Markets are over their biggest hurdle for the week — err, make that stumbled into their biggest hurdle.
Nvidia’s earnings were a powerful blowout, beating estimates for the 28th consecutive quarter.
Record revenue $68.13 billion, +73% y/y, blowing away estimates of $65.91 billion by $2.2 billion.
Here’s a deeper breakdown:
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- Data center revenue $62.31 billion, +75% y/y, smashing estimate $60.36 billion.
- Compute revenue $51.33 billion, +58% y/y, missing estimate $51.61 billion.
- Networking revenue $10.98 billion vs. $3.02 billion y/y, beating estimate $9.02 billion.
- Gaming revenue $3.73 billion, +49% y/y, missing estimate $4.01 billion.
- Professional Visualization revenue $1.3 billion vs. $511 million y/y, beating estimate $770.7 million.
- Automotive revenue $604 million, +6% y/y, missing estimate $643.2 million.
- OEM & other revenue $161 million, +28% y/y, missing estimate $179.4 million.
All told, revenues increased by $2.2 billion. And the move has gone up like clockwork:
Nvidia’s clockwork increase in revenue hasn’t stalled yet, but its share price remains volatile.
“Aside from fireworks, champagne and dancing robots, we are not quite sure what more Nvidia could have done on the 4Q call to get the market re-excited,” noted Jim Fontanelli of Arete Research.
I couldn’t have said it better myself. With earnings and a revenue chart like that, Nvidia has cemented itself as one of the best stocks to own in the past five years.
For most of that period, you could have bought shares at 40 times earnings — that’s why revenues matter too.
But sometimes, even great isn’t good enough. Market expectations are high, and the AI story is a big driver. What happens when things aren’t good enough?
We hit an air pocket.
Nvidia’s selloff isn’t unexpected. It reports late in earnings season. Most of its customers have already reported how many chips they’ve bought or plan to buy.
Most of those big-tech names sold off after their earnings in recent weeks, too. But we’re seeing signs of a slowdown, of sorts.
Companies like Microsoft and Apple are now increasing their AI spend so much that they’re slowing their spending on other priorities.
One of those priorities? Share buybacks.
A buyback has historically been more tax-efficient than a dividend for rewarding shareholders.
(Not to geek out about it too much: Companies are taxed on the profits they had to have the cash to pay the dividend, then shareholders pay income tax on the dividend. A share buyback avoids that latter tax, and can even be funded with the issuance of debt, where interest is tax-deductible.)
The ultimate goal of a buyback is to reduce total shares outstanding. That helps a company increase its earnings per share as the share count decreases — get this — even if total revenues don’t increase by a dime!
For a company that can grow revenues and buy back shares? It’s a wealth compounding machine.
The massive share buybacks of the past 15 years have also provided investors with a steady source of support for stocks like Apple and Microsoft.
But companies don’t have infinite pockets, and AI spending is the priority.
In other words, one of the historic supports for propping up the market has been torn down — hence why the Mag 7 has become the Lag 7.
Because these Big Tech names make up such a huge percentage of market indices, when they lag, the market lags.
It’s hard to see the market breaking higher until the Big Tech selloff is over. And Big Tech is no longer pulling itself up by its proverbial share buyback bootstraps.
That’s a good reason to stay cautious right now, as we watch the market reaction to Nvidia. Want another good reason? Check your calendar.
Seasonality Says Stay Defensive
One of the ideas I like to hammer home in each month’s Grey Swan Bulletin for paid-up members is the market’s seasonality.
The U.S. stock market follows some fairly predictable annual patterns. Rising at the start of the year, a spring pause, a summer rally, an autumn pullback, and some year-end cheer.
However, midterm years are different. They tend to lag going into the election — meaning ten months of sideways trading at best, and a down market at their worst:
Market seasonality in midterm years suggests poor performance through the midterms.
After three back-to-back years of double-digit returns in the stock market, a pause would be healthy. And most calendar years face a significant pullback at some point of 7%-10%.
It’s unlikely that we’ll have a repeat of last year’s tariff tantrum and drop 20%, but market seasonality and the poor reaction to Nvidia’s blowout earnings suggest investors should stay cautious.
That brings me to an unloved asset class and how you should think about it now…
Don’t Get Offended by Wall Street’s “Four-Letter” Word
Wall Street traders can have a salty vocabulary. But the only truly four-letter words are few and far between.
