Halftime Report: “The Big Risks Beyond A.I.”

Date: February 19, 2026
Host: Dominic Scheer (in for Scott Wapner)
Panel: Joe Terranova, Stephanie Link, Malcolm Etheridge, Bryn Talkington
Theme: Major market risks and opportunities—beyond A.I.—amid tech sector volatility, geopolitical tensions, private credit concerns, and sector rotations.

Episode Overview

This episode examines the current state of financial markets with a spotlight on emerging risks outside artificial intelligence (A.I.), including:

• Geopolitical uncertainty (notably US-Iran tensions and Middle East risk)
• Health of US consumer spending
• Sector leadership shifts away from mega-cap tech (“Mag 7”)
• Private credit market jitters
• Where investors might find opportunity amid elevated market volatility

Market Pulse & Sector Rotation

[01:15-03:22]

• Dominic Scheer frames the discussion: Is the market seeing risk aversion, or just a sector rotation away from mega-cap leaders?

• Joe Terranova:
  “I think it’s more rotational volatility than exit volatility… The story in 2026 is really about, underneath the surface, the elevated volatility relative to what we’ve been used to the last couple of years.” (02:19)

  • Energy sector emphasized as continuing to deliver earnings growth and as under-owned.
  • “If you don’t have exposure to energy, what are you waiting for?”

• Stephanie Link:

  • Market remains in a “slow, steady grind higher,” but expects equal-weight S&P to outperform cap-weight thanks to sector broadening:

    “Lower inflation, higher productivity is the definition of Goldilocks. … I am overweight in energy, industrials and materials…” (03:50-05:17)

• Malcolm Etheridge:

  “There’s this huge divergence right now between the best performers in the S&P and the worst performers… Something has to go meaningfully wrong within tech for the rest of the 493 to catch up.” (05:48)

Mega Cap Tech: Opportunity or Threat?

[07:03-09:19]

• Bryn Talkington:
  • Tech ‘dispersion’ (big differences in performance between names) persists: “You can see that with just Google versus Microsoft.” (07:40)
  • Market does not like unchecked CapEx spending (Amazon, Microsoft called out).
  • Software names are “well under their 200-day moving average… Nothing good happens under the 200-day moving average. It’s going to be tough sledding for the next few quarters.” (08:25)
• General panel agreement: Investors skeptical until CapEx rationale and real returns get clarified.

Earnings: Do They Matter Right Now?

[09:19-14:10]

• Stephanie Link:

  “I think we have to keep it into perspective, Dom... Eventually earnings matter. Stocks follow profits on the way up and on the way down.” (10:34)

  • Cites strong S&P earnings, but notes high 2026 expectations limit multiple expansion prospects.

• Malcolm Etheridge:

  • Investor “AI fatigue” is real; sentiment is driving recent market action, not just fundamentals.
  • Parallels drawn to the early 2000s dot-com bust—a “narrative [that] has gotten a little bit exhausted.”

• Joe Terranova:
  “Who at this point does not know you need exposure to AI? … At times the market needs to recalibrate that positioning.” (13:03)

  • Opportunity seen in sectors not yet boosted by AI, especially energy and materials.

The Cybersecurity & Software Selloff

[15:37-20:49]

• Dominic Scheer: Focus on Palo Alto Networks price drop after AI-fueled optimism, broader software weakness.

• Stephanie Link:
  “The long-term story in cybersecurity is very powerful. … AI is not as secure. … I think it’s an opportunity and it really, truly is a buy here.” (16:36-18:05)

• Bryn Talkington:

  • Remains constructive on cybersecurity, but says tactical, patient entry is key for names like Palo Alto: “I don’t think you’re going to have a V-shaped recovery.”

• Malcolm Etheridge:

  • Building position in Zscaler despite chart weakness:

    “There are a number of quality companies that have been thrown out with the bathwater… I think there’s a huge opportunity building up in software, period.” (19:35)

US Consumer Health: Walmart’s Print and the K-Shaped Economy

[20:49-23:33]

• Walmart’s earnings: Strong quarter, but tepid guidance under new CEO.
  • Joe Terranova:
    “E-commerce was incredibly strong—27%—now 23% of overall US sales… Guidance [is] tepid. I would not be chasing this stock here... indicative of … a K-shaped economy.” (22:02)

Private Credit Worries: Blue Owl, BDCs & Liquidity

[23:33-28:00]

• Dominic Scheer & Bryn Talkington:

  • Blue Owl curbing investor liquidity after asset sale, raising BDC/private credit concerns.
  • Bryn:
    “This is a good lesson for investors… These private, semi-liquid private investments… They don’t have CUSIPs. … When someone yells fire, there actually is no fire and everyone wants to exit. … So far at par.” (24:41-26:35)

