The Insider Report: Stocks Continue Downward Drift as AI Concerns Stir

Market Overview The downside risks only continued to mount last week, as warned about previously. The tech wreck continued, with the Nasdaq dropping 2.10% on the week. The S&P 500 and Dow Jones Industrial Average also pulled back, 1.39% and 1.23%, respectively. All of the risk-off sectors outperformed again last week, and bonds saw a flight-to-safety bid. It's really become a laundry list of concerns and finally a narrative is starting to emerge – AI promises failing to deliver. This shouldn't last much longer as the best buying opportunity of 2026 is setting up. Stocks I Like Zoom Communications (NASDAQ:ZM) – 35% Return Potential What's Happening Zoom Communications, Inc. (ZM) is a leading provider of an AI-first, open collaboration platform for seamless human connection, delivering video conferencing, meetings, team chat, phone, contact center, events, and integrated AI Companion features through Zoom Workplace, offering investors exposure to the rapidly growing unified communications, remote work, and artificial intelligence sector with a focus on frictionless collaboration, productivity enhancement, and modern hybrid work solutions. The previous quarter showed revenue of $1.23 billion and earnings of $462.83 million. The valuation in ZM is solid for a tech stock. Its P/E is at 18.56, Price-to-Sales is at 6.16, and EV to EBITDA is at 16.50. At a technical level, ZM just broke out from a triangle formation, and even came back down to retest former resistance. It looks to be starting a new bull trend. Why It's Happening Zoom Communications Inc. is emerging as an unexpected AI winner, leveraging its strategic stake in Anthropic (valued by analysts at $2-4 billion, a massive multiple on the initial $51 million investment) to gain proxy exposure to the booming private AI market. This investment, combined with free AI features integrated into the platform, strengthens its competitive moat against rivals and enhances enterprise retention, positioning Zoom to benefit from the AI surge without bearing the full development costs. Robust AI-first platform enhancements drive accelerating enterprise adoption and monetization. Tools like Zoom AI Companion (now expanded to more workflows and platforms) and partnerships such as Vizrt for AI-powered engagement solutions (InteractifAI and CaptivAIte) are boosting productivity in meetings, webinars, and corporate communications, fueling higher-value usage and creating new revenue streams in the evolving hybrid work landscape. Strong financial momentum and profitability underscore Zoom’s operational resilience. Recent quarters have shown consistent beats on revenue and EPS, with raised full-year guidance reflecting stabilizing core growth and improving margins from AI monetization and cost discipline. This path toward sustained profitability, supported by a debt-free balance sheet and robust cash generation, provides flexibility for further AI investments and shareholder returns. Enterprise and partner-first pivot unlocks long-term growth potential. The shift to a partner-driven model has supercharged product distribution and cross-selling, with accelerating growth in high-margin segments like Zoom Phone, Contact Center, and AI add-ons. This strategy is deepening stickiness among large customers and driving ARR expansion in a market where AI-enhanced collaboration remains a priority. Analyst Ratings:Citigroup: BuyPiper Sandler: Neutral Jeffries: Buy My Action Plan (35% Return Potential) I am bullish on ZM above $81.00-$82.00. My upside target is $125.00-$130.00. Range Resources (NYSE:RRC) – 55% Return Potential What's Happening Range Resources Corporation (RRC) is a leading U.S. independent natural gas and natural gas liquids (NGLs) producer, focused on exploration, development, and acquisition of properties primarily in the Appalachian Basin’s Marcellus Shale, offering investors exposure to the rapidly growing natural gas production and energy sector with a focus on low-cost operations, sustainable development, and reliable domestic energy supply. The last quarterly report showed revenue of $748.53 million and earnings of $135.17 million. Valuation is solid in RRC. P/E is at 15.14, Price-to-Sales is at 3.01, and EV to EBITDA is at 8.74. From a technical perspective, RRC is basing nicely within a saucer formation. It still needs to clear the upper horizontal trendline acting as resistance for a full breakout. Why It's Happening Range Resources Corporation (RRC) is benefiting from tightening natural gas supply dynamics and rising LNG export capacity coming online in 2026, opening premium international markets for its Appalachian Basin production. As a leading Marcellus Shale producer with strong East Coast access and supply flexibility, the company stands to capture higher realized prices for natural gas and NGLs, supporting upward revisions to earnings and free cash flow amid structural demand growth from global energy needs. Projected strong free cash flow generation enhances RRC’s shareholder value proposition. Analysts forecast nearly $500 million in 2026 free cash flow at current strip prices, driven by disciplined capital allocation, operational