Archives February 2025

Guest Post Published on February 25th, 2025 by Jacob Wolinsky

For quite some time, big tech companies have dominated the equities market, leading investors to see impressive returns.

At the same time, Wall Street remains optimistic that developments in Artificial Intelligence (AI) will further create long-term opportunities for the wider industry.

In 2024, several Silicon Valley big leagues entered the dividend space, including Meta Platform (META), Salesforce (CRM), and Google’s parent company, Alphabet (GOOG), announcing their first-ever dividend payouts.

Performance of technology shares, including those listed on the S&P 500 Technology Dividend Aristocrats Index (SPTDAUP) have continued to deliver impressive results despite investors having cold feet over wider economic and market volatility.

Since the beginning of the year, the S&P Technology Dividend Aristocrats Index has gained 5.50% compared to the broader benchmark S&P 500 which has added 4.22% during the same period.

With this in mind, Sure Dividend created a list of dividend-paying technology stocks.

You can see the full technology stocks list by clicking on the link below:

 

Technology companies hold an advantage over other leading sectors with the potential for long-term growth and creating attractive returns.

For instance, the 10-year return of SPTDAUP currently outpaces the S&P 500 Dividend Aristocrats Index (SPDAUDP), with a return of 14.01% compared to 7.17%.

The changing market landscape will see a growing number of companies delivering impressive results due to high exposure to artificial intelligence.

Table of Contents

AI And Big Tech Dividends

Strong market performance, driven by the rapid development of artificial intelligence, from software applications to hardware and microchips, brings a series of opportunities for dividend-focused investors.

There are several big tech firms that have a reliable dividend track record, offering investors consistency, and improved growth possibilities amid shifting market conditions.

These companies are not ordinary pure-play investment options and instead offer investors a refined balance of growth and income.

AI Dividend Stock: International Business Machines (IBM)

International Business Machines (IBM) has come a long way since the beginning years of commercial computer systems.

Though the company remains a strong contender in the computer hardware and Information Technology (IT) space, recent developments have been more centered around artificial intelligence, including Generative AI and Machine Learning tools.

There are numerous AI-powered projects that have been in the making for quite some time, with IBM Watson, a semantic intelligence application, being in development since 2004, and making a global appearance in 2010.

Being a trusted, and established leader in the technology industry has helped IBM retain its top position in the race for innovation and broader artificial digitization.

These long-term modifications have paid off, with IBM seeing its biggest growth in recent quarters coming from its software segment.

For Q4 2024, IBM reported software revenues of $7.9 billion, up 10.4% on a quarter-over-quarter basis, and up 11.5% on a flat currency basis. Total quarterly revenue came up 1% and totaled $17.6 billion for the period.

The company has continued to deliver impressive profitability, reporting Gross Profit Margin (GAAP) at 56.7%, and operating (non-GAAP) margins of 57.8%.

Most impressively has been the company’s growing cash stockpile. IBM generated $4.3 billion in net cash from operating activities, with a total free cash flow of $6.2 billion.

Additionally, IBM reported $1.5 billion in shareholder dividend payouts for the fourth quarter. The company recognizes the need to adjust business sentiment to leverage key market activities, boost cash flow, and remain highly competitive in a saturated market.

AI Dividend Stock Qualcomm Inc. (QCOM)

Qualcomm (QCOM) is another large player in the computer and technology space, and having more than 40 years of experience under its belt makes it an impressive investment choice for those looking to create a balanced portfolio with broad exposure to different corners of the industry.

To say that the company has actively been working on a handful of AI-based projects might come as an understatement.

In fact, Qualcomm has developed several native AI systems for PC, smartphones, automotive, and IoT (Internet of Things). In addition to this, projects such as Cloud AI and Edge AI Box further provide digital solutions in Gen AI and cybersecurity.

In February, Qualcomm announced Q1 2025 results, reporting a 17% increase in revenues compared to the same period in 2024. In total, for the period, reported revenues were $11.66 billion, along with $3.18 billion in net income, up 15% quarter-over-quarter, along with diluted Earnings Per Share (EPS) of $2.83, up 15%.

In October, the company announced a quarterly cash dividend of $0.85 per common share. Currently, QCOM has an annual dividend of $3.40 per share, which is in line with other market contenders.

Stock performance remains modest, seeing a 13.03% increase since the beginning of the year through February 19. For the first quarter, the company returned $2.7 billion to stockholders, including $942 million in cash dividends, with $1.8 billion through share repurchases.

Again, QCOM requires patience, and investors should keep in mind that the company continues to find its niche within a rapidly developing and changing digital environment. Still, there’s long-term upside potential, and investors who can purchase QCOM at a lower price point could benefit when the tide begins to change.

AI Dividend Stock: Broadcom (AVGO)

Global technology developer Broadcom (AVGO) has noticed that AI-enabled technology and software applications are rapidly approaching an inflection point. This in turn has given them an opportunity to leverage their experience to secure a spot at the top of the list of innovative digital companies that’s driving AI scalability.

At the 2024 Open Compute Project (OCP) Global Summit hosted in October last year, Charlie Kawwas, Ph. D., President of the Semiconductor Solutions Group at Broadcom shared that the company is looking to pioneer new innovative technologies, and continues to secure the necessary resources to scale its AI-infrastructure strategy.

Broadcom delivers plenty of hands-on digital solutions and has a reliable track record that has seen them deliver advancements in fiber channel networking, wired and wireless connectivity, and software applications.

2024 presented itself with a new sense of optimism for the company. Full-year revenue of $51.57 billion was an improvement of 44% compared to the previous year. Similarly, quarterly net revenue rose to $14.05 billion, a 51% increase compared to Q4 2023.

