Wall Street Morning News: Apple overtakes Nvidia and returns to the top spot by market value; money flows from AI hardware to software stocks; rumors about Changxin+China lithography equipment send U.S. stocks in storage and semiconductors into a slide

Every Monday to Friday morning, we focus on macro, US equities, AI, precious metals, and crude oil—replaying the market with data and seizing the early lead with trends, produced by PANews.

On Monday, US stocks traded mixed. The Dow Jones Industrial Average rose 0.51%, the S&P 500 inched up 0.02%, and the Nasdaq Composite fell 0.18%. Chip stocks, memory stocks, and optical communications all saw clear declines, dragging the Nasdaq lower. Traditional consumer names, some software stocks, and Chinese concept stocks performed better.

Trump opens an Iran negotiation window; oil prices plunge

For the moment, tensions in the Middle East have cooled. Trump said the US has paused its attacks on Iran to give negotiations another opportunity, but he also warned that if talks fail, the US will resume strong military action.

WTI crude breaks below $80, down 12% so far this week; Brent crude breaks below $85, with a weekly drop of nearly 10%. The market had initially worried that an escalation between the US and Iran would raise risks, and that the Strait of Hormuz would be affected. Now that it sees the US willing to negotiate first, traders have started to close positions that had bet on higher oil prices.

However, risk has not fully disappeared. Israeli Prime Minister Benjamin Netanyahu has arrived in the United States and will meet with Trump; Iran’s nuclear program remains a core topic. At the same time, Yemen’s Houthi group claims it attacked Saudi oil facilities, and Saudi Arabia has also intercepted multiple drones.

So this decline in oil prices looks more like a “temporary unwinding of war premium,” not the end of Middle East risk. If US-Iran negotiations fail next, or if Saudi Arabia, the Red Sea, or the Strait of Hormuz sees more trouble, oil prices could rebound quickly.

The market is waiting for the Fed, worrying about a sudden rate hike

The US dollar is basically flat, bouncing from intraday lows. Morgan Stanley said that ahead of the Federal Reserve and the Bank of England meetings, investors increased USD long positions and GBP short positions—meaning the market is defending in advance.

On US Treasuries, the 10-year yield fell by about 3 basis points to 4.63%. The sharp drop in oil prices eased inflation concerns, so long-end yields also pulled back.

But the real big event is the Fed meeting this week. Most market participants think the Fed will stay on hold, but some traders are betting on an unexpected 25-basis-point hike.

• Trump continues to pressure the Fed. He said the US should have the world’s lowest interest rates, and called Fed Chair Waller “very excellent,” while saying other board members constrain him.

• Castle Securities offered a very bold call: the Fed this week may unexpectedly hike. The firm believes that if Waller chooses to raise rates, it would strengthen his image as anti-inflation, and also signals the Fed is no longer giving the market so many hints in advance.

• Evercore ISI is more cautious. They think raising rates immediately after inflation data has just improved would look a bit odd, but given ongoing uncertainty from the Middle East situation and oil-price shock, this possibility cannot be fully ruled out.

Over the next two days, what the market cares about most is not only whether the Fed will hike, but also what Waller will say at the press conference. If he sounds hawkish, the dollar and Treasury yields could rise further and tech stocks may stay under pressure. If he is more dovish, US equities could get a breather.

AI trading cools down; money shifts from AI hardware to clearer software and cash-flow companies

Last night, US stocks showed clear divergence, with AI application software stocks becoming a safe haven for capital. Shopify surged more than 11%, Palantir rose 7%, SAP SE and ServiceNow gained nearly 7%, Salesforce jumped more than 6%, and Adobe and Applovin rose more than 5%. The market is starting to prefer AI application layers with lighter assets and closer to customer budgets.

By contrast, the hardware chain faced concentrated selling pressure; storage, optical communications, semiconductor equipment, and AI chips all came under pressure. The Philadelphia Semiconductor Index fell 2.23%, and semiconductor ETFs dropped about 2.25%. Memory and optical communications saw even larger declines. UBS said the credit market is repricing the long-term monetization risk for AI capital expenditures. Amazon’s July investment-grade bond subscription multiple was only 1.6 times, far below 3.4 in March.

UBS expects that the six mega-scale cloud providers (Alphabet, Amazon, Microsoft, Meta, Oracle, and CoreWeave) have total capital expenditure forecasts for fiscal 2026 at about $849 billion, and that 2027 could exceed $1 trillion. Investors are demanding higher risk premia, which is the backdrop for pressure on Nvidia and semiconductor stocks.

Meanwhile, in China, news on memory and lithography machines became an additional catalyst. ChangXin Technology’s first trading day surge exceeded 465%, and its market cap surpassed 3 trillion yuan, prompting global investors to reassess the long-term DRAM supply landscape. The Information reported that a Chinese company has started producing immersive DUV lithography machines in small batches, planning to deliver 5 units this year and about 20 units per year in 2027. ASML and semiconductor equipment stocks were hit.

But not all institutions believe this means a fundamental turnaround. Analyst Citrini said China’s DUV progress is not surprising, and ASML’s selloff looks a bit overdone. Bernstein analyst Mark Li also believes a pullback in memory stocks could offer a new opportunity to build positions, since AI high-end memory like HBM still has high entry barriers and the near-term advantage of leading global vendors is hard to dislodge.

