Why Feb. 26 Could Be a Huge Day for the Stock Market

Artificial intelligence (AI) stocks helped the S&P 500 soar in the double digits over each of the past three years. Investors were eager to pile into companies active in this new, high-potential area -- and in many cases, their portfolios benefited from the decision right away. Many companies saw their shares soar in the double and triple digits in this early stage of the AI boom.

In recent times, though, investors have become more cautious about AI investing as they worry that the pace of AI spending may slow at some point -- and send high-flying stocks crashing down. So, investors have been particularly tuned in to what messages industry leaders are delivering, with keen attention directed at levels of demand and AI spending.

Against this backdrop, Feb. 26 could be a huge day for the stock market, with one key message driving big gains or declines. Let's take a closer look and find out how you can prepare.

Image source: Getty Images.

A big event on Feb. 25

So, first, what exactly is happening on Feb. 26? The big event I'm talking about actually unfolds the day before, following the close of the stock market. On Feb. 25, Nvidia (NASDAQ: NVDA) is scheduled to report fiscal 2026 fourth-quarter and full-year earnings. Nvidia has become the central player in the AI growth story as it sells the most powerful chips used for crucial AI tasks -- such as the training and inference of large language models. These, along with Nvidia's entire portfolio of related products and services, have generated billions of dollars in earnings for the company in recent years.

Of course, this is great for Nvidia, but you may wonder why what Nvidia has to say is important for the performance of the entire market. Nvidia, thanks to its leadership in this high-growth field, has become a bellwether for the tech industry. Good news from this player is generally seen as a favorable sign for AI development moving forward -- and most of today's tech leaders have some involvement in AI.

Any potential Nvidia setbacks could worry investors -- the idea is, if this market giant sees AI headwinds, so will others in the field. The use of and investment in AI even spills over into other industries, so a disappointment from Nvidia could weigh considerably on a variety of stocks.

All of this means investors will look closely at Nvidia's report and listen to every word from leader Jensen Huang during the earnings call. The message should be an important one for the company and the stock market in general. And it may set the tone for the S&P 500's performance in the next trading session -- on Feb. 26.

A common message from AI leaders

What does this mean for you as an investor? First, it's important to note that there's reason to be optimistic about Nvidia's upcoming report. The company's peers -- from chip designer Advanced Micro Devices to tech giant Microsoft -- have already reported earnings and have spoken of continued high demand from AI customers. So it's likely Nvidia's message will be very similar. The company also has a solid track record of positive earnings surprises, having beaten estimates for at least the past four quarters.

Of course, this doesn't necessarily mean Nvidia stock will soar or that the entire market will surge following even a fantastic earnings report. As mentioned, investors have been thinking twice before immediately jumping into AI stocks -- and some might even consider rotating out of big winners like Nvidia in favor of stocks that haven't yet gained as much in this AI race.

So, the best thing an AI investor can do on Feb. 26 is remain calm regardless of which direction the S&P 500 takes. It's important to focus on the long-term AI story, which so far continues to look very bright.

This means that if Nvidia and the market climb on Feb. 26, you may celebrate that you got in on certain winning AI stocks early -- and if Nvidia and the market fall, you might use this moment as an opportunity to buy shares of this AI leader and other AI giants for a great price. In either case, your investments in quality AI stocks may lead you to a long-term win -- regardless of the direction the S&P 500 takes on Feb. 26.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.