efficiencies, and robust hedging. This cash generation supports debt reduction, share repurchases, and potential dividend growth, positioning the company as a resilient cash machine in a recovering natural gas market. Premier asset base in the Appalachian Basin provides a competitive edge with low-cost production and vast reserves. Range’s focus on high-quality Marcellus inventory enables consistent output with attractive margins, even in moderate price environments, while ongoing improvements in drilling and completion techniques drive further cost reductions and resource recovery—creating a foundation for sustained profitability and long-term growth. Strategic debt management and balance sheet strength reinforce financial flexibility. Recent redemptions of higher-cost notes and a solid liquidity position allow Range to optimize its capital structure, reduce interest expenses, and pursue opportunistic growth or returns without excessive leverage risks, appealing to investors seeking stability in the volatile energy sector. There's a short interest just under 12% on this stock, which could set it up for a modest short squeeze. Analyst Ratings:Morgan Stanley: Equal-WeightB of A Securities: Neutral RBC Capital: Sector Perform My Action Plan (55% Return Potential) I am bullish on RRC above $30.00-$31.00. My upside target is $58.00-$60.00. Bunge Global (NYSE:BG) – 19% Return Potential What's Happening Bunge Global SA (BG) is a leading global agribusiness and food company connecting farmers to consumers through the processing, trading, and supply of agricultural commodities like soybeans, grains, vegetable oils, and specialty food ingredients, offering investors exposure to the rapidly growing food production, agribusiness, and sustainable agriculture sector with a focus on global supply chain efficiency, refined oils, milling, and bioenergy solutions. The company reported $23.76 billion in revenue in the last quarter along with $388 million in earnings. Valuation in BG is fair. P/E is at 28.01, Price-to-Sales is at 0.32, and EV to EBITDA is at 15.19. From a charting standpoint, BG recently broke out from a descending channel, which led to a continuation of the uptrend. Why It's Happening Bunge Global SA is capitalizing on the transformative Viterra acquisition completed in 2025, significantly expanding its global agricultural network, origination capabilities, and processing footprint across key crops and geographies. The integration is accelerating synergy realization, enhancing operational scale and efficiency, and positioning Bunge as a dominant player in agribusiness with improved logistics granularity and margin expansion potential in a recovering commodity environment. Strong free cash flow outlook bolsters Bunge’s long-term value creation story. Analysts project substantial free cash flow generation around $2.09 billion in 2026 and $2.69 billion by 2027, driven by the enlarged platform, cost discipline, and higher volumes. This cash generation supports debt reduction, shareholder returns, and strategic flexibility, reinforcing Bunge’s appeal as a resilient cash engine in the food and agriculture sector amid structural demand for staples and biofuels. Notable revenue momentum and scale advantages highlight Bunge’s growth trajectory. Recent quarters have shown impressive top-line surges—such as Q4 2025 revenue jumping 75% year-over-year to $23.76 billion—fueled by higher volumes, expanded soybean processing, and grain merchandising. The combined entity benefits from a diversified portfolio across soybean, softseeds, other oilseeds, and grain segments, enabling Bunge to capture value from global supply chains and rising demand in renewable diesel and nutrition ingredients. Attractive valuation relative to growth prospects creates compelling upside. Trading at a forward P/E around 12-13x with analyst consensus targets averaging $126-$131 (implying 8-13% upside from recent levels around $116-$118), Bunge offers a discount to peers despite its enhanced scale and synergy potential. This undervaluation, combined with a solid dividend yield of approximately 2.4%, appeals to investors seeking exposure to essential food supply chains with defensive qualities. Analyst Ratings:JP Morgan: OverweightUBS: Buy Barclays: Overweight My Action Plan (19% Return Potential) I am bullish on BG above $99.00-$100.00. My upside target is $145.00-$150.00. Market-Moving Catalysts for the Week Ahead Mixed Job Messaging The latest U.S. jobs report for January 2026, released on February 11, showed nonfarm payrolls rising by 130,000—surpassing expectations of 55,000—with gains concentrated in health care, social assistance, and construction, while the unemployment rate dipped to 4.3% from 4.4%. However, benchmark revisions revealed that 2025 job growth was far weaker than previously estimated, with nearly 400,000 to 900,000 fewer jobs created, totaling just 181,000 for the year, underscoring a sluggish labor market outside essential sectors. This mixed picture poses challenges for the Federal Reserve, which paused rate cuts in January after three consecutive reductions in late 2025 to insure against labor weakness; the stronger-than-expected January data suggests stabilization, potentially reducing