Additionally, Broadcom reported $5.6 billion in cash from operations, climbing $776 million versus the same period of 2023. The company experienced a gradual decline in capital expenditure, totaling $122 million compared to $172 million in Q3 2024.

Revenue across primary business segments delivered strong results. Semiconductor solutions revenue of $8.23 billion improved by 12% and represents roughly 59% of total company revenue.

Elsewhere, Infrastructure Software revenue climbed to $5.82 billion, which was a robust improvement of 196% compared to Q3 2024.

Last year saw the company’s stock gain 139.30% for the 12-month period, however, current year-to-date delivery is down by 1.43% with stocks making its biggest move in one day, falling by 17.40% between January 24-27.

Looking at the year ahead, Broadcom could remain a strong competitor among other market leaders, and potentially capture broader support for its semiconductor business as AI-focused demand continues to climb.

AI Dividend Stock: OpenText Corp. (OTEX)

Next on the list is the Canadian-based software development company, OpenText (OTEX). The company designs and manufactures integrated information management software that provides a more seamless connection between customers and organizations.

AI development has played a key role for OpenText, with several critical projects coming to the surface in recent years. For example, the company developed OpenText™ ArcSight™ Intelligence, which is a native software protocol that makes use of artificial intelligence to detect insider risks, attacks, and cyber threats.

This is only one of several leading projects that are helping to bring OpenText to the frontlines of digital innovation. Their business model sees them partnering with major companies and organizations for critical cybersecurity solutions, enabling them to create more secure and efficient workplace systems.

OpenText completed the divestiture of Application Modernization and Connectivity (AMC) to Rocket Software for $2.27 billion. The recent sell-off means that the company can begin to focus primarily on its information management segment while using proceeds from the divestiture to reduce debt by $2.0 billion.

In addition to this, the remaining proceeds will be used to further growth in the company’s cloud security and AI market segment. The capital allocation will enable OpenText to become a frontrunner in the AI and cybersecurity space while leveraging new market opportunities to build more robust software solutions.

Fiscal Q2 2025 earnings indicate robust delivery of $1.35 billion in total revenue and is the company’s 16th consecutive quarter of cloud organic growth, which totaled $462 million and improved 2.7% year-over-year.

Similarly, the company reported a net income margin of 17% with operating cash flows of $348 million and free cash flows of $307 million. During Q3 2024 OpenText reported $1.27 billion in revenue, which was the company’s first full quarter following the AMC divestiture.

Performance on the stock market remains volatile following a year of persistent challenges, and having to navigate the divestiture of AMC. Stock performance has declined by over 10% in the last 6 months, with year-to-date delivery down 2.93% through to February 19.

While there’s a lot of room for improvement, OpenText could benefit from the rising demand for AI software and cybersecurity protocols in the coming years.

This year might’ve brought plenty of roadblocks, but the company can now look forward to building a more robust product range which in turn will help them capture a bigger share of the market.

AI Dividend Stock: Accenture plc (ACN)

Information management and consulting agency Accenture (ACN) may have endured a challenging summer on the stock market, seeing shares slide by more than 10% between March and September 2024 but still managed to close the year off on a high note.

In the last six months, share performance has gained 17.64% through to February 2023. Additionally, year-to-date delivery is up 10%, with shares setting their second-highest price since December 2021.

Though the company endured some challenging conditions last year, fiscal Q1 2025 results paint a more promising picture, with new bookings revenue of $18.7 billion up 1%, and the reporting $1.2 billion in Generative AI bookings.

Total revenues for the quarter were $17.7 billion, up 9% compared to Q1 2024. Accenture continues to invest in this space, deploying successful strategies to reinvent digital solutions for their clients and position them as a market leader in the space.

Last year, total new bookings revenue hit a record of $81.2 billion for the full fiscal 2024 year and represented an increase of 14% in local currency.

Accenture remains highly successful in applying a working model that allows them to stay in a flexible position. This ensures that the company has a more autonomous approach to current market conditions, while continuously delivering increased customer turnover.

Across much of its operating regions, Accenture reported strong delivery in new bookings and operating income. The Asia Pacific region witnessed the biggest improvement in operating income at 21%, followed by America up 16%, and Europe, Middle East and Africa (EMEA) up 16%.

Though tailwinds persist, perhaps there’s clear guidance in how Accenture is looking to overcome current challenges, while remaining at the forefront of digital innovation and transformation.

Another Year Of Tech Dominance

2025 proves to hold a new set of challenges for investors, and many will need to take a more flexible approach that would allow them to overcome roadblocks and navigate uncertainty more effectively.

Not only will 2025 be a year to see many of the biggest tech giants in the industry battling to remain at the top of the log, but wider changes in the political and economic environment could mean that companies will need to react to ensure their buoyancy.

After facing several years of hard-to-ignore market pitfalls, the technology sector remains a strong, but seemingly resilient leader that’s inviting investors to find long-term growth and reliable income in the tech companies that are pioneering the development of artificial intelligence.

Additional Reading

Sure Dividend maintains similar databases on the following useful universes of stocks:

In August 2021, Americans were on edge. The Delta variant of COVID-19 had arrived.

This caused consumers to panic a bit, and it showed in the data. The Conference Board’s Consumer Confidence Index fell to 113.8, down from 125.1 in July. That was a steep 9% drop in one month.

Now, it’s happening again – but for very different reasons.

This morning, the Conference Board’s Consumer Confidence Index for February showed a reading of 98.3. That’s down from January’s 105 reading, and economists were looking for a reading of 102.5. Not only that, but it was the third-straight monthly decline for the index.

