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Stocks Slip as Software Selloff Sparks AI Concerns | The Close 2/23/2026

The Bloomberg Close highlighted a broad market pullback driven primarily by a sharp sell‑off in software stocks, as investors worry that generative AI tools could render legacy suites obsolete. The Nasdaq slipped about 1.5%, gold rose on safe‑haven demand, and the 2‑year Treasury yield nudged higher after a Supreme Court ruling that revived tariff‑related uncertainty. Invesco’s head of asset allocation, Alessio de Longis, urged a rotation toward financials, industrials, materials and mid‑cap/value names, arguing that these sectors offer the best exposure to the underlying growth environment while avoiding the AI‑heavy software space. He described the current macro backdrop as a “Goldilocks” scenario: modest global growth, inflation easing toward target, and central banks in a holding pattern, which together support risk assets despite lingering yield‑curve steepening. Notable remarks included de Longis’s confidence that growth is “clearly rising” for the first time in two years, and Nevada Attorney General Aaron Ford’s declaration that the Supreme Court’s decision vindicated the states’ challenge to Trump‑era tariffs, promising to pursue refunds for businesses that paid nearly $1 billion in duties. Analysts also shifted recommendations, with Wells Fargo upgrading Alphabet as an AI winner and cutting Workday’s price target by more than half. The combined effect suggests investors should reassess exposure to software firms, monitor the unfolding tariff‑refund process, and consider sector rotation into more defensive, cyclical equities. Continued vigilance on AI’s impact and policy developments will be crucial for portfolio positioning in the coming weeks.