When it rains, it pours. The AI trade is getting hit by a deluge of bad news right now, and the forecast doesn't look good.
Where to start? Chip stocks are close to bear market territory -- the PHLX Semiconductor Index, SOX, is down 19% from its June peak.
Memory-boom darling Micron closed below a $1 trillion market cap for the first time in six weeks. The $407 billion market value it has lost since June 25 is larger than the combined value of Qualcomm and Marvell.
Oh, and SpaceX closed below its IPO price and then aborted a Starship launch, sending the shares even lower after-hours.
There's more. The Magnificent Seven's recent ride to the rescue has been derailed, too. Alphabet stock fell 4.4% on reports its flagship AI model Gemini 3.5 Pro is months behind schedule. Meta, Amazon, and Nvidia also had bad days.
Beijing-based AI start-up Moonshot released a new open model Friday, which it said closes the gap to Anthropic and OpenAI. The timing is awful -- not now, China!
All of that points to the tech selloff becoming a rout. At least, the S&P 500 has held up OK this week.
Even the good news is being overlooked -- Taiwanese chip maker TSMC reported a 77% jump in profits Thursday, but all the market cared about was its pledge to invest another $100 billion in the U.S.
Bumper AI spending was once celebrated but now seems to be feared. That will be an important factor when Alphabet kicks off Big Tech earnings next week.
One small mercy for tech investors is that the Korean market, a leading indicator for the U.S. recently, is closed for a holiday, sparing the KOSPI Index what would likely be huge losses. That's until it reopens on Monday and plays catch up.
The problem with the momentum trade is that it works in both directions. The momentum lower is only gathering pace.
-- Callum Keown
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Apple Reminiscent of Rockefeller's Standard Oil Playbook
Apple sitting out the AI spending spree takes a leaf from John D. Rockefeller's Standard Oil playbook. And it's working for the stock, which set a record high for the second consecutive session at $333.26 despite being seen as Wall Street's "anti-AI" trade simply because it keeps its AI spending in check.
-- That strategy of course is a much different tack than its fellow
Magnificent Seven members, Alphabet, Microsoft, Amazon, and Meta
Platforms, which are all spending hundreds of billions of dollars on
their AI build outs. Instead, Apple is following Rockefeller's mid-1800s
lead.
-- The Gilded Age titan behind Standard Oil knew oil drilling was risky and
left it to wildcatters to pay the high price while he focused on
refining. Similarly, Apple's Mag Seven peers are funding AI research and
development while it remains ready to swoop in and grab the best models.
-- Another Apple strategy is acquisitions. It's on the hunt for companies to
build AI server chips to run AI, according to the Information.
Rockefeller won at oil because he controlled distribution. Right now,
Apple leads in smartphones and is near the top in devices where AI is
used mostly by consumers.
-- Apple didn't respond to a request for comment about its AI spending
strategy. Wall Street, though, is liking the way Apple is playing -- at
least in the moment. The stock is up 14% this quarter, its best quarterly
performance since last September 2025, when it climbed 24%.
What's Next: Except for Meta's 21% gain, the quarterly numbers aren't nearly as good for most others in the Mag Seven. Alphabet is up 4.2%, Microsoft 6.6%, and Amazon 7%. Apple's good times won't go on forever. A big test will come this fall when the iPhone 18 debuts.
-- Kit Norton
Netflix Disappoints on Outlook for Slower Pace of Revenue Gains
Netflix's third-quarter revenue outlook indicates a slowing pace compared with recent quarterly growth, feeding anxiety that the streaming giant has lost some of its momentum, though it emphasized successes such as Harlan Coben's I Will Find You, its most viewed new original series in 2026.
-- It slightly beat expectations with second-quarter adjusted earnings of 80
cents a share but missed on revenue, which was $12.56 billion, up 13.4%
from a year ago. Third quarter revenue is projected to rise 11.7% from a
year ago. Its third quarter outlook also missed expectations.
