Category Archives for Articles
This Micron Chart Is Insane
What a week! Our hero SanDisk (SNDK) delighted investors with its Investor Day, earnings season kept on cruising along, and the CPI/PPI reports helped quell fears over inflation. So let’s dig into the 5 things you need to know about markets right now. Use the table of contents to skip ahead: Skip Ahead! It Was a BAD Week for Michael Burry and AI ShortsThis Micron Chart Is InsaneEarnings Season Has Been Amazing4 Reasons SanDisk Is KINGTraders Are a Little Bearish It Was a BAD Week for Michael Burry and AI ShortsMichael Burry of “The Big Short” fame made headlines this week. Among other moves, he increased his Micron (MU) short and put on a big QQQ put options position. The problem is that AI shorts are getting crushed. First, SanDisk’s (SNDK) Investor Day was very well-received, pushing up other AI stocks like Micron in sympathy. Second, did you see the monster post-earnings moves in Nebius (NBIS), CoreWeave (CRWV), and Lumentum Holdings (LITE) this week? They are the three most heavily shorted stocks in the Nasdaq 100.And they are among the top-10 performers in the index this month. Plus the QQQs have been grinding up, which eats away the value of put positions. So let’s talk about what makes shorting a stock like Micron so tricky.This Micron Chart Is InsaneHistorically, memory and storage have been highly cyclical. But thanks to the AI boom, demand is outstripping supply like never before. Micron can’t even meet half of customer demand, based on comments from a KeyBanc conference. Customers are insensitive to memory prices, and some are signing deals out to 2030. This supports the “this time it’s structural, not cyclical” argument. And if we look at historical earnings for Micron, you can see how things have changed.In the last two cyclical earnings peaks, Micron earned: -$2.59 per share in Q3 2022-$3.53 per share in Q4 2018 But in Q3 of 2026 the company earned $25.11 per share. By shorting Micron, you are saying this is the peak. But look at that chart again. If Micron can earn $25 a share in a quarter, how can you count out $50? Or $100? And the memory/storage boom is just one reason…Earnings Season Has Been AmazingQ2 earnings season has been absurdly strong, according to FactSet data. Q2 revenue growth is tracking at 15.0%. Back on June 30, analysts expected just 12.2% growth.This is the highest since Q4 2021, when the economy was rebounding from the Pandemic lows. The tech sector has been a major contributor with 35.9% growth thanks to huge numbers from AI-driven names like the aforementioned Micron and SanDisk. We can always say the most obvious thing in the world: “It can’t get much better than this.” But even 3 years ago, people were saying the AI bubble was going to pop. And AI spending just keeps going through the roof as companies trip over themselves to buy servers, GPUs, memory, and other hardware. Speaking of SanDisk…4 Reasons SanDisk Is KINGSanDisk’s Thursday Investor Day was going well. And then the company said it would return 100% Excess Cash to Shareholders. Then things started going REALLY well. The stock took off like a rocket:That was great for my 1,000 shares of SanDisk! Oh, excuse me. That was a typo. I own 1 share of SanDisk. (as in ONE) But the bull case here is obvious:Solid revenue growth back by long-term customer agreementsDirt-cheap valuationSuper-high margins and cash flowThe company will buy back tons of stock in the years to comeOf course, it’s hard to chase a stock that’s up 587% year-to-date. (my entry was $1,587 so I’m not pretending I caught it early) BTW, you can get David Prince’s takes on SanDisk and the AI landscape here:Traders Are a Little BearishThe AAII Sentiment Survey shows that investor sentiment is just all over the place week to week. 34.7% of investors are bullish, which is slightly below the long-term average of 37.5%.Technically, this is the fourth straight week of below-average bullishness, despite a string of all-time highs. I take this as positive, because it implies there is still a lot of doubt facing this market. Meanwhile, CNN’s Fear & Greed Index is at 65/100, signifying modest Greed: See you next week kids!
Continue Reading -->Treasury Secretary’s Memo to Market Bears: Drop Dead.
