The Great Reversal: Are AI And Metals Losing Their Shine?
Feb. 06, 2026 2:35 PM ET
The Ticker by Alpha Picks
Weekly Newsletter
Big Tech and commodities experienced a sell-off this week as investors transitioned from excitement to anxiety over historical price swings.
The U.S. Fed Chair nomination contributed to the broad risk-asset selling and a stronger dollar.
Deutsche Bank’s Jim Reid warned that markets are entering a “more unforgiving phase” of the AI trade, noting the shift from “every tech stock is a winner.”
Welcome Alphas!
The February financial landscape has been defined by a violent collision between risk-on greed and risk-off fear, characterized by a “metals meltdown” and a skepticism toward artificial intelligence valuations.
The nomination of Kevin Warsh as the next Federal Reserve Chair triggered a massive rotation, sending gold and silver into their steepest declines in decades. Meanwhile, tech earnings drove sector divergence as giants like Amazon ( AMZN) dropped over 10% despite beating revenue expectations. AMZN continues to invest hundreds of billions in AI infrastructure, as investors increasingly punish firms unable to demonstrate immediate productivity gains, leading to a broader market shift toward small-caps and value sectors.
Thanks for reading as we navigate the markets.
Steven Cress, VP of Quantitative Strategy and Market Data at Seeking Alpha
The 2026 Metals Meltdown and the Fed Chair Catalyst
As the U.S. stock market remains extremely expensive and concentrated, the nomination of Kevin Warsh as the next Federal Reserve Chair has triggered a massive rotation, strengthening the dollar while sending gold and silver into their steepest declines in decades.
The nomination of Kevin Warsh to lead the Federal Reserve in May 2026 acted as the primary catalyst for a broad risk-asset sell-off. Spot gold ( XAUUSD:CUR) crashed through the $5,000 mark, falling as much as 10% in a single session—the biggest sell-off in years. The metals rout has driven down shares of mining companies like Alpha Picks stock Coeur Mining, Inc. ( CDE), which was down 22% in the last week but sharply rebounded +10% during midday trading on February 6.
5-Day Performance (S&P 500, Gold & Silver Spot Prices, USD, CDE Stock) (Seeking Alpha Market Data (as of 12:40 pm ET on 2/6/26))
Silver ( XAGUSD:CUR) experienced an even more catastrophic “Black Monday”-style plunge of 30%, more than doubling the worst single-day drop during the 2020 COVID crash. To put this in perspective, silver’s single-day collapse rivals the 1987 Black Monday crash, the worst day in S&P 500 ( SP500) history. Over roughly the past 25 years, gold’s price has changed by about 0.8% per day on average in absolute percentage terms, while silver has averaged around 1.4-1.5% per day. Last Friday’s moves represented near statistical impossibilities that should not occur more than once in several lifetimes. What turned orderly profit-taking into a rout was leverage unwinding. CME Group raised margin requirements on COMEX gold and silver futures—up to 8-8.8% for gold and 15-16.5% for silver—the second such measure within a week and a potential factor leading into the precious metals carnage and some of the other concentration we’re seeing.
Big Tech Earnings, U.S. Equity Valuations, and the AI Trade
Big Tech earnings season has been underway, with Magnificent Seven stocks like Amazon and Alphabet ( GOOG) ( GOOGL) reporting. U.S. stocks have reached historically expensive levels, heavily dominated by a few mega-cap names, creating significant vulnerabilities if P/E multiples contract. The market has definitively shifted from the “every tech stock is a winner” mindset to an unforgiving phase where investors demand tangible proof of AI-driven productivity. Jim Reid of Deutsche Bank observed that “the market seemed very confident it already knew who the winners would be,” but that confidence has faded dramatically. Deutsche Bank data shows drawdowns from 52-week highs across a broad set of U.S. tech and tech-related stocks, with several names down between 40% and more than 70%.
