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SOXX dips into a bear market… Luke Lango on when the AI bull will return… one of Jonathan Rose’s favorite trades today… the blue-chip investment that Brian Hunt flagged as just making a new all-time high
As I write on Monday, the tech/AI trade is pushing higher. But on Friday, it briefly dipped into an official bear market.
I’m referencing the Philadelphia Semiconductor Index, tracked by the iShares Semiconductor ETF (SOXX). It provides diversified exposure to the entire critical supply chain of the AI boom – from chip designers, to custom accelerators, to critical manufacturing equipment. It’s a one-click way to own “AI.”
And here’s how it looked at one point on Friday – down 20%+, official bear-market territory.
This bear hasn’t been driven by bad news – it’s arrived despite some of the best news the AI infrastructure trade has seen all year.
Take last week’s earnings from AI bellwether Taiwan Semiconductor Manufacturing Co. (TSMC).
The company reported a record-shattering second quarter, with revenue rising 36% year over year to $40.20 billion and net income surging 77%, driven by strong demand for AI chips. Gross margins were good, and management raised its full-year revenue growth outlook to over 40%, supported by a massive expansion of its capital expenditure budget.
And yet Wall Street punished that blowout performance with a 5% selloff.
It’s not the only one.
Fellow AI giants ASML (ASML) and Samsung Electronics also smashed earnings last week (Samsung reported a colossal 15-fold surge in operating profit) only to be rewarded with heavy selling – ASML dropped 5% the day after it reported earnings while Samsung tanked about 8%.
The most fascinating part of all this is that the “beat-and-drop” anomaly is occurring against a backdrop of clear forward visibility. These AI infrastructure giants aren’t just promising growth – their explosive future revenue and cash flows are heavily backlogged and already under long-term contract.
So, why is AI suddenly in a bear market then?
Because Wall Street has gotten nervous – not about today’s orders, but about tomorrow’s.
Investors are increasingly questioning whether today’s AI spending spree still has legs.
The “capex-taker problem”
Last week, our technology expert Luke Lango, editor of , detailed what’s happening:
The market’s hesitation is not about today’s demand (for AI), but about whether hyperscaler spending remains as robust in 2027 and beyond.
Yes, the hyperscalers have spent billions so far – profiting the supply-chain companies like ASML, Taiwan Semiconductor, and Samsung extravagantly – and they’ve pledged billions more to come.
But yesterday’s pledge isn’t the same thing as tomorrow’s delivery. And Wall Street is increasingly worried it will vanish.
Back to Luke:
The problem is that supply-chain companies are capex takers—they build against spending decisions made months or years ago—and therefore cannot answer the market’s only remaining question:
Whether hyperscalers intend to sustain today’s spending into 2027 and 2028.
Well, we don’t have to wait much longer to find out.
That demand-side confirmation begins arriving on Wednesday when Google (GOOG) reports, followed by Microsoft (MSFT) and Meta (META) next Wednesday (July 29), and Amazon (AMZN) on July 30.
Back to Luke:
The four questions that matter remain straightforward:
- Do hyperscalers maintain or raise 2026 AI capex?
- Do they provide constructive commentary around 2027 and 2028 spending?
- Are AI investments producing measurable returns that justify continued expansion?
- And do they announce additional infrastructure projects that demonstrate the buildout is still accelerating?
Luke believes that all four questions will receive positive answers. And if so, get ready for a sharp recovery rally across AI infrastructure.
Here’s his bottom line:
The capex taker problem is real and it ends [starting this week].
Google, Microsoft, Meta, and Amazon will tell the market what Samsung, ASML, and TSMC structurally cannot: Whether the AI infrastructure buildout has durable legs into 2027 and 2028.
We believe the answer is yes, and every leading indicator from the demand side supports that belief.
To see how Luke is positioning his Innovation Investor subscribers to be ready for the potential AI rally, .
Now, while money has been flowing out of AI infrastructure over the past few weeks, another group continues to strengthen: oil refiners.
