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

Author: Deep Tide TechFlow

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

All three major indices closed higher:

Dow Jones Industrial Average rose nearly 400 points, up 0.8%, closing around 49,250

S&P 500 gained 0.8%, closing near 6,890

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.

Tuesday morning, Anthropic held a corporate AI tools launch event, announcing that Claude Cowork now integrates deeply with Salesforce’s Slack, Intuit, DocuSign, LegalZoom, FactSet, and Google Gmail. The key message: Anthropic emphasizes AI tools as “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 analysts bluntly stated in their Tuesday report: “The AI panic in the software sector has been exaggerated.” They believe AI models cannot “tear apart and replace” deeply embedded enterprise software ecosystems, “the value of these AI tools depends on the data they can access, and that data remains firmly in existing software.”

But this rebound appears more like a technical correction after an oversell rather than a trend reversal. The iShares Software ETF (IGV) is still down over 27% year-to-date, at its lowest since late 2022. 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 is “stopping the bleeding,” AMD’s surge is “giving blood.”

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

The trigger was a jaw-dropping order: Meta reached a multi-year, multi-generation architecture partnership agreement with AMD, deploying up to 6 gigawatts (GW) of AMD Instinct GPUs for Meta.

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

Details of the agreement:

The first batch of 1 GW 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;

Warrants will unlock in stages: the first after the initial 1 GW delivery, and fully after all 6 GW are delivered, with unlocking contingent on AMD’s stock reaching certain price thresholds, the highest being $600 per share (about three times the current price).

Wolfe analyst Chris Caso pointed out that this order is comparable in scale to AMD’s October last year agreement with OpenAI. With revenue estimates of $150-200 billion per GW, after dilution from warrants, AMD could see approximately $30 billion in profit per GW.

He emphasized that Meta has already been 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 signed a “long-term partnership” with Nvidia just 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 being locked into a single supplier. Meta’s CFO revealed at the earnings call that in 2026, Meta’s capital expenditure will reach $135 billion, with AI infrastructure accounting for the largest share.

This deal is significant for AMD. AMD’s AI chip market share is about 9%, far below Nvidia’s 90%. But securing a “hyperscaler” like Meta addresses AMD’s 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 the suspense for Wednesday (tonight).

At 5:20 a.m. Beijing time (4:20 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 6 a.m. Beijing time (5 p.m. EST).

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 compute, $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 in revenue and 12 consecutive quarters in EPS. Can it continue this streak?

Market sentiment is complex. On one hand, demand is strong: Meta, Microsoft, Google, and 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.”

But on the other hand, the market is no longer satisfied with “beating expectations” alone. It wants “beating expectations + guidance that beats expectations + Huang’s optimistic outlook.”

UBS analyst Timothy Arcuri pointed out that implied expectations for Q1 2027 (April quarter) 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 pricing suggests traders expect Nvidia’s stock to fluctuate by up to 6% in either direction this week. But Jay Woods, chief market strategist at Freedom Capital Markets, warned: “Even if Nvidia’s results are perfect, the stock reaction might just be a ‘market psychology shift,’ not purely driven by numbers.”

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 “is already pricing in a peak in AI demand in 2026.”

Key points to watch:

Blackwell chip shipments and revenue contribution — last quarter about $7.1 billion, how much this time?

Order situation in China — Beijing has paused H200 orders; customs reportedly blocking H200 entry.

Customer diversification — besides the Big Four cloud giants, are enterprise clients, sovereign AI projects, and vertical industry demands growing?

Gross margin sustainability — with HBM memory costs rising, can Nvidia lock in prices through long-term contracts?

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 “half-time break” or “the party’s over.”

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

While U.S. stocks rebound, the crypto market continues to sink.

Bitcoin briefly dipped below $62,858 on Tuesday, hitting a recent low during the day, ultimately struggling around $63,000. Ethereum is about $1,870, Solana around $78.

February is nearly over, and Bitcoin’s monthly decline exceeds 25%, set 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). 24-hour liquidation volume exceeds $470 million, with Bitcoin liquidations at $112 million.

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

Hedge funds continue to withdraw from Bitcoin spot ETFs, retail interest remains low. The shadow of Wu Jihan’s Bitcoin liquidation and Vitalik’s ongoing ETH sales still lingers.

XS.com senior market analyst Linh Tran predicts Bitcoin will oscillate between $65,000 support and $70,000 resistance in the medium term, but if current pressure persists, 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, after reaching a three-week high of $5,240 per ounce on Monday, retreated on Tuesday, closing around $5,160–$5,180, down about 1.2% for the day.

The pullback was due to two reasons:

U.S. stock rebound and risk sentiment recovery, reducing safe-haven demand;

The U.S. dollar index strengthened slightly, pressuring dollar-denominated gold.

But the decline isn’t large, indicating that the safe-haven logic hasn’t completely 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 thanks to Anthropic’s reassurance, AMD soaring on Meta’s billion-dollar order, and U.S. stocks catching a technical breath.

But the real answers come tonight.

Nvidia’s earnings will set the tone for the AI frenzy: is it “demand accelerating continuously, exploding in 2027,” or “peaking in 2026 and slowing down”? Is “Blackwell supply constrained,” or “China orders changing”?

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

Tonight at 5:20 a.m. Beijing time, Jensen Huang will give the answer.