Here are the 3 big things we’re watching in the stock market this week
Fears about AI disruption spread to new corners of the stock market last week. Now, investors entering the holiday-shortened trading week have a question on their minds: How long can this sell-first-ask-later type of market behavior continue? Here’s a closer look at three key events trending this week: 1. Palo Alto Networks’ Tuesday night earnings report comes at a pivotal moment. It offers CEO Nikesh Arora an opportunity to rebut concerns that AI will take away market share from cybersecurity providers; This concern is the same concern that has hit the shares of other software vendors that sell design or accounting software, for example. We argued that reliable cybersecurity is only becoming more valuable to companies in a world full of artificial intelligence, and that the complexity of the mission poses less risk of displacement than other corners of enterprise software. But that hasn’t stopped the market from punishing companies like Palo Alto Networks and fellow Club name CrowdStrike in this 2026 sell-off, even though they’re relatively better off than their counterparts in the software ETF known as IGV and are showing signs of life by the end of the week. Will Arora be able to completely dismantle this narrative and turn the conversation back to just the basics? It doesn’t seem likely. But this is a chance for a respected cyber CEO to offer food for thought to investors trying to distinguish between the winners and losers of software in the age of artificial intelligence. Frankly, we expect Palo Alto to deliver better-than-expected quarterly results and guidance, particularly on key metrics such as annual recurring revenue (ARR) and remaining performance obligation (RPO). Updates on the currently completed CyberArk and Chronosphere acquisitions will also likely be a topic of conversation. However, in these worrying times for software, strong results and an optimistic short-term outlook may not be enough to reverse sentiment as investors are not focused on the next three months. The concern is more existential, forcing investors to rethink how much they are willing to pay to realize future gains, resulting in a dramatic multiple squeeze and falling stock prices. Consider the BTIG analysts’ note on Palo Alto’s quarter released Thursday: They said demand trends were “strong” and they were confident the company could sustain low-to-mid-teens growth next year. They reiterated their buy rating on the stock. But they still lowered their price target by $45 per share to $200, mostly because they were using a lower price-to-earnings ratio. This is a challenging setup. But if there are no cracks in the works, it will strengthen our resolve to weather the storm. Revenue is $2.58 billion, according to LSEG. According to LSEG, EPS is 94 cents. Total RPO of $15.776 billion, per FactSet. Annual recurring revenue (ARR) is $6.128 billion, according to FactSet. 2. When Texas Roadhouse reports fourth-quarter results Thursday night, our focus will shift from safety to steak. The prevailing concern here is not AI, but the rising cost of beef. There was pressure on margins as the company did not increase prices in line with beef inflation. For a restaurant chain that prides itself on attracting customers with a value-focused message, there’s a risk that prices will rise too much. In its initial 2026 outlook presented in November, Texas Roadhouse predicted full-year commodity inflation would be 7%. While live cattle futures fell from late October to late November, the upward march has resumed. As of Friday, they are within a few points of their all-time highs. While the bar is low, we expect Texas Roadhouse to keep its commodity inflation outlook stable. Another thing to watch: The company also typically shares plans for menu price changes on its fourth-quarter call, with implementation being implemented at the beginning of the second quarter in April. Last year it increased prices by 1.4% in April and 1.7% in October, so managers’ choice this time is interesting. Texas Roadhouse’s ability to drive traffic increases that fuel same-store sales growth, a key metric by which restaurants are evaluated, has attracted investors to the stock. When traffic increases, it shows that you are gaining share relative to your competitors. Texas Roadhouse saw a 4.3% increase in traffic in the third quarter; this, combined with a 1.8% increase in price, led to a 6.1% increase in same-store sales. If Texas Roadhouse can deliver sustained traffic growth in the fourth quarter, that’ll be something bulls should hang their hats on. Considering we’ve reduced our position to the $180s twice this year, we’re comfortable keeping the stock here. But with no clear indication that beef inflation has peaked, this is not the place to invest new money. Wall Street’s expectation is this: According to LSEG, revenue will be $1.496 billion. According to LSEG, EPS is $1.51. 