TMTB EOD Wrap; Seagate (STX) KLAC NXPI First Takes
Good afternoon. QQQs -1% as more of the same unwind that we’ve seen the last 3 days continued. NDX and SOX both testing 100MA for first time in months as the SOX is in a 25% drawdown with QQQs now in a 10% drawdown and only up 10% YTD. Semis still up 55% YTD despite a 30% drawdown which gives some good perspective despite the pain many investors are feeling in July. TMT Mo down another 10%+ today and in a 50% drawdown as semis were a sea of read with memory leading the way lower (SNDK -14%; MU -9%) as investors worry about 2nd derivative pricing slowing & Chinese supply. But plenty of other names down high single digits+ as well. Not much new to touch on the AI semis narrative/sentiment front that we didn’t touch on in yesterday’s EOD wrap.
This is all happening with SPX down less than 3% from ATHs and AAPL hitting ATHs. Internet got the big bid today with mid cap names rallying (DASH +6%, CHWY +5%; CART +3.5% and even SPOT/NFLX +3% catching a bid) while hyperscalers languished again (META/AMZN flattish with GOOGL +2%). Software continued to be a beneficiary of the unwind & narrative change (open-source/lower model costs debate favors better margins for the SaaS players): HUBS +7%; WDAY +8%; MNDY +6% NOW +5% etc. PLTR -6% after Clev flagged below street commercial growth in Q2 and DOCN -6% getting looped with AI semis the big losers.
A quick snapshot of sentiment among investors right now:
Arun — who is always great at coming up with good mental models to frame outcomes/distributions — wrote a great post in TMTB Slack that’s worth a full read, which followed up on the thread we called out yesterday regarding what’s plaguing the AI trade. Great discussion in that thread from others as well. Here’s a brief summary of Arun’s points from Claude: