Market Update
There has been a significant shift in the market narrative regarding Artificial Intelligence (AI), with fears moving from an "AI bubble" (centered on businesses overspending for this technology) to "disruption risk" (that AI will replace existing business models). In other words, Investors have shifted their worrying about whether companies are spending too much on AI infrastructure to worrying that advanced "agentic AI" (AI capable of performing complex tasks autonomously) will make legacy software and services obsolete.
While this prompted some sell off across the software sector this last month, software is still expected to grow earnings this year by 25%, according to Bloomberg data. The Research Team at LPL Financial, our broker/dealer, sees the recent activity as a reflection of the shift in the market narrative rather than a broad breakdown in fundamentals.
“It’s important to remember, however, that seasonal indicators reflect historical tendencies rather than guarantees. They do not incorporate factors such as earnings trends, monetary or fiscal policy shifts, economic conditions, or geopolitical developments, all of which can significantly influence market outcomes.”
– Adam Turnquist, Chief Technical Strategist, LPL Financial
The end of February witnessed downside market volatility, driven by these AI concerns. It’s important to keep in mind that market sell-offs are a normal, frequent part of investing and do not necessarily signal long-term failure. During market turbulence it can be helpful to use an unemotional, long-term approach focused on what you can control rather than reacting to short-term fluctuations.
Market Recap
In February 2026, the U.S. indices experienced a month of volatility with a slight retreat from the previous months of gains we have seen.
- The S&P 500 was down -0.87% for the month after crossing the historic 7,000 mark at the end of January and beginning of February.
- The Nasdaq Composite Index posted a decline of -3.38% due to a semiconductor sell-off.
- The Dow Jones Industrial Average (DJIA) was the most resilient of the three and saw a gain of 0.17%.
As always, please don’t hesitate to reach out with your concerns or questions.
Sources:
https://www.morningstar.com/indexes/spi/spx/performance
https://www.morningstar.com/indexes/dji/!dji/performance