One of them is “sell,” as in, an analyst’s sell rating on a company. Gentlemen and ladies of Wall Street prefer the term “underperform.”
The other four-letter word? It starts with a “C.” I’m talking about cash.
Please, stop covering your ears. Instead, I need you to hold your nose and rethink your cash allocation.
I get it. Holding cash is tough. It’s like holding an ice cube in your hand.
With every inflation report out of the Fed, with every time you check your grocery bill against a receipt of the same items from a year ago — it just feels like it’s a sucker’s game.
But cash is critically important to your wealth. Cash is optionality. It’s the asset that you can quickly turn into any other asset when the timing is right.
For instance, if the stock market suddenly drops 20% from its highs, like it did last year, having some cash on hand allowed you to buy the dip.
More importantly, having that cash on hand also meant it wasn’t in the stock market while it dropped 20%.
Cash may lose its purchasing power over time, but when other assets drop, they take the elevator, not the escalator.
Currently, the stock market is at its highest valuation relative to GDP, a term known as the Buffett Indicator.
On December 31, 2025, the Buffett Indicator was 222%. In other words, the stock market was valued at more than twice U.S. GDP.
Anything over 100% is worrisome for Warren Buffett. But he’s now retired. The rest of us have to decide how to invest at current valuations.
Stocks are stretched by any measure of traditional valuation. But they can go higher. However, on any sign of a slowdown, we tend to see big air pockets — like today’s Nvidia selloff — and that’s where having a cash buffer pays off.
We expect market volatility this year. It’s just what markets do!
That’s why cash matters. That’s why we continue to suggest trimming stock positions, especially those that have had significant gains or are in their early stages.
And why we continue to recommend that you focus your investments on dividend-paying stocks of industry-leading companies trading at a reasonable valuation. Or taking some of your tech stock profits and putting them into alternative assets, such as rare coins (more on that below).
Ultimately, when you invest, thinking about the downside first will protect you. The upside will take care of itself. The market continues to warn on high valuations today — and that there may not be significant upside left.
~ Andrew
P.S. from Addison: I have arrived in the Windy City ahead of tomorrow’s Grey Swan Live! from the Rarcoa vault.
Why journey out into the winter weather? Because scarcity behaves differently from software or hardware.
In a world of instant messages, viral charts and agentic AI spinning up code in seconds, most assets exist as pixels on a screen. Rare coins do not.
Their supply was fixed the moment they were struck. Their surviving population can be counted. Their condition is graded, slabbed, and certified.
In an age where intelligence is scaling and information is free, permanence carries its own premium. A coin minted a century ago does not update its firmware, issue guidance, or dilute shareholders. It sits in steel and waits.
Rarcoa itself carries some lore.
The Rare Coin Company of America is the oldest continuously operating rare coin wholesaler in the United States, founded in the 1960s and passed from father to son.
Wayde Milas joined the firm in 1994 and purchased it from his father in 2009, later serving as President of the Professional Numismatists Guild.
The company has handled some of the most significant U.S. rarities over the decades, navigated cycles in gold and silver, and built its reputation on authentication and institutional-grade sourcing.
In 2024, it became an exclusive U.S. distributor for the Royal Mint’s commemorative business — a reminder that even in a digital age, sovereign mints still strike metal that collectors line up to own.
The coins we’ll be examining carry their own stories. The 2025 Eagle Privy Silver Eagle graded NGC MS70 — “One of the First 50,000” — represents modern scarcity layered atop a four-decade American Silver Eagle legacy.
More than 640 million Silver Eagles have been minted since 1986, yet perfect-grade, low-population privy issues form a distinct tier within that ocean of metal.
The Proof Silver Eagles honoring the Army, Navy, and Marine Corps, graded PF70 with First Day of Issue pedigree and labels signed by former U.S. Mint engraver Michael Gaudioso, blend craftsmanship, military heritage, and collector demand.
In a culture moving at algorithmic speed, these coins move on a different clock. They are tangible, finite, and rooted in history — qualities that feel increasingly rare themselves.
Please join us as we tour the vault and look at these rare coins, tomorrow, February 27, 2026, at 2 p.m. ET/11 a.m. PST.
