Volatility in Markets, Gold's All-Time High, and a Quantum Breakthrough

Today’s Breakdown

• US markets enter correction territory but rebound on Friday

• D-Wave achieves a computational breakthrough

• Intel appoints new CEO as TSMC eyes foundry stake

• Wall Street turns cautious while retail investors keep buying

• Gold breaks all-time highs above $3,000 per ounce

• SoftBank, OpenAI, and Oracle pour billions into AI infrastructure

Let's dive into the key stories moving markets.

Markets Continue Free Fall

It was only three weeks ago that exuberance over Donald Trump's blueprint for the economy had vaulted U.S. stocks to a record high. Today, with concerns mounting over the goals and impact of his trade war, the S&P 500 has tumbled into its first 10% correction in almost two years.

The selloff accelerated Thursday as Trump threatened to enact a 200% tariff on European wine, champagne, and other alcoholic beverages—a dramatic escalation of trade tensions that began with tariffs on Canada, Mexico, and China.

"In only a few weeks, the broader market has gone from record highs to correction territory," said Adam Turnquist at LPL Financial. Tariff uncertainty has captured most of the blame for the selling pressure and is creating economic growth concerns, and retail investors becoming more fearful than ever about a recession.

US consumers’ perceived likelihood of a recession over the next 12 months rose to 67% in February.

The market fall began Monday with the S&P 500 plunging 2.7%, the Nasdaq 100 falling 3.8%, and Bitcoin dropping below $80,000 for the first time since November.

By Thursday, the S&P 500 had slid to a six-month low, closing below its 200-day moving average for the first time since November 2023—a development that has historically signaled extended market trouble.

On Wednesday, when cooler-than-expected inflation data (0.2% vs forecast 0.3%) offered temporary relief, the selling pressure quickly resumed as investors focused on longer-term trade policy uncertainties.

Former Treasury Secretary Steven Mnuchin attempted to downplay the selloff:

Markets had a solid recovery on Friday, however, when the S&P added over $1 Trillion of market cap and officially posted the best day of 2025.

One major question looms: Will this correction mark a temporary pullback or signal the beginning of a more prolonged market downturn?

With several fundamental concerns beyond just tariffs—including stretched valuations and slowing earnings growth—investors are wondering if these valuations can be sustained.

There's more to the story.

Wall Street Turns Cautious While Retail Keeps Buying

As financial markets continue in turmoil, a divergence has become apparent between professional investors and individual traders—perhaps signaling more pain ahead.

So who’s bullish and who’s bearish?

Wall Street professionals have grown increasingly cautious, with strategists across major institutions tempering bullish calls as the trade war escalates.

Morgan Stanley's Michael Wilson has been the latest to sound the alarm, warning clients about deteriorating economic fundamentals. JPMorgan Chase & Co. and RBC Capital Markets have also scaled back their optimistic outlooks for 2025.

On the other hand, individual investors continue to pour money into the market. Retail traders added $7.3 billion to equities in the week through Wednesday, according to Emma Wu, a global quantitative and derivatives strategist at JPMorgan Chase & Co. This buying occurred even as the S&P 500 slipped over 4% and big tech stocks gave up even more.

Time will tell whether they are catching knives or successfully buying the bottom.

Most telling was their continued faith in perennial favorites like Tesla, where individuals bought more than $4 billion of stock since last Tuesday despite shares falling nearly 20% since the start of March. Leveraged ETFs including the ProShares UltraPro QQQ (ticker TQQQ) and Direxion Daily Semiconductors (SOXL) saw more than $1 billion of inflows each last week.

This divergence creates an interesting market dynamic. Historical patterns suggest that market bottoms often occur only after retail investors finally capitulate and sell.

In other words, this correction may have further to run. Don’t shoot the messenger.

Gold Breaks All-Time Highs

As equity markets tumble, gold has emerged as a standout performer, recently hitting new all-time highs above $3,000 per ounce for the first time in history.

This ascent reflects a broader trend worth examining: are stocks currently overvalued relative to commodities by historical standards?

We think yes — check out this chart that shows the commodities index relative to the S&P.

Gold has crushed most asset classes over the last 12 months. While the S&P 500 has risen +11% since March 2024, gold is up nearly +44%. Even more striking, as the S&P 500 has fallen -5% YTD, gold has gained over +10%.

This outperformance even goes against historical trends, as gold has continued rising despite high interest rates and a strong U.S. dollar—conditions that typically pressure the precious metal.

Notably, physical gold demand in the U.S. has soared. U.S. gold imports hit a record $30.4 billion in January, marking a second consecutive month of sharp increases — this is double the amount seen over the pandemic.

This surge suggests investors are increasingly viewing gold as a safer store of value than traditional financial assets.

This shift may reflect deeper concerns about U.S. fiscal policy. The United States is now spending 44% of GDP per year, matching levels last seen during World War II. This deficit spending has made U.S. government bonds appear "less safe" to many investors, particularly as recessionary fears grow.

