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SOXX slides into a bear market… Luc Lango talks about when the bullish AI will return… One of Jonathan Rose’s favorite trades today… Blue chip investing that Brian Hunt flagged as hitting a new all-time high
As I write on Monday, the technology/AI trade is trending higher. But on Friday, it briefly fell into an official bear market.
I’m referring to Philadelphia Semiconductor Indextrack it iShares Semiconductor ETF (SOXX). It provides a diverse view of the entire supply chain critical to the AI boom – from chip designers, to custom accelerators, to critical manufacturing equipment. It’s a one-click way to own AI.
Here’s what it looked like at one point on Friday – down 20%+, official bear market territory.
This bear was not driven by bad news – it arrived despite some of the best news AI infrastructure trading has seen all year.
Take last week’s earnings from leading AI Taiwan Semiconductor Manufacturing Company (TSMC).
The company reported a record-breaking second quarter, with revenue rising 36% year over year to US$40.20 billion and net income rising 77%, driven by strong demand for AI chips. Gross margins were good, and management raised full-year revenue growth forecasts to more than 40%, supported by a massive expansion of the capital spending budget.
However, Wall Street punished this strong performance with a 5% sell-off.
She’s not the only one.
My fellow AI giants ASML (ASML) and Samsung Electronics It also smashed its earnings last week (Samsung reported a massive 15x increase in operating profit) only to be rewarded with heavy sales – ASML fell 5% the day after announcing its earnings while Samsung fell about 8%.
The most amazing part about all of this is that the “rhythm and fall” anomaly occurs against the background of clear frontal vision. Not only are the AI infrastructure giants promising growth, but their massive future revenues and cash flows are significantly backlogged and already under long-term contracts.
So, why is AI suddenly in a bear market?
Because Wall Street is getting nervous – not about today’s orders, but about tomorrow’s orders.
Investors are increasingly wondering whether today’s AI spending spree is still here.
“Capital Expenditure Recipient Problem”
Last week, our technology expert Luke Lango, editor Innovation investorDetail what happens:
Market hesitation is not about today’s demand (for AI), but whether hyperscale spending will remain strong in 2027 and beyond.
True, hyperscalers have spent billions so far – capitalizing on the lavishness of supply chain companies like ASML, Taiwan Semiconductor, and Samsung – and have pledged billions more for the future.
But yesterday’s pledge is not the same as tomorrow’s delivery. Wall Street is increasingly concerned that it will disappear.
Back to Luke:
The problem is that supply chain companies embrace capital expenditures, they rely on spending decisions made months or years ago, and therefore cannot answer the only question remaining in the market:
Whether ultra-expanders intend to maintain spending today through 2027 and 2028 remains to be seen.
Well, we don’t have to wait much longer to find out.
Order-side confirmation begins arriving on Wednesday when google (goog) Reports, followed Microsoft (MSFT) and Meta (META) Next Wednesday (July 29), and Amazon (AMZN) On July 30th.
Back to Luke:
The four important questions remain clear and straightforward:
- Will ultra-balance sheeters maintain or raise capital expenditures for 2026?
- Do they provide constructive feedback on spending in 2027 and 2028?
- Do AI investments produce measurable returns that justify continued expansion?
- Are they announcing additional infrastructure projects that prove that the construction process is still accelerating?
Luke believes that all four questions will receive positive answers. If so, prepare for a sharp rebound across AI infrastructure.
Here’s his bottom line:
The capex recipient problem is real and is ending (starting this week).
Google, Microsoft, Meta, and Amazon will tell the market what Samsung, ASML, and TSMC structurally cannot: whether the AI infrastructure build has solid legs until 2027 and 2028.
We believe the answer is yes, and all the leading demand-side indicators support this belief.
Let’s see how Luke positions himself Innovation investor subscribers to be prepared for the potential rise of artificial intelligence, Click here.
Now, while money has been pouring into AI infrastructure over the past few weeks, another group is continuing to ramp up: oil refineries.