This is its biggest drop since August 2021.

This didn’t come out of nowhere, either.

On Friday, the University of Michigan’s Consumer Sentiment Survey also plunged. The February reading came in at 64.7, down almost 10% from January’s 71.7.

This also marked a 15-month low. The last time the consumer sentiment survey was this low was in October 2023, when people were grappling with the October 7 terrorist attacks by Hamas in Israel, the U.S.’s ballooning budget deficit and elevated Treasury yields and interest rates.

Now, the reasons for the drop in consumer confidence and sentiment this time around are different. Some of the current consumer pessimism could be weather-related. But the main driver we are seeing this time around is due to tariff threats. The Conference Board noted today that “there was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019.”

The truth is Americans are still feeling the sting of high prices. Even though inflation has cooled from its 2022 peak, it’s still sticking around. Gas, groceries, rent – they’re all more expensive than they were a year ago.

Tariffs threaten to raise the prices of imported goods and reduce consumer demand. So, consumers are on edge that these tariffs might unravel the progress made in bringing inflation down recently.

We already knew that S&P 500 companies are concerned. According to FactSet, more S&P 500 companies are citing “tariff” or “tariffs” on quarterly earnings calls than at any point since Q2 2019. 

But it was Walmart Inc.’s (WMT) earnings report last week really raised the first major red flag that consumers were concerned about tariffs.

So, in today’s Market 360, we’ll take a closer look at Walmart’s earnings and what the company management had to say about tariffs. I’ll also share the important details that investors are overlooking. Not only do they bode well for Walmart’s future, but they highlight a huge shift in companies’ approach to artificial intelligence. I’ll explain what’s shifting… and how you can profit from it.   

Let’s get started.

Written by the Market Insights Team

A worrying sign

Kevin Ford –FX & Macro Strategist

During a press conference yesterday, President Trump confirmed that tariffs on Canada and Mexico are ‘on time and on schedule’ to begin on March 4^th, following the one-month pause. Markets are still hesitant to fully price in the threats and aren’t anticipating the tariffs will be imposed. Don’t be surprised if Trump lifts the tariff until the very last minute, as he did previously.

We’ve been trying to make sense of all the noise and commentary from President Trump. Initially, the tariffs were seen as a bargaining tool or a way to reduce the US deficit, but as time goes on, the motivation becomes clearer. Trump’s recent post on Social Truth spells trouble for Canada. It remains unclear whether the tariffs will apply only to Canada and Mexico, to steel and aluminum, to reciprocal tariffs, or to all of these. However, as the debt ceiling agreement deadline approaches on March 14^th, the Trump administration is expected to push for its tax cut agenda, which includes revenue projections from tariffs and fiscal spending cuts from the newly established Department of Government Efficiency (DOGE).

The revenue projections from tariffs come from Commerce Secretary Howard Lutnick, who claimed that reciprocal tariffs could generate $700 billion annually. Also, Kevin Hassett, the director of the National Economic Council, estimated that a 10% levy on Chinese imports could yield between $500 billion and $1 trillion over 10 years. While Republicans see tariffs as a significant revenue source, these numbers alone seem far fetched from a macro point of view and will face challenges in congressional hearings.

So far, the US Senate has passed its $340 billion border bill, which excludes tax cuts. Meanwhile, the House is advocating for a single comprehensive bill that incorporates tax extensions and border spending. This bill has advanced through the Budget Committee, but only after making concessions to fiscal conservatives.  The proposed bill is an extension of the 2017 tax cuts, which according to the proposed numbers, could cost $4.8 trillion over the next 10 years.

Starting the week, the Loonie began testing upward resistance levels at 1.425. In the absence of significant news, as we get closer to March 4^th, it could again face upward pressure, pushing it to test the 20, 60, and 40-day SMAs resistance zone between 1.43 and 1.435.

Dip buyers save the day

Boris Kovacevic – Global Macro Strategist

Yesterday’s market session was split into two distinct phases, as investors began the week by selling risk assets amid growing concerns of a U.S. slowdown. Recession fears intensified following weaker-than-expected leading indicators from the Chicago and Dallas Federal Reserves. U.S. equities fell, bond yields plunged, and the dollar followed suit, pressured by deteriorating sentiment.

However, dip buyers stepped in during the U.S. session, helping equities and the Greenback recover some losses. Overall, the impact of the day’s news and data appeared to be net-neutral for markets. That said, recent growth concerns could become a bigger problem for risk assets if soft economic data persists, making secondary indicators increasingly important to monitor.

The dollar ended the day slightly lower after briefly touching its weakest level since mid-December. As we highlighted in our feature for Fortune, the dollar remains under pressure for two key reasons: the absence of new tariffs reducing safe-haven demand and the Fed’s pause being linked to rising inflation expectations rather than strong macro data. With recent data reaffirming these trends, the dollar has struggled to benefit from steady rates, currently sitting at its lowest level this year, down 3.4% from January’s peak.

For a meaningful rebound, dollar bulls will need either stronger U.S. economic data or renewed tariff enforcement by Trump. The latter could materialize today, as Trump reiterated overnight that tariffs on Canadian and Mexican goods will be implemented once the delay expires.

New government, old problems

Boris Kovacevic – Global Macro Strategist

The euro briefly climbed above $1.05, reaching its highest level in nearly a month before retreating to $1.0460. Investors see the potential for increased fiscal spending, particularly in defense, as a way to support economic activity. However, fiscal constraints may limit the impact, as political hurdles complicate efforts to boost spending. Meanwhile, business sentiment is showing cautious optimism, though immediate economic conditions remain subdued. We will continue to monitor political developments and key macro releases, as they will play a crucial role in shaping EUR/USD’s near-term direction.

