February 2026

Newsletter February 2026

February Recap

• Welcome-back Workshop: In the first workshop of the semester, the new board was formally presented and an overview of this semester's objectives was shared. We finished the night off with an aperitivo at Dahlia. 

• AoD & Recruitment Aperitivo: We were thrilled to see so many girls interested in learning more about WiF during Associations on Display and the Recruitment Aperitivo. Meeting motivated applicants and answering your questions in more detail was very fulfilling. Thank you to all that took the time to meet us!

• "The Art of Pitch: Strategic Communication in Finance": We were honoured to welcome Antonio Frizzi, Maria Paola Toschi, and Claire Caulliez to our first open event of the semester, in which we discussed how communication gives power to numbers. One key takeaway was that “less is more”. Instead of overwhelming your audience with data and numbers, clearly explain why your message deserves attention.

• Visit to BCC ICCREA: On February 18th, we had an in-company visit to BCC ICCREA's headquarters in Milan. It was an amazing opportunity to hear from successful women in the field and learn about their day to day lives. 

• Workshop on LBOs: We ended the month by discussing the main financial news of the past couple of weeks, followed by a lesson on LBOs, in which we first explored the theory and then put our learnings to the test by solving a practical case in groups.

Don’t miss out on our social media where we post our weekly tips, market news, and market quizzes as well as stories of women that keep inspiring us!

News Recap

The Software Meltdown

The sharp decline in software stocks over the past month signals investor concern regarding the rise of AI agents. Unlike traditional AI systems that simply provide information, agents use tools to complete workflows and are capable of taking actions on behalf of users. 

Recent developments by Anthropic and OpenAI signal a shift from conversational chatbots toward more autonomous AI agents, which could act as a new layer on top of existing applications and become the primary computing interface for many workers. If this is the case, companies could reduce their reliance on separate Software as a Service (SaaS) products, leaving AI providers with an even larger share of corporate IT budgets and therefore threatening the relevance of many traditional software providers. On the back of this, the State Street SPDR S&P Software & Services ETF, which tracks an equal-weight benchmark of about 140 software companies, fell by around 20% in the first two months of the year. 

The implications of the sell-off extend beyond public equities. According to some estimates, software accounted for around 40% of private equity deal activity over the past decade, and nearly one third of lending in private credit. Many buyouts were completed during a low-interest rate period, driving valuations very high. Continued weakness could increase refinancing risks and pressure returns as firms struggle to justify past valuations.  

However, integrating AI agents securely and persuading customers to adopt them takes time due to concerns regarding data privacy, reliability, and switching costs. Financial markets are nevertheless indicating that SaaS companies must adapt quickly.  

Software Sector Underperformance vs. the Broader Market

*State Street SPDR S&P Software & Services ETF Data from FactSet  

UK Set to Reduce Government Debt Sales for the First Time in Four Years

After four years of heavy borrowing, the UK government is expected to reduce its debt issuance, with major banks forecasting around £247 billion in gilt sales (UK government bonds) for the next fiscal year. While still high by historical standards, the projected drop suggests that borrowing pressures may finally be starting to ease.

Government bond issuance is an important indicator of fiscal health and market confidence. Heavy debt sales increase supply of bonds in the market, typically pushing prices lower and yields higher. Conversely, reduced supply may support prices and ease financing costs. This matters beyond public finances, as gilt yields directly affect mortgage rates, corporate borrowing costs, and overall financial conditions in the economy. However, the scenario is more complicated because of the Bank of England’s ongoing quantitative tightening programme. As the central bank sells bonds accumulated during years of asset purchases, it continues to add supply to the market, meaning overall pressure on the gilt market could remain significant even if government issuance falls.

For Chancellor Rachel Reeves, lower borrowing may provide limited “fiscal headroom” under her rule that debt must fall as a share of GDP within five years. Such headroom is politically valuable, offering flexibility to respond to economic shocks without immediately resorting to tax rises or spending cuts. That said, the UK’s debt level remains historically high and borrowing costs are still sensitive to global market conditions. The reduction in issuance therefore signals gradual stabilisation rather than a decisive turning point. Ultimately, long-term improvement will depend less on marginal reductions in borrowing and more on sustained economic growth.

