If yesterday's note ended with "Tonight is about Micron," then today's note basically writes itself. The memory-chip maker did not deliver good numbers, it delivered numbers that made analysts look conservative across the board.
After three sessions of nervous selling in the AI complex, one earnings release flipped the mood almost immediately. Whether that lasts more than a day is the actual question.
The Rundown
- Wall Street closed mixed Wednesday, with chip and AI infrastructure names again under pressure during regular trading.
- A blowout fiscal-Q4 guide from a leading memory-chip maker blew past every estimate after the close and reignited the AI trade.
- Crude slid further as tankers move through the Strait of Hormuz again, putting oil back at pre-war levels.
- All eyes turn to Thursday's PCE inflation read and a Fed that the market still expects to hike in September.
A Day of Two Tapes
The regular session was the same script we've been reading all week. The Dow Jones (DJI | ???0.35%) crept higher while the Nasdaq (COMPX | ???0.43%) leaked again, dragged down by another bout of selling in semis and AI infrastructure.
APPLIED DIGITAL CORP (APLD | ???7.27%) and NEBIUS GROUP NV (NBIS | ???5.66%) were the loudest sellers, with the bigger chip names - SEMTECH CORP (SMTC | ???2.94%), NVIDIA CORP (NVDA | ???0.52%), RAMBUS INC (RMBS | ???2.88%) - leaking another fraction. Not panic, not capitulation, just the same patient distribution we've seen since Monday.
Then came the close. And then came Micron.
Micron Resets the Bar
Heading into the print, you could feel the weight of expectations. A lot of commentary called it a make-or-break moment for the chip rally, and for once that framing was earned. What Micron delivered was not a small beat. It was a numbers reset.
- For fiscal Q4, the company guided to revenue of $49 to $51 billion, analysts were modeling $43.24 billion.
- EPS guide came in at $30 to $32, against a $25.31 consensus.
- The gross margin guide of around 86 percent topped the 83.6 percent the Street had pencilled in.
- The third-quarter numbers themselves were already eye-watering: $41.46 billion in adjusted revenue versus $9.30 billion a year ago, and adjusted EPS of $25.11, a twelvefold jump from $1.91 the year before.
The market reaction told you everything: shares ripped roughly 12 percent in after-hours trading, adding more than $120 billion in market cap in a single evening.
What I take away from this is simple. The AI demand picture is not slowing down at the component level. The story that hyperscalers might pull back on capex was always more sentiment than data.
Micron just put hard numbers on a table where rumours had been doing the talking. Memory is structurally tight, multi-year customer agreements are now smoothing the boom-bust pattern that historically defined this sector, and the pricing power is sitting where you'd expect it to sit when supply can't keep up.
The cyclicality risk has not disappeared. Memory has burned investors before. But for now, the AI party that started to wobble earlier this week has been handed a lifeline.
Cerebras Gets a Welcome to Public Life
Not every chip story went well.
CEREBRAS SYSTEMS INC - A (CBRS | ???19.61%) dropped almost a fifth of its value after its first major guidance update since going public last month. The 2026 revenue range of $855 to $865 million actually came in above consensus, but the Street was clearly modeling something higher, and management warned operating margins will stay under pressure through year-end.
I find this a useful reminder of what happens when a freshly listed name with a big narrative meets quarterly accountability. Cerebras has a real story, its chips promise faster inference than the dominant GPU architectures, and it landed a multibillion-dollar deal with OpenAI back in January. But narrative doesn't survive the first guidance miss. The bar moves the moment you ring the bell.
Qualcomm Wants a Seat at the Datacenter Table
The other notable AI story came from QUALCOMM INC (QCOM | ???3.29%). The stock leaked again during the regular session, but the after-hours move told a different story, shares jumped roughly 13 percent on the back of a strategic update and a set of long-dated targets that signal real ambition.
Management is now guiding for more than $15 billion in datacenter AI revenue by fiscal 2029, with total non-smartphone revenue scaling to $40 billion, of which $10 billion is expected to come from automotive. The company also confirmed a roughly $4 billion acquisition of AI specialist Modular and revealed Meta as the first customer for its new Dragonfly C1000 chip starting in 2028.
CEO Cristiano Amon is pitching energy-efficient silicon as the answer to the power constraints that are now genuinely capping datacenter deployment timelines. That's a smart angle. The reality of AI infrastructure has shifted from "how many GPUs can you ship" to "how much power can you get to your facility." Qualcomm is reading the room correctly.
The Single-Name Sideshow
A few other moves deserve a mention.
ALPHABET INC-CL A (GOOGL | ???0.24%) leaked again on news that two more senior AI researchers, Jonas Adler and Alexander Pritzel - both viewed internally as central to the Gemini effort - are heading to Anthropic.
