While last week’s volatility in oil prices placed downward pressure on several technical moving averages, it remains too early to suggest a meaningful shift in the underlying economic fundamentals. Energy markets often react swiftly to geopolitical shocks, but just as quickly recalibrate as events unfold. If tensions involving Iran persist, the recent weakness could evolve into a more durable technical trend. For now, Sowell’s technical gauges remain composed—cautiously invested while awaiting clearer confirmation from the data.
Fasten Seatbelt Light - AI Hangover and the PPI Punch
If the previous week was a Sunday drive with a backfiring engine, this week was more like trying to drive that same car through a car wash with the windows rolled down. We started the week with high hopes for an AI-fueled victory lap, but we ended it realizing that even the most powerful chips can’t outrun a hot inflation report and a geopolitical headache. It was another volatile week for stocks, with the AI trade and concerns over AI-driven job displacements leading Gold to rise 3.4% as a hedge against uncertainty. Consequently, the CBOE Volatility Index (VIX) has also been rising, climbing to 19.85.
The Magnificent One (and its Discontents)
All eyes were on NVIDIA this week, which has become less of a semiconductor company and more of a secular religion for Wall Street. On Wednesday, the "AI Dream" delivered the goods: fourth-quarter revenue hit a staggering $68.1 billion—up 73% year-over-year—beating even the loftiest expectations. But in a classic case of "the news was so good it was scary," NVIDIA reported earnings but was unable to lift the broader markets, and the stock actually slid after the report. It turns out that when you’re priced for perfection, even a "blowout" can feel like a letdown if investors start wondering how much longer you can keep pulling rabbits out of the hat.
The rest of the tech world followed NVIDIA's lead into the red. The Nasdaq Composite took the brunt of the damage, falling 0.91% on Friday to close at 22,668.21. It wasn't just chip jitters; software names like Salesforce also felt the heat as investors began to question which companies would actually profit from the AI revolution and which would be disrupted by it. Even Financials took a hit, with bank stocks falling 2% on Friday amid inflation concerns.
The S&P 500 didn't fare much better, dropping 0.43% on Friday to end at 6,878.88, capping off its worst month in nearly a year. For the week, the S&P 500 index fell by 0.42% (+0.68% YTD). However, market breadth indicates otherwise; the S&P 500 Equal-Weighted Index, in contrast, is up a robust +0.48% (+7.06% YTD).
The main culprit for the index-level slide was a hotter-than-expected Producer Price Index (PPI) report. The headline monthly gain of 0.8% was the biggest jump since July 2025, and the +3.6% core year-over-year print is the highest since March 2025. This was the "Check Engine" light flashing in real-time. It signaled that inflation is stickier than a toddler with a lollipop, likely forcing the Federal Reserve to keep interest rates in the "Wait and See" zone of 3.5% to 3.75% for even longer. Additionally, recent reports of private credit liquidity and credit quality concerns have been on the rise, causing spreads to widen.
Treasuries: A Flight to (Geopolitical) Safety
While stocks were stumbling, the bond market was busy processing a mix of inflation fears and "drums of war." It was another week where geopolitics overshadowed the markets, following a U.S.-Israel joint strike against the Iranian regime over the weekend that could lead to Middle East unrest and global chaos. Despite the hot PPI data—which usually sends yields higher—Treasury yields actually narrowed as the week closed. The 10-year Treasury note yield fell to 4.22%. Reports also indicated that mortgage rates had been falling prior to the escalation of the Iran conflict, tracking the lower U.S. Treasury yields.
The Key Catalysts: A Quick Recap
The PPI Punch: Headline wholesale prices increased 0.5% in January (above the 0.3% expected). More alarmingly, PPI Core-Core increased 0.8% MoM and +3.6% YoY, well above the 3.0% economists expected.
Consumer Resilience: Consumer Confidence rose to 91.2 in February (above the 87.2 expected), fueled by a jump in the Expectations Index to 72.0.
