7/1/26 Recap
The SPY continues a nice move up after that 8/21 bullish crossover recently. The weakness today is in tech land where META dropped a bomb about selling excess capacity today. Meta had mentioned possibly doing this before if AI wasn’t going as planned, did they do this because of that or were they just looking for a new business line which would help pump the stock? I guess we will find out in a couple weeks at earnings. For now, the semis did not like the news and neither did all the parts of the ai trade built around people modeling never ending spend. Meta was really struggling with ai, they spent a fortune hiring that dream team of names and had yet to show anything for it. The stock kept pressing lower and Zuckerberg had to do something to save it, he did the same thing a couple years back when Metaverse sank the stock below $90. You’re seeing the rotation today back to software with the IGV up 4% and the SMH down 5%. Is this real? Is it a short term overreaction? Who knows but Meta was not seeing much from their ai spend and I personally never got why they were so gung ho about it, to me snapchat and tiktok are the only relevant competition to them and neither was going to make any serious inroads with ai. Either way, it looks like at least 1 of the megacaps may be waving the white flag on constantly soaring capex and the market is rewarding it.
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