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The AI Reality Check: Breaking the 7,000 Barrier · The SPY Trader

• 0:00
  Good morning and welcome to the Spy Trader podcast .
• 0:03
  I am your host , Barnaby ButterToast , and it is 5 AM on Thursday , February 12th , 2026 , here on the Pacific coast .
• 0:14
  We have a lot of movement in the markets today , and things are feeling a bit wobbly as we all try to wrap our heads around some big economic shifts .
• 0:23
  The S&P 500 , which you might track through the SPY or VOO ETFs , finished yesterday almost flat at 6,941.47 .
• 0:33
  It is currently struggling to break through that huge psychological wall of 7,000 .
• 0:39
  Over on the tech side , the Nasdaq , or the QQQ , took a 0.2 percent hit .
• 0:46
  Big tech is under a lot of pressure because investors are starting to worry if all this money being spent on artificial intelligence is actually going to pay off .
• 0:55
  In fact , more than a trillion dollars in market value was wiped out from big tech just in the last week .
• 1:01
  Even the Dow Jones , tracked by the DIA , slipped about 66 points to finish at 50,121.40 .
• 1:10
  The biggest news story driving this uncertainty is the January jobs report .
• 1:16
  The Labor Department reported 130,000 new jobs , which shattered the consensus estimate of 55,000 .
• 1:24
  Normally , more jobs is great news , but for the stock market , it means the Federal Reserve is unlikely to cut interest rates soon .
• 1:33
  With inflation sitting around 2.7 percent , it looks like the Fed is going to keep rates exactly where they are , between 3.5 and 3.75 percent , until at least June .
• 1:46
  Plus , the market is pricing in the nomination of Kevin Warsh as the next Fed Chair .
• 1:51
  Looking at specific companies , Amazon is causing some waves .
• 1:55
  They projected a massive 200 billion dollars in AI spending for 2026 , which sparked a bit of an alarm .
• 2:03
  Microsoft also saw its shares drop significantly because their Azure cloud growth slowed down by 1 percent .
• 2:10
  On the other hand , Nvidia remains the AI bellwether .
• 2:15
  CEO Jensen Huang recently defended the massive industrywide AI investment , leading to an 8 percent bounce in Nvidia shares earlier this week .
• 2:25
  Then there is Apple .
• 2:26
  They are hitting record quarters because the demand for the iPhone 17 is unprecedented .
• 2:31
  Not everyone is winning , though .
• 2:33
  IBM fell 6.5 percent yesterday and Cisco dropped 7 percent on weak margins .
• 2:40
  So , what should you do with your money ?
• 2:42
  Here are our top strategies for today .
• 2:45
  First , for Strategy A , we are looking at AI Realism .
• 2:49
  Tech valuations are in a showmethemoney phase , so I recommend reducing your exposure to the techheavy QQQ and looking at healthcare instead .
• 2:58
  The Health Care Select Sector SPDR , or XLV , or the Vanguard Health Care ETF , ticker VHT , are great defensive moves .
• 3:08
  Strategy B focuses on defensive growth and income .
• 3:12
  I recommend accumulating Apple , ticker AAPL , because they are growing through hardware cycles without the extreme spending risks of other tech giants .
• 3:22
  I also like the Energy Select Sector SPDR Fund , ticker XLE .
• 3:27
  It rose 2.6 percent yesterday and acts as a necessary hedge against geopolitical instability .
• 3:34
  For Strategy C , we are positioning for sticky interest rates .
• 3:39
  With the 10year yield at 4.17 percent , I would avoid longterm bonds like TLT and instead stick with shortterm instruments like the iShares 1 to 3 Year Treasury Bond ETF , ticker SHY , or the Vanguard Total Bond Market ETF , known as BND .
• 3:56
  Finally , Strategy D is the broad market catchup .
• 4:00
  Since the S&P 500 is very topheavy with tech right now , consider switching from SPY to VTI , the Vanguard Total Stock Market ETF .
• 4:11
  This gives you exposure to mid and smallcap stocks that are less burdened by AI spending expectations .
• 4:17
  That is all for this update .
• 4:19
  I am Barnaby ButterToast , and this has been Spy Trader .
• 4:23
  Stay smart and I will talk to you in a few hours .