Savers Take the Lead

Iran 'hopes' prevented a correction for tech stocks... The StockTracker was right about semiconductors... Apple's back on top... Investors are rewarding 'savers'... Big Tech's debt concerns... Get ready for volatility...

Tech stocks nearly entered their second correction of the year today...

Markets opened lower this morning, led by technology and semiconductor stocks (more on that in a minute).

At its lows today, the tech-heavy Nasdaq 100 Index was down roughly 10% from its June 2 high, which would have marked its second correction of 2026.

But stocks rebounded throughout the late morning and early afternoon after President Donald Trump told Fox News that the U.S. had "very good talks" with Iran.

Now, Iranian officials said the only discussions they've had were with Oman regarding control of traffic through the Strait of Hormuz. But the president's comment, coupled with another day of the U.S. holding off on strikes on Iran, kept stocks afloat.

So the recent rotation we've mentioned in these pages continued. Technology and energy stocks – the two biggest beneficiaries of the AI boom – were two of the three sectors to close lower today. Oil prices fell, too, with West Texas Intermediate crude dropping more than 4%.

On the other side, healthcare and consumer-staples stocks posted strong gains, with both sectors rising about 2%.

Tipping our hat to Doc's new system...

Yesterday, the iShares Semiconductor Fund (SOXX) fell another 2% and hit its lowest level in more than two months. That decline put SOXX more than 20% below its mid-June high, officially entering a bear market.

The chip space – led by AI darlings Nvidia (NVDA) and Advanced Micro Devices (AMD), as well as memory-chip giant Micron Technology (MU) – has been on a tear... more than doubling over the past 12 months. It's up more than 60% in 2026 alone. The semiconductor sector has been a huge beneficiary of this trend.

But the tide has started to turn. And MarketWise CEO and Retirement Trader editor Dr. David "Doc" Eifrig's new StockTracker system saw the warning signs first.

As he wrote in the July 22 issue of his free Health & Wealth Bulletin e-letter...

The State Street SPDR S&P Semiconductor Fund (XSD), which invests in semiconductor stocks in equal weight, hit an all-time high in June. Then, just a few weeks later, XSD went into what I call "bearish" territory in my StockTracker.

If you had used my system at the time, you could've seen the 20%-plus drop in semiconductor stocks coming before it happened... and taken your profits.

Since Doc's warning, SOXX has fallen another 11%. Now, every component of SOXX is trading below its 50-day moving average. That hasn't happened since April 23, 2025, according to Barrons' Josh Schafer.

Now, that wasn't a bad time to buy semiconductor stocks. From that date until its peak in June, SOXX surged more than 250% in about 14 months.

But while these stocks may run higher over the long term, the StockTracker system isn't expecting a turnaround just yet. More from Doc in the July 22 issue of Health & Wealth Bulletin...

According to StockTracker, XSD is still in bearish territory. My system shows that XSD has a long way to go until it's officially in "bottoming" territory. So we don't think a bottom is in for semiconductor stocks just yet.

It may be weeks or even months before XSD makes it back into my system's "buy zone."

When Doc's system does turn bullish on semiconductors, Retirement Trader subscribers will be the first to know.

But for now, we wouldn't go buying the dip just yet. Instead, the StockTracker currently rates five other industries as "bullish." Retirement Trader subscribers can view those right here.

We have a new market-cap leader...

Thanks to Apple's (AAPL) 1% gain yesterday (and Nvidia's 5% decline), Apple has retaken the title of the largest company by market cap.

As of yesterday's close, Apple had a market cap of $4.95 trillion, compared with Nvidia's market cap of $4.76 trillion. Today, Apple briefly surpassed $5 trillion in market cap.

So far this year, Apple has risen roughly 25% – making it far and away the top performer out of the Magnificent Seven. Nvidia is second with a 4% return this year.

Apple's lack of AI capital expenditures ("capex") is a big reason why...

While companies like Meta Platforms (META), Alphabet (GOOGL), Amazon (AMZN), Microsoft (MSFT), and Oracle (ORCL) spent more than $413 billion on capex last year (a number that will nearly double in 2026), Apple "only" spent about $12 billion.

For 2026, Wall Street expects Apple's capex to remain about the same – around $14 billion. And its capex even fell year over year in the first two quarters. That marks a stark contrast from the rest of Big Tech.

As we've noted, investors are getting impatient about the massive wave of Big Tech AI spending – even more so with companies issuing new shares and taking on debt to fund their AI goals.

So investors are rewarding Apple for being a "saver" rather than a spender. Just take a look at this chart from Bloomberg, shared by Michael Burry of The Big Short fame on social media platform X...

