Trading volumes have collapsed to year-to-date lows as Wall Street heads to the Hamptons. However, beneath the calm surface, cracks are forming in the AI narrative. Several hyperscalers (GOOGL, META) have hinted at 'optimizing' capital expenditures, sparking fears of an AI spending slowdown.
All eyes are on Nvidia's upcoming earnings. The buy-side whisper numbers are astronomical, setting a bar that may be impossible to clear. A disappointment here could trigger a broader correction in the semiconductor index (SOXX).
Strategy: We are observing a quiet rotation into Healthcare (XLV) and Utilities (XLU) as investors seek yield and defensive characteristics amidst the uncertainty.