Daily Update

Everything you need to know about the stocks that matter in 5 minutes

Good morning,

First, let me know if you like this format. If so I can make it a daily briefing for paid subscribers.

Portfolio Update: Added a very small (~1%) position in BRR which is down about 95%, is very speculative, but could work out well if Bitcoin rebounds.

I’ll do a deep dive on BRR for paid subscribers soon.

I’ll share a full portfolio screenshot in the portfolio watch section below.

Broad Market

Tuesday was a relief rally. The S&P 500 closed up 0.38% at 7,543.59, the Nasdaq jumped 0.9% to 26,107.01, and the Dow eked out a 9.63-point gain to 52,508.27, with chip stocks doing the heavy lifting after June’s CPI came in cooler than expected, a 0.4% monthly decline that pushed the annual rate to 3.5% against a 3.8% consensus. The one scar on the tape was IBM, which fell 25% after warning that Q2 profits will miss on soft software and infrastructure demand.

The CPI miss did real work on rate expectations. Odds of a July Fed hike collapsed to 17% from 42% the day before, though traders still see roughly 60% odds of a hike in September. The 10-year yield has been chopping around 4.58% to 4.62%, near two-month highs. Fed Chair Kevin Warsh testifies before the Senate Banking Committee today at 10am ET, his first congressional appearance since being sworn in on May 22. Worth watching closely given where rate expectations sit right now.

The wildcard is oil. The US reinstated its naval blockade of Iranian shipping as tensions in the Strait of Hormuz escalate again, and crude has responded: Brent gained 2% to $84.98 and WTI rose 2.1% to $79.79 on Tuesday, after Brent’s 9.6% single-day surge on Monday, its strongest daily move since May 2020. With strait traffic reportedly down to 5-15% of pre-war levels, some analysts are floating $95 crude if the disruption persists. That’s the real risk to the soft-landing story right now, not the Fed.

Tech & AI

Semiconductors did the reversing. The VanEck Semiconductor ETF (SMH) rallied 2.5% on Tuesday, clawing back Monday’s Iran-driven selloff, helped by data showing hyperscaler capex holding up and a cooler PPI print. AMD led with a 6% pop to $566.73 after ZTE, Kingsoft Cloud and other Chinese firms were cleared to buy its AI chips, with BofA lifting its target to $620. Nvidia jumped as much as 4% after Morgan Stanley reiterated it as their top semi pick and a Commerce official confirmed H200 shipments to China have begun, even if volumes so far are small.

Meta is the story I keep coming back to. It unveiled a new frontier AI model and launched Meta Compute, a cloud unit that puts it in direct competition with AWS and Azure, sending shares up 15% on the week. Zuckerberg confirmed the in-house Iris chip enters production in September as Meta scales toward 14GW of AI compute by 2027. Wolfe Research put a number on the monetization math: roughly 20% EPS upside for every gigawatt monetized at a $25B run rate, with an $800 target. The catch is capex. Wolfe flags 2026 spend closer to $200B versus the Street’s $160B, and floated the possibility of a capital raise. Earnings land July 29.

Microsoft is the mirror image. Despite beating on its last quarter ($81.3B revenue, +17% YoY, $4.14 EPS) the stock is down 20% year to date on AI spending anxiety. It’s committing $190B to AI and Azure infrastructure in 2026 while cutting about 4,800 jobs, including a chunk of Xbox, and standing up a new subsidiary, Microsoft Frontier Co., to sell AI engagements directly to enterprise clients. Notably, ByteDance is reportedly now its largest Azure/OpenAI customer in China at over $1B a year. MSFT reports July 29, the same week as Meta and Alphabet, with Amazon following July 30. That week is going to set the tone for the whole AI trade.

Also on my radar: Broadcom expanded its custom silicon partnership with Apple through 2031, and SK Hynix’s Nasdaq listing is drawing attention as one of the largest foreign IPOs ever, ahead of Samsung’s own earnings.

Portfolio Watch

Here’s the current full portfolio and important updates for our companies.

Performance since August 2022: +275% vs S&P 500 performance of +89%