Nvidia posted record fourth-quarter revenue of $68.1 billion, a 73% increase from a year earlier, as demand for artificial intelligence infrastructure continued to surge. Net income climbed 94% year over year to $43 billion, significantly surpassing analyst expectations and reinforcing Nvidia’s dominance in the AI hardware market.

The results highlight the scale of the AI-driven capital expenditure cycle, with hyperscale cloud providers and enterprise customers continuing to invest heavily in high-performance computing capacity. Nvidia’s earnings not only exceeded consensus forecasts but also extended its streak of outsized quarterly beats during the AI boom.

AI Data Center Demand Powers Growth

The company’s data center segment once again accounted for the majority of revenue growth. Demand for advanced GPUs used in training and deploying large language models remained robust, supported by sustained investment from major cloud platforms and AI startups.

Management emphasized that AI infrastructure spending remains in its early stages. As previously covered, the global buildout of AI capacity is expected to span multiple years, with Nvidia positioned at the center of that expansion.

Gross margins remained elevated, reflecting strong pricing power and favorable product mix. Analysts noted that few companies at Nvidia’s scale are able to sustain both rapid top-line growth and expanding profitability simultaneously.

The company also highlighted continued strength in networking and AI software ecosystems, reinforcing its strategy of integrating hardware, systems, and software into a unified platform.

Investor Reaction and Market Implications

Investors responded positively to the report, viewing the results as validation that AI spending has not meaningfully slowed despite broader market volatility. The earnings beat provided support not only to Nvidia shares but also to the broader semiconductor and AI supply chain sectors.

With revenue up 73% and profits up 94%, Nvidia’s growth trajectory remains exceptional relative to the broader technology industry. The scale of earnings — $43 billion in a single quarter — underscores how central the company has become to the global AI ecosystem.

However, analysts caution that expectations remain elevated. As AI-related valuations stretch across markets, Nvidia faces increasing scrutiny regarding sustainability of growth rates and potential competitive pressures from rivals.

For now, the company’s performance suggests that AI demand remains structurally strong. If capital expenditures by major technology companies continue at current levels, Nvidia may remain one of the primary beneficiaries of the ongoing AI investment cycle.

The quarter reinforces a broader market narrative: while concerns about an AI bubble persist, Nvidia’s financial results continue to provide concrete evidence of real revenue, real profits, and sustained demand at unprecedented scale.

A growing theme in U.S. markets is the fear of an unexpected shock from artificial intelligence a sudden breakthrough that could undermine established software businesses almost overnight. Investors are increasingly selling shares of software makers amid concerns that new AI-native competitors could render long-standing products obsolete.

The selloff has intensified even in cases where earnings remain relatively stable, suggesting the pressure is driven less by fundamentals and more by forward-looking disruption risk.

Recent volatility was highlighted by a sharp decline in shares of IBM, which fell heavily in the latest session, adding to mounting anxiety across the sector.

Why investors are dumping software stocks

Since the start of 2026, several major U.S. software companies have seen steep declines. Snowflake is down about 28%, Intuit has dropped roughly 46%, Salesforce is off 33%, Autodesk has fallen 26%, and Workday is down around 40%.

Bloomberg reports that investors continue to unload software stocks regardless of earnings updates, underscoring the depth of skepticism surrounding the sector.

Market participants increasingly worry that an AI startup could launch a new product capable of rapidly displacing legacy platforms that took years and millions of dollars to develop. With generative AI tools evolving quickly, barriers to entry in certain software categories appear lower than before.

As previously covered, the AI boom has shifted investor focus toward infrastructure providers and chipmakers, while application-layer software firms face questions about defensibility and pricing power.

Warnings of structural risk

The concerns are not limited to traders. Nassim Nicholas Taleb, author of The Black Swan, has warned that parts of the software sector could face bankruptcy risk if AI dramatically alters competitive dynamics. Taleb argues that rapid technological shifts can create nonlinear outcomes, catching even established companies off guard.

Analysts say the core issue is unpredictability. In the past, software cycles unfolded gradually, allowing incumbents time to adapt. Today, with AI development accelerating globally, disruption can emerge from virtually anywhere – across geographies, industries, and business models.

This perceived fragility has led investors to reassess valuations that once reflected high recurring revenue and strong customer lock-in. Even profitable firms are being repriced as markets factor in potential long-term erosion.

For now, the software sector remains under pressure as investors grapple with a new paradigm: in the age of AI, competitive threats can materialize faster and with greater force than ever before. Whether these fears prove justified or excessive will depend on how quickly incumbents adapt and whether the next breakthrough truly reshapes the landscape.

EPAM Systems shares plunged 20% in one of the steepest single-day declines in the S&P 500 after the company’s latest earnings report failed to reassure investors. While fourth-quarter results exceeded management’s own outlook, the company’s guidance for 2026 weighed heavily on sentiment.

The sharp drop made EPAM the worst-performing stock in the S&P 500 for the session. The selloff compounded earlier weakness, with shares already down 18% year-to-date before the earnings release.

Strong quarter overshadowed by cautious outlook

EPAM reported fourth-quarter and full-year 2025 results that management said surpassed expectations. Revenue and margins came in ahead of prior guidance, reflecting continued demand for digital transformation and artificial intelligence-related services.

However, investors focused on the company’s 2026 forecast, which signaled a more challenging operating environment. Management cited shifting client spending patterns toward AI initiatives and a modest headwind tied to a major NEORIS customer. Analysts said the tone of the outlook suggested limited near-term acceleration in growth.