Drawdowns from 52-Week Highs for U.S. Tech and Related Stocks (Seeking Alpha, Bloomberg, FactSet)
AMZN’s announcement of a $200 billion capital expenditure plan for 2026 highlights the tide of cash being funneled into data centers and chips. Four of the biggest U.S. tech companies— GOOGL, AMZN, META, and MSFT—together have forecast capital expenditures reaching about $650 billion in 2026, a boom without parallel this century. Yet Amazon’s stock fell over 10% despite beating revenue expectations, as investors questioned the timeline for profitability. The “software slaughter” was exacerbated by new AI automation tools from Anthropic ( ANTHRO), which sparked fears that traditional financial services and asset management workflows could be disrupted faster than companies can adapt and impacted former Alpha Picks stock PayPal ( PYPL). PayPal’s stagnation sawit removed from the Alpha Picks portfolio just before shares plunged more than 30%. Former PayPal President David Marcus critiqued that the firm has “lost the innovative spirit that once defined it” and “surrendered its product edge” as newer fintech rivals and tech giants outmaneuver PayPal in digital wallets, checkout, and cross-border payments. Florian Ielpo at Lombard Odier Asset Management captured the market’s central concern surrounding AI automation tools: “The question isn’t: Will AI be profitable? But: are profits imminent? This temporal dimension constitutes a predominant market theme.”
Strategic Rebalancing: The Shift to Value and Small-Cap Resurgence
In response to tech-led sell-offs, investors are rotating into undervalued sectors such as staples, pharmaceuticals, and utilities. The Russell 2000 Index ( RTY), which tracks small firms, has shown resilience, rising 2.2% on Friday, while the Nasdaq 100 has posted its worst week since November.
Tech is the worst-performing sector over the last week
Tech is the worst-performing sector over the last week (Seeking Alpha Market Data (as of 12:40 pm ET on 2/6/26))
Bank of America strategists led by Michael Hartnett noted that President Trump’s “aggressive intervention” to reduce the price of energy, healthcare, credit, housing, and electricity is weighing on sectors including energy giants, drugmakers, banks, and big tech—making smaller stocks the main beneficiary from a “boom” in the run-up to U.S. midterms. Dhaval Joshi, Chief Strategist at BCA Research Counterpoint, offered a nuanced view: “Tech is no longer ‘one big bet.’”
Alpha Picks: A Quantitative Edge
As always, during periods of elevated volatility, a disciplined, data-driven investment approach can help relieve investor anxiety by removing the impact of emotions on investment decisions. Alpha Picks selects fundamentally strong stocks like top-performing industrial Powell Industries ( POWL) based on multi-factor criteria across Valuation, Growth, Profitability, Momentum, and Revisions. POWL has performed incredibly well and continues to gain from artificial intelligence tailwinds. As highlighted above, while not all Alpha Picks can be winners, we believe in transparency–and the power of Quant, having removed PayPal from the portfolio before its 30% plunge. Stay tuned for our next Alpha Pick stock, to be released on February 16.
Written by Steven Cress
VP of Quantitative Strategy and Market Data at Seeking Alpha
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given that any particular security, portfolio, transaction or investment strategy is suitable for any specific person. The author is not advising you personally concerning the nature, potential, value or suitability of any particular security or other matter. You alone are solely responsible for determining whether any investment, security or strategy, or any product or service, is appropriate or suitable for you based on your investment objectives and personal and financial situation. The author is an employee of Seeking Alpha. Any views or opinions expressed herein may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.
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Comments (2)
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dlt&dmf
Yesterday, 4:00 PM
Comments (3)
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Trump has always championed the phrase "No one has made any money from a stronger dollar". His pick of Kevin Warsh only emphasizes that. Likewise, many economists are predicting more interest rate cuts after May than just the two if Powell was to remain. I hope no one's thesis regarding precious metals has changed. I've been long gold and silver miners since Trump 1.0 and see no reason to change. Happy investing every one.
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shenness
08 Feb. 2026, 10:32 AM
Comments (1.32K)
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The long reach of CME's increased margin requirements was the primary catalyst for the declines. My bet is that unlike the 1980s the global precious metals market will stabilize and backfill the huge gap up. Silver will see $100 before $40 and gold $6,000 before $3,500.
Equities are anyone's guess at this point. The rotation is something to behold. Mag 7 leadership is under pressure. Question is what replaces it?
long SLV w.covered calls and puts
long SSO call spreads |