Dealflows and IPOs

Nvidia’s $100bn Ambition Turns Into $30bn Strategic Equity Bet

Back in September 2025, Nvidia and OpenAI announced a headline-worthy strategic deal in which Nvidia intended to invest up to $100bn over several years to support OpenAI’s planned expansion of AI data-centre capacity. As part of the agreement, Nvidia would supply its AI chips to OpenAI for the infrastructure build-out, in return for staged investments as new capacity was installed. However, the arrangement was structured as a letter of intent and never became a legally binding contract.

Although initially welcomed by stock market investors, the scale of long-term capital commitments, combined with growing concerns about AI valuations and capital intensity, ultimately prevented the deal from being finalized. Instead, Nvidia is now expected to make a more straightforward $30 billion equity investment in OpenAI in the near term. This forms part of a broader funding round that could total over $100 billion and may include other major investors such as SoftBank, Amazon, and Microsoft.

What does this mean, in practice?

Instead of linking multi-year infrastructure build-outs to staged capital commitments, Nvidia will now make a direct equity investment in exchange for shares. The new structure brings greater clarity and certainty through an up-front commitment with defined terms and reduces risk for Nvidia, removing the need to commit tens of billions to infrastructure projects that would only proceed if future expansion targets were met. It also gives OpenAI greater flexibility by allowing the involvement of additional partners and broadening its investor base, signalling market confidence beyond a single large deal. 

What began as a proposed $100bn infrastructure commitment has therefore evolved into a more clearly defined $30bn equity investment, shifting the focus from large-scale AI buildout to a direct ownership stake and reflecting a broader recalibration in AI financing.

Technicals Explained

Capital Asset Pricing Model 

Developed in the early 1960s by William Sharpe, Jack Treynor, and others, CAPM is a foundational pillar of Modern Portfolio Theory (MPT). The MPT is a framework for assembling a portfolio of assets to maximize expected return for a given level of risk through strategic diversification. Within this context, the Capital Asset Pricing Model provides a linear framework for quantifying the relationship between systematic risk and the expected return of an asset. In other words, CAPM tells us that investors need to be compensated for two things: the time value of money and risk. We represent this relationship through a linear equation: E(Ri​) = Rf+βi​(E(Rm​)−Rf​).

The Expected Return E(Ri​) is anchored by the Risk-Free Rate (Rf​), typically the yield on a U.S. Treasury bill. Added to this is the product of the Beta (βi​), a measure of the asset’s volatility relative to the market where a 1.2 beta signifies 20% more volatility, and the Market Risk Premium (E(Rm​)−Rf​). This premium represents the additional return investors demand for exiting "safe" Treasuries to enter the volatile stock market.

Applications:

In a professional context, the CAPM serves as the industry standard for calculating the cost of equity, an important input for determining the Weighted Average Cost of Capital (WACC) used in DCF analysis. By establishing the "required return" of a security, an analyst can evaluate whether an asset is fairly valued. If the discounted value of projected future cash flows aligns with the current market price, the asset is considered to be in equilibrium on the Security Market Line.

However, the model’s elegance is predicated on several stringent, often criticized assumptions that diverge from real-world market dynamics. These include market efficiency, which assumes all information is instantly absorbed by rational, risk-averse investors, and homogeneous expectations, where all participants operate with identical time horizons. Furthermore, CAPM’s reliance on Beta as a proxy for risk assumes that price volatility alone captures an asset’s risk profile, ignoring idiosyncratic factors. While idiosyncratic risk is unique to a particular company or industry, systematic risk (measured by Beta in CAPM) affects everyone. In conclusion, despite its reliance on idealized conditions, CAPM remains a vital benchmark for risk-adjusted performance, serving as a hurdle rate to ensure an investment's projected returns justify its systematic risk exposure.