• Joe Terranova:
  “I don’t have the answer for you today." Can’t say if price action is a buying opportunity or the start of something more sinister: “That’s either going to be a tremendous opportunity… or we are at the precipice of something that needs to re-rate lower.” (27:20)

Geopolitics & Energy: Oil’s Surge on Iran Tensions

[31:32-35:22]

• Pippa Stevens: (oil/energy update)

  • Oil at 6-month highs; Wall Street gives a 65% chance of US military strike on Iran.
  • “Traders do not want to be bearish… Positioning points to more concern about a price spike than a decline.” (31:53-32:50)

• Joe Terranova:

  • Likes oil field service stocks (Baker Hughes, Schlumberger) and majors (Exxon).
  • Stephanie Link: “Still only 3% of the S&P 500… to try to create alpha it is by actually going against the grain and making it a bigger bet.” (34:22-34:37)
  • Bryn Talkington: “If you don’t own energy, don’t buy it today just on this news [US-Iran]… You’re purely speculating.” (34:42)

Panelist Moves & Fresh Ideas

[37:03-39:57]

Stephanie Link:

• New buys:

  • Truist and added to Bank of America

    “The fundamentals are improving for the industry… The catalyst for me was the deregulation piece… [Excess capital] will be returned to shareholders and buybacks and dividends.” (37:16)

  • Dover (industrials)

    “We’re now starting to see expansion in the manufacturing parts of the economy … The short-cycle stocks within industrials are the ones where they may outperform the long cycle ones.” (39:12)

Notable Tensions & Divergences

[40:48-42:18]

• Michael Santoli (CNBC):
  • Market breadth surprisingly strong—most stocks outperform S&P, but index only 3% off highs.
  • “Mag 7 is down 6.5% YTD; you’d have thought the index would be suffering. And we’re not.”
  • On Blue Owl/private credit: Not “commercial real estate sector melting down,” but a liquidity mismatch worth monitoring.

Standout Quotes & Memorable Moments

• Malcolm Etheridge:

  “I think the narrative [of A.I.] has gotten a little bit exhausted for investors who are making sure that they’re not the last one out the door.” (12:07)

• Stephanie Link:

  “The market may not pay for [earnings beats] today, maybe they don’t pay for it for the next six months, but eventually earnings matter.” (10:34)

• Joe Terranova:

  “Who at this point does not know that you need to have exposure to AI? … At times the market needs to recalibrate that positioning.” (13:03)

Closing Trades (Final Takeaways)

[46:34-46:57]

• Bryn Talkington: XLI Industrials ETF—bullish
• Malcolm Etheridge: Microsoft—“close to putting in a new 52-week low,” worth watching
• Stephanie Link: Quanta Services—should be up more than 5% after great earnings
• Joe Terranova: Edison International—bullish on utilities

Timestamps for Key Segments

| Segment | Speaker | Timestamp | |-------------------------------------------------|-----------------------------|-------------| | Sector Rotation vs. Risk Aversion | Joe Terranova | 02:19 | | “Goldilocks” Macro, Equal Weight S&P view | Stephanie Link | 03:50-05:17 | | S&P Divergence, Tech Fatigue | Malcolm Etheridge | 05:48 | | Tech Dispersion, CapEx Critique | Bryn Talkington | 07:40 | | Are Earnings Being Ignored? | Stephanie Link | 10:34 | | A.I. “Fatigue”, Dot-Com Parallels | Malcolm & Joe T. | 12:07-13:03 | | Cybersecurity/Software Weakness Opportunities | Stephanie, Bryn, Malcolm | 16:36-20:49 | | Walmart & the Consumer | Joe Terranova | 22:02 | | Blue Owl & Private Credit Liquidity Concerns | Bryn Talkington | 24:41-26:35 | | Oil Surge & Energy Positioning | Pippa/Joe/Stephanie/Bryn | 31:53-35:22 | | New Buys: Financials & Industrials | Stephanie Link | 37:16-39:57 | | Market Structure & Breadth | Michael Santoli | 40:48-42:18 | | Closing Trades | All panelists | 46:34-46:57 |

Tone & Language

Conversational and data-driven, with frank admissions on uncertainty (“I don’t have that answer for you today”—Joe T.) and an undercurrent of caution amid otherwise constructive longer-term views. Emphasis on tactical sector/off-the-beaten-path opportunities versus overcrowded trades.

Summary in One Line

While the post-A.I. market appears to be grinding higher with conflicting undercurrents, panelists recommend tactical positioning—in energy, industrials, and select financials—while monitoring tech fatigue, private credit tremors, and geopolitical risk closely.