U.S. equity markets are closed on Monday in observance of the Presidents Day holiday, suspending all trading activity until Tuesday's regular session. This pause interrupts a period of notable volatility for stocks tied to the artificial intelligence sector, which ended the previous week with divergent performances among key chipmakers.
Friday's Divergent Moves
In the final session before the break, major AI semiconductor names displayed a split tape. Applied Materials (AMAT) led the advancers, jumping 8.0% to close at $354.91. The surge followed the company's release of a second-quarter revenue and profit forecast that exceeded analyst expectations. CEO Gary Dickerson attributed the robust outlook to accelerating industry investments in AI computing, which is tightening the memory market. Peers in the semiconductor equipment space, including Lam Research (LRCX) and KLA (KLAC), also traded higher.
Conversely, sector bellwether Nvidia (NVDA) retreated 2.2% to $182.81. Broadcom (AVGO) also declined, slipping 1.8% to $325.17. Advanced Micro Devices (AMD) managed a modest gain of 0.7%, closing at $207.32. The Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100 Index, edged up 0.2%.
Broader Market Context and Capex Surge
The trading activity unfolds against a backdrop of massive capital investment from cloud computing giants, known as hyperscalers. Analyst estimates indicate that hyperscaler capital expenditure—encompassing big-ticket spending on data centers, advanced chips, and power infrastructure—has ballooned to approximately $660 billion. This figure represents an increase of roughly $120 billion since the start of the recent earnings season.
As this investment surge continues, a counter-trend has emerged in corporate share repurchases. Analysis from Goldman Sachs points out that buyback activity for S&P 500 companies has declined by 7% compared to the same period a year ago, suggesting a potential shift in how corporate cash is being allocated.
Upcoming Catalysts and Investor Sentiment
The immediate calendar presents two significant events for markets. First, the U.S. Bureau of Economic Analysis is scheduled to release its advance estimate for fourth-quarter and full-year 2025 Gross Domestic Product on Friday, February 20, at 8:30 a.m. EST. This data point can influence Treasury yields and, by extension, the valuation models for high-growth technology stocks.
The following week, on Tuesday, February 25, Nvidia will report its fourth-quarter and fiscal-year 2026 results after the market closes. The company's conference call, set for 5 p.m. ET, is widely anticipated as a critical barometer for AI demand and data center spending trends. Investors will scrutinize management commentary for signals on order momentum and future budgets.
Risks and Sector Rotation
Despite the long-term optimism surrounding AI adoption, near-term risks are becoming more apparent. The S&P 500 Software & Services index has shed approximately $2 trillion in market value since its peak in October, with about half of that decline occurring in the past two weeks. This sell-off reflects growing investor concern that rapidly advancing AI tools could disrupt existing software subscription business models. Barclays equity strategist Emmanual Cau recently described the market mood as entering a "sell first, think later" phase regarding these potential disruptions.
This cautious sentiment could push capital toward more defensive sectors and away from stocks trading at high earnings multiples if AI spending shows signs of cooling faster than anticipated.
Global Policy and Investment Shifts
Beyond corporate earnings, the global policy landscape for AI is actively evolving. India commenced its AI Impact Summit in New Delhi on Monday, featuring executives from major technology firms including Alphabet's Google (GOOGL), Microsoft (MSFT), and Amazon (AMZN). These companies, alongside OpenAI and Anthropic, have collectively committed an estimated $68 billion toward AI and cloud infrastructure investments in India through the year 2030, highlighting the global scale of the capital deployment.
When U.S. markets reopen on Tuesday, traders will be watching to see if the recent drift away from mega-cap technology shares persists or if the holiday pause allows for a snapback rally. The performance of chipmakers will likely remain sensitive to any new information regarding data center orders and capital expenditure budgets from the world's largest cloud providers.