As previously covered, software and IT services stocks have faced heightened scrutiny in 2026 as investors reassess valuations amid AI-driven disruption. In such an environment, even minor signs of weakness in guidance can trigger outsized reactions.

AI opportunity meets market skepticism

Like many of its software and services peers, EPAM has been integrating artificial intelligence into its offerings and helping clients implement AI-driven projects. While management emphasized long-term opportunity, markets appear increasingly impatient for tangible revenue acceleration.

Barron’s noted that in a sector under intense pressure, investors are unforgiving when earnings guidance falls short of elevated expectations. The market’s reaction reflects a broader repricing across software names, where optimism around AI is being tempered by concerns about execution and margin stability.

The 20% slide underscores how quickly sentiment can turn in the current environment. Despite beating quarterly expectations, EPAM’s cautious outlook proved decisive in shaping investor response.

Looking ahead, analysts say the company’s ability to convert AI-related demand into sustained growth will be critical in stabilizing the stock. Until clearer signs of reacceleration emerge, volatility in the shares may remain elevated.

The U.S. stock market experienced a sharp intraday reversal, with hundreds of billions of dollars in market capitalization erased and then largely restored within a matter of hours. The dramatic swings highlighted heightened volatility and fragile investor sentiment across major indices.

Early in the session, selling pressure pushed broad benchmarks lower, briefly intensifying fears of a deeper correction. However, buyers returned aggressively, triggering a rapid recovery that reversed most of the losses.

The scale of the moves underscores how quickly capital is rotating in and out of risk assets in the current environment.

How the major indices swung

The S&P 500 initially fell about 1%, wiping out roughly $600 billion in market value. It later reversed course, rising approximately 1.1% and adding back around $650 billion.

The Nasdaq dropped as much as 1.34% earlier in the session, erasing about $536 billion before rebounding 1.43%, restoring roughly $540 billion in capitalization.

The Dow Jones Industrial Average slid 1.13%, destroying about $258 billion in value, then climbed 1% to recover approximately $240 billion.

Meanwhile, the Russell 2000 declined 1.31%, removing around $40 billion, before rising 1.36% and adding back roughly $42 billion.

What the volatility signals

Such rapid reversals reflect a market environment driven by short-term positioning and algorithmic flows rather than clear fundamental shifts. As previously covered, periods of elevated uncertainty often produce exaggerated intraday swings as traders react quickly to headlines and technical levels.

The sharp bounce suggests that dip-buying appetite remains strong despite earlier weakness. Investors appear willing to step in when losses accelerate, preventing broader downside momentum from taking hold.

At the same time, the magnitude of the intraday destruction and recovery highlights the fragility of sentiment. With markets trading near historically elevated valuations, small shifts in risk perception can translate into large capitalization swings.

For investors, the session serves as a reminder that volatility remains elevated, even when daily closing levels appear relatively stable. The ability of indices to recover losses may reinforce confidence in the short term, but analysts caution that continued choppiness is likely as markets digest macroeconomic signals and corporate earnings.

As capital continues to move rapidly across asset classes, such intraday reversals may become more common – underscoring the importance of risk management in a market defined by speed and scale.

Lawmakers in the Netherlands have advanced plans to introduce a 36% tax on unrealized capital gains beginning in 2028, a move that would apply to stocks, bonds, and cryptocurrencies. The proposal would require investors to pay taxes on the paper appreciation of assets, even if they have not sold them.

Under the new framework, investors whose portfolios show gains at the time of annual tax assessment could face levies based on market value increases rather than realized profits. The measure represents a significant shift from traditional capital gains taxation, which typically applies only when assets are sold.

Supporters argue the reform is designed to create a more transparent and consistent system for taxing wealth and investment income.

Why the Netherlands is changing its tax model

The proposal follows years of legal and political debate over how investment income is taxed in the Netherlands. Courts have previously ruled that elements of the country’s existing “Box 3” wealth tax system unfairly assumed a fixed return on assets, prompting calls for reform.

Policymakers say taxing unrealized gains at 36% more accurately reflects actual market performance and could help stabilize government revenues. The plan would cover a broad range of financial assets, including publicly traded equities, fixed-income securities, and digital assets such as cryptocurrencies.

As previously covered, several countries have explored alternative wealth taxation models in response to rising asset prices and widening income inequality. However, directly taxing unrealized gains remains controversial due to valuation complexity and liquidity concerns.

Concerns over capital flight and investor behavior

Critics warn that the proposed tax could alter investor incentives and encourage capital outflows. By taxing gains that have not been converted into cash, investors may be forced to sell assets to cover tax liabilities, particularly during volatile market conditions.

There are also fears that high-net-worth individuals and internationally mobile investors could relocate assets or residency to more tax-friendly jurisdictions. Analysts note that in an increasingly globalized financial system, capital can move quickly in response to policy changes.

The inclusion of cryptocurrencies in the tax regime adds another layer of complexity, given the asset class’s volatility and cross-border nature. Investors may face significant tax bills following market rallies, even if prices subsequently decline before assets are sold.

Supporters of the reform argue that a clear and rules-based system could reduce uncertainty compared with the current framework. Still, the debate highlights the tension between revenue generation and competitiveness in financial markets.

If implemented as planned in 2028, the 36% levy would place the Netherlands among the more aggressive European jurisdictions in taxing investment gains. The final impact will depend on implementation details, market conditions, and whether investors choose to adapt or exit.