3 themes that drove Wall Street’s wild week and the new U.S.-Iran conflict wildcard
Stocks have fluctuated wildly over the past week as investors grapple with the impact of artificial intelligence on various sectors and the overall economy. Next week is a wild card after the US and Israel attack Iran. President Donald Trump said Saturday that “major combat operations” in Iran began overnight, with U.S. and Israeli strikes on military and nuclear targets there. Trump called on the Iranian people to “take control of your destiny” and overthrow the Islamic leadership regime. Iran reportedly retaliated with missile attacks on US military facilities in the Middle East. The president on Friday expressed his displeasure with nuclear negotiations with Tehran, signaling that an attack could be imminent. “We’re not very happy with the way they’re negotiating. They can’t have nuclear weapons,” he said. The biggest question for investors next week is how markets will react. Wall Street has been absorbing geopolitical and economic squabbles from the last tariff change until the US captured Venezuelan President Nicolas Maduro last month and attacked Iran’s nuclear facilities in June 2025. But the current issue is much more serious. Oil prices rose on Friday on concerns about what is happening in Iran and the risk of disruptions to crude oil supplies from the Middle East. Stocks had a rough session on Friday as concerns that artificial intelligence would hurt the economy have dogged the market for weeks. With persistent inflation added to the list of unknowns, Friday’s higher than expected February producer price index was the nail in the coffin. Fears of AI-related job losses have been fueled by fintech firm Block laying off almost half of its workforce. In February, AI disruptions and broader macro concerns dragged the S&P 500 and Nasdaq down about 1% and 3.4%, respectively. These were the worst monthly losses for the indexes since March 2025. While financial names (Capital One and Wells Fargo) took a hit last week, industrial AI plays (Corning) rose. Traditional enterprise software stocks (Salesforce) jumped, while cybersecurity names (CrowdStrike and Palo Alto Networks) tumbled. Chip makers (Nvidia and Broadcom) also went bankrupt. As a result, the S&P 500 and Nasdaq finished the week down 0.4 and nearly 1%, respectively. Here are three forces that have driven the market and the Club’s portfolio over the past week. Chips decreased, AI industries increased The market was not very happy with chip stocks. Nvidia shares fell nearly 6.7% last week despite announcing better-than-expected quarterly results and forward guidance on Wednesday evening. It has nothing to do with the company’s fundamentals. “This is the hardware [stocks have] “It’s gone up a lot,” Jim Cramer said Thursday. Nvidia fell 5.5% on Thursday and fell another 4.2% on Friday. Fellow AI chip maker Broadcom fell along with Nvidia that day, ending the week down nearly 4%. These declines indicate a broader market shift away from chip stocks. Broadcom reports earnings after the close next Wednesday. While chips have fallen, AI industries have risen. This was good news for Corning, which was benefiting from increased demand for data centers due to fiber optics. Corning rose 7.8% last week to Qnity Electroncis, which produces the materials needed to produce high-performance AI chips. Shares have gained 11.7% in the past week since Qnity was spun off from DuPont on Thursday. 5.2% over the last five trading sessions – enterprise software’s best weekly performance since early December. The capital shift from sky-high hardware to crashing software helped, but we were also pleased with what Salesforce’s better-than-expected earnings report Wednesday evening said about new deals for Agentforce, the company’s key AI-powered platform. Software as a service model. Following the earnings release, we lowered our Salesforce price target from $300 to $250 to account for the industry-wide price-earnings multiple squeeze. Cybersecurity stocks also fell at the start of the week after AI startup Anthropic announced a new cybersecurity tool. There was a mid-week rise along with the rest of the software on Wednesday and Thursday. Still, CrowdStrike ended the week down 4.3%. Palo Alto, which rebounded from a better quarter the previous week, reiterated last week during the club’s February Monthly Meeting that cyber should not decline like other software. As a result, he thinks the Club should have only one cyber name and prefers CrowdStrike, which reports earnings after next Tuesday’s close. Financial names came under pressure last Sunday after a viral research report raised concerns about the impact of artificial intelligence on the economy. Citrini Research has warned that rapid adoption of artificial intelligence could lead to double-digit unemployment by 2028. Stocks closely tied to U.S. consumer health fell according to the research. Capital One, Wells Fargo and Goldman Sachs each fell on Monday in the first trading session after the report was released. Considering that bearish moves appeared to be an overreaction, we used Tuesday as a buying opportunity. This was a new controversy, and it destroyed Wells Fargo and Capital One,” Jim said during the Monthly Meeting. “We are grateful to the writers for the opportunity to buy these stocks at such low prices.” Capital One ended the week down 6%, while Goldman fell 6.8%. Wells Fargo was our worst Club stock, losing more than 8% last week. (See here for a full list of stocks in Jim Cramer’s Charitable Trust.) 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