Tuesday gave Wall Street almost everything it could ask for. |
→ Inflation cooled more than expected. → Goldman Sachs delivered a record quarter. → JPMorgan’s profits jumped 41%. → And chip stocks rallied as investors trimmed their expectations for an immediate Fed rate hike. |
Then IBM showed everyone who was paying for the party. |
The company warned that customers were shifting technology budgets away from traditional software and mainframes—and toward servers, storage, memory, and AI infrastructure. Its stock collapsed 25%, a worse one-day decline than it suffered during Black Monday in 1987. |
That explains the unusual scoreboard. |
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⚡ Closing Bell:
→ Dow Jones: ▲ +0.02% to 52,508.27 › Barely finished in the green as strong bank earnings were largely offset by IBM’s historic 25% plunge.
→ S&P 500: ▲ +0.38% to 7,543.59 › Softer-than-expected inflation and upbeat bank results lifted the benchmark, while semiconductor stocks led the advance.
→ Nasdaq: ▲ +0.90% to 26,107.01 › Chipmakers rallied as investors rotated back into AI infrastructure despite renewed Middle East tensions.
→ Russell 2000: ▲ +0.39% to 2,964.76 › Small caps participated in the rally as cooling inflation improved sentiment beyond megacap technology. |
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Macro Moves:
→ 10-Year Treasury Yield: ▼ to ~4.58% › Bond yields eased after June CPI came in below expectations, reducing immediate pressure on the Fed despite higher oil prices.
→ Dollar Index (DXY): ▼ 0.33% to 100.91 › The dollar weakened as softer inflation prompted traders to dial back near-term rate hike expectations.
→ Bitcoin: ▲ Around 4% › Crypto joined the broader risk-on rally as easing inflation boosted investor appetite for growth assets. |
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❗ Looking Ahead: The AI story gets its next test on Thursday. |
TSMC reports earnings before the bell, offering one of the clearest reads yet on global AI demand.
Investors will also watch June PPI for another inflation checkpoint, while Fed Chair Kevin Warsh returns to Capitol Hill for a second day of testimony. |
The market has liked the AI story. Now it wants the receipts. |
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#TRUTH: ❗❗❗ ❝ The bamboo that bends is stronger than the oak that resists. ❞ ~ Japanese Proverb |
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Take a look at this… It's a radical "light-speed" device that's turning AI as we know it into "Accelerated AI", making it 100 times faster and 100 times more energy efficient. |
In fact, Jensen Huang, Nvidia's founder and CEO, says this device is shattering the limitations of AI and without it, AI can't scale. |
If you want to discover what this technology is, why Nvidia is betting billions on it… |
And the one stock we believe could be the biggest winner when "Accelerated AI" goes mainstream… |
Click here to see all the details. |
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AI Took the Budget. |
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IBM just delivered one of the biggest surprises of earnings season. They preannounced second-quarter results that missed Wall Street’s expectations.
→ Revenue: $17.2B vs. $17.9B expected
→ Adjusted EPS: $2.93 vs. $3.02 expected |
The stock plunged 25%, its worst one-day drop in decades, after the company warned that customers are redirecting spending away from software and mainframes toward AI infrastructure. |
In other words: businesses are spending somewhere else.
For the first time, a major technology company openly admitted that AI spending isn't simply creating new demand—it's reshuffling existing budgets. |
IBM believes the shift is temporary, but analysts say it also highlights a broader reality: AI is forcing companies to rethink where every technology dollar goes. |
For months, investors have focused on the winners of the AI boom—Nvidia, SK Hynix, and other chipmakers. |
IBM may have just shown everyone where their growth is coming from.
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China’s AI Memory Bet. |
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Last week, Wall Street welcomed SK Hynix. |
This week, China answered. |
Memory-chip maker ChangXin Memory Technologies (CXMT) is seeking to raise up to $9.8 billion in one of the country’s largest semiconductor IPOs, giving investors another reminder that the race to build AI infrastructure is becoming increasingly global. |
Memory has become one of the biggest bottlenecks in AI. Every advanced model needs enormous amounts of DRAM and high-bandwidth memory to train and operate, turning companies that make memory chips into some of the industry’s most valuable suppliers. |
The IPO highlights something bigger. |
The AI race is becoming a competition over who controls the factories, supply chains, and components that make those models possible. |
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The New Toll Booth. |
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Data-center operator Switch has hired Goldman Sachs and JPMorgan for an IPO that could raise as much as $10 billion and value the company at nearly $80 billion, including debt. If it goes ahead, it would rank among the largest U.S. listings in years. |
Switch doesn’t build AI models or design chips. |
It owns the large-scale campuses that provide the electricity, cooling, and connectivity needed to run them. Customers include Nvidia, Dell, and FedEx, all of which rely on increasingly scarce computing capacity. |
The valuation says a lot. |
Switch was taken private for $11 billion in 2022. Four years later, investors may value it at roughly seven times that amount as data centers move from industrial real estate to critical AI infrastructure. |
It is also arriving into a much healthier IPO market. U.S. listings have already raised $155.5 billion this year, the strongest pace since 2021, with AI-related companies dominating the pipeline. |
The AI gold rush is no longer rewarding only the companies building the models. |
It is rewarding the companies that own the power outlets. |
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Gains & Pains: |
Gains:
→ SK Hynix (SKHY): ▲ +27.29% › Soared after analysts turned bullish following its record-breaking U.S. IPO, extending investor enthusiasm for AI memory chips. |
→ ChronoScale Holdings (CHRN): ▲ +16.68% › Continued its AI infrastructure rally as investors favored high-growth technology names. |
→ AXT (AXTI): ▲ +14.09% › Semiconductor materials stocks climbed alongside the broader AI chip rebound led by Nvidia and SK Hynix. |
→ Atai Life Sciences (ATAI): ▲ +14.08% › Growth stocks rebounded as cooler-than-expected inflation boosted appetite for risk assets. |
→ Sezzle (SEZL): ▲ +13.82% › Buy-now-pay-later names benefited as easing inflation improved sentiment toward consumer spending. |
😬 Pains:
→ IBM (IBM): ▼ -25.21% › Posted its worst one-day decline since 1987 after warning customers are shifting spending from legacy software toward AI infrastructure. |
→ Polestar (PSNY): ▼ -14.99% › EV shares remained under pressure as investors rotated toward AI and financial stocks. |
→ Denali Therapeutics (DNLI): ▼ -14.46% › Biotech stocks weakened as investors rotated into technology following the softer CPI report. |
→ Ericsson (ERIC): ▼ -13.48% › Telecom equipment shares lagged as capital flowed into semiconductor and AI infrastructure companies. |
→ Biogen (BIIB): ▼ -8.17% › Slipped after investors reacted negatively to updates on its Alzheimer’s drug program.