And that’s exactly where veteran trader Jonathan Rose of Masters in Trading Live is finding opportunity today…
Plenty of fuel in the tank
Jonathan has long kept a close eye on oil refiners.
One of the primary indicators he watches is the “crack spread” – essentially the profit margin refiners earn by turning crude oil into gasoline and diesel.
Historically, refinery stocks tend to follow that margin. When the crack spread expands – as it’s been doing recently – refiners’ earnings power often improves soon after.
During last Friday’s free Masters in Trading Live video, Jonathan pointed out that the crack spread has continued strengthening – and then called it one of the most powerful moves he’s ever seen:
I’ve actually never seen such a strong, violent move…
You want to stay long. All refiners. Patience. There is no reason to cover.
Among the names he highlighted were Phillips 66 (PSX), HF Sinclair (DINO), CVR Energy (CVI), and PBF Energy (PBF).
As you can see below, over the last month, these stocks have surged between 24% and 67%.
While this might feel like “too far, too fast,” just recognize that as long as refining margins continue to expand, the industry’s underlying fundamentals remain supportive of more gains.
If you’d like to hear Jonathan walk through the charts himself – including why he believes the crack spread remains one of the market’s most reliable leading indicators – you can .
And if you’re new to Jonathan, he publishes these free MIT Live videos every day that the market is open at 11 a.m. ET. He profiles market trends, explains entries and exits, discusses the opportunities he’s watching in real time, and offers plenty of tickers along the way. .
But energy isn’t the only place investors have been finding relief from the wobbly AI trade.
Senior Analyst Brian Hunt just highlighted the recent outperformance of a traditionally defensive corner of the market…
There’s always a bull market somewhere
One of the easiest mistakes investors make during a sharp selloff is assuming everything is falling.
That’s rarely true.
Here’s Brian, editor of , with the reality:
There’s always a bull market somewhere. And in pursuit of finding such bull markets, money usually stays in the market.
It ‘sloshes’ back and forth in between various sectors, industries, and themes… looking for at least a temporary home where it will be treated well.
This month, that “sloshing” has become especially apparent.
While many of the market’s premier AI infrastructure stocks are down 20%+ from their recent highs, Brian notes that another group has been setting records – the Invesco Dividend Achievers ETF (PFM) just hit a fresh all-time high.
Dividend Achievers are companies that have raised their dividends every year for at least 10 years. Think Johnson & Johnson (JNJ), Visa (V), Coca-Cola (KO), Procter & Gamble (PG), ExxonMobil (XOM), Chevron (CVX), Walmart (WMT), and PepsiCo (PEP). Many of these companies are as “blue” as “blue chip” comes.
If the AI selloff is keeping you from sleeping well, you don’t have to abandon the market altogether – just choose a different investment vehicle, one that has a multi-decade track record of strength.
Back to Brian:
These businesses have paid and increased their dividends through recessions, bear markets, and a global pandemic.
In terms of consistency, these firms rank just behind the rising sun. PFM is a fund designed specifically to own such firms.
Whether the current AI selloff proves temporary, as Luke expects, or lasts longer than investors hope, Brian’s broader reminder is important to remember:
There’s always a bull market somewhere.
If you’d like Brian’s help in finding them, he writes Money & Megatrends every day the market is open, highlighting all sorts of opportunities before they become front-page news – best of all, it’s 100% free.
His issues are loaded with trend analysis, actionable advice, and loads of specific tickers. .
Coming full circle
We’ll learn a lot over the next two weeks.
The hyperscalers are finally going to answer the question Wall Street has been asking all summer: Is the AI infrastructure buildout still accelerating, or is the spending boom beginning to fade?
If Luke is right, this recent AI bear market could prove remarkably short-lived.
If not, Jonathan and Brian offer an equally valuable reminder: markets don’t move as a single giant monolith. Capital is constantly searching for opportunity – sometimes in oil refiners, sometimes in blue-chip dividend growers, and soon enough, perhaps back into AI.
Have a good evening,
Jeff Remsburg
(Disclosure: I own TSM, ASML, GOOGL, MSFT, AMZN, CVX, WMT)