Following the German election outcome, Chancellor-designate Friedrich Merz is actively engaging with the Social Democrats (SPD) to accelerate defense spending in response to escalating geopolitical tensions. However, the rise of fringe parties, securing a minority with blocking rights, has complicated efforts to amend the constitutional “debt brake”, which restricts government borrowing. To navigate these constraints, Merz is considering pushing reforms through the current parliament before the new session begins on March 24. These political maneuvers have added uncertainty to the euro’s performance, as markets assess their potential economic impact.

On the macro front, the Ifo Institute’s latest survey indicates a modest improvement in business expectations, with the index rising to 85.4 in February, up from 84.3 in January, and exceeding forecasts of 85.0. However, current conditions worsened, highlighting that while businesses are hopeful about the future, they continue to struggle with present challenges.

Pound running into resistance

Boris Kovacevic – Global Macro Strategist

The pound climbed to a nine-week high of $1.2690 before encountering resistance near $1.27. Strong UK data and persistent inflation in recent weeks continue to provide support, leaving room for further gains—especially if U.S. economic momentum slows in parallel.

However, geopolitical risks remain a key factor. Trump’s tariff agenda, while not directly targeting the UK, could disrupt global trade flows, particularly with China and the eurozone, leading to potential spillover effects for Britain. Meanwhile, elevated UK inflation still supports GBP, but a renewed rise in gilt yields—back toward January highs—could shift rate expectations from a tailwind to a headwind if fiscal concerns resurface.

This morning, the pound is trading in the lower $1.26 area, as a risk-off mood takes hold following Trump’s overnight comments. The administration is set to raise tariffs on major trading partners and is considering further restrictions on China’s access to advanced chips, adding fresh uncertainty to markets.

Dollar continues to decline

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: February 24-28

All times are in ET

Have a question? [email protected]

*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

New CuNi commemorative collectors’ type in normal and colour version:

“Red Arrows“

TECHNICAL DATA
Composition: copper-nickel
Diameter: 27.30 mm
Weight: 8.00 g
Mint: The Royal Mint



Silver and gold proof coins have been issued as well.

LINK: The Royal Mint

Guest Post On February 25th, 2025 by Tom Hutchinson, Chief Analyst, Cabot Dividend Investor

We’ve been spoiled by a booming bull market over the past two years. The S&P 500 posted two consecutive years of better than 20% returns in 2023 and 2024 for the first time in 26 years.

As a result, more subdued returns are possible in 2025.

At the same time, the artificial intelligence boom continues. And the bull market is still young by historical standards.

But stocks are expensive. The overall price/earnings ratio for the S&P is well above the ten-year average. Then there’s interest rates. Interest rates are likely to stay higher for longer than previously expected as the economy remains strong, and inflation is proving sticky.

Investors will have to balance between the benefits of stronger growth and the realization that interest rates probably won’t fall to the degree stocks have already somewhat priced in.

That okay. It’s normal and healthy for a bull market to take a bit of a breather while earnings catch up. And more subdued returns put a greater emphasis on dividends, which provide a greater portion of total return in a flatter market.

We tend to forget all about dividends when stocks are flying. But they may play a much bigger role in your overall return in 2025.

One of the best places on the market for dividends is energy stocks. The payouts are among the highest anywhere. And energy is in the spotlight.

With this in mind, Sure Dividend has compiled a list of nearly 80 energy stocks (along with important investing metrics such as dividend yields), available for download below:

 

The Trump administration will pursue vastly different energy policies than the previous administration. A mainstay of the new economic strategy is to unleash domestic fossil fuel production to its fullest extent. The regulatory environment is likely to become far friendlier and encouraging for more oil and gas activity.

Of course, the policies may not be good for many energy company stocks. More production of oil and gas means lower prices. Lower energy prices mean lower profits for commodity-sensitive companies.

But there is one area in the energy realm where the new policy approach is positive: midstream energy.

Midstream energy companies are involved in the middle stages of the energy chain between production and final sale to end users. They gather, process, transport, store, and export oil and gas.

A key differentiator is that revenue is primarily generated by collecting fees for such services, and they are not reliant on commodity prices.

They are toll collectors on the energy highway that benefit from more oil and gas sloshing around the county, which is a good bet going forward.

The best-positioned midstream companies deal in natural gas, the fastest-growing fossil fuel. Sure, clean energy is the wave of the future, but not for a while. The U.S. currently relies on fossil fuels for 79% of its energy needs.

Fossil fuels are expected to remain the dominant energy source for decades to come. Natural gas is the bridge to the future. It is more abundant and cheaper than oil and coal, and it is much cleaner.

Demand for natural gas is strong and getting stronger. It’s the number one fuel source for electricity generation. It’s also the supplement of choice for clean energy, that kicks in when the sun goes in, and the wind stops blowing. The U.S. is the world’s number one producer of natural gas and international demand for exports is strong and growing.

And there’s something else – artificial intelligence. The massive AI catalyst doesn’t just affect high-flying chip companies. Its wake ripples through many aspects of the economy. A major side effect of the new technology is rapidly rising electricity demand.

AI generation sucks up massive amounts of electricity. Data centers (special facilities that house computers and related components) involve sophisticated cooling, back-up, and fire suppression systems.

Large data centers require as much electricity as a small town. And that was before AI. Data centers that house AI components require three times as much electricity as a traditional data center.

As a result, electricity demand is expected to skyrocket in the years ahead, beyond what the current grid can provide. There will be capacity expansion. And natural gas is the number one fuel source for electricity generation. The higher demand will require pipelines of natural gas and expansion opportunities for midstream energy companies.