The short setup into the FOMC decision last week was one of the best I’ve ever seen: during an ominous time of the year where crashes occur, the stock market was being pushed closer to the edge by 10yr US Treasury bond rates rising in response to pressure on the Bank of Japan (BOJ) to hike rates and in response to pressure on the Japanese Ministry of Finance (MOF) to sell dollar assets to buy yen in order to stop yen weakness. I had been on the lookout for a rate hike by a foreign monetary authority that would cause the initial break in the market which could lead to a crash just like the 1987 and 1929 crashes, both of which had foreign bank rate hikes as the catalysts. The BOJ was the obvious candidate for a hike as their currency was in free fall, and their domestic population was clamoring for authorities to stop the pain. The MOF would normally intervene in the FX market by selling US Treasuries to buy yen, but that option was off the table as Scott Bessent can’t have rates in the US rise. I thought the BOJ would be forced to hike, which would pull money out of US assets and into Japan. I laid out my reasoning for a low risk short and was short the SPY from just above $740. Instead of a BOJ hike, what we got was a coordinated intervention between the US and Japan with Scott Bessent as the front man, complete with a full media appearance tour and planted photos of Bessent’s memo pad detailing his secret plan to buy yen for $5-$10B. Bessent’s move was a masterful stroke that averted a crisis in the stock market by offering Japan a reprieve without requiring them to either hike rates or sell Treasuries. The very public announcement that the US will not allow the yen to weaken further was enough to put the squeeze on shorts like me (fortunately, I followed my plan to cover and took a 2.5% loss). Bessent’s public statement in support of the yen is enough to take any notion of shorting this market off the table for now, but it also revealed the Achilles heel of the entire global financial system: the yen carry trade. We caught a glimpse of the importance of the yen carry exactly 2 years ago when the BOJ was forced to raise rates off the zero bound to 0.25%. On August 5, 2024 the SPX gapped down, and a full blown melt down was a real concern. The BOJ helped calm the panic by promising not to raise rates again any time soon. The panic level was high enough for Jamie Dimon to release an absurd statement that most of the yen carry trade had been unwound, and there was no reason to be concerned about a market melt down. Jamie is too smart to think that’s true so it’s obvious he was being compelled to sooth the highly leveraged speculative community and their brokers and to convince them to ease off the short yen covering and margin calls. The dire situation of a yen carry unwind was allowed to grow acute in August 2024, but Bessent was taking no chances this time around in 2026 and preemptively intervened before the stock market could weaken. In doing so, he revealed the lynch pin to the asset price bubble we now find ourselves in, and while he may have relieved the pressure building up to that point, neither he nor the BOJ did anything to alter the underlying dynamics of the situation. While Bessent may have altered the path we are taking, I don’t think he was able to change the ultimate destination at which we will eventually arrive: a significantly lower stock market. I think this short squeeze will buy enough time for Wall Street to get out two more big IPOs: OpenAI and Anthropic. One of the greats, Paul Tudor Jones, lays out his case for why those IPOs will likely signal the top in the market. I’m not as smart or as rich as PTJ, so I’ll just adopt his opinion until he changes it. I won’t have a chance at getting anywhere near as rich as PTJ if I dig my heels in on the short side. I’m still bearish, but I’ve got very little trading inventory left to sell and way too much cash if this is the start of a melt up into the IPOs. As bearish as I’ve grown the past month, I managed to resist the temptation to prematurely sell what few longs I’ve got until the time was right. FTK was an easy ride until the recent sell off from $27 to $22, but I reviewed my trade plan when the temptation to bail out of the trade seemed to be on the verge of overpowering my holding discipline. It was a gamble holding over earnings, but I figured the odds were on my side based on the monthly chart and the acceleration in business described on its last report. The bet paid off. DAC was another great win that I locked in this week. With these two trading positions moved out of inventory, I’ve only got a little bit of ATUSF, NTR, XOM, and CVX left in long inventory. I’ve still got a large chunk of the gold miners as long term position trades I put on in 2023. My trades in FTK and DAC are a reminder to myself that my process works. I have a strict set of criteria for putting on longs and sticking to that discipline has been profitable all year. I’ll only buy stocks when I get the setup I’m looking for, like FTK at $18, DAC at $100, MT at $34, ATUSF at $20, XOM at $120, or CVX at $156. If you look at those on a chart, you can see the tight price structure I am looking for. If
Continue Reading -->Nvidia: The Force Awakens
What a week! We had a light jobs report. SanDisk (SNDK) and Western Digital (WDC) hit me where it hurt (my account). And SpaceX delivered its first earnings report as a public company. So let’s jump into what you need to know right now, including the earnings season boom, Nvidia’s (NVDA) monster comeback… and even how Caterpillar (CAT) turned into an AI stock.Earnings Season Has Been Awesome. But Not for SanDisk.Q2 earning season has been ridiculously strong, according to FactSet data. 86% of reporting companies have beaten EPS estimates, the highest percentage since Q2 2021. And earnings are coming in a ridiculous 29.2% above expectations, the highest since at least 2008. Excluding Alphabet (GOOGL) and Amazon’s (AMZN) large one-time investment gains, earnings would still be 10.9% above estimates. Earnings growth is tracking at a whopping 32.0% excluding GOOGL and AMZN. Unfortunately, our biggest, brightest shining star SanDisk (SNDK) got taken to the woodshed. The flash memory maker delivered a strong report, but its guidance disappointed and the stock got smacked around. The same happened with Western Digital (WDC). Now SanDisk is almost 50% off its highs! But fun fact: SanDisk is still the #1 stock in the S&P 500 index this year: Get JR Romero’s latest take on SanDisk here.Meet the Guidance MonsterLast Friday, I said power management semiconductor stock Monolithic Power (MPWR) may be the new SanDisk. And I bought the stock on Monday. SanDisk and Western Digital’s (WDC) guidance disappointments took them out of a unique category of AI stock I call “Guidance Monsters.” These are the AI stocks that deliver revenue guidance so strong that even the biggest bulls can’t believe it. Monolithic Power is seeing wild demand from data center clients. And last week, its Q3 revenue guidance came in 17% above consensus. You have to think that the company plans to handily beat that guidance. See the lines going up and to the right? Those are consensus earnings estimates:This is exactly what you want to see with high-octane growth stocks. Note: I also own SanDisk and Western Digital, so I didn’t have a bang-up week on the AI front.The Nvidia Value Trap Debate Ends for NowI’ve been suggesting Nvidia might be a value trap based on its cheap valuation. That was dead wrong because the stock just woke up:This week, the stock got a nice boost when Elon Musk said SpaceX (SPCX) will exclusively buy Nvidia chips over AI chipmakers like AMD (AMD). I’ve been wondering myself where Nvidia could find its next big customer, and SpaceX may be just that. I have my doubts about how soon we’ll see fully operational data centers in space, but SpaceX’s capex spending is going through the roof. JP Morgan said “we now project capex of nearly $200B in both 2027 & 2028.” A decent chunk of that will flow through to Nvidia.It’s Gonna Be Another Busy Week for AIWhile most big companies have reported, multiple key AI/semiconductor names will report earnings next week, including: Tuesday: Lumentum Holdings (LITE), CoreWeave (CRWV), Super Micro (SMCI)Wednesday: Cisco (CSCO), Coherent (COHR), Cerebras Systems (CBRS)Thursday: Applied Materials (AMAT) So we’ll have even more inputs to help us deal with the ultimate question: Will the spending ever stop? Everyone from Alphabet (GOOGL) to Meta (META) to Amazon (AMZN) to SpaceX is throwing wild amounts of money at AI infrastructure projects. Heck, Caterpillar (CAT) raised guidance because of AI data center buildouts. So maybe we’ll add CAT to our list of AI stocks… Here’s the full calendar for next week:Traders Are… Confused?The AAII Sentiment Survey shows that investor sentiment is just all over the place week to week. 37.0% of investors are bullish, which is right in-line with the long-term average of 37.5%. This follows two straight weeks of bearish readings.This continues the trend of there being no real trend from week to week. Meanwhile, CNN’s Fear & Greed Index popped to 63/100, signifying modest Greed: Of course, if the market dips 2% next week, sentiment will swing back bearish in the blink of an eye. So it’s getting harder and harder to make sense of sentiment data, because there’s never any sustained string of positive or negative readings. Oh well… Have a great weekend!
