Dear readers,
On Wednesday, we asked whether Jensen Huang’s earnings call would validate the thesis that $700 billion in AI capital expenditure is money well allocated. Nvidia delivered. But before the market could fully digest those numbers, the geopolitical landscape shifted beneath our feet.
When news wires flashed Friday morning that the US is advising embassy staff in Israel to leave immediately, trading floors went quiet. The sudden specter of an imminent American military strike against Iran—and the looming threat of Iranian retaliation against Israel—sent S&P 500 futures sliding 0.8% before the opening bell while crude oil surged. It is a blunt reminder that while Wall Street obsesses over earnings multiples and software margins, the geopolitical chessboard remains the ultimate variable for every portfolio.
But while the drums of war beat in the Middle East, a very different kind of confrontation is escalating between Washington and Silicon Valley.
The Pentagon vs. Anthropic
Artificial intelligence has crossed from enterprise productivity tool to national security flashpoint. The Pentagon is now locked in an unprecedented standoff with Anthropic, the AI company whose “Claude Code” tool—as we noted Wednesday—has already upended the investment case for legacy tech firms like IBM.
The dispute is direct: the Department of Defense is demanding that Anthropic allow its Claude AI model to be deployed for autonomous weapons systems and mass surveillance, with a hard deadline of tomorrow, February 28. The Pentagon is threatening coercive measures if the company refuses. Anthropic CEO Dario Amodei is holding firm, rejecting the mandate on safety and ethical grounds.
The backdrop reads like a screenplay. The Pentagon’s demands reportedly stem from discussions involving a hypothetical nuclear attack scenario and the recent use of AI during the arrest of Venezuela’s Nicolás Maduro. With a $200 million defense contract hanging in the balance, this confrontation is stress-testing the fragile alliance between Silicon Valley idealism and the imperatives of the military-industrial complex.
And if you need proof that AI is reshaping the civilian economy with equal force, look at Jack Dorsey’s Block. The fintech company announced Friday that it is slashing 40% of its workforce. The stated reason: rapid AI advancements have rendered those roles obsolete. Wednesday’s newsletter drew a sharp line between companies building the AI future and those being displaced by it. Block just demonstrated that the displacement can come from within—companies wielding AI against their own headcount.
Paramount Takes the Crown
While tech grapples with existential questions, the media landscape just experienced its most significant consolidation in years. The bidding war for Warner Bros. Discovery is effectively over.
Netflix has officially walked away, abandoning its $27.75 per share bid—roughly $83 billion—for WBD’s studio and streaming assets. That clears the runway for Paramount, whose $31 per share offer values the combined entity at approximately $111 billion including debt. The WBD board deemed Paramount’s bid superior, and it is easy to see why.
If regulators approve, the deal creates a media colossus housing HBO Max, CNN, CBS, and Paramount+ under a single roof. Paramount has signaled its confidence with a $7 billion regulatory break fee. Netflix, for its part, clearly decided the price of admission to legacy television was not worth the dilution, opting instead to double down on its organic playbook. For an industry that has spent years fragmenting into a dozen competing streaming services, the pendulum is swinging decisively back toward consolidation.
The Inflation Ghost and the Golden Hedge
Anyone hoping for a smooth glide path to lower interest rates received an unwelcome data point this week.
The US Producer Price Index for January came in hotter than expected, rising 2.9% year-over-year against consensus estimates of 2.6%. The core reading—stripping out volatile food and energy—jumped to 3.6% from 3.3% in the prior month. This sticky wholesale inflation signals that the pipeline of price pressures has not fully cleared, and the Federal Reserve may need to keep its foot on the brake longer than equity markets have priced in.
Wednesday’s newsletter noted the bond market’s quiet rally, with the 10-year Treasury yield easing toward 4.05%. That calm may prove short-lived if producer-level inflation continues feeding through to consumer prices.
Investors are reading the signal clearly—and seeking refuge in the oldest store of value known to civilization. Gold has been hitting record highs, sparking a literal modern-day prospecting rush across the American West.
Institutional money is positioning accordingly. Bernstein has upgraded Newmont Mining to “Outperform,” radically lifting its long-term gold price forecast. The firm now projects gold reaching $4,800 an ounce in 2026 and a staggering $6,100 by 2030. Their thesis rests on relentless central bank buying, accelerating ETF inflows, and eventual US rate cuts—a combination that, if it materializes, would represent a near-tripling from recent levels.
The Bottom Line
February 2026 is closing out in a market defined by stark contradictions. AI is simultaneously securing massive defense contracts and triggering double-digit workforce reductions within the same sector. Media is consolidating into legacy titans at price tags that would have seemed absurd three years ago. And stubborn producer inflation is driving capital back into physical gold even as equity markets price in rate relief that may not arrive on schedule.
Keep a close eye on the headlines out of the Middle East this weekend. The geopolitical premium on oil and defense stocks could gap significantly by Monday morning.
Have a great weekend, stay nimble, and we will see you back here on Monday.
Best regards,
The StocksToday.com Editorial