And this is exactly where veteran trader Jonathan Rose is Masters in Trading Live Find an opportunity today…
Too much fuel in the tank
Jonathan has been keeping a close eye on oil refineries for a long time.
One of the primary indicators he monitors is “crack spread” — essentially the profit margin that refineries earn by converting crude oil into gasoline and diesel.
Historically, refinery inventories tend to follow this margin. When the rift spreads – as it has recently – the earnings power of refineries often improves soon after.
During the last Friday for free Masters in Trading Live In the video, Jonathan noted that the spread of crack continued to strengthen — and then described it as one of the strongest movements he had ever seen:
In fact, I have never seen such a strong and violent movement before…
You want to stay for a long time. All refineries. patience. There is no reason to cover up.
Among the most prominent names Phillips 66 (PSX), HF Sinclair (Dyno), CVR Energy (CVI), and Energy PBF (PBF).
As you can see below, over the past month, these stocks have risen between 24% and 67%.
While this may seem like “too far, too fast,” just realize that as long as refining margins continue to expand, the underlying fundamentals of the industry remain supportive of further gains.
If you’d like to hear Jonathan go through the charts himself – including why he believes crack spread remains one of the most reliable leading indicators on the market – you can Watch Last Friday for free Masters in Trading Live The episode is here.
And if you’re new to Jonathan, he posts these free MIT Live videos every day the market is open at 11 a.m. ET. He provides insight into market trends, explains entries and exits, discusses opportunities he is seeing in real time, and provides plenty of pointers along the way. You can subscribe here.
But energy isn’t the only place investors are finding relief from volatile AI trading.
Senior Analyst Brian Hunt has just highlighted the recent outperformance of a traditional defensive cornerstone in the market…
There is always a bull market somewhere
One of the easiest mistakes investors make during a sharp sell-off is to assume that everything is going down.
This is rarely true.
Here’s Brian, editor Money and mega trendsWith reality:
There is always a bull market somewhere. In the quest to find such bull markets, money usually stays in the market.
He “moves” back and forth between different sectors, industries, and topics… looking for at least a temporary home where he will be treated well.
This month, this “knocking” became particularly evident.
While many of the market’s leading AI infrastructure stocks are down 20%+ from their recent highs, Brian points out that another group has hit record highs – Invesco Dividend ETF (PFM) Just reached a new all-time high.
Dividend Achievers are companies that have raised their dividend every year for at least 10 years. He thinks Johnson & Johnson (JNJ), Visa (V), Coca-Cola (KO), Procter & Gamble (PG), Exxon Mobil (XOM), Chevron (CVX), Walmart (WMT), and PepsiCo (PEP). Many of these companies are “blue” like “preferred stocks.”
If AI sell-offs are keeping you from sleeping well, you don’t have to abandon the market completely — just choose a different investment vehicle, one with a proven track record of strength for several decades.
Back to Brian:
These companies have paid and increased their dividends through recessions, bear markets, and a global pandemic.
In terms of consistency, these companies rank right next to Sunrise. PFM is a fund specifically designed to own such companies.
Whether the current AI sell-off proves to be temporary, as Locke expects, or lasts longer than investors hope, it is important to remember Brian’s broader reminder:
There is always a bull market somewhere.
Write if you’d like to help Brian find them Money and mega trends Every day the market is open, highlighting all kinds of opportunities before they become front-page news – and best of all, it’s 100% free.
Its issues are loaded with trend analysis, actionable tips, and plenty of specific pointers. You can subscribe here.
Coming full circle
We will learn a lot over the next two weeks.
Hyperscalers will finally answer the question Wall Street has been asking all summer: Is AI infrastructure construction still accelerating, or is the spending boom starting to fade?
If Locke is right, the recent AI bear market may be remarkably short-lived.
If not, Jonathan and Brian offer an equally important reminder: markets don’t move as one giant bloc. Capital is constantly looking for opportunities – sometimes in oil refineries, sometimes in big profit-growers, and soon back to AI.
I wish you a good evening,
Jeff Remsburg
(Disclosure: I own TSM, ASML, GOOGL, MSFT, AMZN, CVX, WMT)
