Market Analysis for February 25, 2026
1. Big picture
On February 25, U.S. equities delivered a tech-led rebound on the surface, while overall sentiment remained negative, making for a nuanced session.
- Reference time: 2026-02-25T22:30:33.190876
- Market sentiment: Negative
- Sectors up: 4 of 11
- Leading sector: Technology (+1.45%)
- Lagging sector: Basic Materials (-1.33%)
Helped by strength in tech, the Nasdaq outperformed and moved back toward a two‑week high, with semis and software doing much of the heavy lifting. After weeks of anxiety over massive AI spending and the risk of disruption, markets briefly shifted toward the view that recent AI panic had been overdone, prompting a sharp rebound in software names. (home.saxo)
2. Sector performance and what it means
Technology – +1.45%: software stages a powerful comeback
Tech led the market with a +1.45% return and 2.26% volatility, the best performance among all 11 sectors. The move was driven largely by a snapback in software stocks, which had been hit hardest during the recent AI scare.
Top performers
- Workday (WDAY): +10.49%
- Intuit (INTU): +7.69%
- Atlassian (TEAM): +7.03%
All three are cloud-based enterprise or developer/finance software providers. Over the past few weeks, fears that “AI will make traditional software obsolete” triggered heavy selling, driving software ETFs such as IGV more than 20% lower year to date and to their weakest levels since late 2023. (www-tc.aicoin.com)
The narrative is now shifting. Investors are increasingly focused on the idea that, for AI models to deliver real value, they must be integrated with enterprise data and existing workflows:
- Large software vendors can use AI as a tool layered on top of their platforms, rather than facing immediate displacement.
- Deeply embedded enterprise software is very costly and risky to rip and replace, which limits how fast disruption can realistically occur. (www-tc.aicoin.com)
Financial Services – +0.92%: fintech and data names in focus
- Sector return: +0.92%
- Key gainers:
- Coinbase (COIN): +6.50%
- Erie Indemnity (ERIE): +3.96%
- FactSet (FDS): +3.84%
Coinbase benefited from the ongoing recovery in digital assets and growing demand for regulated crypto infrastructure. As stablecoins such as USDC expand their market share, Coinbase is increasingly viewed as a core gateway to institutional crypto adoption, even as regulatory overhang keeps volatility elevated. (thestreet.com)
FactSet rallied alongside the broader software rebound, reflecting renewed appreciation for data and analytics providers. Recent commentary has emphasized that in an AI world, the owners of high‑quality, proprietary data may gain bargaining power, because AI tools are only as valuable as the data they can access. (www-tc.aicoin.com)
Communication Services – +0.38%
- Sector return: +0.38%
- Top names:
- AppLovin (APP): +6.86%
- Netflix (NFLX): +3.00%
- The Trade Desk (TTD): +2.53%
Ad‑tech and streaming platforms gained on a mix of
- hopes for a gradual recovery in ad spending, and
- optimism that AI‑powered targeting and recommendation engines will improve monetization.
AppLovin and The Trade Desk sit at the intersection of advertising, algorithms, and data, so they tend to attract buyers whenever investors lean back toward growth stories with clear AI angles.
Utilities – +0.32%
- Sector return: +0.32%
- Key movers: CEG, NI, CNP
Utilities, a classic defensive sector, inched higher with low volatility. In an environment of mixed macro signals and policy uncertainty, there remains a baseline bid for income‑oriented, lower‑beta assets, but the day clearly belonged to higher‑growth tech.
Cyclicals, Industrials, and Materials – broadly weaker
- Consumer Cyclical: -0.23%
- Industrials: -1.07%
- Basic Materials: -1.33% (worst sector)
In contrast to the tech rebound, economically sensitive groups underperformed.
- Newly implemented 10% blanket import tariffs and talk of a possible 15% rate are a direct overhang on global manufacturers, industrials, and materials companies. (home.saxo)
- Concerns about a slowdown in global demand continue to weigh on expectations for commodity and capital‑goods spending.
Within materials, fertilizer and gold names such as Mosaic (MOS), CF Industries (CF), and Newmont (NEM) managed modest gains, reflecting the more defensive nature of agriculture inputs and precious metals compared with cyclical metals and chemicals.
3. Notable single‑stock moves
1) Workday (WDAY) – +10.49%
Workday, a leader in cloud HR and financial management software, posted one of the strongest moves of the day.
