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1. Leader industry as of 5:46 pm

Telecom - Equipment related stocks: Lumentum Holdings, Inc.(LITE.US), Ciena Corporation(CIEN.US), EchoStar Corporation Class A(ECHO.US), Applied Optoelectronics, Inc.(AAOI.US).

Quick Summary and Outlook

Market Overview — S&P 500 hit another record. 87% of S&P 500 index(SPX.US) companies have beaten earnings estimates, and Deutsche Bank raised its 2026 EPS forecast to $358, citing broad-based profit strength extending beyond big tech. The quality factor is re-emerging as the dominant market theme, and the 10-year Treasury yield breaking above 5% remains the biggest risk for a pullback.

 

Semiconductors: Earnings Dispersion is the Story. AMD posted a record $11.54B in Q2 revenue (+50% YoY), with data center revenue of $6.7B (+107% YoY). But Q3 guidance of $13.0B fell short of the buyside bogey of ~$13.2B, sending shares down 9%. Management guided for data center revenue to grow "well over 100%" in 2027, with the Helios ramp being the key catalyst. ANET crushed estimates — Q2 revenue of $3.036B (+37.7% YoY) beat the Street, and Q3 guidance of ~$3.3B (+43% YoY) came in ~12% above consensus, sending the stock up 11%.

Astera Labs(ALAB.US) posted Scorpio X mass production and Q3 guidance of $550M well above consensus, though shares edged down 1% on lingering long-term questions. NVIDIA Corporation(NVDA.US) rose 7.58% over 5 days, with networking revenue growth of 142% now outpacing compute at 59%, signaling value is spreading beyond GPUs into interconnects. xAI's exclusive commitment to NVDA targeting 10GW by 2027 further reinforced the moat. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR(TSM.US) is expected to reach 180K wpm of 3nm by Q4, with 2nm approaching 100K wpm. CoWoS total demand is projected to rise from 216K wpm in Q1'26 to 702K wpm by Q4'27, with NVDA consuming over 50% of capacity in 2026.

 

Memory: HBM Prices Expected to Nearly Double, Shareholder Returns Signal. Goldman Sachs forecasts SK Hynix gross margin could peak at 86% in 2027, with HBM blended ASP reaching ~$2.9/Gb by 2027, implying an 87-100% YoY increase. Samsung and SK Hynix both confirmed they are evaluating expanded shareholder returns, with Samsung potentially announcing a special dividend. Sandisk Corporation(SNDK.US) posted record Q4 revenue of ~$9.0B with 84.6% non-GAAP gross margin, as data center revenue more than doubled, and locked in $93B+ in minimum contracted revenue. Western Digital Corporation(WDC.US) delivered Q4FY26 revenue of $3.747B with 54.4% non-GAAP gross margin, guiding Q1FY27 revenue to ~$4.1B.

 

Optical: US Weighing Ban on Chinese Components, Beneficiaries Named. The US is reportedly considering an import ban on Chinese-manufactured optical components for AI data centers. Seven of the top 10 global optical module makers are Chinese, supplying over 50% of high-speed modules.

Citi believes exemptions will apply and that Coherent Corp.(COHR.US) (the clearest scaled beneficiary), Applied Optoelectronics, Inc.(AAOI.US), and Fabrinet(FN.US) are positioned to absorb incremental demand, though near-term non-Chinese capacity remains insufficient to fully replace Chinese supply.

Lumentum Holdings, Inc.(LITE.US) should benefit from tighter EML supply but faces potential InP substrate risk from China.

The key question is whether the ban covers manufacturing in China or just corporate domicile.

 

Software: Crowding Drops Below Historical Average. Software sector crowding has fallen below its 25-year historical average, creating selective opportunities.

Datadog(DDOG.US) and Palo Alto Networks, Inc.(PANW.US) are the most crowded names, while Salesforce.com, inc.(CRM.US), GITLAB INC.(GTLB.US), and Adobe Systems Incorporated(ADBE.US) are the least favored.

Bernstein recommends balancing crowded and uncrowded positions to mitigate downside risk, as crowded stocks tend to sell off in unison during market stress.

 

SpaceX(SPCX.US): Solid Revenue but Capex Overhang. Q2 revenue of $7.814B (+92% YoY) beat consensus, with Starlink contributing $4.291B in revenue and $2.597B in adjusted EBITDA.

The AI segment posted $2.561B in revenue and turned EBITDA-positive, but AI capex reached $15.8B, driving free cash flow to -$16B.

The stock fell 11% on capex concerns and lock-up expirations beginning Aug 6.

Management expects $100B+ annualized revenue run rate by year-end, targeting over 2GW of compute by YE26 and closer to 10GW than 5GW by YE27.

 

AI Infrastructure: $1 Trillion+ Market Takes Shape. Bernstein estimates the global server market will break $1 trillion by 2028, with GPU AI server shipments growing at a 22% CAGR through 2028.

Goldman Sachs now expects hyperscaler capex to reach ~$800B in 2026 (up 92% YoY), and $1.053 trillion in 2027.

Morgan Stanley projects global cloud capex to hit $1.2 trillion in 2027 (+30% YoY), potentially reaching $1.4 trillion in a bull case.

Since March 2026, consensus 2026 capex estimates for major CSPs have been raised ~15%.

Value is expanding from GPUs across seven layers of physical infrastructure — semiconductor production, servers, networking, power/cooling, and electricity supply.

 

Macro: Quality Factor Returns, Rate Hike Bar Remains High. Minneapolis Fed's Kashkari called for an immediate 25bp rate hike, but the market views the bar for rate hikes as high given low unemployment and inflation still above target. Morgan Stanley emphasizes that the quality factor has re-emerged as dominant, and the 10-year yield breaking above 5% is the biggest risk to the bull case.

 

One Sentence to Sum It Up: AI investment is still accelerating, but the market has shifted from "buying GPUs indiscriminately" to scrutinizing order conversion, gross margins, and capex efficiency — and the stock dispersion we saw yesterday is the direct expression of that logic, as value expands from chips into interconnects, memory, power, and packaging across the entire supply chain.

 

2. Breaking Out Today as of 5:46 pm

3. Near Breakouts as of 5:41 pm

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