The Wall of Worry: Why Markets are Primed for a Spring Surge

Despite boiling geopolitical tensions, tariff uncertainty, and AI funding fears, five data points suggest that markets are primed for a rally:

AI Spending & Funding Concerns are Overdone

Artificial intelligence is the leading industry on Wall Street by leaps and bounds. AI companies have the fastest growth, the most robust stock performance, and the most robust forward growth expectations. However, most AI stocks have declined in 2026 amid concerns about AI spending and funding.

First, let’s talk about AI spending concerns. Although AI-related CAPEX spending was already huge, ‘hyperscalers’ are telling us it’s going to get even bigger. CAPEX spending guidance from hyperscalers Microsoft (MSFT), Alphabet (GOOGL), and Amazon (AMZN) is expected to grow to a mind-blowing $515 billion this year and ~600 billion next year. The spending expectations from these tech juggernauts suggest that spending concerns are very misunderstood and overblown. Such massive spending will reverberate through the economy, boosting adjacent industries such as energy and construction. Read more about NVIDIA’s upcoming earnings here.

For instance, Texas Pacific Land Corporation (TPL) is rising on Monday after an extremely bullish upgrade and price target hike from KeyBanc. KeyBanc analyst Tim Rezvan raised his price target from $350 to $659, a rare 88% increase (the stock currently trades at ~$525). Rezvan highlighted the company’s potential outside of its core oil and gas businesses. He believes TPL can benefit from its massive land ownership (~900k acres), which has the potential to attract data centers and, by extension, power and water infrastructure projects. Additionally, Rezvan believes TPL can benefit from carbon capture, hydrogen, and sand mining projects that are beyond the scope of its legacy oil and gas businesses. Finally, the KeyBanc analyst believes that Wall Street is undervaluing the company because it only sees it as a traditional oil and gas stock – not a beneficiary of the AI revolution.  

Meanwhile, X user @meeijer made an astute observation about AI infrastructure stocks CoreWeave (CRWV) and Nebius Group (NBIS). Friday, a headline surfaced that CRWV would not be able to secure a $4B loan from Owl Capital. Both companies fell nearly 10% on the news. However, just a couple of hours later, both CoreWeave and Owl denied that the financing was in jeopardy. In other words, investors are overly concerned about AI funding, causing unjustified selling.

Seasonality Turns Higher in March

Based on historical seasonality patterns, selling pressure in the month of February is the expectation, not the exception. However, historical data suggests that stocks tend to bottom in March and rally into the summer.

Market Breadth is Broadening

The net difference between the cumulative advancing and declining stocks on the NYSE just printed a fresh all-time high. In other words, market participation is broadening.

Sentiment is Overwhelmingly Bearish

Although the major indices are within a stone’s throw of all-time highs, market sentiment is bearish. According to the CNN Fear/Greed Index, market sentiment has plunged from ‘Greed’ in January to ‘Fear’ in February.

Valuations are Reasonable

Despite the fear, uncertainty, and doubt about AI spending and valuations, NVDIA (NVDA) and other leading stocks have cheap valuations. For instance, NVDIA trades at just a 46 P/E. NVDA’s valuation is very reasonable given its scorching-hot growth rates. Read more about NVDA’s upcoming earnings here.

Bottom Line

Ultimately, the current market malaise appears to be a classic case of noise overshadowing signal. While retail sentiment has dipped and seasonal weakness has occurred, the fundamental pillars of the bull market remain intact.

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This article originally published on Zacks Investment Research (zacks.com).

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