Most midstream energy companies that deal in natural gas had a stellar year in 2024 while the overall energy sector floundered. These companies also provide high dividend yields.

Here are two of the best midstream natural gas companies on the market.

Midstream Natural Gas Dividend Stock: ONEOK Inc. (OKE)

ONEOK is a large U.S. midstream energy company specializing in natural gas. It owns one of the nation’s premier natural gas liquids (NGLs) systems connecting NGL supply in the Rocky Mountains, Midcontinent, and Permian regions in key market centers.

It also has an extensive network of natural gas gathering, processing, storage, and transportation assets.

Here are some things to like about the stock.

• Investment-grade rated debt
• 85% of earnings are fee-based
• 28 years of stable and growing dividends
• C corporation structure (generates a 1099, not a K-1)

The high-yielding and reliable revenue generator provided a 48.5% total return in 2024 and an 85% return over the last three years. There should be good times ahead as well.

ONEOK recently acquired two midstream companies, Enlink Midstream (ENLC) and Medallion Midstream, which are accretive to earnings immediately. The growing earnings combined with highly favorable industry dynamics should make OKE a winner in 2025.

Midstream Natural Gas Dividend Stock: The Williams Companies Inc. (WMB)

Williams is involved in the transmission, gathering, processing, and storage of natural gas. It operates the large Transco and Northwest pipeline systems that transport gas to densely populated areas from the Gulf to the East Coast. Roughly 30% of the natural gas in the U.S. moves through William’s systems.

Like most other midstream energy companies, the overwhelming bulk of earnings are guaranteed by long-term contracts. And those contracts have automatic inflation adjustments built in.

It also operates a near monopoly in its areas and doesn’t have to compete in price with other similar companies. As a large and established player, it can easily grow with network expansion.

The company continues to raise future earnings guidance as business is booming. WMB also had a stellar 2024 as investors anticipate the growth in natural gas. It returned a whopping 59% for the year. But WMB still trades below the all-time high in 2014 with much higher earnings now.

Additional Reading

Additionally, see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.

Trump tariffs and consumer confidence weigh on Wall Street … hope you didn’t sell your AI energy stocks … how to adjust your risk with position sizing

This morning, Wall Street moved lower after two headlines weighed on investors.

First, President Trump announced that tariffs on products from Mexico and Canada are back on.

Here’s CNBC:

President Donald Trump said that sweeping U.S. tariffs on imports from Canada and Mexico “will go forward” when a monthlong delay on their implementation expires next week.

“The tariffs are going forward on time, on schedule,” Trump said when asked at a White House press conference if the postponed tariffs on the two U.S. trading partners would soon go back into effect.

Products from Mexico and Canada will face a 25% levy, plus 10% duties on Canadian energy.

For investors and consumers, tariffs raise fears of a resurgence of inflation. And that dovetails into our next story – February’s downbeat consumer confidence report.

Here’s MarketWatch:

Consumer confidence [has sunk to an] 8-month low on worries about inflation and Trump tariffs. The decline was the third in a row since the index hit a 16-month peak of 112.8 in November…

Americans also said it was harder to get a job and they were more worried about their incomes.

Put these headlines together and Wall Street is unhappy. All three major indexes were down sharply earlier today with the Nasdaq off nearly 2% at one point.

The good news is that stocks are well off their lows of the morning.

Consider using this tech selloff as a shopping opportunity

I hope you didn’t sell your AI energy stocks back in January when the news of DeepSeek broke…

As you’ll recall, the emergence of the Chinese low-cost AI platform sent Wall Street into a panic.

The fear was that DeepSeek’s groundbreaking low-cost technology meant that the tsunami of AI investment capital that everyone anticipated wouldn’t materialize. And that meant saying “goodbye” to all those earnings-juiced, super-bullish stock price projections.

Not so much.

Here’s the Wall Street Journal:

Despite a brief period of investor doubt, money is pouring into artificial intelligence from big tech companies, national governments and venture capitalists at unprecedented levels.

Before we dive into why, let’s back up.

In the days following DeepSeek’s arrival, our experts Louis Navellier, Eric Fry, and Luke Lango urged investors not to bail on AI

While they believed the leaderboard could change slightly, they agreed that DeepSeek’s low-cost technology would be bullish for AI, not bearish, thanks to Jevons Paradox.

This economic principle suggests that AI at lower cost will result in more total AI spending, not less, because more companies will be able to pay for AI. So, while the cost-per-unit of AI could drop dramatically, total AI spend would explode higher.

Now, Jevons Paradox is happening. We are seeing certain AI costs drop dramatically, leading to greater demand.

But at the same time, the bleeding edge of AI technologies are still coming at a high price tag along with enormous energy demand. To understand why, it’s important to recognize that technology is moving away from traditional large language models (LLM); it’s now moving toward reasoning models and AI agents.

For a good explanation, let’s go back to the WSJ:

Reasoning models, which are based on large language models, are different in that their actual operation consumes many times more resources, in terms of both microchips and electricity…

DeepSeek caused a panic of sorts because it showed that an AI model could be trained for a fraction of the cost of other models, something that could cut demand for data centers and expensive advanced chips.

But what DeepSeek really did was push the AI industry even harder toward resource-intensive reasoning models, meaning that computing infrastructure is still very much needed.

So, how much more “resource-intensive” are these reasoning models?

Here’s Kari Briski, Nvidia’s vice president of product management:

On tasks like generating complex, customized code for developers, this AI reasoning process can take multiple minutes, or even hours — and can easily require over 100x compute for challenging queries compared to a single inference pass on a traditional LLM.

