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From Narrative to Numbers
Earnings season forces tougher questions on AI returns and market leadership.
George Babis
February 08, 2026
👋 ICYMI
U.S. markets closed the week mostly lower as investors reassessed the return profile of large-scale AI spending. The S&P 500 and Nasdaq retreated after a sharp post-earnings selloff in Microsoft $MSFT ( ▲ 1.9% ) and Amazon $AMZN ( ▼ 5.56% ) weighed on sentiment across megacap tech. Overall, the tape reflected a market shifting from narrative-driven optimism toward harder questions around profitability, cash flow, and valuation discipline.
🔁 Market Movers
📉Big Tech Extends Pullback
Microsoft’s post-earnings selloff continued to ripple across megacap tech, weighing on the Nasdaq. Weakness spread to software and cloud-adjacent names as investors demanded clearer evidence that AI capex is translating into margin expansion.
🏦 Dow Outperforms on Old-Economy Strength
Industrials, and select energy names held up well, allowing the Dow to outperform growth-heavy indices and hit the 50,000 milestone for the first time. The rotation highlighted renewed investor preference for cash-flow visibility and balance-sheet strength.
📊 Credit Markets Stay Calm Despite Equity Weakness
High-yield and investment-grade credit spreads remained largely unchanged even as equities fell, signalling that bond investors see limited near-term default risk.
👀 Signals I’m Watching
🤖AI Spending Is Being Repriced — Not Abandoned
Corporates are still investing heavily in AI infrastructure, but markets are shifting focus from spend levels to ROI timing. Names with visible margins and cash conversion are being rewarded; narrative-only plays are not.
📊 Guidance Is Now the Market Catalyst
This earnings season, stocks are reacting more to forward guidance than headline beats or misses. That’s a classic late-cycle signal that expectations were stretched.
🔄 Rotation, Not Risk Exit
Capital isn’t fleeing equities — it’s rotating within them. Industrials, and infrastructure-linked names continue to attract flows even as tech stumbles.
💼 Labour Market Still Cooling Gradually
Private labour indicators suggest slower hiring but no collapse. That keeps the Fed’s path finely balanced between easing hopes and inflation vigilance.
To all new readers of The Latte who may be wondering who’s behind this newsletter, let me briefly introduce myself.
I’m George Babis, a digital entrepreneur and long-term investor. I’ve built three 100% self-funded companies in my early and mid-twenties, but my real passion has always been investing — not reacting to markets, but understanding them over time. That’s why I passionately write The Latte every week and run our Investment Club.
Last week’s market pullback was uncomfortable for many investors. Moments like these often test conviction and tempt people to quit at exactly the wrong time. But meaningful returns are rarely built in calm, straight lines — they’re built by staying invested through volatility with a clear, long-term framework.
My portfolio performance since October 2022
Since late 2022, my personal portfolio has grown nearly 300%, not by chasing short-term moves, but by focusing on high-conviction ideas and letting time do the heavy lifting. The chart above reflects that long-term journey — including the drawdowns along the way.
I share all my trades, portfolio holdings, and ongoing thinking with members of our Investment Club.
If you’d like to learn how we approach the market with a long-term mindset, and the stocks we buy you’re welcome to join us here.
— George
⚠️ Red Flag to Note
Guidance Sensitivity Is Replacing Earnings Power
This earnings season has revealed a subtle but important shift: markets are reacting far more to forward guidance and tone than to headline beats. Even companies that exceeded expectations saw sharp selloffs if management commentary suggested slower monetisation, cautious spending, or delayed margin expansion.
🔍 Insider Transactions I’m Watching
Ticker | Insider | Action | Value | Why It Matters |
|---|---|---|---|---|
Josh Fiedler — EVP Sales & ServicesJ | Buy | ~$925K | A sizeable open-market purchase by a senior sales executive signals confidence in long-term recurring revenue — a positive cue in a software name facing broader sector pressure. | |
Maria Sokil —EVP & Director | Buy | ~$560K | Buying at these levels suggests belief in auto parts cyclicals and earnings resilience amid rotation away from growth tech. | |
Andrew C. Florance — EVP & Director | Buy | ~$310K | Insider accumulation in homebuilder sector reinforces conviction as housing stocks stabilise with mortgage rate plateau. |
🔔 Newly Listed
🌳Once Upon a Farm Inc. ($OFRM)— This organic children’s food brand priced its IPO last week and began trading on the NYSE, highlighting continued investor appetite for consumer and differentiated food concepts.
👁️ 👁️SpyGlass Pharma Inc. ($SPG) — A late-stage biotech focused on chronic eye conditions, priced its offering and began trading on Nasdaq.
🗓️ Upcoming IPOs
📈 Clear Street Group Inc. ($CLRS) — Targeting a valuation of up to ~$11.8 billion in a Nasdaq listing under ticker CLRS. The broker and prime-services platform aims to raise around $1.05B, drawing interest from major banks and signaling confidence in specialist financial names.
🏦 Agibank ($AGBK) — A nascent financial institution planning a U.S. IPO with strong revenue growth and broad retail banking exposure.
☀️ SOLV Energy Inc. ($MWH) — Renewable energy developer replacing traditional models with decentralised power solutions, lining up a sizable Nasdaq listing.
⛽️ Arko Petroleum Inc. ($APC) — Retail fuel and convenience operator preparing its IPO, signalling continued investor interest in consumer staples and energy infrastructure.
☢️ Jaguar Uranium Corp. ($JAGU) — Resource-sector IPO targeting niche energy-materials demand tied to clean energy and nuclear growth themes.
📬 Closing Note
Navigating the 2026 market will likely mean balancing short-term catalysts with long-term structural growth — especially around tech and productivity trends — while keeping an eye on inflation and labor data that still matter to policy expectations.
Stay selective, stay informed, and approach this market with discipline and curiosity.
Until next Sunday —
George ☕️