NVIDIA Pullback Weighs on Tech as Market Rotation Supports Broader Indexes

The major averages finished mostly lower as renewed pressure on mega-cap and semiconductor stocks followed the market’s reaction to NVIDIA’s latest earnings report. The S&P 500 slipped 0.5%, the Nasdaq Composite dropped 1.2%, and the Dow Jones Industrial Average ended essentially flat. Despite the weakness, the S&P 500 held just above its 50-day moving average, finding technical support after trading near session lows earlier in the day.

By most fundamental measures, NVIDIA’s report was exceptionally strong. The company exceeded expectations, delivered record data-center revenue, and issued bullish guidance. Yet the stock declined sharply as investors questioned whether hyperscale customers can sustain the enormous capital expenditures currently driving the AI infrastructure boom. The reaction highlighted a recurring 2026 theme: strong results are no longer enough to justify elevated valuations across the AI complex.

The weakness spread across semiconductor names, with Broadcom and Advanced Micro Devices posting sizable losses that dragged the chip sector sharply lower and weighed on technology shares overall.

Software stocks, however, provided an important counterbalance. Sentiment toward software-as-a-service companies continued to recover, lifting Salesforce despite cautious guidance. The group’s rebound helped cushion broader market losses, supported in part by comments from NVIDIA CEO Jensen Huang dismissing concerns that artificial intelligence will disrupt software companies.

This strength spilled into other sectors. Financials led the gainers, buoyed by advances in banks and financial technology firms, including Block and Fidelity National Information Services. Industrials also benefited from technology-adjacent names such as Equifax and Paycom Software. Energy and real estate posted modest gains, rounding out the limited group of sectors that finished higher.

Elsewhere, losses were contained. Communication services lagged as Alphabet declined, while mega-cap weakness from Tesla and Amazon weighed on consumer discretionary stocks. Even so, strength in travel-related companies such as Expedia Group and Norwegian Cruise Line helped moderate the sector’s decline.

Notably, smaller companies outperformed. Both the Russell 2000 and the S&P MidCap 400 recovered from early losses to finish higher, extending the year’s pattern of rotational flows away from mega-cap leadership toward broader market participation.

In many ways, the session reflected the defining dynamics of the market in 2026. A dominant AI leader delivered blockbuster results yet still declined amid valuation and spending concerns, while strength rotated into select cyclical areas and smaller-cap stocks. After several days of tech-driven gains, the pullback left the S&P 500 and Nasdaq essentially flat for the week heading into Friday’s session, with the broader index hovering just above a key technical support level.

Our FTinvest 11 model portfolio rose 0.30% to close at 1,012.22, posting a modest rebound after yesterday’s sharper pullback. The portfolio remains in a consolidation phase following its recent all-time high of 1,039.51, with daily movements reflecting a more balanced trading environment.

While momentum has cooled compared to the strong breakout earlier in February, FTIinvest 11 continues to hold above the key 1,000 milestone. The portfolio’s disciplined, value-driven approach remains central as it navigates short-term volatility while preserving solid year-to-date gains.