Back to the WSJ for how this is likely to affect overall demand:

In January, it appeared that the cost per token [of AI development] —in both computing power and dollars—would crash in the wake of the release of DeepSeek R1…

On its face, this would seem to indicate that AI’s future demand for computing power would be some fraction of its current amount—say, a tenth, or even less.

But the increase in demand from reasoning models…could more than make up for that.

If…reasoning models become the standard and increase demand for those models by a factor of 100, that’s still a 10-fold increase in future demand for power for AI.

This is just the starting point. As businesses are discovering that the new AI models are more capable, they’re calling on them more and more often. This is shifting demand for computing capacity from training models toward using them.

The WSJ goes on to profile a company that provides AI computing resources to other companies. Here’s its CEO commenting on AI costs and overall demand:

For one customer, we brought their costs down probably 60% six months ago, and within three months, they were already consuming at a higher level than they were consuming initially.

Bottom line: Unless your investment time horizon is less than a year or so (we’ll circle back to you in a moment), ignore the risk of a market correction. Diversify your picks (chipmakers, components suppliers, energy plays, and so on) but invest and then just hang on.

If you’re more risk averse, consider investing a small starter position from which you’ll dollar-cost-average over time (adding to your position in equal dollar increments at regular intervals going forward so that you average out your overall cost basis).

If you’d like help with which stocks to add to your portfolio, our macro expert Eric just identified several that are set to benefit from artificial general intelligence. They’re in his special reports: My 3 Top AGI Stocks for 1,000%Gains and The AI Dominators. To learn how to access these reports, click here.

I’ll wrap up this section with the following quote from Tomasz Tunguz, venture capitalist and the founder of Theory Ventures:

Every keystroke in your keyboard, or every phoneme you utter into a microphone, will be transcribed or manipulated by at least one AI.

And if that’s the case, the AI market could soon be 1,000 times larger than it is today.

How to remain in the AI trend if you can’t stomach the coming ups and downs

In Friday’s Digest, I noted that not everyone has a decade-long investment horizon.

Frankly, not everyone has a one-year investment horizon.

If you’re in that boat – or if you’re a more conservative investors – how do you invest in AI without too much exposure to market risk?

In Friday’s Digest, I highlighted an entry/exit timing tool from our corporate partner, TradeSmith. It uses historical market data to create a unique volatility thumbprint for any given stock.

This proprietary “Volatility Quotient” (VQ) reading helps investors know how much volatility is normal and to be expected. And that can inform an investor about when it’s time to get out of a position… and eventually, back in.

But you can use this VQ reading in a second way – to detail exactly how much money to invest based on your specific risk tolerance.

Circling back to today’s AI megatrend, let’s say you find a stock you want to buy, but you have a fixed amount of money you’re willing to risk losing. We can use the VQ reading again, yet with another tool – a Position Size Calculator.

Here’s TradeSmith’s CEO Keith Kaplan:

In our TradeSmith system, we offer something called a Position Size Calculator. It has three different scenarios for how to buy a stock.

1. You could say, “I want to risk $1,000; how much of this stock should I buy?”
2. Or let’s say you have a $100,000 portfolio. You could say, “I’d like to risk 2% of my portfolio; how much should I buy?”
3. And finally, you could say, “I want to buy this stock with equal risk to the stocks in my portfolio; how much should I buy?”

This tool is VERY user friendly, and it’s set to walk you through the perfect position sizing for your portfolio in less than a minute.

Based on the amount of money you’re willing to risk on an AI stock, the Position Size Calculator would tell you the exact position size to take relative to the unique volatility of your chosen stock.

Many investors don’t realize how much these details affect your market performance. Here’s Keith:

Your position size matters a LOT. Don’t get it wrong.

Don’t buy too much of a risky stock and not enough of a low-risk stock.

You must find (and keep!) the right blend to maximize your potential gains while lowering your risk.

Keith is holding a live event this Thursday at 8 PM ET that provides a walk-through of these TradeSmith market tools.

He’ll also introduce a new technological breakthrough, demoing it for the first time. This “MQ Algorithm” is designed to detect and model market melt-ups mathematically. And even though the market is selling off as I write, this MQ algorithm is signaling a melt-up for a subset of stocks.

From Keith:

To be clear, I do think now is the time to buy stocks – but you want to make sure you’re buying the right ones at the right time.

On Thursday at 8 p.m. Eastern, I’m going to share the biggest prediction in my company’s 20-year history. One that will likely have you eager to buy stocks as well.

It’s free to attend. All you have to do is register for The Last Meltup, right here.

We’ll keep you updated on all these stories here in the Digest.

Have a good evening,

Jeff Remsburg

Written by the Market Insights Team

A rolling one-month threat

Kevin Ford –FX & Macro Strategist

The blueprint of a threat, followed by a deadline extension, was on display yesterday, as the presumed March 4^th deadline for Canada and Mexico might now be pushed back to early April. The Eurozone also faced a new round of tariff threats from President Trump, capping the EUR/USD at 1.05. As highlighted in previous Daily Market Updates (DMU), speculation is rife about another push towards April 2^nd, aligning with the deadline President Trump set for his cabinet to assess reciprocal tariffs and global trade relations.

Since inauguration day, trade policy has been a rollercoaster of uncertainty. It’s now unclear whether the steel and aluminum tariffs, initially set to begin on March 12^th, will also be postponed to April 2^nd. For now, the FX markets will believe in tariffs only when they see them.