Continue Reading -->Shorting a Vulnerable Market
One of the most profitable beliefs about the stock market that I’ve adopted is that there exists a distinction between the real world company and the common shares of that company. I like to think of these two, distinct entities as being tethered, sometimes loosely, and sometimes strongly together. At times when the tether between the company and its traded shares is too loose, the price of the shares can travel very far away from the actual value of the company. I think we are approaching a point in time when the tether between the shares and the company is stretched to the max on the upside. A snapback of price down to true value is quickly coming. One of the more prominent metrics that most traders will be familiar with is the Schiller PE which has only been higher than the current level of 40x for several months in the year 2000 before the .com crash. It would be improper speculation to simply take this as a reason by itself to be bearish on the market. Proper speculation requires one to dig deeper and to look for a reason why the market would be vulnerable now. I think that reason is that passive investing is about to see a big slowdown in inflows. As tech companies work AI into their workflows, they are seeing just how many employees they need to keep the same level of output. Big corporations have been, for months now, burning through compute tokens as they let their employees run unconstrained with AI to see how much they can produce. The employees that can produce the most output, document it, and present it to management get to keep their jobs. This has been going on since this Spring. As CFOs get back from the lazy days of summer, they will be planning their budgets for next year. The inflation that has caused all of us to figure out how to do the same with less is now biting corporations as well. The belt tightening always hits them last because they have so much money that they can resist the inflation for longer than individuals. It’s these employees that are getting let go that will cause a slowdown in inflows to passive ETFs in retirement accounts; no more job, no more contributions every paycheck. Mike Green has been publicly vocal for 6 years now that passive investing has an outsized influence on the price of the index as it plows money indiscriminately into the largest market cap companies. This is exactly why SpaceX needed to get a huge valuation on a tiny sliver of shares that are allowed to be traded and why the rules are being changed to allow these shares to be included in a large index like the S&P 500 far quicker than has customarily been allowed. Wall Street needs these shares to get inclusion so the price will be supported. We’ve gotten to the point in this cycle where professionals on Wall Street are gaming the system right out in the open for all to see. Signals like this indicate we are very close to the end of the up cycle in asset prices. Another cycle that seems to be coming to an end is the credit cycle. Michael Howell has been making the podcast rounds lately telling us that the 65 month credit cycle is due to peak imminently. I’ve attempted to read his book, Capital Wars, but it’s far too complex in it’s entirety for me to fully grasp. All I need to know is that when excess reserves in the banking system fall below a certain dollar amount at the end of the credit cycle, we get a liquidity crisis, and asset prices fall. We know we are nearing the end of the credit cycle because the first warnings that private credit was in trouble came when Tricolor defaulted. Private credit funds have been gating their products for months now. The combination of a slowing passive inflow and an ending credit cycle leave the market vulnerable. We saw the first hint of that this week with the FOMC decision to hold and the response in the market was a hard sell to the lows of the week. We’ve got expanding new 52 week lows as the market has been stuck in a range for 2.5 months. My bet is that this range resolves to the downside. I think the market is vulnerable, and I see a low risk opportunity to short in a good, low risk location, with the added benefit of a potential autumn crash whose signs I’ve been watching for several weeks now. Here’s my trade plan for shorting the SPY. I’ve left plenty of room for a logical stop for the usual coordinated market intervention by the Fed and BOJ that could spike the SPY up to $750. That gives about 2.5% of risk at current prices around $740, but the reward is two times that risk if the SPY can get down anywhere near the 200dma on a good sell move down. That’s my plan on the large portion of a short position, but I do want to see if this $760 is the real top, so I’d like to keep a small short on unless and until $757 is breached on the upside. That’s not a great risk to reward if my profit target is $700 so I’ll keep that portion of the position to maximum 1/3rd (in other words, only $33 of every $100 bet would have the higher $757 stop). There are more indications that this range could resolve to the downside like heavy volume on the last good sell move and weak volume on the subsequent rally to here. There are also increasingly more frequent volume increases on red days lately. All these elements combine to give me enough evidence to hypothesize that shares are moving to weak hands. The odd part about being short the market is that my
Continue Reading -->The Next AI Chip King?