Mixed Economic Signals: The Chicago PMI came in at 57.7 (the highest since May 2022), while Factory Orders disappointed at -0.7%.
Initial Jobless Claims remained tight at 212K, below the 216K expected.
Looking ahead to the first week of March, investors have plenty of reasons to remain engaged as the market navigates a sophisticated blend of geopolitical developments and fresh economic data. While the situation in the Middle East introduces a layer of complexity, the market’s seasoned ability to price in risk and find its footing remains a testament to its underlying durability. On the domestic front, we’ll gain valuable insights into the economy’s engine with the release of Factory Orders and the latest unemployment figures; any cooling here could actually provide the Federal Reserve with the "green light" it needs to soften its stance. Finally, the upcoming Trade Balance report will offer a front-row seat to how American commerce is adapting and expanding amidst the global conversation. In this environment, the "Fasten Seatbelt" light is simply a reminder that the market is finely tuning itself for the road ahead.
“The Iranian people are among the most naturally pro-Western in the region. If that impulse is allowed to surface and spread, and replace the divisive, radical Islamist poison propagated by the Iranian regime, we have the possibility for a much more inclusive Middle East.”
– New York Times Columnist Thomas Friedman, How to Think About Trump’s War with Iran, March 2, 2026
Micron: Is the AI Gold Rush Rewriting the Memory Cycle?
By Fiona Zhang, Affinity Investment Advisors
For much of its history, the memory industry has been viewed as one of the most cyclical corners of the semiconductor market. Companies such as Micron Technology often experienced dramatic swings in profitability as periods of strong demand were eventually followed by oversupply and collapsing prices.
Over the past year, however, Micron’s performance has prompted investors to reconsider whether the structure of memory demand may be evolving. After a strong 2025, Micron reported record revenue of $13.64 billion and non-GAAP earnings of $4.78 per share in Q1 FY2026, with operating cash flow surging to $8.41 billion.
CEO Sanjay Mehrotra noted that strong performance across all business units, combined with Micron’s technology leadership and differentiated product portfolio, positions the company as a key AI enabler, supporting growing memory and storage needs.
The company has been one of the strongest performers in the semiconductor sector, with its stock rising sharply by over 240% in 2025, underscoring strong investor enthusiasm for the role of memory in AI infrastructure.
What makes the current cycle noteworthy is not simply stronger demand, but where that demand comes from. Historically, memory demand was dominated by consumer electronics. PCs, smartphones, and other devices have highly volatile replacement cycles.
Today, an increasing share of demand is tied to the buildout of AI infrastructure in data centers. Systems designed to train and run large AI models require far more memory bandwidth than traditional computing environments, creating strong demand for advanced products such as high-bandwidth memory (HBM).
Micron has been a major beneficiary of this shift: HBM revenue has surged, and the company reported that supply for its HBM products was effectively sold out through 2025, with strong demand visibility extending into 2026.
This change in end-market mix has fueled the argument that memory demand may be undergoing a structural transition. Rather than depending primarily on consumer electronics cycles, suppliers like Micron are increasingly tied to large-scale infrastructure investment by cloud providers and AI developers.
AI systems require dramatically higher memory capacity and bandwidth as models grow more complex. Moving from text to multimodal data, including images and video, the amount of memory required per system continues to rise.
In that sense, memory has become a critical enabler in the AI ecosystem rather than simply a commodity in personal devices. The scale and persistence of this demand have led some analysts to suggest that the memory market may be entering a new phase, in which infrastructure-driven growth could sustain higher baseline demand for multiple years.
For now, Micron sits at the center of this debate. AI may not eliminate the cyclicality of the memory industry, but it is clearly reshaping demand structure.
The semiconductor sector has experienced similar narratives before during the PC boom, the smartphone expansion, or earlier waves of data-center growth. These each appeared structural at the time, only to settle back into familiar supply-and-demand cycles once capacity expanded.
Even today, Micron and its competitors are investing heavily to increase production capacity, and if supply eventually catches up with AI-driven demand, pricing pressures could re-emerge.