The Loonie has encountered resistance at the 1.435 level, as flight-to-quality persists in the US markets amid widespread uncertainty. From macroeconomic data to fiscal spending cuts, debt ceiling negotiations, US-Russia relations, and the burgeoning relationship between the Chinese government and the mega tech industry, investors face a myriad of questions with no clear playbook for navigating these uncertain times.

As a result, the fear index, or the VIX, has been up and down between the alarming 20 levels and 17. Nvidia’s strong quarterly earnings have provided a measure of relief to the markets, amid the prevailing uncertainty and doubts about the sustainability of AI momentum in corporate America.

The uncertainty has particularly impacted the crypto market, causing a sell-off that has wiped out around $400 billion in market capitalization over the last few days. BTC/USD is now trading at 86,000, significantly below its all-time high of 106,146.

Equities rattled, currencies calm

George Vessey – Lead FX & Macro Strategist

There’s growing confusion around the timing and scale of tariffs to be implemented by the US administration following US President Donald Trump’s cabinet meeting on Wednesday. Trump said that the 25% tariffs on Mexico and Canada would be implemented on April 2, rather than the looming March 4 date. It wasn’t clear if the president meant that he was giving the countries additional time, or got confused with a separate program. Either way, the slew of contradictions has stoked investor skepticism over Trump’s policy agenda.

Equity markets have been rattled in the wake of the ongoing twists and turns in the tariff narrative, with US equities having now wiped out the initial post-election burst. But currencies appear to be taking it in their stride a little more, with realised volatility in G10 FX shrinking of late. Aside from tariff uncertainty, the growth-scare narrative in the US has worsened, which has led to risk-off market conditions . A combination of weaker growth and disinflationary forces will encourage further interest rate cuts at the Federal Reserve (Fed), with markets now pricing two 25 basis point cuts for the year, whereas the expectation was for just one cut two weeks ago.

Meanwhile, in the commodities space, oil prices are trading a multi-month lows having lost around 4% this month as Trump’s aggressive moves on trade triggered anxiety at a time when oil traders were already concerned about lackluster consumption in China. Moreover, hopes for a potential Russia-Ukraine peace deal weighed on the market, as lifting Russian sanctions could increase global oil supply. Commodity FX thus remains under pressure with the Aussie and Canadian dollars trading softer.

Tariff threats losing sting on euro

George Vessey – Lead FX & Macro Strategist

The euro retreated from a one-month high of $1.0528, whilst Germany’s 10-year bond yield fell to 2.44%, near a one-week low, as doubts emerged over a swift increase in European defense spending and its funding through bond issuance. Meanwhile, economic data showed German consumer sentiment unexpectedly weakened heading into March. Plus, US President Trump fired another round of tariff threats overnight, but it hasn’t rattled the euro like one might have expected.

EUR/USD continues to knock on the door of $1.05 but the 100-day moving average located just above this level remains a strong barrier to the upside. Nevertheless the euro appears relatively calm after the latest bout of tariff threats, falling only 50 pips on the news. Trump stated he intends to impose duties of 25% on the European Union without giving any further details on whether those would affect all exports from the bloc or only certain products or sectors. Meanwhile, Germany’s incoming chancellor, Friedrich Merz, ruled out a swift reform of the country’s borrowing limits and said it was too early to determine whether the outgoing parliament could approve a major military spending increase.

Investors will be monitoring the trade and fiscal policy developments closely, but on the macro front today, Spanish inflation data could prove important for clues on where the Eurozone figure will land next week ahead of the European Central Bank (ECB) meeting. Markets expect another 25 basis point rate cut and about 82 bps of ECB easing in total this year. The spread between US and German 10-year yields closed at 181 basis points on Wednesday, near the narrowest since October. It’s set for the biggest monthly decline since May, which has helped support the euro’s modest rebound over the past month.

Sterling’s double edged sword

George Vessey – Lead FX & Macro Strategist

Due to higher interest rates in the UK relative to other G10 peers, the pound’s elevated carry status increases its exposure to equity market fluctuations. The modest uplift in equity markets helped the pound inch higher versus the euro and US dollar on Wednesday, with the former trading just shy of the €1.20 handle. GBP/EUR is up over 1% month-to-date, but is flat on the year, whilst GBP/USD is up over 2% month-to-date and near its highest in two months.

The pound’s yield advantage can be a blessing and a curse though. When markets are in risk-on mode – investors happy to take on more risk for more reward – sterling tends to appreciate, but in deteriorating global risk conditions, the pound becomes more vulnerable. This is amplified by the UK’s worsening net international investment position and persistent current account deficit, which leaves GBP reliant on foreign capital inflows. With this in mind, if we see a bigger drawdown in equity markets, expect the pound to tumble too. Several warning signals are rearing their ugly heads on this front, including bearish investor sentiment surveys and a surge in demand for protection against a stock-market correction.

We can also look at 1-month implied-realized volatility spreads in the FX space to gauge whether the market expects future volatility to be greater than what has been observed historically. From this, we can see traders are paying up for protection in safe havens like the Japanese yen and Swiss franc as they look to hedge against potential shocks from trade policy, geopolitics and political uncertainty.

Dollar index holds in top 5% of 7-day range

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: February 24-28

All times are in ET

Have a question? [email protected]

*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

Buy-now-pay-later offers SMEs an alternate credit source.

Although generally available in the consumer market for about a decade, the electronic payment model of buy-now-pay-later (BNPL) is finally bearing fruit for micro, small and midsize enterprises (MSMEs) by avoiding interest payments on corporate credit cards, reducing paperwork, facilitating quicker transactions, and improving liquidity management.

The business-to-business (B2B) BNPL transaction works similarly to the business-to-consumer (B2C) BNPL transaction. After a third party runs a credit check and assumes the credit risk of non-payment, a purchaser can delay payment for a fixed period or pay in whole or installments.