urgency for further easing, but the downward revisions highlight persistent vulnerabilities that could pressure the Fed to reconsider if economic momentum falters ahead of its March meeting. How Markets Correct There is a common misconception when it comes to market corrections. They don't always have to occur via dramatic pullbacks. However, corrections can also occur through time. In many ways, this is often more frustrating than corrections through price. The Nasdaq has engaged in a correction through time since late-October. There was an 8-9% pullback back into a low in November, but since then, the tech-heavy index has been range bound, frustrating bulls and bears alike. Bigger picture, the Nasdaq is building a massive base from which new all-time highs can follow. There's a saying in this business that goes, "The bigger the base, the higher the space." Once the Nasdaq resolves from this range, look for a huge move. But of course, that doesn't mean we won't have volatility near-term. Sector & Industry Strength The market internals just keep getting worse for bulls. Utilities (XLU) dominated every other sector last week, and is now climbing steadily out from the bottom of the sector pack. At the top of the leaderboard since Q4 is energy (XLE), which is a late-cycle outperformer. The four worst-performing sectors all have to do with growth, which is a problem. Consumer discretionary (XLY) and financials (XLF) are battling neck and neck for the worst-performer since the start of Q4. Communications (XLC) and tech (XLK) aren't far behind. Interestingly, it's these growth sectors that the market needs to see rally in order to bottom. As long as sectors like energy (XLE), consumer staples (XLP), and healthcare (XLV) outperforming, it's going to continue having problems. 1 week3 Weeks13 Weeks26 WeeksUtilitiesEnergyBasic MaterialsEnergy Editor's Note: These are all sectors that warrant caution at the moment. Classical Risk-Off Signal (Sector ETF: SPY/TLT) The laundry list of risk-off signals for markets have continued to grow. But this week, I want to look at the most classic indicator – the ratio between stocks and bonds. I like to use the S&P 500 (SPY) and long-term Treasuries (TLT) as proxies. The logic is pretty straightforward – when stocks (SPY) outperform bonds (TLT), we're in a risk-on environment. When bonds outperform stocks, we're in a risk-off environment. 2022 was a glaring exception, but throughout the years, this simple rule works very well. Over the past couple weeks, this ratio pulled back a little bit. It's no coincidence that the stock market's internals have deteriorated. I'm not looking for a new bear trend by any means, but perhaps a retest of the lower trendline of the rising channel would suffice to reset sentiment in the overall market. Concentration Risks (Sector ETF: MAGS/SPY) A couple years ago when stocks were rallying, a common complaint was how it was "only seven stocks" taking the market higher. But what happens when those "seven stocks" start breaking down? Concentration risk exists on both sides. I have the ratio here between the Magnificent Seven (MAGS) against the S&P 500 (SPY). It's no surprise to see this ratio in a clean uptrend over the past couple of years. After all, the components of the Mag 7 are what helped take stocks to all-time highs. It's worth noting that MAGS typically underperforms during market downturns as well. In other words, the stocks drop harder than the index itself. Every period of historical weakness in this index has corresponded to a pullback in the broader indices – will this time be different? Final Liquidity Flush? (Sector ETF: LQD/IEI) Whenever markets experience a swift move lower, it has to do with issues on the liquidity front. My favorite measurement of market liquidity comes from credit spreads, specifically the ratio between investment-grade corporate debt (LQD) and 3-7 Year Treasuries (IEI). This ratio has been holding steady. It's far from breaking down. However, its last top was back in late-October, and it just so happened to correspond almost exactly to the top in the Nasdaq. This isn't a coincidence. It could go either way here. I'm not expecting a sharp drop, but a sustained drift lower could lead to continued near-term volatility in stocks. If this ratio starts to surge, it will be a signal from bonds that bulls are back in control. Cryptocurrency When it comes to crypto right now, the most important thing to keep in mind is to not fight the trend. It's a bloodbath in the entire sector, and as long as Bitcoin keeps making lower-lows and lower-highs, it remains a highly dangerous environment for bulls. Prices broke down from a rectangle formation at the end of January, which led to a continuation to the downside. There's some support in the 53,000-56,000 zone right now – I fully expect the February 4 low to be taken out to the downside. There's some additional support in the 42,000-46,000 zone. This could be a downside target for an important low, but as it stands now, the path of least resistance remains lower as long as it stays below 83,000-85,000. Legal Disclosures: This communication is provided for information purposes only. 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