Finance x Sustainability

Climate Risk and Financial Stability in the Age of Green Regulation

Climate change is no longer only an environmental issue, it has now become a financial risk. In recent years, central banks and financial regulators have increasingly treated climate risk as a potential trigger of systemic crises. The question is no longer whether sustainability matters for finance, but how green finance can protect the financial system itself.

A recent example is the European Central Bank’s integration of climate considerations into monetary policy. Through climate stress tests and the gradual tilting of its corporate bond purchases toward greener issuers, the ECB explicitly links environmental performance to access to capital. Similarly, the EU Green Taxonomy and stricter ESG disclosure rules under the Corporate Sustainability Reporting Directive (CSRD) aim to standardize what qualifies as “green,” reducing information asymmetry in financial markets. These measures directly address one classic cause of crises: mispricing of risk.  

From a financial perspective, climate change creates three major risks: physical risks (extreme weather damaging assets), transition risks (sudden policy changes affecting carbon-intensive sectors), and liability risks. If these risks are ignored, markets may overvalue “brown” assets, leading to abrupt corrections that are often called “climate Minsky moments”. Furthermore, the NGFS (Network for Greening the Financial System), formed in 2017, develops large amounts of data on climate change so that banks can incorporate them into their budget and capital allocations. 

Green finance, by reallocating capital toward sustainable activities and pricing carbon exposure more accurately, seeks to prevent such disorderly adjustments. However, finance remains central to the challenge. Rapid inflows into ESG funds have raised concerns about green bubbles and greenwashing, which could undermine market confidence. Ultimately, green finance represents a structural transformation of capital allocation.

Writer's Choice

The New Energy Hedge

When markets think about hedging energy risk, the default instinct is still oil. The logic is intuitive: energy price spikes precede recessions, oil producers benefit from those spikes, and therefore oil equities should offset macro stress. But this framework may be anchored in a world that is already fading.

A useful way to approach the question is to distinguish between cyclical hedges and structural hedges. Oil is a cyclical hedge. It performs when supply shocks hit, inflation rises, and growth slows. Yet its long-term fundamentals are increasingly constrained by electrification, efficiency gains, and policy pressure. In other words, oil may hedge the next shock, but it does so within a structurally narrowing demand base.

Clean energy, by contrast, does not hedge inflation spikes in the same mechanical way. Solar and wind equities will not surge simply because crude jumps $20. However, they are levered to a different force: the steady electrification of transport, industry, and AI-driven power demand. As electricity becomes the backbone of economic activity, assets tied to generation and grid expansion gain macro relevance.

This creates an important asymmetry. Oil hedges volatility within the old energy regime. Clean energy hedges the transition to the new one.

Therefore, the question is less about which performs better in the next crisis, and more about which aligns with the direction of structural change. In that context, clean energy increasingly looks like the more durable hedge.

2 Truths & 1 Lie

Results will be posted to Instagram!

• On February 20th, the Supreme Court ruled that President Trump’s unilateral imposition of the so-called “reciprocal” tariffs in August 2025 was unconstitutional.

• In February, Switzerland announced it would abolish cash entirely and move to a fully digital currency by 2027.

• The Italian National Olympic Committee has committed to paying $7,757,000 in total as a cash bonus to its country’s athletes who won medals.

  
  

WiF Recommends 

Barbarians at the Gate by Bryan Burrough and John Helyar: A compelling account of the RJR Nabisco leveraged buyout, offering insight into LBO structuring, valuation battles, and the role of investment banks in 1980s corporate finance.

Getting to Yes by Roger Fisher, William Ury, and Bruce Patton: Presents a method of negotiation called “principled negotiation,” the purpose of which is to reach a mutually-agreeable outcome without jeopardizing professional relations between both parties. 

Wake Up To Money BBC Radio 5 Live podcast: A daily UK business news podcast providing concise updates and expert analysis on markets, policy, and the economic forces shaping financial decision making.

What’s next?

We are looking forward to all of the workshops we have planned in the upcoming month!

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