Shopify [2]

Group 1 - The recent selloff in global software stocks was triggered by the launch of a new AI "agent" by Anthropic, which surprised investors and highlighted the market's increasing discrimination between AI winners and losers [3] - Walmart became the first retailer to surpass a market valuation of $1 trillion, with its shares rising nearly 26% over the past year, positioning it among tech giants [2] - Novo Nordisk's shares fell almost 20% after the company warned about its profit outlook for the year due to intense competition in the weight-loss drug market [5] Group 2 - Major Wall Street indexes experienced a decline of about 1%, with Nasdaq futures remaining negative, indicating a broader market concern [4] - The ISM manufacturing index showed a sharp increase, suggesting signs of accelerating economic activity, alongside brisk business loan growth reported by the Fed [5] - Upcoming reports include ISM's service sector data and ADP's private sector jobs report, which are anticipated to provide further insights into the economic landscape [6]

Core Insights - Cognizant reported strong financial results for Q4 and full-year 2025, exceeding revenue guidance and showing growth in adjusted operating margin and adjusted EPS [1][2][3] Financial Performance - Q4 2025 revenue reached $5.3 billion, a 4.9% increase year-over-year, while full-year revenue was $21.1 billion, up 7.0% year-over-year [1][5] - Full-year GAAP EPS was $4.56, a 1% increase year-over-year, and adjusted EPS was $5.28, an 11% increase year-over-year [1][5] - The full-year operating margin was 16.1%, up 140 basis points year-over-year, and adjusted operating margin was 15.8%, up 50 basis points year-over-year [1][5] Guidance for 2026 - For 2026, Cognizant expects adjusted diluted EPS to be in the range of $5.56 to $5.70, representing growth of 5% to 8% [1][2] - The company anticipates full-year 2026 revenue to be between $22.14 billion and $22.66 billion, indicating growth of 4.9% to 7.4% [1][2] Shareholder Returns - Cognizant plans to return $1.6 billion to shareholders in 2026 through share repurchases and dividends, including $1 billion in share repurchases [1][2] - A cash dividend of $0.33 per share was declared for Q1 2026, marking a 6.5% increase [1][2] Bookings and Contracts - Trailing twelve-month bookings increased 5% year-over-year to $28.4 billion, with a book-to-bill ratio of approximately 1.3x [1][5] - In 2025, Cognizant signed 28 large deals, including 12 in Q4, with total contract value growth of nearly 50% year-over-year [1][2] Employee Metrics - Voluntary attrition in tech services was 13.9% for the year ended December 31, 2025, down from 15.9% in the previous year [1][5] - Total headcount as of December 31, 2025, was 351,600, an increase of 14,800 from the previous year [1][5] Strategic Partnerships and Client Engagements - Cognizant renewed a multi-million-dollar collaboration with Travel + Leisure Co. to enhance digital transformation through AI [2][3] - The company entered a five-year IT services agreement with ERIKS to manage operational IT services and support technology modernization [2][3] - Cognizant expanded its partnership with Microsoft to co-build industry-grade AI solutions across key sectors [3][4]

Core Insights - The current market environment is characterized by a focus on high-quality companies with strong balance sheets, as there are concerns about economic acceleration and earnings growth [1][4][6] - There is a notable interest in the bond issuance from companies like Oracle, which alleviates fears regarding funding in the hyperscale sector [3] - The expectation for equity returns this year is projected to be in the high single digits, with potential for a market pop later in the year due to ongoing monetary policy accommodation [8][12] Company and Sector Analysis - Companies with positive price momentum are believed to have better fundamentals, and there is a focus on marrying high-quality firms with those already rewarded by the market [2] - The tax rate changes between hardware and software sectors are significant, indicating a divergence in performance among tech stocks [5] - Credit spreads have reached lows not seen since 1997, indicating significant issuance activity typical of later economic cycles, suggesting continued economic expansion [7] Market Dynamics - There are mixed sentiments regarding the impact of midterm elections on the market, with some anticipating a potential market melt-up while others foresee risks in specific sectors like artificial intelligence [10] - The first half of the year may experience bouts of risk aversion, but underlying fundamentals remain strong, with opportunities to buy on pullbacks [11] - Expectations for earnings acceleration are not being met, which could impact the broader economic outlook and investment strategies [4][6]