Scare Trades

Nvidia’s ($NVDA) Q4 results are in. The AI bellwether beat Wall Street’s estimates on both revenue and EPS, with a 73% YoY jump to US$68.1B in revenue and a 82% rise in adjusted EPS of US$1.62. $NVDA rallied to a four-month high in the after-hours session after another record quarter that proved data centre demand is here to stay.

The report comes at a time when tariff headlines and AI scare trades have been shaking up the market. U.S. equities shed a collective US$800B on Monday, but recovered on Tuesday led by tech gains including AMD ($AMD) on a Meta ($META) chip deal.

Investors were also processing Trump’s proposed 15% tariffs on most imports from all countries after the Supreme Court struck down all previous tariffs as illegal. A messy process for at least US$175B in refunds could follow: FedEx ($FDX) is already suing the U.S. government for a full refund of duties paid.

Part of the shaky ground this week came after Citrini Research’s dystopian AI report made waves. Prefaced as ‘a scenario, not a prediction’, the report outlined the potential impact of its disruption to sectors like payments, software and services.

To illustrate certain hypothetical points, Citrini named DoorDash ($DASH), Mastercard ($MA), and BlackStone ($BX), which all shed over 5% after the report made the rounds on social media. 

Elsewhere, Claude Code updates have served chaos across industries. It’s not just SaaS. The most recent victim? Cybersecurity. CrowdStrike ($CRWD) and Zscaler ($ZS) lost over 17% in consecutive trading sessions after Claude dropped an AI tool that scans codebases for threats.

The 114-year-old IBM ($IBM) wasn’t spared either. $IBM fell 13% on Monday, clocking its worst single-day loss since 2000 after Anthropic said Claude could modernise systems that run COBOL – a programming language deeply embedded in the businesses IBM serves.

Hard-hit software names rebounded after Anthropic framed its offerings as more collaborative and less disruptive. On Tuesday, the firm introduced 10 new ways for enterprise customers to integrate its technology into core workflows.

Still, the re-pricing playing out today is hard to ignore. Less considered is the still-unknown, potentially optimistic scenario of tomorrow. What if AI boosts productivity without killing the labour market – by creating new categories of economic activity and consumption? 

A market in transition requires more selective portfolio additions. But the task isn’t just tracking what AI disrupts… it's also anticipating what gets built next. 

This is not financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.