- Investors increasingly see AI as a way to enhance Workday’s analytics and automation for HR and finance, rather than a direct competitive threat.
- With a large, entrenched enterprise customer base, Workday looks more like foundational infrastructure that will incorporate AI, not be swept away by it.
Given how sharply software had sold off during the AI scare, Wednesday’s broad sector relief rally helped snap back what many viewed as oversold valuations in names like Workday. (newsmax.com)
2) Intuit (INTU) – +7.69%
Intuit, best known for TurboTax and QuickBooks, climbed strongly after solid recent earnings.
- The company beat consensus estimates on both EPS and revenue, supported by strength in its small‑business and consumer tax franchises. (ainvest.com)
- Intuit has been leaning into AI‑driven features—from smart bookkeeping to personalized tax guidance—which positions it as a potential beneficiary of AI adoption rather than a victim.
That said, analysts remain divided, with price targets spanning a wide range and some citing valuation and insider selling as reasons for caution. This suggests that while the long‑term story is intact, short‑term volatility is likely to remain elevated. (ainvest.com)
3) Atlassian (TEAM) – +7.03%
Atlassian, the company behind Jira and Confluence, also rode the software rebound.
- In early February, the firm delivered better‑than‑expected quarterly results, with revenue up more than 20% year on year and cloud revenue surpassing $1 billion in a single quarter for the first time. (ticker.report)
- Despite that, the stock sold off sharply at the time on sector‑wide AI worries—an example of good fundamentals being overwhelmed by macro narrative.
As the market revisits the idea that deeply embedded collaboration tools are more likely to integrate AI than be replaced by it, Atlassian is now seen as a quality name that was punished too harshly during the panic.
4. Macro and sentiment: why is tech up while others lag?
Three big themes are shaping the current tape: AI, tariffs, and interest rates.
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AI panic is morphing into AI repricing
- Initially, markets flirted with an extreme scenario in which AI would rapidly wipe out existing software business models, driving a steep drawdown in software valuations.
- As dust settles, investors are recognizing that, in practice, AI is more likely to be embedded into existing platforms, where access to proprietary data and existing customer workflows confers an advantage on incumbents. (newsmax.com)
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Tariff and trade uncertainty
- The newly implemented 10% across‑the‑board tariff, and the possibility of a 15% rate, are direct headwinds for physical goods producers, particularly industrials and materials. (home.saxo)
- In contrast, software and digital services face less immediate exposure to physical supply chains, making them comparatively more insulated from trade shocks.
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Rates and the growth premium
- Higher rates compress valuations for long‑duration growth assets, but when cyclical growth is uncertain, investors often rotate back into companies with clear structural growth stories.
- In this environment, large‑cap tech and software are again being treated as the default “growth basket”, even if valuations remain demanding.
In short, cyclical sectors are absorbing most of the macro pain, while tech—especially software and data platforms—is being repositioned as the place to hide for long‑term growth exposure despite headline AI risks.
5. Key takeaways for non‑professional investors
You don’t need to be a market pro to extract a few useful lessons from today’s action:
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1) Re‑thinking the role of software and data in the AI era
AI models are powerful, but their value depends on who controls the data and the customer relationship. Large software and analytics firms may gain leverage as essential infrastructure rather than lose relevance. -
2) Growing gap between sectors
Performance is diverging sharply between growth‑oriented tech and economically sensitive cyclicals. It’s worth asking whether your portfolio is over‑exposed to one side of this divide. -
3) Volatility remains high
Headlines around AI, tariffs, and interest rates can still move software and growth stocks up or down by several percentage points in a single day. That argues for approaches such as staggered entry on pullbacks and disciplined risk management after big rallies, rather than all‑in bets.
6. Closing thoughts
February 25 can be summed up as “the counterattack of software in the face of AI fear.” Still, given the heavy year‑to‑date losses in many names, this looks more like a technical and sentiment-driven rebound than a confirmed trend reversal.
From here, the key drivers to watch will be:
- how quickly AI features translate into tangible revenue and profit for major tech and software players,
- the evolution of tariff and trade policy, and
- the interest‑rate path set by the Federal Reserve.
Understanding these underlying economic and policy mechanisms can help you look beyond day‑to‑day price swings and build a more structured view of where the market may be headed next.
This content is for informational purposes only and does not constitute a recommendation to invest in any specific security or asset.