What a week! Microsoft (MSFT) and Amazon (AMZN) dropped beautiful earnings reports. Kevin Warsh delivered a short and sweet FOMC statement. And hedge fund Situational Awareness choke on leveraged AI stock bets before a rescue by Ken Griffin’s Citadel. Now let’s drill down for the most interesting things happening in markets now. We go over what’s been an awesome earnings season, a candidate for the next AI chip King, and 2 semiconductor stocks that appear to on the edge of greatness… or failureEarnings Season Has Been Awesome27% of S&P 500 companies have reported, according to FactSet.And the numbers are pretty dang amazing.86% of companies reported positive EPS surprises. And 80% beat revenue forecasts.The strongest numbers are coming from the financials, tech, and energy. And utilities are lagging.Q2 EPS growth is tracking at 37.9%, the highest growth rate since Q3 2021, which had the benefit of an easy year-over-year comp from the pandemic:That 37.9% number was boosted by a $98 billion one-time gain by Alphabet (GOOGL). Excluding that, earnings growth is still tracking at 25.9%, which is still spectactular. Plus that 25.9% was calculated before this week’s beats by Microsoft (MSFT), Amazon (AMZN), Apple (AAPL), Seagate (STX), Lam Research (LRCX) and Monolithic Power (MPWR). And odds are we’ll see positive earnings surprises from Palantir (PLTR), AMD (AMD), SanDisk (SNDK), and Western Digital (WDC) next week.Interestingly, the data shows that the market is not reacting well to reports. This goes for companies that beat AND companies that miss. So Microsoft and Amazon’s booms this week were exceptions to the rule!We May Have a New AI Semiconductor KingI’ve heard of the company Monolithic Power (MPWR), but never paid any attention to it. Until I saw its earnings report on Thursday, July 30. MPWR reported $980.6 million in sales, 9% above consensus. EPS was 11% above estimates. And revenue guidance for next quarter was 17% above expectations, which reminds me of SanDisk since it came public again last year, and Nvidia in 2023. Look at how fast analyst estimates are rising:Again, just like prior boom periods for SanDisk and Nvidia. And what does Monolithic Power do? It designs and develops power management solutions that go into everything from AI GPUs and TPUs to batteries to robots. And it’s seeing booming demand for AI data center and server applications. With a $72 billion market cap, this isn’t exactly a top-secret micro cap, but there’s surprisingly little discussion about it. So put Monolithic Power stock on the radar. It could be the next SanDisk, and it’s at the top of my personal watchlist. Related: check out JR Romero’s Greatest Hits: SanDisk Edition.The Nvidia Value Trap Debate ContinuesLast week, I suggested Nvidia might be a value trap at 21X forward earnings. Well, now it’s trading at 20X forward earnings, even with Microsoft (MSFT) and Amazon (AMZN) showing huge cloud and AI growth.This is Nvidia’s cheapest valuation in decades. The problem remains the same. Nvidia is so well-known that it’s hard to deliver a major positive surprise. And major AI infrastructure tech buyers like Alphabet and Amazon have made major strides in developing chips in house. Which means more competition for Nvidia’s high-priced GPUs. Plus from a basic market mechanics perspective, attention and money has shifted to the memory/storage names, which are posting much bigger earnings beats and upside guidance. Sure those stocks are more volatile, but that’s where the momentum money goes when the market is in a good mood,SK Hynix Is in for a FightKorean memory superpower SK Hynix (SKHY) made a huge splash when it listed in the US on Friday, July 10. The $26.5 billion deal priced at $149 per share, and the stock hit $194.80 on July 14, its 3rd day of trading. On July 29, it hit a low of $124.80 after an Earnings Miss. It’s since rebounded to $149+. But now the fight begins. 2026’s other two big IPOs have been messes. SpaceX (SPCX), which also made a high on its third day of trading, is down over 60% from its peak. (FYI: SpaceX delivers its first earnings report on Tuesday, August 4 after the close) Cerebras Systems (CBRS) made itsarecord high on its May 14 IPO day, and has since dropped about 50%. And aside from sagging sentiment towards these mega-issues, traders are concerned about Chinese memory giant CMXT disrupting the likes of SK Hynix, Micron, and Samsung.Traders Are… Bearish?The AAII Sentiment Survey shows that the topsy-turvey downside action in tech stocks may be impacting the mood. Just 31% of surveyed investors are bullish, which is the second straight week of below-average bullishness.So it looks like the crowd is leaning bearish. The tricky thing with sentiment data is that it’s lagging, and AAII tends to bounce around from week-to-week. However, if we get another below-average reading next week, that could signify real negativity. Meanwhile, CNN’s Fear & Greed Index is at 38/100, signifying modest Fear.
