2026-02-27 14:13:00
U.S. equity futures are under pressure this morning, with the Nasdaq (NQ) and S&P 500 (ES) both down 0.9%, while the Russell 2000 (RTY) is lagging further with a 1.3% drop. While the “Magnificent 7” are seeing modest declines led by Microsoft (-2.5%), the real story is a violent resumption of selling in the software sector.
Investors are increasingly wary of companies transitioning their business models toward AI, punishing any signs of slowing growth or margin compression in exchange for long-term AI positioning.
On CNBC this morning, they ran a pair of comments from software markers highlighting how “something changed” in December with regards to the capability of models in replacing coders. One of those was Block, which is up 15% today after laying off 40% of staff. Everyone is taking that as a sign of what’s to come.
The software sector is seeing some of its sharpest single-day declines of the year, driven by a “show-me” attitude from investors regarding AI monetization.
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Duolingo (DUOL) -27%: The language-learning giant is the morning’s biggest casualty. Despite beating Q4 numbers, the stock is cratering on weak 2026 guidance. Management is pivoting toward a “growth over profit” strategy, investing heavily in free-user experience and AI features (like Video Call) to scale to 100 million DAUs. The market, however, is fixated on the projected EBITDA margin compression (from 29.5% to 25%) and slowing bookings growth.
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Zscaler (ZS) -13%: Even a “beat and raise” wasn’t enough for the cybersecurity firm. While ZS topped estimates, investors were disappointed by the organic growth metrics. Much of the upside was attributed to the Red Canary acquisition rather than core organic acceleration, sparking fears of a “growth ceiling” in a crowded security market.
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Intuit (INTU) -3.1%: The financial software leader posted a robust quarter with 17% revenue growth, but a disappointing outlook for the upcoming quarter has weighed on shares. Investors are cautious about the high debt load used to fund AI initiatives and the slower-than-expected return to double-digit growth for the Mailchimp segment.
While “SaaS” (Software as a Service) is struggling, the “Picks and Shovels” of AI continue to show diverging paths based on their balance sheets.
Today’s winner is Dell, up 11% on stellar Q4 results fueled by a massive backlog in AI servers. Dell remains a primary beneficiary of the hardware build-out.
On the flip side, CoreWeave is down 11.5% on a wider than expected loss and $30 billion capex plan.
Finally, NFLX shares are up 8.6% after bowing out of the race for Warner Brothers and taking a $2.8 billion break fee.
