Market Commentary | March 2026

Wildermuth Commentary March 2026.pdf

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Boom and Bust, All at Once

It’s rare to see a market that feels optimistic and uneasy at the same time. Artificial intelligence continues to generate eye-popping numbers, yet is now creating doubts about the future. Nvidia, currently the most valuable company in the world by market cap, just reported quarterly revenue up 73% year over year. The company exceeded expectations across the board, and the shares still slipped. Investors seemed to question whether the companies buying all those chips can keep spending at this pace without stretching themselves.

Yet the spending certainly continues. The largest technology firms are on pace to spend roughly $670 billion this year building out data centers, chips, networking equipment, and power infrastructure. Because of fears for the future, stocks tied to AI stumbled in February. The S&P 500 slipped 1.4% for the month. The Nasdaq did worse. Software companies, banks, and parts of the broader tech complex were hit hardest.

What triggered it? A mix of slightly hotter inflation data, softer labor indicators, tariff headlines complicated by a sharp geopolitical shock of the military conflict between the United States and Iran. Oil prices moved quickly higher on fears of disruption in the Strait of Hormuz, defense stocks rallied, and investors were briefly reminded that macro risk doesn’t disappear just because earnings are strong. So far, markets have treated the conflict as fairly contained, but energy prices and regional escalation bear watching.

None of that qualifies as a financial shock — at least not yet. But it was enough to dampen enthusiasm. The shift isn’t about whether AI is real but more about the impact that it’s going to have. For the past two years, AI was treated almost exclusively as a growth engine. Lately, investors have started asking harder questions. What if companies overspend? What if returns take longer? What if AI boosts productivity but compresses margins in certain industries? What happens to the job market?

Meanwhile, the broader economy looks steady. Inflation is easing. The unemployment rate sits around 4.3%. January added 130,000 jobs, with private hiring stronger than the headline number once government payroll declines are stripped out. Bond yields near 4% suggest an economy running close to normal speed, not overheating and not stalling. Even with geopolitical tension rising, credit markets have not shown signs of stress.

Markets often struggle most during transitions — not from boom to bust, but from certainty to recalibration. Expectations adjust. Valuations are refined. And that’s what seems to be happening. Equal-weight indexes are doing better. Smaller companies have touched new highs. International markets have had their moments. The leadership is broadening, even if the headlines remain fixated on AI.

History tells us major technological shifts rarely move in straight lines. Railroads, electricity, the internet — all created enormous value. All also produced volatility along the way. Spending surges first. Profits sort themselves out later.

Right now, we’re seeing both sides of that equation — and layering on top of it a reminder that geopolitical risk can reprice assets quickly, particularly commodities and defense. The bigger picture hasn’t really changed. Earnings are still growing. Capital is still being deployed. The economy isn’t flashing recession signals. But the easy optimism phase appears to be over. Fortunately, we don’t seem to be facing panic, but simply a bit more measured scrutiny.

Daniel Wildermuth

Portfolio Manager, Quartz Astra Strategies

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DATA SOURCES

Market Data: https://www.wsj.com/market-data


INDEX DESCRIPTIONS

The Standard & Poor’s 500 Index is a capitalization-weighted index that is generally considered representative of the U.S. large capitalization market.

The NASDAQ Composite Index is a capitalization-weighted index that is comprised of all stocks listed on the National Association of Securities Dealers Automated Quotation System stock market, which includes both domestic and foreign companies.

The Dow Jones Industrial Average is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities.

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