Continue Reading -->24 AI Stocks Explained in Plain English
Updated July 29, 2026 using data from Koyfin. This is an educational overview, not a big list of stocks to buy right now. Always do your own research or talk to a financial advisor before buying anything. People talk about AI stocks all the time, and the media’s obsessed. So it’s easy to want to start buying these wild stocks, even if you don’t know what they actually do. That’s why we’re breaking down 24 key AI stocks in plain English. Take your time reading this. There’s a lot of ground to cover since the AI supply chain is absurdly complex. Building and running applications like ChatGPT, Claude, Gemini, and Grok takes a massive supply chain: chips, cloud computing, software, networking, cooling, and of course, electricity. That’s why everything from GPU makers to memory producers to nuclear power companies gets lumped into the “AI stocks” category. Below are 24 companies across that entire chain, grouped by what they actually do, explained without the jargon (or at least minimizing it). We’ve also included some helpful stats for each one like the current stock price, market cap, recent performance, distance from its 52-week high, the average Wall Street price target, and short interest. These numbers were last updated on July 29, 2026, so keep that in mind. 🧠 Part 1: The Chipmakers (the “brains” of AI) These companies make the physical processors that train and run AI models. Without them, there’s no AI boom. 1. Nvidia (NVDA) Nvidia is pretty much THE flagship AI name. This Mag 7 name makes the GPUs (graphics processing units) that have become the industry standard for training and running AI models like ChatGPT. Originally built to power graphics in high-powered gaming PCs, these chips turned out to be awesome at AI math. Nvidia is the single most important hardware company in the AI world right now, and most of the biggest AI buildouts run on its chips. 📊 Stock Price: $194.13 | Market Cap: $4.70T | 1-Mo performance: -0.4% | YTD Performance: +4.2% | Below 52-Wk High: -17.9% | Analyst Target: $302.83 (+56% implied return) | Short Interest: 1.3% 2. Advanced Micro Devices (AMD) AMD is Nvidia’s main rival in AI chips, just as it is in PC GPUs. AMD makes its own line of AI accelerators (called Instinct) and has landed major deals, including a huge multi-year agreement to supply GPUs to Meta (META). AMD isn’t likely to dethrone Nvidia anytime soon, but it gives big tech companies a second supplier so they’re not fully dependent on one vendor. 📊 Stock Price: $444.05 | Market Cap: $724.1B | 1-Mo performance: -17.7% | YTD Performance: +107.3% | Below 52-Wk High: -24.1% | Analyst Target: $575.49 (+30% implied return) | Short Interest: 2.6% 3. Broadcom (AVGO) Broadcom doesn’t sell off-the-shelf chips. It’s best known for making Google’s TPU processors, and also co-designs custom AI chips for other customers like Meta, and OpenAI. This lets those companies get chips tailor-made for their own AI workloads instead of using general-purpose GPUs. Broadcom’s AI chip and networking business has grown explosively, and management has talked about reaching $100 billion in annual AI-related revenue. 📊 Stock Price: $380.02 | Market Cap: $1.81T | 1-Mo performance: +2.0% | YTD Performance: +10.2% | Below 52-Wk High: -23.2% | Analyst Target: $527.00 (+39% implied return) | Short Interest: 1.5% 4. Taiwan Semiconductor Manufacturing Company (TSM) TSMC doesn’t design chips. It manufactures them for everyone else, including Nvidia, AMD, Apple, and Broadcom. If you own an AI chip, there’s a good chance TSMC physically made it. That makes TSMC one of the most important, and most geographically concentrated, companies in the entire AI supply chain, since nearly all of its advanced manufacturing happens in Taiwan. However, TSMC is looking to make inroads in the US. 📊 Stock Price: $385.75 | Market Cap: $1.79T | 1-Mo performance: -15.2% | YTD Performance: +27.5% | Below 52-Wk High: -19.5% | Analyst Target: N/A | Short Interest: N/A 5. ASML Holding (ASML) ASML makes the extraordinarily complex (and pricey!) machines that TSMC and other chipmakers need to actually print circuits onto silicon (called EUV lithography). Nobody else on Earth makes machines capable of this at scale, which gives ASML a near-monopoly on the equipment behind the most advanced chips. News reports indicate China is entering the same market, but is way behind ASML in terms of technology. 📊 Stock Price: $1,583.21 | Market Cap: $607.5B | 1-Mo performance: -15.8% | YTD Performance: +48.6% | Below 52-Wk High: -20.8% | Analyst Target: N/A | Short Interest: N/A 6. Micron Technology (MU) Micron makes memory chips (DRAM and, increasingly, high-bandwidth memory or “HBM”) that sit right next to AI processors and feed them data fast enough to keep up. Demand for its newest memory has been so strong that Micron has reportedly sold out its 2026 HBM supply through long-term contracts. Memory used to be thought of as a boring, cyclical business, like potatoes or soybeans. Now it’s a high-growth piece of the AI puzzle. And the debate is raging over whether AI has turned memory into a secular growth sector. 📊 Stock Price: $772.02 | Market Cap: $871.9B | 1-Mo performance: -32.6% | YTD Performance: +170.6% | Below 52-Wk High: -38.5% | Analyst Target: $1,507.38 (+95% implied return) | Short Interest: 2.8% 7. Marvell Technology (MRVL) Like Broadcom, Marvell designs custom AI chips for big cloud companies (its biggest customer is reportedly Amazon) and makes chips that help data move between AI processors. It’s grown fast and joined the S&P 500 in 2026, but it also trades at a very high valuation relative to its earnings, meaning investors are pricing in a lot of future growth. 📊 Stock Price: $171.02 | Market Cap: $149.8B | 1-Mo performance: -38.4% | YTD Performance: +101.5% | Below 52-Wk High: -48.2% | Analyst Target: $256.91 (+50% implied return) | Short Interest: 3.9% 💾 Part 2: The Storage Makers (where all this AI data actually lives) Training and running AI takes a ridiculous amount
Continue Reading -->The 2 Ugliest Charts in the World