That follows Monday's exit of Nobel laureate John Jumper, and earlier the departure of Noam Shazeer to OpenAI. The talent drain is becoming a pattern, and the reason is structural: with Anthropic and OpenAI both eyeing post-summer IPOs, the pre-IPO equity upside is something Alphabet simply cannot match, no matter how generous the comp package. The stock will also be added to the Dow Jones Industrial Average from Monday, replacing VERIZON COMMUNICATIONS INC (VZ | ???2.25%).
HERTZ GLOBAL HLDGS INC (HTZ | ???40.71%) collapsed more than 40 percent after a profit warning citing weak demand. That's the kind of move that should give anyone in consumer cyclicals a moment of pause.
WENDY'S CO/THE (WEN | ???25.66%) ripped on a coordinated Reddit-driven buying call. We've seen this movie before, and it usually ends the same way... UBER TECHNOLOGIES INC (UBER | ???6.00%) also did well after announcing it's adding non-food delivery partners, including FedEx Office and Academy Sports + Outdoors to its platform. That's a real, defensible expansion of the addressable market.
ORACLE CORP (ORCL | ???4.62%) gave back another five percent, continuing its post-rally cool-off.
What's Next: PCE and the Fed
The setup for Thursday tightens immediately. The PCE inflation reading lands before the open, and after last week's Fed meeting, Kevin Warsh's first as chair, where the updated dot plot moved the median 2026 fed funds projection from 3.4% to 3.8% and effectively pencilled in a rate hike this year, that number carries more weight than usual.
LSEG data currently shows a 90 percent probability the Fed will hike 25 basis points in September. New home sales fell in May, and the euro/dollar pair eased to 1.1354, both nudging the broader macro picture in the same direction: a stronger dollar, firmer rate path, and a market that has to keep one eye on inflation regardless of how loud the AI conversation gets.
Bottom Line
Micron just bought the AI trade some breathing room. The numbers were not a stretch, they were a rebuke of the past few days of nervous selling. But one earnings release doesn't reset an entire narrative on its own.
The chip complex needs follow-through, and the macro setup - sticky inflation, a hawkish Fed, a stronger dollar - is still pulling in the other direction. Tomorrow's PCE print is the next test. For now, the picks-and-shovels names that drove this rally have at least one credible reason to stop selling. Whether buyers show up in size depends on what the inflation number says about the Fed's next move.
ChartMill Market Desk - Kristoff
With regard to the stocks discussed in the article above; the author owns individual shares in Nvidia.
This daily update is prepared by ChartMill for informational purposes only and does not constitute investment advice. Always do your own due diligence before making investment decisions.
Read full article here »
View the Zacks #1 Rank List
Micron Blows the Doors Off and Throws the AI Rally a Lifeline
If yesterday's note ended with "Tonight is about Micron," then today's note basically writes itself. The memory-chip maker did not deliver good numbers, it delivered numbers that made analysts look conservative across the board.
After three sessions of nervous selling in the AI complex, one earnings release flipped the mood almost immediately. Whether that lasts more than a day is the actual question.
The Rundown
A Day of Two Tapes
The regular session was the same script we've been reading all week. The Dow Jones (DJI | ???0.35%) crept higher while the Nasdaq (COMPX | ???0.43%) leaked again, dragged down by another bout of selling in semis and AI infrastructure.
APPLIED DIGITAL CORP (APLD | ???7.27%) and NEBIUS GROUP NV (NBIS | ???5.66%) were the loudest sellers, with the bigger chip names - SEMTECH CORP (SMTC | ???2.94%), NVIDIA CORP (NVDA | ???0.52%), RAMBUS INC (RMBS | ???2.88%) - leaking another fraction. Not panic, not capitulation, just the same patient distribution we've seen since Monday.
Then came the close. And then came Micron.
Micron Resets the Bar
Heading into the print, you could feel the weight of expectations. A lot of commentary called it a make-or-break moment for the chip rally, and for once that framing was earned. What Micron delivered was not a small beat. It was a numbers reset.
The market reaction told you everything: shares ripped roughly 12 percent in after-hours trading, adding more than $120 billion in market cap in a single evening.
What I take away from this is simple. The AI demand picture is not slowing down at the component level. The story that hyperscalers might pull back on capex was always more sentiment than data.
Micron just put hard numbers on a table where rumours had been doing the talking. Memory is structurally tight, multi-year customer agreements are now smoothing the boom-bust pattern that historically defined this sector, and the pricing power is sitting where you'd expect it to sit when supply can't keep up.
