How Split Is the U.S. Stock Market in July 2026? Chips Are in a Frenzy, While Software Crashes—If Ordinary People Can Understand This Market Move, That’s Enough

Friends who’ve been watching U.S. stocks lately are probably confused—because this market isn’t really “up together and down together.” It’s a wildly absurd script of extremes: one side is an all-out chip celebration, and the other is software crashing and burning. Today, I’ll talk with everyone in plain, easy-to-understand language about the hottest things going on right now—no obscure jargon, just keep it grounded and real.

First, let’s look at the market’s recent look and feel. On July 13, the Nasdaq plunged 1.55%, and the Dow slipped only 0.26%. Then on the 14th, when the CPI data came out, all three major indexes flipped back to green: the Dow edged up 0.02%, the Nasdaq jumped 0.9%, and the S&P 500 rose 0.38%. Most mind-boggling of all, the sector split is taken to the extreme: AI compute hardware is surging, traditional software stocks are basically lying flat. On one side, SK Hynix ADR surged 27% in a single day; on the other, IBM sold off aggressively at the open, dropping 25%, setting the biggest one-day decline in nearly 40 years.

Why have chips and storage gone so crazy this time? The core reason is that AI capital expenditure has completely changed its game plan! Earlier, Meta said it would lease out idle compute capacity, and the market panicked—people feared that AI compute would be oversupplied and that chips would not be able to sell. In early July, the semiconductor index fell more than 11% over two days, and Micron and SanDisk slid straight into what looked like bear-market territory. Then Zuckerberg stepped in to refute it, saying it’s not idle capacity at all—instead, they plan to accelerate spending to build compute capacity. Add SK Hynix ADR listing on the Nasdaq, plus options listing, and the picture gets even more intense. With HBM high-bandwidth storage in short supply and pricing expectations ramping up, funds quickly launched a furious comeback—Micron, AMD, and Nvidia rebounded one after another. On the 14th, Nvidia rose more than 4%, and SK Hynix swung from a plunge of 9% to a surge of 27%. Storage and foundry wafer manufacturing both strengthened across the board.

Meanwhile on the other side, software stocks are basically “an AI bear-market warning on-site.” IBM missed expectations on both Q2 revenue and EPS, and the CEO basically called it out directly: customers have moved money away from software and traditional IT into AI infrastructure like servers and storage, and orders are being delayed. This shock dragged down the entire software sector: ServiceNow fell 5.76%, Adobe fell 4.26%, and Microsoft and Oracle were pulled down as well. Goldman Sachs even said “a software bear market is coming,” and capital has been fleeing old-tech software, doubling down on compute hardware instead.

Inflation and the Federal Reserve—this “market’s nervous system”—have also been especially tightly watched lately. A few days ago, Waller turned more hawkish and geopolitical tensions escalated, and the market pushed the probability of a July rate hike to 42%. Then June CPI cooled more than expected: year over year it fell to 3.5%, and month over month it declined for the first time in six years. The rate-hike probability was cut straight down to 17%. Treasury yields fell accordingly, giving tech stocks a big exhale. But don’t get too optimistic. The newly appointed chair, Waller, is still biased hawkish, and the September rate-hike expectation remains around 60%. On top of that, this week, five major banks—including JPMorgan and Bank of America—are set to concentrate their earnings releases, so over the next few days, U.S. stocks will likely keep bouncing around in response to the data.

There’s also a pretty interesting split among institutions. Goldman Sachs and Bank of America have issued back-to-back warnings, saying the market is overheated. But over the past four weeks, hedge funds have been net buyers of U.S. stocks for the first time, and bullish options sentiment has hit a new high since 2020—especially with heavy positioning in tech. Put simply, this market right now isn’t an era where you can just close your eyes and buy AI for easy gains. Stock selection matters far more than timing by 10,000 times. Companies that can convert compute orders into real delivery and have genuine AI revenue are in favor, while companies that only sell a story and rely on traditional software for income are being discarded by capital.

Apple’s independent rally is also worth mentioning. Even on days when chips were falling hard, Apple still hit new highs. And Nvidia, long before that, proved with its quarterly results—$46.7 billion in revenue and $41.1 billion from data center—that the AI compute dividend hasn’t ended; it’s just shifted from a “broad-based rally hype” phase to the earnings-season test where real performance gets validated.

For regular investors like us, there’s no need to chase prices up or panic-sell. The mainline in today’s U.S. stock market is very clear: AI infrastructure (chips, storage, servers) is still the long-term theme, but near-term volatility will be driven by inflation, Federal Reserve policy, and earnings guidance. Traditional software and legacy tech should be alert to pressure from budget shifting. In the second half of 2026, the U.S. stock market won’t be a mindless carnival—it’ll be a differentiated market where “hardcore AI reigns supreme.” Understanding where the money is running is the real way to understand the hotspots behind this round of U.S. market interest.

Lastly, a straightforward reminder: the stock market is risky; invest with caution. We can watch the excitement, but please don’t blindly follow the crowd into U.S. stocks—okay? #摩根士丹利增持千枚BTC $BTC ‌