🔥 Most Active: |
→ Nu Holdings (NU): ▲ 2.34% › Fintech giant remained one of the market’s busiest names as investors continued accumulating financial stocks. |
→ American Airlines (AAL): ▼ 3.92% › Airlines fell as higher oil prices revived concerns over fuel costs. |
→ SK Hynix (SKHYV): ► 0.00% › One of the most actively traded stocks following its record-breaking U.S. listing and AI-fueled buying frenzy. |
→ Ondas (ONDS): ▲ 5.75% › Drone and autonomous technology shares attracted speculative buying. |
→ Nvidia (NVDA): ▲ 4.06% › AI leadership returned as semiconductor stocks rallied after cooler inflation data and optimism ahead of TSMC earnings.
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Escapes: |
Steamboat Rock📍 WY 🇺🇸 |
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Commodities Check : ✔️ |
→ WTI Crude: ▲ +2.2% to $79.56/barrel › Oil climbed as renewed U.S.-Iran attacks and concerns around the Strait of Hormuz kept supply fears elevated. |
→ Brent Crude: ▲ +1.7% to $84.73/barrel › Reached its highest level in about a month as geopolitical tensions outweighed the softer inflation report. |
→ Gold: ▲ +1.6% to $4,061/oz › Bullion rallied after cooler-than-expected CPI weakened the dollar and eased near-term Fed tightening expectations. |
→ Wheat: ▲ +1.5% › Prices rose as renewed attacks in the Sea of Azov raised concerns over Russian grain exports. |
→ Corn: ▼ 0.6% › Improved U.S. crop conditions and easing weather concerns weighed on prices despite strong demand. |
→ Soybeans: ▼ 0.3% › Better crop ratings and favorable Midwest forecasts offset healthy export demand.
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The stinger: |
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Disclaimer |
This letter is not offering investment, trading, or investment advice nor is based on any individual portfolio or business operation. We are not a registered investment, stock nor commodity advisor. One should consult with their own registered advisor to discuss investment strategies that are appropriate for their business or personal goals, risk tolerance and financial situation. Information in this report and on any website is derived from a variety of source believed to be reliable however no representation is made that the information is accurate, complete or correct. These lessons, newsletter and site content is not intended nor shall not constitute or be construed as an offer or recommendation to “buy”, “sell”, “trade” or invest in any securities, commodities, futures, options or other asset referred to in said lessons, reports or newsletters. Rather, this research is intended to identify situations and circumstances that those in the trading community should be aware of to better help assess and improve their own risk management skills. |
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Disclaimer |
This letter is not offering investment, trading, or investment advice nor is based on any individual portfolio or business operation. We are not a registered investment, stock nor commodity advisor. One should consult with their own registered advisor to discuss investment strategies that are appropriate for their business or personal goals, risk tolerance and financial situation. Information in this report and on any website is derived from a variety of source believed to be reliable however no representation is made that the information is accurate, complete or correct. These lessons, newsletter and site content is not intended nor shall not constitute or be construed as an offer or recommendation to “buy”, “sell”, “trade” or invest in any securities, commodities, futures, options or other asset referred to in said lessons, reports or newsletters. Rather, this research is intended to identify situations and circumstances that those in the trading community should be aware of to better help assess and improve their own risk management skills. |
This publication is for informational and educational purposes only. It does not constitute investment, trading, or financial advice and is not based on any individual’s financial circumstances, goals, or risk tolerance. We are not registered investment, stock, or commodity advisors. Always consult a licensed financial professional before making investment decisions. |
Information provided in this newsletter (and on any affiliated website) is obtained from sources believed to be reliable; however, accuracy and completeness cannot be guaranteed. Opinions expressed are those of the authors and are subject to change without notice. |
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