The cyclicality risk has not disappeared. Memory has burned investors before. But for now, the AI party that started to wobble earlier this week has been handed a lifeline.
Cerebras Gets a Welcome to Public Life
Not every chip story went well.
CEREBRAS SYSTEMS INC - A (CBRS | ???19.61%) dropped almost a fifth of its value after its first major guidance update since going public last month. The 2026 revenue range of $855 to $865 million actually came in above consensus, but the Street was clearly modeling something higher, and management warned operating margins will stay under pressure through year-end.
I find this a useful reminder of what happens when a freshly listed name with a big narrative meets quarterly accountability. Cerebras has a real story, its chips promise faster inference than the dominant GPU architectures, and it landed a multibillion-dollar deal with OpenAI back in January. But narrative doesn't survive the first guidance miss. The bar moves the moment you ring the bell.
Qualcomm Wants a Seat at the Datacenter Table
The other notable AI story came from QUALCOMM INC (QCOM | ???3.29%). The stock leaked again during the regular session, but the after-hours move told a different story, shares jumped roughly 13 percent on the back of a strategic update and a set of long-dated targets that signal real ambition.
Management is now guiding for more than $15 billion in datacenter AI revenue by fiscal 2029, with total non-smartphone revenue scaling to $40 billion, of which $10 billion is expected to come from automotive. The company also confirmed a roughly $4 billion acquisition of AI specialist Modular and revealed Meta as the first customer for its new Dragonfly C1000 chip starting in 2028.
CEO Cristiano Amon is pitching energy-efficient silicon as the answer to the power constraints that are now genuinely capping datacenter deployment timelines. That's a smart angle. The reality of AI infrastructure has shifted from "how many GPUs can you ship" to "how much power can you get to your facility." Qualcomm is reading the room correctly.
The Single-Name Sideshow
A few other moves deserve a mention.
ALPHABET INC-CL A (GOOGL | ???0.24%) leaked again on news that two more senior AI researchers, Jonas Adler and Alexander Pritzel - both viewed internally as central to the Gemini effort - are heading to Anthropic.
That follows Monday's exit of Nobel laureate John Jumper, and earlier the departure of Noam Shazeer to OpenAI. The talent drain is becoming a pattern, and the reason is structural: with Anthropic and OpenAI both eyeing post-summer IPOs, the pre-IPO equity upside is something Alphabet simply cannot match, no matter how generous the comp package. The stock will also be added to the Dow Jones Industrial Average from Monday, replacing VERIZON COMMUNICATIONS INC (VZ | ???2.25%).
HERTZ GLOBAL HLDGS INC (HTZ | ???40.71%) collapsed more than 40 percent after a profit warning citing weak demand. That's the kind of move that should give anyone in consumer cyclicals a moment of pause.
WENDY'S CO/THE (WEN | ???25.66%) ripped on a coordinated Reddit-driven buying call. We've seen this movie before, and it usually ends the same way... UBER TECHNOLOGIES INC (UBER | ???6.00%) also did well after announcing it's adding non-food delivery partners, including FedEx Office and Academy Sports + Outdoors to its platform. That's a real, defensible expansion of the addressable market.
ORACLE CORP (ORCL | ???4.62%) gave back another five percent, continuing its post-rally cool-off.
What's Next: PCE and the Fed
The setup for Thursday tightens immediately. The PCE inflation reading lands before the open, and after last week's Fed meeting, Kevin Warsh's first as chair, where the updated dot plot moved the median 2026 fed funds projection from 3.4% to 3.8% and effectively pencilled in a rate hike this year, that number carries more weight than usual.
LSEG data currently shows a 90 percent probability the Fed will hike 25 basis points in September. New home sales fell in May, and the euro/dollar pair eased to 1.1354, both nudging the broader macro picture in the same direction: a stronger dollar, firmer rate path, and a market that has to keep one eye on inflation regardless of how loud the AI conversation gets.
Bottom Line
Micron just bought the AI trade some breathing room. The numbers were not a stretch, they were a rebuke of the past few days of nervous selling. But one earnings release doesn't reset an entire narrative on its own.
The chip complex needs follow-through, and the macro setup - sticky inflation, a hawkish Fed, a stronger dollar - is still pulling in the other direction. Tomorrow's PCE print is the next test. For now, the picks-and-shovels names that drove this rally have at least one credible reason to stop selling. Whether buyers show up in size depends on what the inflation number says about the Fed's next move.
ChartMill Market Desk - Kristoff
With regard to the stocks discussed in the article above; the author owns individual shares in Nvidia.
This daily update is prepared by ChartMill for informational purposes only and does not constitute investment advice. Always do your own due diligence before making investment decisions.
Read full article here »