Specific project moves and stock price volatility:

• Apple rose 1.17%, market cap near $5 trillion: it regained the top spot globally by market value above Nvidia for the first time since April 2025. One reason Apple is popular is that its AI spending is relatively restrained. Compared with building large-scale data centers in-house, Apple is more inclined to rent computing power. Now the market worries that AI capital expenditures are too high, and Apple’s “lower spend” model is actually more attractive. Apple will release earnings after the close this Thursday. The market will focus on iPhone demand, services revenue, AI feature progress, and whether the company keeps its capital-expenditure discipline. Among Mag7 giants, Microsoft rose 1.94%. The company released its first network security model, MAI-Cyber-1-Flash, to reduce vulnerability scanning costs. Google climbed 2.13%, with the White House pushing it to finalize a voluntary AI review framework by August 1. Amazon dipped 0.31%. The company announced a plan to deploy 5,000 satellites, directly challenging Starlink. Meta fell 0.22% and Tesla fell 1.22%.

• Nvidia fell 4.99%; concerns over AI infrastructure financing: its default protection cost (CDS) hit the largest single-day increase in history. Pressure is coming from both sides: one is that AI infrastructure projects are huge in scale, raising worries about debt, vendor financing, and circular transactions; the other is that “Big Short” Michael Burry added to his short bets on Nvidia and Micron, forecasting a 30% pullback in semiconductors. Dragged by this, related chip giants AMD plunged 5.17% and TSMC fell 1.03%.

• SanDisk (Western Digital) crashed 11.02%; memory stocks are the hardest hit: after ChangXin Technology’s IPO rally, the market worries that China’s DRAM production capacity and capital support will change the traditional memory supply landscape. Combined with the prior surge in memory stocks, profit-taking accelerated quickly. Among related memory names, Western Digital and Seagate fell more than 4%, while Micron dropped 2.25%.

• SK Hynix fell 7.47%, breaking below the $149 issue price: previously, SK Hynix was a key beneficiary of the AI memory boom. Even though HBM demand is still expected long term, investors have started worrying about valuation being too high, the size of the rally, and accelerating competition from Chinese memory players.

• ASML fell 5.80%: media reported that a company in Shanghai has started producing immersive DUV lithography machines in small batches. It plans to deliver 5 units this year, with annual output of about 20 units by 2027. This volume is not large and won’t shake ASML’s position in the short term, but it reminds the market that China is pushing localization of semiconductor equipment. Analyst Citrini said the market reaction may be a bit excessive because this kind of progress is not entirely unexpected, and the equipment is still in an early stage. Among related equipment stocks, Applied Materials and Lam Research both fell about 4%.

• Palantir surged 7%: Citigroup lowered its target price to $200, but sharply raised its 2027 revenue outlook. The continued acceleration in fundamentals led investors to ignore valuation pressure.

• The application software sector exploded across the board: Shopify jumped more than 11%, Salesforce? (note: source says “赛富时” which is Salesforce) Salesforce? rose nearly 7%, ServiceNow rose nearly 7%, and Adobe rose more than 5%. SpaceX fell 1.36%. The market is still questioning the valuation of its AI business. Axe Compute rose 5.26%. A recent research report led by Yilihua (易理华) and its team, an AI investment fund, listed Axe Compute as an undervalued AI compute entry point for US stocks, calling it one of the most resilient bets in the “AI compute assetization wave.”

• Space fell again 1.36% to a new low of $108.66: the market worries that Starlink user growth may slow, Starship test-flight progress is not going well, and that investment in AI and space compute businesses is too high. But Morgan Stanley insisted that if the stock falls to $100, it would be equivalent to the market pricing AI option value at zero, and that this is already a very good “forced selloff” buying point.

• Corning fell more than 2%; today’s earnings call will be critical: the market is focusing on demand for AI server glass substrates, optical communications, display materials, and data-center hardware. Because the optical communications sector fell overall on Monday, Lumentum dropped nearly 7%, Coherent fell nearly 4%, and MKS? (迈威尔) and Corning and Credo fell more than 2%. If Corning’s management provides strong demand guidance, it could help the AI hardware chain catch a breather; if guidance is weak, the optical communications sector could remain under pressure.

What to watch next

July 28 (Tuesday)

• Netanyahu meets Trump: focus on Iran’s nuclear program and Middle East ceasefire talks. If both sides send hardline signals, oil and gold could rebound. If they continue pushing negotiations, oil could stay under pressure.

• Major earnings: Corning, Boeing, Coca-Cola, UPS, Royal Caribbean Cruises, and others will release results. The market will focus on Boeing’s delivery recovery, Coca-Cola’s consumer resilience, UPS logistics demand, Corning’s AI hardware and optical communications demand, and Royal Caribbean’s outlook on travel consumption. Among them, Corning’s Q2 earnings call will be held at 20:30 Beijing time, an important window to observe demand for AI server glass substrates, optical communications, display materials, and data-center hardware.

July 29 (Wednesday) (AI earnings battle #1)

• 08:00 SK Hynix Q2 earnings: The market expects SK Hynix’s second-quarter operating profit could hit a record. Key focuses are HBM shipment volumes, AI server demand, NAND pricing, and guidance for the second half. If results are strong, it will benefit the global memory chain; if management is cautious on demand, chip stocks may continue to adjust.

• Major earnings: Seagate, Western Digital, Ford Motor, Visa, KLA, NXP Semiconductors, Skyworks, Teradyne, Bloom Energy, Procter & Gamble, Vertiv, Amphenol, SK Hynix, and others are set to report or hold earnings calls around the same time. The market will focus on Seagate and Western Digital’s views on enterprise storage, NAND pricing, and AI data-center storage demand.