What a week! Alphabet (GOOGL) failed on earnings and there’s no peace in the Middle East. So let’s go over: The 2 ugliest charts in the world Why it’s hard to be an AI hyperscaler right now Why Nvidia may be a value trap Where sentiment sits Let’s go. Ugliest Chart in the World #1 SpaceX (SPCX) was hot for 4 days. Now it’s been cut in half. We identified $150 as an obvious line in the sand. And SpaceX just cut through it like a knife through butter: And let’s give credit to Sami Abusaad! He got short at $154.89 and has been riding it down the whole way. So why is this stock getting dumped? Because the more the stock drops, the more attention is paid to the danger on the horizon (insider lockup expirations). That’s created a race to the exits. Meanwhile, Wall Street banks (many of whom earned paid big fat IPO underwriting fees from SpaceX) love the stock. According to Koyfin, the average analyst target price is $236.71: So they think SpaceX will double. Do you? Now let’s talk about its twin… Ugliest Chart in the World #2 This is Oracle (ORCL) over the past year. Oracle has a major problem. It’s a hyperscaler with potential credit problems. While other AI stocks like Microsoft has heaps of recurring revenue and free cash flow to reinvest in capital expenditures, Oracle does not. Just so you understand the difference in scale here, Microsoft generated almost $73 billion in free cash flow over the past 12 months. Oracle (ORCL) had NEGATIVE free cash flow of almost $24 billion. So it has to borrow tons of debt to power its AI dreams. Maybe too much. It’s Hard Out Here for a Hyperscaler The AI market remains split between “haves” and “have nots.” The AI hyperscalers are most certainly have-nots in 2026, given these performance numbers: Alphabet (GOOGL): +2.8% Amazon (AMZN): +2.3% Meta (META): -7.9% Microsoft (MSFT): -19% Oracle (ORCL): -36% Meanwhile, the VanEck Semiconductor ETF (SMH) is up a whopping 61%. This makes sense because the hyperscaler buildout is a wholesale transfer of cash flow to the likes of Nvidia (NVDA), AMD (AMD), ASML (ASML), Micron (MU), SanDisk (SNDK), etc. Think of it this way. Google sucks up money selling ads. Then that money goes straight to hardware and chips from the likes of Nvidia, AMD, Micron, Dell, etc. Which flows down to networking gear, semiconductor equipment, etc. At some point the trend reverses, but for now – hardware looks like easy money. Especially when we have Alphabet raising its capex forecast. And Meta, Microsoft, and Amazon might do the same when they report earnings this week. Is Nvidia a Value Trap? Many traders and investors are zeroing in on Nvidia’s (NVDA) valuation. The stock is now trading at 21x forward earnings, which looks cheap for the flagship AI chip name: But I wonder if Nvidia is a value trap. As in, it looks cheap but goes nowhere. I see Nvidia’s biggest challenge as a lack of sex appeal relative to other places within the AI landscape. Right now, the market is excited about the memory and storage names, because that’s where the biggest supply-demand imbalance is. On Thursday’s earnings call, Intel (INTC) CEO Lip-Bu Tan said “…memory has become the big supply constraint challenge.” Yes, Nvidia is most likely still supply-constrained. Just not at the level of a Micron (MU) or SanDisk (SNDK). But we’ll know for sure this coming week. If we see Meta, Microsoft, and Amazon signal higher capex spending and Nvidia does nothing, then maybe the thrill really is gone. We’ll see. In the meantime, I recommend watching this interview with Cerebras (CBRS) CEO Andrew Feldman, who shares some interesting points about the AI chip universe. He discusses why Nvidia’s CUDA platform may be losing its competitive moat, though you should obviously take that with a massive grain of salt: Investors Are Bearish… for Now The AAII Sentiment Survey shows that just 29.6% of investors are bullish. This is well below the 37.5% long-term average. And it’s a massive decline from last week’s 44.9% reading (above average bullishness). So are investors bearish? Kind of. These sentiment surveys have been topsy-turvy all year, so we never get any sustained bullishness or bearishness. That reduces the predictive power of these numbers, which wasn’t all that great to begin with (outside of real extremes). Meanwhile, the CNN Fear & Greed Index is at 41, which is slightly fearful. Add it up and it looks like investors are far from euphoric. But they’re not down in the dumps either.
Continue Reading -->The First Step to a Crash
I’m naturally inclined to be bearish. I have been since my formative years in the market during the 2008 GFC. There are only two, maybe three times in a career where it pays to be bearish. This may be one of them. Last week I detailed the steps to a possible stock market crash this October. We just got the first step in that sequence: an initial break in the Dow Jones Industrial Average from the summer rally trend. The reason for this break is that something appears to be going wrong in the Iran situation. The US 10y yield is approaching 20 year highs, crude oil is abundant yet going higher in price, and gold, the best barometer for global base money, is sinking. As more global money gets burned up securing crude oil, there is less available to roll over the massive amount of debt that’s been built up since 2020. If central banks don’t start printing, base money doesn’t grow, and asset prices fall as there is no money to bid higher for financial assets. An exchange with Senator Kennedy and Secretary Hegseth this week should give the market a reason to sell more as it prices in a deteriorating situation in Iran. Senator Kennedy, usually with an unperturbed and jovial demeanor, seems flustered to a degree I’ve never seen him before. He thinks the situation is getting serious, and that “we are down to it”. I’ll bet he just received a briefing telling him the supply chain breakdown we’ve been hearing about since March is coming soon unless we commit ground troops to go into Pickaxe Mountain, destroy centrifuges, and end the conflict. With the House passing a resolution to limit Trump’s ability to escalate further, I think the market has more downside in the near future to price in a possible worst case scenario of a supply chain breakdown if the US doesn’t send in ground troops. This is a situation with no good outcome, and it’s starting to resemble Britain’s Suez crisis. I’ve been in about 70% cash since March, and now I wish my cash position was even bigger. I’ve got about 15% in gold miners and 7.5% in energy, shipping, and fertilizer stocks. Right now, I wish I’d bought more of the “conflict” stocks such as $XOM, $NTR, and $DAC earlier this year, and I wish I’d sold more of the gold miners in March. My portfolio seems to be in the same situation as the US in Iran: no good outcome in sight. I’m too long and too short at the same time. I can’t sell what I’ve got that is going down, and I can’t buy more of what I’ve got that is going up. The only way out of this situation for me is