The companies in the top left – Alphabet, Amazon, and Microsoft – have been both the biggest AI spenders and the largest drags on the S&P 500 Index's return since the start of June. With folks rotating out of the spenders, Apple has been the beneficiary.

As Burry said in his post, "The market has voted and the results are clear." Spenders will have a higher hurdle to clear going forward.

We expect this trend to continue in the coming months, with investors punishing the big spenders until they see some return on their AI investments.

Ratings agencies are joining investors in their concerns...

In a recent research note, credit-ratings agency Moody's said the switch from asset-light business models to capex-heavy models is bringing "unprecedented levels of investment and capital raising."

That threatens the credit quality of the six hyperscalers tracked by Moody's – Alphabet, Amazon, Meta Platforms, Microsoft, Oracle, and CoreWeave (CRWV). Combined, Moody's estimates that these companies have already raised $460 billion in debt.

Moody's added that these companies have another $1.2 trillion in lease obligations that don't appear on their balance sheets but still add to the credit risk from AI investment.

Other ratings agencies are going a step further...

Earlier this month, S&P Global downgraded Oracle's debt rating to BBB-, the lowest investment-grade rating before "junk" territory.

In the case of Alphabet, concerns may be overblown. As our colleague and Stansberry's Credit Opportunities editor Mike DiBiase wrote in his July issue, Alphabet is "one of the safest credit risks on the planet."

More from Mike...

It maintains the second-highest credit rating possible, AA+. S&P only gives two companies this credit rating – Alphabet and Apple. And only two earn an even higher AAA rating – Microsoft and Johnson & Johnson (JNJ).

The truth is that Alphabet has room to issue far more debt if needed without giving up its investment grade credit rating.

Put simply, when it comes to credit risk, not every hyperscaler is equal. Oracle, with its near-junk rating, and CoreWeave, which has a "junk" rating from all three major ratings agencies, are clearly the most at risk.

Still, all these companies are interconnected – whether through direct investments or just through being a part of the AI ecosystem.

So any weakness from Oracle or CoreWeave could translate into volatility for a company like Alphabet in the short term.

The week is just ramping up...

Tomorrow afternoon, the Federal Reserve will release its latest policy decision, the second under Chair Kevin Warsh. As we wrote in yesterday's Digest, traders are expecting a "hold" at this meeting, but a rate hike at September's meeting.

After markets close tomorrow, Microsoft and Meta Platforms will release their latest earnings. On Thursday, we'll hear from Apple and Amazon. All eyes will be on the companies' plans for AI spending. Investors will likely punish any increases that push their cash flows negative (or close to it).

Since Microsoft and Meta make up about 7% of the S&P 500, their stock moves will have an outsized impact on the rest of the market.

In short, there's a lot still to come. And that'll provide plenty of "noise" for the market.

New 52-week highs (as of 7/27/26): Arch Capital (ACGL), AXA (AXAHY), Bristol-Myers Squibb (BMY), Alpha Architect 1-3 Month Box Fund (BOXX), Brady (BRC), Pacer U.S. Cash Cows 100 Fund (COWZ), Quest Diagnostics (DGX), iShares MSCI Spain Fund (EWP), Philip Morris International (PM), Travelers (TRV), and Invesco DB U.S. Dollar Index Bullish Fund (UUP).

In today's mailbag, feedback on yesterday's Digest, which discussed Alphabet's latest earnings, the war in Iran, and that parasite that's going around, plus Dr. David "Doc" Eifrig's tips for protecting yourself from it... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"My goodness, so much to cover today...

"1. Alphabet. While I won't hide my concern over Alphabet's level of AI spending, I'm willing to play Rip Van Winkle on this and just go to sleep for a while, as I'm willing to wager that at the end of the day Alphabet will be one of the companies that makes all this spending pay off. In other words, I'm with Whitney, and in Alphabet I trust.

"2. The Iran War. This lull is meaningless. The US signed a Memorandum of Understanding... and it failed to hold. How much more can we possibly give up short of saying oops, never mind and just withdrawing (which would probably actually be better than the MOU, but which Trump will never do)? In other words, I'm not selling my energy stocks.

"3. Cyclosporiasis. Yesterday I was at Whole Foods picking out a head of organic romaine, and out of the blue, a woman standing next to me said she hoped this lettuce was OK, obviously referring to the iceberg scare. My wife and I assiduously wash everything and we will continue to do so, although I'm sure we won't cook the romaine. In any case, the big miss by the Feds here is no surprise at all..." – Subscriber Sherwin R.

All the best,

Nick Koziol
Baltimore, Maryland
July 28, 2026