Markets spent Wednesday looking for cracks in the AI story and it found plenty of questions. |
Technology stocks slipped again as investors worried about rising AI spending, a more hawkish Federal Reserve, and Thursday’s closely watched inflation report. |
Nobody wanted to make a big bet.
The Dow managed another gain, but the S&P 500 and Nasdaq finished in the red as chip stocks struggled to regain momentum. |
Semiconductor stocks remained under pressure ahead of Micron’s earnings, while investors continued rotating away from companies spending billions to build the AI future. |
Then Micron showed up after the bell. |
The memory-chip giant delivered record revenue, record earnings, and a blockbuster outlook that immediately shifted the conversation. |
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⚡ Closing Bell:
→ Dow Jones: ▲ +0.36% to 51,850.87 › Industrials helped the Dow extend higher even as technology remained under pressure. |
→ S&P 500: ▼ -0.10% to 7,358.44 › AI spending concerns continued weighing on the broader market. |
→ Nasdaq: ▼ -0.43% to 25,476.64 › Chip stocks stayed cautious ahead of Micron’s closely watched earnings report. |
→ Russell 2000: ▲ +0.28% to 2,983.73 › Small caps outperformed again as investors continued rotating away from megacap technology. |
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Macro Moves:
→ 10-Year Treasury Yield: ▼ to 4.41% › Yields eased as investors positioned ahead of Thursday’s PCE inflation report.
→ 2-Year Treasury Yield: ▲ around 4.15% › Short-term yields remained elevated as traders priced in additional Fed tightening.
→ Dollar Index (DXY): ▲ to 101.58 › The greenback touched a 13-month high as higher-rate expectations fueled demand.
→ Bitcoin: ▼ briefly below $60,000 › Crypto joined the broader risk-off move before recovering.
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❗❗❗ Looking Ahead:
The market gets its answer today. |
Thursday brings the Fed’s preferred inflation gauge — the PCE Price Index — along with GDP and durable goods data. |
After a week dominated by AI spending concerns, investors may shift their attention back to the one number that matters most: |
Inflation. |
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#TRUTH:
❗❗❗ ❝ Success is getting what you want. Happiness is wanting what you get. ❞
~ Dale Carnegie |
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He helped call Dow 50,000, the boom in gold and silver, and the dollar's crash. Now he's warning of a new "cash panic" in 2026.
Here's how you should prepare.
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Where’s The Beef? |
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Wendy’s served up one of the market’s strangest rallies this week. |
The fast-food chain surged as much as 37% after a viral Reddit post urged traders to “save Wendy’s before it’s too late.” |
There was just one problem. |
Nothing actually happened. |
No earnings surprise. |
No acquisition. |
No breakthrough turnaround plan. |
Just a social media post and a familiar recipe that meme-stock traders have used for years. |
Wendy’s shares have fallen more than 70% since 2023, making it the kind of beaten-down stock retail traders love to target. Add a sizable short interest, a recognizable brand, and a little nostalgia, and suddenly a burger chain becomes Wall Street’s hottest trade. |
For a few hours, Wendy’s wasn't just selling burgers. It was selling hope.
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The Nvidia Tax |
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Everyone wants AI. |
Nobody wants to wait in line for Nvidia chips. |
OpenAI unveiled its first custom AI processor this week, a new chip called Jalapeño developed alongside Broadcom in just nine months. |
The company claims the chip delivers better performance per watt than today’s leading processors in early testing. |
Whether that proves true remains to be seen. |
OpenAI currently relies heavily on Nvidia’s processors to power ChatGPT and its growing suite of AI products. But as demand for computing power explodes, waiting in line for chips is becoming an increasingly expensive strategy. |
That’s why OpenAI isn’t alone. |
Amazon, Google, Microsoft, and Meta are all building custom silicon designed specifically for their own AI workloads. |
The goal isn’t necessarily to replace Nvidia. |
It’s to depend on Nvidia a little less.