5.16% same-store sales growth, according to FactSet. 3. There are also a few economic reports on our radar, headlined by Friday’s personal consumption expenditures (PCE) index. This is the Federal Reserve’s preferred inflation indicator. Following Friday’s colder-than-expected consumer price index (CPI) report, the hope is that the PCE will deliver more good news on the inflation front and provide the central bank with additional cover for rate cuts throughout the year. As of Friday, the market is pricing in the first interest rate cut of 2026 at the Fed’s June meeting, according to the CME FedWatch Tool. This is also the first event on the calendar after Chairman Jerome Powell’s term ends in May. As Home Depot shareholders, we want lower interest rates to shake up the still stagnant housing market. Other economic reports to watch this week include the Census Bureau’s look at January housing starts on Tuesday morning and new home sales on Friday morning. The National Association of Realtors’ pending home sales for January will be released Thursday. Finally, on Friday we will receive the first data on the fourth quarter US gross domestic product. The Atlanta Fed’s real-time tracker estimates GDP growing 3.7% in the final three months of 2025. Next Week Monday, February 16 All major US stock and bond markets, including the NYSE and Nasdaq, are closed for Presidents Day. Tuesday, Feb. 17 Empire State Manufacturing Survey, 8:30 a.m. ET NAHB Housing Market Index, 10 a.m. ET Before the bell: Energy Transfer LP (ET), Medtronic (MDT), SunCoke Energy (SXC), Leidos Holdings (LDOS), Vulcan Materials Company (VMC), Krystal Biotech (KRYS), Ceragon Networks (CRNT), Fluor Corp. (FLR), Allegion (ALLE), Builders FirstSource (BLDR), CNH Global (CNH) After the bell: Palo Alto Networks (PANW), Hecla Mining Company (HL), Cadence Design Systems (CDNS), Devon Energy (DVN), EQT Corporation (EQT), SSR Mining (SSRM), Toll Brothers (TOL), FirstEnergy (FE), Halozyme Therapeutics (HALO), Huntsman (HUN), Kenvue (KVUE), MKS Instruments (MKSI), Nano Nuclear Energy (NNE), Axcelis Technologies (ACLS), Celanese (CE) Wednesday, February 18 Census Bureau Meeting Begins at 8:30 a.m. ET Fed’s Industrial Production and Capacity Utilization Report at 9:15 a.m. ET Fed’s January meeting minutes at 2:00 p.m. ET Before the bell: Analog Devices (ADI), SolarEdge Technologies (SEDG), Garmin (GRMN), Moody’s (MCO), Constellium (CSTM), Liberty Global (LBTYA), ProPetro Holding (PUMP), Bausch + Lomb (BLCO), Charles River Laboratories (CRL), Jones Lang LaSalle (JLL) After the bell: Kinross Gold (KGC), Coeur D’Alene Mines (CDE), Pan American Silver (PAAS), Carvana (CVNA), Figma (FIG), Royal Gold (RGLD), DoorDash (DASH), Equinox Gold (EQX), Remitly Global (RELY), eBay (EBAY), Occidental Petroleum (OXY), B2Gold (BTG), Cheesecake Factory (CAKE), Blue Owl Capital Corporation (OBDC), Oceaneering International (OII), Bausch Health (BHC), Nutrien (NTR), Molson Coors Beverage Company (TAP) First Unemployment Thursday, February 19 Applications open at 8:30 a.m. ET Philadelphia Fed Index 8:30 a.m. ET National January Pending Home Sales Association 10 a.m. ET Before the bell: Walmart (WMT), First Majestic Silver (AG), Quanta Services (PWR), Lemonade (LMND), Deere & Company (DE), Klarna (KLAR), Visteon (VC), Wayfair (W), NICE (NICE), Alight (ALIT), Southern Company (SO) Before the bell then: Texas Roadhouse (TXRH), Opendoor Technologies (OPEN), Newmont Mining (NEM), Transocean (RIG), Live Nation Entertainment (LYV), Sprouts Farmers Market (SFM), Akamai Technologies (AKAM), AXT (AXTI), Centerra Gold (CGAU), Copart (CPRT), Eldorado Gold (EGO), Metallus (MTUS), Ardelyx (ARDX), Barings BDC (BBDC), Chemours (CC) Friday, February 20 Personal Consumption Expenditures (PCE) Index 8:30 a.m. ET Fourth Quarter GDP Report (Preliminary) 8:30 a.m. ET Census Bureau’s New Home Sales 10 a.m. ET Before the bell: AngloGold Ashanti (AU) (See here for a full list of stocks in Jim Cramer’s Charitable Trust.) 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