to either get shorter or get longer. There’s no way I’m getting longer with a market setup this bad fundamentally, so I’m sticking to my plan I detailed last week of waiting for a confirmation of a bear market with a failure of the $DJIA to get back above this initial break level of $51,850 if bulls attempt a rally back in the next couple weeks, then, and only then, shorting the $SPY and/ or $QQQ. It’s not just the US in Iran that is worrying the market. The Yen keeps getting weaker with a clean break above $160. The Bank of Japan won’t tolerate too weak of a Yen for much longer. An emergency rate hike by the BOJ would weaken the dollar, and that would slow the capital inflows into the USA that have been flowing into financial markets. The stock market needs foreign capital inflows to sustain these lofty valuations. Stock valuations are too high to find any meaningful support from value investors, and passive investors won’t help the situation if concern about lower prices causes them to stop retirement inflows. There are dozens of reasons to be bearish, but the market simply has not cared about any of them as long as excess liquidity was finding it’s way into stocks. The SpaceX IPO was very large and took up a lot of balance sheet capacity (i.e. liquidity) that is now needed to support stock prices. It’s been my view that the professionals on Wall Street had the resolve to forge together a market for two more big IPOs: Anthropic and OpenAI, and that would signal an intermediate top in the market. Scrapping those IPO’s would be an even more bearish indicator that the pros on the Street don’t want to even try because they see a bear market ahead. Bear markets are extremely difficult to navigate because they require you to constantly think negatively, to think about what can go wrong. This goes against our human nature to always improve, to think about what can go right. I’m far more introverted than the average trader (an extreme INTP on Jung’s psychological type, and a Type Five on the enneagram), and as a result, I’ve spent more time analyzing my own mental activity than the average trader. I’ve come to understand how being so bearish since the QE era began in 2012 cost me so much. It was really just a pessimistic world view that made me see only the reasons the markets should go down. Around March of 2020, I began to understand the benefits of shifting my mindset to a more productive, positive, and optimistic one. I began to see clearly that it wasn’t pessimists that got rich trading in the markets. The bearish arguments seemed so smart, so correct, but they just didn’t matter. Other guys were getting rich by being bullish, and I was stuck in a negative mental state with more desire for wealth than talent in attaining it. For me, finding success in the markets was a choice. It was a choice to do the work to be bullish on something. That happened to be gold, and that choice changed my trajectory in a big
Continue Reading -->How This Stock Market Will Top
“There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market to-day has happened before and will happen again.” -Edwin Lefèvre, Reminiscences of a Stock Operator. The term “speculator” has been used derogatorily ever since the 1929 stock market crash. Ben Graham spent an entire chapter in Security Analysis attempting to delineate the differences between investing and speculating. I’ve read that chapter dozens of times over the years in hopes that repetition will bring clarity as to what exactly is the distinction between the two. All these years later I still can’t believe in a real distinction between speculation and investing, and I don’t think he believed it himself. From what I understand, Ben Graham ran a proto-hedge fund, lost all his investors’ money “investing” according to his method, got a job as a professor teaching others how to do what he couldn’t do for himself, and then spent decades winning back his investors’ lost money. That’s a lot of effort and a lot of years for a scratch trade. If that’s what happened to the genitor of common stock “investing” as we know it today, then for my money, speculation seems like a better approach… Nowadays it’s almost verboten to refer to your market participation as “speculation.” This wasn’t always the case. It certainly wasn’t the case in the late 1920’s. I like to surf old New York Times archives from the financial section to get a feel for the zeitgeist from earlier periods in the market. What’s most stunning to a contemporary reader is the brutal honesty with which reporters delivered the financial news. Everyone back then accepted that stock markets were for speculation. There was no need to explain price movement with a fundamental narrative. It was all insiders creating pools and bidding up stocks, or hammering them down. Today we would call that “insider trading.” While it’s tempting to think so much has changed in the stock market between then and now, I don’t think our markets are very different from markets in the late 1920’s. That’s because human nature never changes. The quote from Lefèvre stands true: whatever happens in the stock market today has happened before and will happen again. Deep in the annals of stock market history lie the clues to discern what we are going through in the present. Market quotations, in their essence, are the manifestation of thoughts in the minds of men. To study their recorded thoughts from the past is the closest we can come to gaining their experience, and experience is the most powerful tool we have in attempting to win in the markets. We can stamp either label we’d like on the activity, whether it’s investing or speculation, but the approach is the same: figure out what has worked in the past, and apply it to the present. This is the way we win in the markets. As for me, I think it’s all speculation, so we better aim to do it well. Proper investing is merely one element of speculation. You’ve got to have some understanding of basic fundamental conditions to speculate well. It’s my view that we are in the contraction phase of the business cycle, and that this autumn we will see a window of opportunity for the market to sell. All the conditions are in place: a stock market that requires a lot to go right to justify a 20 PE, a new technology that created a mania and parabolic charts like memory chip stocks, an opaque securitization scheme with leverage in private credit, the largest stocks shifting their capitalization tables from buybacks to debt issuance for AI capex, and now the biggest IPOs in history adding tons