-- Netflix narrowed its guidance on 2026 to a range of $51 billion to $51.4
billion, compared with the prior range of $50.7 billion to $51.7 billion.
There's been ongoing concern about engagement as the industry
consolidates, including Paramount Skydance's pending deal for Warner
Bros. Discovery.
-- The company is facing more than just competition from fellow media
companies, including social media sites like TikTok and YouTube. Netflix
is changing the way it shares engagement updates, something sure to raise
eyebrows amid those competitive concerns.
-- Netflix's formerly biannual engagement report called "What We Watched"
will now be published annually in the first quarter, beginning in 2027.
The company says it isn't about the quantity of view hours, but the
quality and variety of its offerings.
What's Next: Netflix says its third-quarter outlook is driven by growth in memberships, pricing, and ad revenue, and its 2026 outlook is driven by growth in memberships and pricing, and a projected rough doubling of ad revenue to approximately $3 billion.
-- Angela Palumbo
Why Trump's Meeting With Senators on Crypto Bill Matters
The crypto industry's most critical Washington priority is hanging by a thread, and whether it succeeds or fails could come down to the results of a White House meeting that was scheduled Thursday between President Donald Trump and Republican senators about the Clarity Act, a crypto regulation bill long sought by the industry.
-- The bill, long sought by Coinbase and others, has provisions such as the creation of clearer pathways for raising money through token sales, the establishment of consumer protections, and the removal of crypto trading from the purview of the Securities and Exchange Commission, a longtime industry goal. -- Because of Senate rules, it's going to need support from several Democrats to pass. A critical hangup, however, is Trump's own investments in the crypto industry. As a condition of passing the bill, some Democrats want to include a provision barring Trump and other government officials from crypto investments. -- Thursday's meeting could make clear what prohibitions, if any, Trump is willing to accept. Trump's most recent financial disclosure form showed he made more than $1 billion last year from crypto-tied investments, including from World Liberty Financial, which the president and his family co-founded before he was re-elected in 2024. -- The White House didn't respond to a request for comment but in the past has said Trump's investments aren't a conflict of interest. Reaching a deal soon is critical to passage of the Clarity Act. Lawmakers leave for recess in August, and don't have much time before the midterms after that.
What's Next: Some analysts think the bill is already basically out of time. Stifel Washington policy strategist Brian Gardner gives it a 30% chance of passing this year and says even that may be optimistic. Its chances would fall below 20% should the Senate not pass it before the recess, he said.
-- Joe Light
Verizon to Slash 3,000 Jobs in Cost-Cutting Push
Verizon Communications is laying off more staff as new CEO Daniel Schulman seeks to bring down costs. The wireless carrier told Barron's on Thursday that it would cut 3,000 jobs and reduce the number of retail stores it owns.
-- Verizon will lay off 2,500 retail workers and 500 corporate employees,
and will sell 274 of its corporate-owned stores to franchise owners,
bringing the overall number down to about 1,000. The company will also
restructure some departments, according to an internal email and call
reviewed by Barron's.
-- The latest round of layoffs impacts about 3.3% of employees, based on
Verizon's total head count of 89,900 at the end of 2025. Barron's
reported earlier this week that Verizon would announce layoffs on
Thursday.
-- Schulman has made cost savings a priority since he took the job last
October. During an earnings call in January, Schulman said Verizon was
aiming to save $5 billion in operating expenses in 2026 and a
"substantial portion" of the savings would come from head count
reductions among other areas.
-- In November, Verizon cut 13,000 jobs, its largest-ever layoff. The
company announced a smaller round of layoffs in May.
What's Next: Verizon is set to report its second-quarter earnings on July 24. Analysts expect an adjusted profit of $1.28 a share, according to a FactSet poll, compared with $1.22 a share 12 months ago.
-- Karishma Vanjani and George Glover
Berkshire Hathaway Appears to Have Accelerated Buybacks
(MORE TO FOLLOW) Dow Jones Newswires
July 17, 2026 07:07 ET (11:07 GMT)
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