NEW YORK, Feb 11, 2026, 12:27 EST — Regular session
- AI-driven software stocks stumbled once more. Microsoft shed around 2.6%, while Palantir gave up roughly 4.1%.
- Chip-related AI stocks found support. Nvidia tacked on roughly 1.5%, while the semiconductor ETF SMH advanced about 2.2%.
- Friday brings fresh U.S. inflation numbers, and before the month’s out, traders will be digesting another slate of big-tech earnings.
AI-related stocks in the U.S. split directions Wednesday. Software names slumped—Microsoft slipped 2.6% to $402.72, Alphabet dropped 2.0% to $312.25 by 12:27 p.m. EST. Chipmakers, though, kept attracting buyers: Nvidia was up 1.5% at $191.29.
The split is drawing attention, since for years investors lumped “AI” stocks together. Lately, cash has been shifting in fits and starts: hardware vendors for data centres are seeing inflows, while software providers contend with possible disruption from new AI “agents” — tools able to execute tasks within apps, not just respond to prompts.
It’s coming right after software sentiment took a hit. The central question now: does AI boost the current crop of software vendors, or just make their products that much simpler to replicate?
JPMorgan strategists, with Dubravko Lakos-Bujas at the helm, say the recent selloff feels overdone. “The market is pricing in worst-case AI disruption scenarios that are unlikely to materialize over the next three to six months,” they wrote. The team cited the S&P 500 software and services index’s recent drop and recommended boosting positions in what they call “higher quality and AI-resilient” stocks—Microsoft, Palo Alto Networks, ServiceNow, CrowdStrike, and Datadog made the list. On a similar note, Morgan Stanley’s Katy Huberty described the valuation pullback as “sentiment-driven, not fundamental.” 1
Freshworks dropped a company-specific update late Tuesday, projecting annual profit that missed Wall Street’s expectations. The move knocked its shares down over 6% after hours. CEO Dennis Woodside, speaking to Reuters, dismissed the notion that customers would ditch enterprise software for DIY AI solutions. “We’ve spent a decade to build a system of record and a system of interaction that understands everything about your IT environment,” he said. 2
Wednesday’s chip sector action diverged from the rest of the market. While traders tracked big cloud players’ appetite for more data center investment, Nvidia surged ahead, pushing up the entire semiconductor group. Investors are sticking with the “picks and shovels” approach to AI, betting that’s where the more reliable growth is.
The infusion of private money hasn’t hushed the controversy. Blackstone has ramped up its investment in AI startup Anthropic to around $1 billion, according to a source cited by Reuters, part of an active fundraising push that pegs Anthropic’s value near $350 billion. That figure highlights just how aggressively cash is chasing the firms engineering the technologies that could disrupt swaths of the software industry. 3
Those nerves aren’t limited to the U.S. European equities slipped Wednesday, weighed down by tech stocks. Investors, per Reuters, fretted over fresh AI tools possibly pressuring profit margins for incumbent software firms. 4
The new market divide swings in both directions. Should enterprise clients drag their feet rolling out AI agents widely, the recent software slide might have jumped the gun. On the flip side, a slowdown in cloud infrastructure budgets could leave chipmakers—already valued for sky-high demand—facing sharper pain.
Rates remain a wildcard. Kansas City Fed President Jeffrey Schmid said it’s “too soon” to bank on productivity improvements—even those powered by AI—to fix persistently high inflation, underscoring the risk that “higher-for-longer” rates could pressure expensive growth names. 5
Investors are eyeing two big dates: the January U.S. consumer price index lands Feb. 13 at 8:30 a.m. ET, and then Nvidia is up with its quarterly numbers on Feb. 25. The focus there—signs the AI boom might be moving from hype to real strain. 6
