Weekly Investment Update (02/27/2026)

Markets turned cautious heading into month-end, with much of the anxiety centered on a high-profile research note that outlined an aggressive AI disruption scenario. The piece imagined widespread white-collar job displacement, collapsing business models, and cascading equity losses. While technological change can certainly pressure individual companies and sectors, the broader macroeconomic impact contemplated in the piece, particularly on a two-year timeline, appears far less convincing. In our view, productivity gains will lower costs and lift real incomes across other parts of the economy, offsetting disruption rather than triggering systemic collapse. We believe the market reaction to the note says more about fragile sentiment than about a sudden break in economic fundamentals.

Concerns about private credit added to the unease, particularly after Blue Owl disclosed asset sales within one of its vehicles. Importantly, this appears to be a liquidity and fund-structure story rather than a wave of credit losses. The investments were reportedly sold at roughly 99.7% of par, with buyers including long-term institutions such as pensions and insurers. If underlying credit quality were broadly deteriorating, assets would likely have cleared only at distressed levels.

While volatility around AI and private credit has weighed on risk appetite, the broader economic backdrop remains intact. Disinflation continues to progress, labor conditions are stabilizing, and business investment, particularly in technology and infrastructure, remains solid. For now, we see little evidence of a systemic credit break or a macroeconomic downturn, and we continue to view recent turbulence as part of a sentiment reset rather than the start of a deeper cycle.

Policy in Focus: Markets Weigh Trump’s Agenda, Tariff Workarounds, and Rising Iran Tensions

What is happening: U.S. policy returned to center stage this week as President Trump addressed the nation, highlighting economic achievements and sharply criticizing Democratic policies. The speech offered limited detail on new initiatives, but several proposals were mentioned, including restricting institutional investors from purchasing homes, requiring technology companies to shoulder more energy costs tied to data center expansion, implementing price controls on prescription drugs, establishing government-matched 401(k) contributions where employers do not contribute, and limiting stock trading by elected officials. Notably absent were prior focal points such as China policy and a proposed cap on credit card interest rates.

Foreign policy also featured prominently, particularly regarding Iran. Trump referenced Iran’s development of missile systems capable of reaching the U.S. The administration has increased pressure on Tehran to abandon its nuclear program, including an expanded U.S. military presence in the Middle East. Diplomatic talks are ongoing, but the president reiterated that military action remains an option if negotiations fail.

On trade, the administration continues to navigate constraints after the Supreme Court struck down the use of the International Emergency Economic Powers Act (IEEPA) for the majority of its tariff agenda. In his speech, Trump characterized the ruling as unfortunate and reaffirmed his commitment to pursuing alternative avenues to impose tariffs. While other statutory tools are already being utilized, they carry limitations on both tariff rates and duration, absent congressional approval.

Why it matters: The speech arrives at a pivotal moment for the administration, with approval ratings subdued and midterm elections approaching. From a market standpoint, however, there was little new information. Most proposals floated would require congressional approval, limiting their immediate impact on markets. That lack of surprise is, in many ways, constructive. Markets tend to react negatively to unexpected policy shifts, and the absence of major new initiatives allows investors to remain focused on earnings, growth, and inflation trends.

A scaled-back tariff framework, relative to what had been in place, would provide a modest boost to global growth. Countries and industries that have faced tariff rates well above the expected 10%–15% range stand to benefit, with China among the more notable relative winners under a capped regime. In addition, as much as $175 billion in previously collected tariffs could ultimately be refunded with interest. This is not a question of if, but when, creating the potential for additional stimulus across corporate America.

Iran remains a near-term risk, and the administration’s pointed reference to Iran’s strike capabilities, combined with recent military successes abroad, suggests a willingness to project strength if negotiations falter. While a diplomatic resolution would likely exert modest downward pressure on oil prices, military escalation could push energy prices meaningfully higher and introduce broader market volatility. For markets, the main takeaway is continuity rather than disruption, and in the current environment, stability itself is a meaningful outcome.

Nvidia Reports Strong Earnings and Forward Guidance Amid Continued AI Spending Growth

What is happening: On Wednesday, Nvidia again reported record quarterly revenues and earnings. Revenues grew 73% year-over-year to $68.1 billion, above analysts’ estimates of $66.2 billion. Data center revenue accounted for more than $62 billion in sales. The segment’s outsized contribution reflects hyperscaler and enterprise investments in AI training and inference infrastructure, particularly for large language models. Nvidia’s core GPU compute products, such as Blackwell, continue to represent the majority of the company’s revenues. Earnings per share rose to $1.62 and beat estimates of $1.52. Gross margins remained robust at 75.2%, underscoring sustained pricing power.

Beyond the headline beats, forward guidance has become equally significant for investors and for the broader AI capital expenditure cycle. Management commentary suggests the company anticipates continued strong demand through year-end, fueled by expanding deployments of next-generation platforms and elevated capital budgets among cloud and enterprise customers. In particular, Nvidia also announced it has shipped samples of its next-generation Vera Rubin rack-scale system to select customers. Vera Rubin is expected to deliver 10 times more performance per watt than the current leading Blackwell systems.

The market reaction has been relatively negative, with Nvidia shares declining more than 5% on Thursday. This likely reflects elevated investor expectations heading into the release and lingering concerns about the durability of hyperscaler chip demand. Nevertheless, Nvidia’s stock continues to outperform many other megacap technology companies year-to-date.

Why it matters: Nvidia’s earnings reinforce the view that AI infrastructure spending remains strong in the near term. Sustained strength for advanced GPU platforms and AI systems suggests hyperscalers are not meaningfully pulling back on capital expenditures tied to AI training and inference. Across the broader ecosystem, semiconductor equipment suppliers, memory manufacturers, and power and cooling infrastructure providers stand to benefit from ongoing multiyear deployments.

Equally important was management’s commentary around demand breadth. Nvidia indicated expanding enterprise and sovereign AI deployments, signaling that capital spending is broadening beyond the largest U.S. hyperscalers.

At the same time, the ecosystem remains sensitive to Nvidia’s execution and guidance. Any moderation in forward guidance, gross margins, or inventory buildup would likely ripple across AI-exposed equities, given Nvidia’s role as a bellwether for the capex cycle. Geopolitical constraints also remain swing factors for demand, and we will continue to monitor those developments closely. For example, CEO Jensen Huang noted that revenue from China remains effectively zero due to export restrictions.

At Bessemer, we maintain an overweight position in Nvidia relative to the benchmark. We have recently increased our exposure, reflecting continued strength in AI-related demand, sustained pricing power, and more attractive valuations.