February 2026 was a month where “boring is beautiful” and “safety first” became the mantra for many investors. While the high-growth AI story encountered its first real sanity check, the companies that provide the essentials of daily life and the energy that powers them took the lead. Nvidia, the leader of the S&P 500 Index, by market cap, beat earnings estimates on both revenue and earnings per share, but investors greeted that news with a wave of selling. This “sell on the news” reaction may suggest that investors are demanding clearer evidence that the AI trade still has a meaningful runway.
As the tech-heavy Nasdaq fell 3.4%, investors began moving into defensive sectors like consumer staples, which gained roughly 7.5% in February. The energy sector was the clear leader this month, up over 14%. This wasn’t just about demand; it was about supply-chain anxiety. Escalating tensions and military strikes in the Middle East led to price increases in oil and liquid natural gas, particularly as uncertainty grew regarding the stability of global shipping lanes and conflict.
Software stocks were among the hardest hit as investors questioned whether the significant spending on AI tools is translating into measurable profitability. We are observing a shift from “AI Dreamers” to “AI Builders,” with capital rotating away from pure software companies and into utilities and infrastructure firms that provide the substantial power and data center capacity required to support AI. This reflects a growing recognition that AI’s impact depends not just on software innovation, but also on the underlying infrastructure that makes it scalable and sustainable.
If February was a reset for tech, it was a renaissance for precious metals. While the S&P 500 and the Nasdaq indices were searching for direction, gold and silver prices were busy shattering records and acting as the market’s primary shock absorbers (see chart below). Interestingly, February saw a de-coupling of gold and bitcoin. While bitcoin faced selling pressure alongside tech stocks, dipping below $66,000, gold moved in the opposite direction. This may suggest that in moments of true geopolitical crisis, the market still views physical bullion as the ultimate insurance policy over digital alternatives.
The FSA portfolios continue to deliver consistent results, with value and small-cap tilts gaining traction. These areas of the market are finally stepping into the spotlight as the rally spreads beyond a handful of names in the Magnificent 7. By participating in this broader leadership, the portfolios benefit from the next tier of market performers, helping to balance growth potential with diversification and reduce reliance on a small group of mega-cap technology stocks.
The Sector Rotation strategy has led performance among our ten strategies, including February, as well as year-to-date. This strong result reflects the strategy’s recent focus on the “boring” yet essential parts of the market, including materials and industrials, which have benefited from the broader rotation away from high-growth tech stocks as the ordinary 493 (the other stocks in the S&P 500 Index) starts to take the spotlight.
As always, please let us know if there are any changes in your financial situation so we can continue managing your portfolio in line with your goals.
Chris Jones
Senior Trader
Disclosures are available at www.fsawealthpartners.com/disclosures/market-update.
FSA’s current written Disclosure Brochure and Privacy Notice discussing our current advisory services and fees is available at www.fsawealthpartners.com/disclosures or by calling 301-949-7300.