of shares on the market. If you were looking for a recipe to make a top in the stock market, you couldn’t ask for better ingredients. To understand how to speculate in this market properly, I study the past. The charts of previous market tops show us the subtle clues that revealed the shifting probabilities favoring price declines rather than further increases after a long bull run. Below are two famous crashes we can scour for portents that inside the minds of men, fear was beginning to replace greed, stocks were being distributed from strong hands to weak hands, and the natural proclivity for stock prices was to retreat. The 1929 and 1987 tops display a certain uniformity in price structure that we can capture and build into a “top template” for memorization and pattern recognition as we move into the window for a crash this autumn of 2026. While all tops have their own unique characteristics, there are two broad categories of tops I’ve identified from historical studies: autumn tops and spring tops. 1929 and 1987 are autumn tops, and 2000 and 2008 are spring tops. Since we are past the spring window, and the 2026 market most resembles the autumn tops, I’m focusing on those. The autumn tops both share these basic elements in common: a summer time rally, an extension of price far above the 200 day moving average, an initial break, a failure to surpass the initial break price level, and an autumn crash. Here are annotations of the basic elements on the historical charts of the Dow Jones Industrial Average:. 1929: 1987: Now here’s an annotation on the current 2026 $DJIA and what I’d expect to happen if this market follows the autumn top template. 2026: After this summer rally, I’m looking for an initial break sometime in late August or early September, coinciding with back-to-school time when no one besides professional traders will be paying attention to the markets. Everyone will be busy getting back to work and CFO’s will be creating budgets for the next year. This is the earliest an initial break would occur. The initial break, if it comes, would be our first warning that the market is at risk of following
Continue Reading -->The 5 Horsemen of the AI-pocalypse
What a week! We may have peace in the Middle East, SapceX is fighting for its life, and we have a new AI powerhouse trading in the US: Meet the 5th Horseman, SK Hynix I called these stocks the 4 Horsemen of the AI-pocalypse: SanDisk (SNDK) Micron (MU) Western Digital (WDC) Seagate (STX) AI has created unprecedented demand for storage and memory to the point that they comprise 4 of the 5 best S&P 500 stocks this year: And now we may have a new horseman in the form of South Korean memory giant SK Hynix (SKHY), which had a blockbuster US market debut Friday. The $26.5 billion deal priced at $149 per share, and the stock was trading around $169 as of 2:33 pm ET. Pretty solid first day. And CEO Kwak Noh-jung is telling the right story. He told Reuters “We forecast that next year will be the worst year in the industry’s history from the supply perspective.” And he added that demand will exceed supply beyond 2030. Nothing drives momentum like a massive supply-demand imbalance. So I’m making SK Hynix a probationary “5th Horseman of the AI-pocalypse.” Get David Prince’s take on SK Hynix here: Meanwhile, another high-profile IPO is fighting its own battle: SpaceX Fights for $150 We all know the bear case for SpaceX (SPCX). IPO lockup expirations will flood the market with shares. The valuation is outrageous. The Nasdaq 100 addition didn’t help the stock. At the same time, it is stubbornly holding the $150 area: That looks like a major psychological line in the sand. And maybe this situation is as simple as a hard break above or below this level will dictate the next big move. For more on SpaceX, check out this video: And since we’re on the topic of IPOs and AI… Bank Earnings Should Be HUGE This Year This coming week, we get earnings from the big banks like JP Morgan (JPM), Goldman Sachs (GS), Bank of America (BAC), and Morgan Stanley (MS). And now that I think about it, maybe the banks are a stealth AI play. Especially the capital markets focused names like Goldman and Morgan Stanley, which are up nicely in 2026: Aside from the massive SpaceX IPO and the prospective OpenAI and Anthropic deals, there’s been a ton of capital markets activity related to AI, like: Alphabet (GOOGL) raising $85 billion in equity Oracle (ORCL) raising $40 billion to help fund its AI buildout Super Micro (SMCI) raising $7 billion to buy components to fill new $39 billion in AI server orders According to Crunchbase, global venture funding hit $510 billion in the first half of 2026. That compares to $440 billion for all of last year. Crunchbase also said that this is the strongest exit market since 2021. All this capital markets activity should mean fat fees for Wall Street banks. Earnings Season Is About to Go BOOM Q1 earnings season was huge, thanks to massive beats in tech, particularly in the semiconductor industry. As noted above, this coming week, Q2 results kick off with the likes of JP Morgan (JPM), Netflix (NFLX), and ASML (ASML). I’d argue ASML is the biggest report of the week since it sells into the AI/Semi giants like Samsung, AMD (AMD), SK Hynix (SKHY), Micron (MU), Intel (INTC), and Taiwan Semi (TSM). Note: Taiwan Semi also reports next week. There’s a whole lotta optimism out there. FactSet data shows that 111 S&P 500 companies issued guidance. 57% issued positive guidance, well above the long-term average of 41%. This is the highest percentage of companies issuing positive guidance since Q3 2021. And tech guidance is at a record high. Analysts are also pumped. They are now estimating 23.3% growth, up from 18.8% on March 31. And looking forward, Q3 growth is forecast at 26.8%, and Q4 is 24.1%. This is bad. Because the bar is very high. Plus, if results come in as expected or better, we are going to be facing some tough year-over-year comparisons next year. But even as companies and analysts are positive, investors and traders show no signs of joy: Sentiment Remains Neutral The AAII Sentiment Survey shows that 36.3% of investors are bullish. This keeps sentiment in neutral territory. And while we’ve had a few positive or negative readings here and there, there hasn’t been a true extreme reading (in either direction) since early 2025. Meanwhile, the CNN Fear & Greed Index is at 47, smack in the middle at neutral. On balance, this is all bullish because it shows little euphoria on the part of market participants.
Continue Reading -->