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The AI Flywheel |
$2.7 trillion. |
That’s how much market value the Magnificent Seven, Broadcom, and Oracle have lost this month as investors take a harder look at the economics behind the AI boom. |
The irony is that nobody is questioning AI itself. |
They’re questioning the bill. |
For the better part of two years, Wall Street rewarded almost every company connected to artificial intelligence. Chip makers rallied because demand was exploding. Cloud companies rallied because AI would drive future growth. Software companies rallied because AI promised new products and higher productivity. |
Everybody won. |
Until investors started asking who was paying for it. |
The answer is the same handful of companies leading the race. |
Microsoft, Amazon, Google, Meta, and Oracle are spending hundreds of billions of dollars building data centers, buying chips, expanding power capacity, upgrading networks, and constructing the infrastructure needed to support increasingly powerful AI models. |
Those dollars become revenue for Nvidia, Broadcom, memory-chip makers, networking companies, power suppliers, and a long list of firms benefiting from the AI buildout. |
For a while, Wall Street loved both sides of the trade. |
The companies writing the checks. |
And the companies cashing them. |
Now the market is becoming more selective. |
According to Nomura, free cash flow among hyperscalers is expected to fall sharply as AI spending accelerates. That matters because free cash flow is what funds stock buybacks, dividends, acquisitions, and many of the shareholder-friendly policies investors have come to expect from Big Tech.
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Gains & Pains: |
Gains:
➝ Micron (MU): ▲ +12% (after-hours) › Beat earnings estimates and announced $22 billion in customer commitments for AI memory chips. |
➝ Qualcomm (QCOM): ▲ (after-hours) › Investor Day announcements and new AI data-center ambitions lifted sentiment. |
➝ Broadcom (AVGO): ▲ +0.5% › Partnered with OpenAI to launch its first custom AI inference chip. |
➝ Wendy’s (WEN): ▲ +27% › A viral WallStreetBets post sparked another meme-stock frenzy. |
➝ Krispy Kreme (DNUT): ▲ +9% › Retail traders continued piling into another familiar meme favorite. |
😬 Pains:
➝ Oracle (ORCL): ▼ -5.6% › AI infrastructure spending concerns continued weighing on the cloud giant. |
➝ Tesla (TSLA): ▼ -5.8% › High-growth names remained under pressure as investors reduced risk. |
➝ Nvidia (NVDA): ▼ -0.5% › AI leader paused as Wall Street reassessed chip valuations. |
➝ Micron (MU): ▼ -0.3% (regular session) › Investors waited cautiously ahead of earnings before the stock surged after the close. |
➝ Technology Sector: ▼ 9.3% below its June high › The correction in tech continued despite improving AI fundamentals. |
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Escapes: |
Medina River📍 Texas 🇺🇸 |
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Commodities Check : ✔️ |
→ WTI Crude: ▼ about 4% › More oil flowed through the Strait of Hormuz, easing supply concerns. |
→ Gold: ▼ below $4,000/oz › A stronger dollar and rising rate expectations pressured precious metals. |
→ Silver: ▼ 5.2% › Precious metals broadly weakened as Treasury yields and the dollar remained elevated. |
→ Palladium: ▼ 4.3% › Industrial metals joined the broader commodity retreat. |
→ Soybeans: ▼ to $11.34½/bushel › Weaker crude prices and a firmer dollar weighed on biofuel demand expectations. |
→ Corn: ▼ to $4.06¼/bushel › Technical selling extended the grain’s losing streak. |
→ Wheat: ▲ to $5.98/bushel › Supply concerns in Europe and Russia provided support despite the stronger dollar. |
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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. |
From time to time, this publication may include sponsored content, affiliate links, or advertisements. Such inclusions do not constitute endorsements, and any compensation received does not influence the analysis or opinions presented. TradingLessons is not affiliated with, nor does it verify or guarantee the claims, products, or services of any sponsor or advertiser. Readers should perform their own due diligence before engaging with any advertised offerings. |
Nothing herein should be interpreted as an offer, recommendation, or solicitation to buy, sell, or trade any security, commodity, derivative, or other financial instrument. This content is intended solely to highlight market developments and educational insights to help readers enhance their understanding of trading and risk management.
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