The trend extends globally as well. China's gold reserves have reached a record $73.5 billion, while India's gold reserves hit an all-time high of $70.9 billion. Global gold demand jumped 24% year-over-year in 2024 to a record $382 billion.

Looking at the relative valuation between stocks and commodities, we're currently at one of the most extreme readings in decades. The relationship between stocks and commodities typically moves in 10-20 year cycles, where one outperforms while the other lags. The current extreme suggests we could be nearing an inflection point where commodities broadly outperform stocks—a potential regime change that could reshape portfolio strategies for years to come.

Major Quantum Computing Update

The quantum computing industry received a significant boost following news of a groundbreaking technological achievement. D-Wave Quantum (QBTS) led the sector's impressive rally with shares closing Friday up 47% at $10.13—having nearly quintupled (up 383%) from a year ago.

In what CEO Alan Baratz called "an industry first," D-Wave's annealing quantum computer demonstrated quantum computational supremacy on a practical problem. The company's quantum system performed a complex simulation in minutes with high accuracy—a task that would reportedly take nearly one million years using one of the world's most powerful classical supercomputers.

The company noted that solving this problem with traditional supercomputers built with GPU clusters would require more than the world's annual electricity consumption.

The breakthrough propelled shares across the quantum computing sector, with Quantum Computing (QUBT), Rigetti Computing (RGTI), and IonQ (IONQ) all having substantial gains.

This surge comes after the sector had recently been pummeled following comments from Nvidia CEO Jensen Huang, who suggested we were roughly 20 years from seeing "very useful quantum computers."

During D-Wave's fourth-quarter earnings call, Baratz countered this timeline:

D-Wave posted mixed financial results with a wider-than-expected fourth-quarter loss, but revenue that beat Wall Street's forecasts. More importantly, the company's first-quarter guidance came in well above expectations.

The stunning performance demonstrates growing investor confidence in quantum computing's potential to revolutionize how computers solve highly complex problems, despite the technology being in it’s infancy.

Intel Appoints New CEO and TSMC Eyes Foundry Stake

Intel (INTC) shares soared nearly 15% on Thursday as Wall Street cheered the appointment of Lip-Bu Tan as the company's new CEO, marking the struggling chipmaker's best day in years.

The news came amid reports that TSMC has approached fellow semiconductor manufacturers including Nvidia, AMD, and Broadcom about forming a joint venture to run Intel's foundry business.

Tan, a highly respected industry veteran who previously led Cadence Design Systems to 3,200% stock appreciation during his 2009-2021 tenure, will be tasked with reviving Intel's fortunes after it missed out on the artificial intelligence-driven semiconductor boom.

The company has posted several quarters of market share losses in data centers and PCs, while accumulating billion-dollar losses in its manufacturing business. And their overall failure over the years comes from a variety of missed opportunity: the mobile phone, the dominance in any manufacturing market, and now the AI computing boom.

The image below shows the lack of market share that Intel has endured:

Adding to the excitement is that TSMC has now approached chip designers about forming a consortium to run Intel's foundry business, with the Trump administration allegedly asking TSMC for help in turning around Intel.

According to sources, TSMC would not own more than 50% of the joint venture, which would focus on making custom chips for other companies.

While analysts have optimistically embraced these developments, they caution that any turnaround will likely take years. Intel's market value has remained stuck below $100 billion for the first time in three decades, with most analysts maintaining "hold" ratings on the stock.

SoftBank, OpenAI, and Oracle Pour Billions Into AI Infrastructure

A wave of massive investments in data center infrastructure is sweeping across the tech industry, with SoftBank, OpenAI, and Oracle all announcing multi-billion dollar plans this week.

SoftBank Corp. plans to transform a former Sharp LCD panel plant in Japan into one of the country's largest data centers for operating artificial intelligence agents developed in collaboration with ChatGPT creator OpenAI. The telecom giant will acquire the facilities at Sharp's defunct TV LCD plant in Sakai, Osaka for $677 million, with operations targeted to start in 2026.

This partnership aims to commercialize OpenAI's AI agent base model in Japan—the first such deployment globally. The facility will likely require around 100,000 GPUs, pushing the total investment to approximately $6.7 billion. The joint venture will train the model on client companies' human resources, marketing, and other information to sell AI agents customized for each client.

Meanwhile, Oracle announced plans to spend $10 billion on new data center construction and expansions in 2025, a 33% year-over-year spend increase.

"Oracle has been building data centres at a record level," said Larry Ellison, Oracle's chief technology officer and chairman, highlighting ongoing construction of "the largest data centres in the world." He noted that Oracle is building 20 data centers for Microsoft and Azure, who "just ordered three more data centres this quarter."

These massive investments reflect the exploding demand for AI infrastructure and data center capacity globally. When hyperscalers continue to throw billions at these data centers for AI model training and agentic AI compute, it’s hard to ignore.

That's all for this edition of Forward Thesis, where we cut through the noise to analyze the tech trends and market shifts that matter.

See a trend we should cover? Let us know.

Until next time.