Using B2B BNPL, MSMEs avoid tapping their credit lines to pay invoices and avoid trade credit negotiations. For suppliers, it works like reverse factoring, where the buyer uses a third party to pay the invoice immediately and reimburses the financing third party later.

Many MSMEs in sectors like retail, manufacturing and technology have become early adopters of B2B BNPL, according to Arjun Singh, partner and global head of fintech, financial services practice at Arthur D. Little (ADL). “Additionally, marketplaces are increasingly incorporating B2B BNPL as part of their embedded finance and financial innovation strategies, helping businesses address liquidity challenges and streamline payment processes.”

On the other hand, B2B BNPL is a sleeping giant that is ready to awaken. It is driven by larger and often more complex transactions. The authors of a viewpoint published by ADL estimated that B2B BNPL would capture 15% to 20% of all B2B payments by the decade’s end.

“This would equal approximately $25-$30 trillion BNPL volume and, assuming average BNPL fees of 3%-4% per transaction, a total addressable market between $700 billion and $1.3 trillion,” they wrote.

Geographically, BNPL is a global phenomenon available in approximately 80 markets, with the Asia-Pacific markets leading adoption in China and South Asia, such as Malaysia, Indonesia and Singapore, according to Vaidya. “After that, we have seen a lot more applicability in Europe because the immediate payment access is better. In the US, there have been many new BNPL providers.”

Where Credit Is Due

The BNPL model would not function without third parties taking on the non-payment credit risk. Fintechs—such as Sweden’s Klarna, Australia’s Afterpay, and America’s Affirm—blazed a path for the B2C BNPL space, capturing considerable market share while expanding their offerings.

Nonetheless, Capgemini’s Vaidya notes that banks will likely dominate the B2B BNPL market.

“Klarna and Afterpay have a lot of retail customers, individuals who are buying in malls and big box retailers or on an e-commerce online shop,” he says. “Banks are doing better in the small and midsize enterprise segment.”

While fintechs continue to crack into the B2B market, banks already have existing financial relationships with MSMEs and their suppliers and offer them another way to provide credit to their commercial customers. This is especially true for businesses with revenues in the $20-$50 million range and had difficulty obtaining small-ticket loans historically.

However, financial institutions’ results are not all rosy. The B2B BNPL business comes at the cost of commercial credit card fees and those generated by a bank’s factoring and reverse factoring business lines.

“In the past, a business would go and buy something on its commercial credit card, and a bank would generate a fee on the transaction,” explains Vaidya. “When an immediate account-to-account payment option is possible, they can pay their suppliers directly where they didn’t need credit. So the banks need to do something.”

The banks have gone big with their B2B BNPL offerings. Global banking giants Banco Santander and BNP Paribas began offering their respective BNPL services to their large multinational clients in 2023 via partnerships with payment platforms and trade insurance providers. Banco Santander Corporate Investment Bank launched its turnkey service, which incorporates the payment platform from net-terms infrastructure provider Two and the services of insurance broker Marsh Spain and credit-insurance provider Allianz Trade.

“The fact that buyers have to use personal or corporate credit cards is still hindering B2B transactions. Enabling businesses to maintain their payment habits within 30 or 60 days of their invoices in an e-commerce environment will be a big differentiator for sellers while adding a major game changer: all concerns about non-payment risk are now removed, and their cash flow is preserved at all times,” said Ignacio Frutos Lopez, global head receivables at Banco Santander CIB at the time of the launch.

Three months later, BNP Paribas launched its service in partnership with Hokodo, a B2B payment platform provider that can integrate with existing checkout platforms via an API. The service provides real-time credit decisions, transaction financing, credit and fraud insurance, and collection capabilities.

Moving Forward

Despite its potential remarkable growth, B2B BNPL still has a few hurdles to overcome. According to the authors of the ADL viewpoint, customer awareness and regulation are the leading concerns, followed by risk assessment, product structures, cross-border trade issues, technology integration, costs and competition.

“A significant portion of the target market needs to be educated about the benefits and risks of the proposition,” says ADL’s Singh.

According to research by Capgemini, BNPL’s expected adoption rate will remain flat for the next couple of years. In a study of e-commerce shares by checkout method, BNPL garnered a 5% share in 2023 and is forecasted to have a 5% share in 2027. Meanwhile, credit cards, which had a 22% share in 2023, are predicted to shrink to a 15% share over the same period.

As the size of the entire BNPL market increases, regulators are investing more effort in addressing BNPL offerings as separate from typical longer-term interest-bearing loans. However, according to Eric Mitzenmacher, a partner at the law firm Mayer Brown, BNPL-specific regulation remains nascent in many jurisdictions.

“The US—despite being a fertile market for BNPL offerings due to the size of its economy and certain helpful regulatory factors—has one of the more complex and rapidly evolving regulatory environments for BNPLs,” he says. “Many other jurisdictions currently have more permissive environments for BNPL, particularly for BNPLs offered to SMEs versus consumers, with the potential exception of BNPLs offered by banks and similarly regulated financial institutions.”

Singh agrees, saying, “Unlike consumer credit, which has a relatively uniform regulation across jurisdictions, business lending and credit regulations are diverse and fragmented, lacking the same clarity—especially in cross-border scenarios.”

Even with these hurdles, Singh expects B2B BNPL to have a similar adoption curve as its consumer counterpart and gain traction across multiple sectors and transaction types. “As commerce continues to unify across channels and customers demand greater personalization, the reach and impact of B2B BNPL will expand significantly, offering businesses increased flexibility and financial options.”