Yet, despite these historical patterns, the AI-driven memory boom is structurally different in one key way: it is tied to the rapid buildout of infrastructure to support exponentially growing workloads.
Micron is benefiting from this transformation today, capturing opportunities that would have been unimaginable in prior cycles, and it will be fascinating to watch how the AI gold rush evolves as companies scale up productivity and expand capacity in the years ahead.
Advisory services offered through Sowell Management, a Registered Investment Advisor. The views expressed represent the opinion of Sowell Management. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and non-proprietary sources that have not been independently verified for accuracy or completeness. While Sowell Management believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sowell Management’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.
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WEEK AHEAD
March 9-13, 2026
Fasten Seatbelt Light - AI Hangover and the PPI Punch
If the previous week was a Sunday drive with a backfiring engine, this week was more like trying to drive that same car through a car wash with the windows rolled down. We started the week with high hopes for an AI-fueled victory lap, but we ended it realizing that even the most powerful chips can’t outrun a hot inflation report and a geopolitical headache. It was another volatile week for stocks, with the AI trade and concerns over AI-driven job displacements leading Gold to rise 3.4% as a hedge against uncertainty. Consequently, the CBOE Volatility Index (VIX) has also been rising, climbing to 19.85.
The Magnificent One (and its Discontents)
All eyes were on NVIDIA this week, which has become less of a semiconductor company and more of a secular religion for Wall Street. On Wednesday, the "AI Dream" delivered the goods: fourth-quarter revenue hit a staggering $68.1 billion—up 73% year-over-year—beating even the loftiest expectations. But in a classic case of "the news was so good it was scary," NVIDIA reported earnings but was unable to lift the broader markets, and the stock actually slid after the report. It turns out that when you’re priced for perfection, even a "blowout" can feel like a letdown if investors start wondering how much longer you can keep pulling rabbits out of the hat.
The rest of the tech world followed NVIDIA's lead into the red. The Nasdaq Composite took the brunt of the damage, falling 0.91% on Friday to close at 22,668.21. It wasn't just chip jitters; software names like Salesforce also felt the heat as investors began to question which companies would actually profit from the AI revolution and which would be disrupted by it. Even Financials took a hit, with bank stocks falling 2% on Friday amid inflation concerns.
The S&P 500 didn't fare much better, dropping 0.43% on Friday to end at 6,878.88, capping off its worst month in nearly a year. For the week, the S&P 500 index fell by 0.42% (+0.68% YTD). However, market breadth indicates otherwise; the S&P 500 Equal-Weighted Index, in contrast, is up a robust +0.48% (+7.06% YTD).
The main culprit for the index-level slide was a hotter-than-expected Producer Price Index (PPI) report. The headline monthly gain of 0.8% was the biggest jump since July 2025, and the +3.6% core year-over-year print is the highest since March 2025. This was the "Check Engine" light flashing in real-time. It signaled that inflation is stickier than a toddler with a lollipop, likely forcing the Federal Reserve to keep interest rates in the "Wait and See" zone of 3.5% to 3.75% for even longer. Additionally, recent reports of private credit liquidity and credit quality concerns have been on the rise, causing spreads to widen.
Treasuries: A Flight to (Geopolitical) Safety
While stocks were stumbling, the bond market was busy processing a mix of inflation fears and "drums of war." It was another week where geopolitics overshadowed the markets, following a U.S.-Israel joint strike against the Iranian regime over the weekend that could lead to Middle East unrest and global chaos. Despite the hot PPI data—which usually sends yields higher—Treasury yields actually narrowed as the week closed. The 10-year Treasury note yield fell to 4.22%. Reports also indicated that mortgage rates had been falling prior to the escalation of the Iran conflict, tracking the lower U.S. Treasury yields.
The Key Catalysts: A Quick Recap
Looking ahead to the first week of March, investors have plenty of reasons to remain engaged as the market navigates a sophisticated blend of geopolitical developments and fresh economic data. While the situation in the Middle East introduces a layer of complexity, the market’s seasoned ability to price in risk and find its footing remains a testament to its underlying durability. On the domestic front, we’ll gain valuable insights into the economy’s engine with the release of Factory Orders and the latest unemployment figures; any cooling here could actually provide the Federal Reserve with the "green light" it needs to soften its stance. Finally, the upcoming Trade Balance report will offer a front-row seat to how American commerce is adapting and expanding amidst the global conversation. In this environment, the "Fasten Seatbelt" light is simply a reminder that the market is finely tuning itself for the road ahead.
Micron: Is the AI Gold Rush Rewriting the Memory Cycle?
By Fiona Zhang, Affinity Investment Advisors
For much of its history, the memory industry has been viewed as one of the most cyclical corners of the semiconductor market. Companies such as Micron Technology often experienced dramatic swings in profitability as periods of strong demand were eventually followed by oversupply and collapsing prices.
Over the past year, however, Micron’s performance has prompted investors to reconsider whether the structure of memory demand may be evolving. After a strong 2025, Micron reported record revenue of $13.64 billion and non-GAAP earnings of $4.78 per share in Q1 FY2026, with operating cash flow surging to $8.41 billion.
CEO Sanjay Mehrotra noted that strong performance across all business units, combined with Micron’s technology leadership and differentiated product portfolio, positions the company as a key AI enabler, supporting growing memory and storage needs.
The company has been one of the strongest performers in the semiconductor sector, with its stock rising sharply by over 240% in 2025, underscoring strong investor enthusiasm for the role of memory in AI infrastructure.
What makes the current cycle noteworthy is not simply stronger demand, but where that demand comes from. Historically, memory demand was dominated by consumer electronics. PCs, smartphones, and other devices have highly volatile replacement cycles.
Today, an increasing share of demand is tied to the buildout of AI infrastructure in data centers. Systems designed to train and run large AI models require far more memory bandwidth than traditional computing environments, creating strong demand for advanced products such as high-bandwidth memory (HBM).
Micron has been a major beneficiary of this shift: HBM revenue has surged, and the company reported that supply for its HBM products was effectively sold out through 2025, with strong demand visibility extending into 2026.
This change in end-market mix has fueled the argument that memory demand may be undergoing a structural transition. Rather than depending primarily on consumer electronics cycles, suppliers like Micron are increasingly tied to large-scale infrastructure investment by cloud providers and AI developers.
AI systems require dramatically higher memory capacity and bandwidth as models grow more complex. Moving from text to multimodal data, including images and video, the amount of memory required per system continues to rise.
In that sense, memory has become a critical enabler in the AI ecosystem rather than simply a commodity in personal devices. The scale and persistence of this demand have led some analysts to suggest that the memory market may be entering a new phase, in which infrastructure-driven growth could sustain higher baseline demand for multiple years.
For now, Micron sits at the center of this debate. AI may not eliminate the cyclicality of the memory industry, but it is clearly reshaping demand structure.
The semiconductor sector has experienced similar narratives before during the PC boom, the smartphone expansion, or earlier waves of data-center growth. These each appeared structural at the time, only to settle back into familiar supply-and-demand cycles once capacity expanded.
Even today, Micron and its competitors are investing heavily to increase production capacity, and if supply eventually catches up with AI-driven demand, pricing pressures could re-emerge.
Yet, despite these historical patterns, the AI-driven memory boom is structurally different in one key way: it is tied to the rapid buildout of infrastructure to support exponentially growing workloads.
Micron is benefiting from this transformation today, capturing opportunities that would have been unimaginable in prior cycles, and it will be fascinating to watch how the AI gold rush evolves as companies scale up productivity and expand capacity in the years ahead.
Source for chart above: https://www.micron.com/markets-industries/ai/ai-data-center
Advisory services offered through Sowell Management, a Registered Investment Advisor. The views expressed represent the opinion of Sowell Management. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and non-proprietary sources that have not been independently verified for accuracy or completeness. While Sowell Management believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sowell Management’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.