Good morning investors,
Futures this morning are an ugly shade of red. Nasdaq futures are down more than 2.4%, S&P futures are off 1.3%, and the Dow has shed over 300 points. The selling that began on Wall Street yesterday has gripped global markets, with South Korea's Kospi collapsing nearly 10% overnight, its worst session in months, as foreign investors dumped chip stocks. Samsung and SK Hynix each fell more than 12%. The semiconductors that led this market up are now leading it down, exactly as I warned they would when the leadership cracked.
I want to be clear about my posture before we go further, because it matters. I have been calling for a 5% to 10% pullback at some point this summer, so I am never surprised when the futures signal lower, but I am a wealth manager and financial advisor, not a day trader, and my job is to help you see through the short term noise to the long term picture. A pullback of this magnitude is healthy, expected, and ultimately an opportunity. The structural bull case remains firmly intact even as the tape gets uncomfortable. More on that throughout, but hold that frame as we walk through the carnage.
A Word on Working Together
Before we dig in, a brief and genuine note. I am currently taking on new clients, and I would love to talk with any of you about your complete financial plan. Mornings like this one, with markets selling off hard and headlines screaming about an AI bubble, are precisely when having a real plan and a steady hand matters most. If you have been thinking about whether your portfolio is built around your actual goals rather than around whatever is exciting or frightening this week, I would welcome the conversation. Helping people navigate exactly this kind of volatility, with discipline rather than emotion, is the most rewarding part of what I do. Reach out anytime. I would be glad to discuss how I could help with your whole financial picture.
Monday's Session and the Global Spillover
The S&P fell 0.4% yesterday and the Nasdaq dropped 1.3% as Big Tech declined and investors rotated out of the Magnificent Seven. SpaceX was the dramatic standout, plunging 16% in its worst session since listing. The tech-light Dow actually managed a small gain of 0.3%, and Micron continued to climb ahead of its earnings reveal tomorrow, a notable bit of relative strength heading into the most important print of the week.
This morning the damage is broad. SanDisk is down more than 9% in the premarket, Micron and Marvell off more than 7%, Intel down nearly 8%, with AMD and Qualcomm both shedding more than 5%. The semiconductor ETF is off around 5% and even Nvidia is down 3%. Europe is selling off in sympathy, with the Stoxx technology index down more than 3%. This is a genuine global risk-off move in the most crowded trade on earth.
As Liz Ann Sonders at Schwab noted, the retail interest in AI and tech has not disappeared, it has simply shifted toward ETFs rather than individual stock bets, and corporate earnings remain the most important underlying support for the market. I would echo that last point emphatically. The earnings are the scoreboard, not the daily price swings, and we will get a major reading on that scoreboard tomorrow night.
SpaceX Returns to Earth
The SpaceX story has played out almost exactly as I feared it would, and I want to walk through it because it carries lessons that extend across the entire AI trade. The stock that passed Amazon a week ago and briefly touched Microsoft has now given back nearly the entire run. After opening near $150 and peaking around $225, it sits only about 14% above its IPO price, and Monday's 16% drop wiped out roughly $400 billion in market value in a single session. The average investor who bought in the open market is close to flat.
None of this surprises me. I said on the day it listed, and again to the BBC last week, that the valuation worried me in the short term and that the price you pay in opening euphoria is rarely the price the market hands you later. The data backs this up starkly. The ten largest US IPOs since 1999 are down about 30% on average a year after they debut. The excitement is front-loaded, and the year that follows tends to be a long grind back toward earth. SpaceX launched far above even that path, and the lock-ups keeping its float near 4% begin rolling off in August and September. More supply is coming, not less.
Two fresh catalysts added pressure. The company announced its first ever bond offering, throwing debt financing into the mix, while disclosing a remarkable $100.8 billion in cash on hand. It also signed a major computing agreement with open-source AI startup Reflection, which will pay SpaceX $150 million a month for access to the Colossus infrastructure through 2029. The business is real. Starlink is profitable, the contracts are locked in, and the quality was never my worry. The price was.
The lesson is an old one and worth repeating. Be patient with these enormous IPOs as you do not have to catch the first trade. If a company is genuinely transformative, there is plenty of runway after the float settles and the euphoria fades. The only question that matters is whether owning it, at this price and this size, moves you closer to what your money is actually for. That depends on your goals, your time horizon, and your honest tolerance for a 16% day. A portfolio is not a collection of exciting bets. It is the financial expression of a plan, and for a lot of people this week, the right size was zero, or small enough to sleep through. There is no shame in either.
What This Means for Retail, and the AI Bubble Question
Let me share how I am thinking about the broader risk to retail investors, because it goes to the heart of mornings like this one.
The thing that hurts retail in the AI trade is almost never the technology. It is the structure of how they get access and their own behavior once the price starts moving. With SpaceX, the investors who really did well were the venture funds and accredited individuals who bought into the company years ago while it was private, at a fraction of today's valuation. For many of them the public listing was not an entry point at all, it was the exit, the liquidity event where a long held private gain finally turns to cash. Retail sat on the other side of that trade, arriving at the exact moment the early money was looking to realize what it had already made. Then the second layer compounded it. Institutions and a favored slice of retail bought at the $135 IPO price, while the bulk of retail demand could only get in once the stock was already trading at $150 and running toward $225. Same stock, very different starting line.
A professional desk also knows the float is only 4%, knows when the lock-ups expire, knows insiders could be free to sell close to half the company by September, and holds the position hedged inside a diversified book. Many retail buyers knew none of that, held it unhedged, and in some cases put a meaningful slice of their net worth into a single name priced entirely by scarcity. Institutions are built to buy when others are fearful and trim when others are euphoric. Retail tends to do the reverse, and SpaceX compressed that entire cycle into about a week.
On the bubble question, I want to be careful and two sided, because this is exactly the kind of morning when people overreact. Fears that the AI bubble has burst have become a recurring event rather than a single moment. We saw it with the DeepSeek shock, again on June 5 when a hot jobs report knocked Nvidia and Broadcom down hard, and in the software selloff earlier this year. Every one of those scares has so far proven sharp but short lived. The dip kept getting bought, often by retail at a record pace, and the underlying AI spending kept climbing straight through the fear, but the wrong lesson is that the warnings are just noise and every dip is a gift. That belief is precisely what gets people hurt when a real downturn eventually arrives, and nobody reliably calls that top in advance.
To be clear about my own view, I would not read today's selloff as the AI bubble bursting. These are sentiment events. The moment I would genuinely start to worry is when the companies leading this, the ones that have promised extraordinary growth and so far delivered it, start to miss. A bubble bursts when the earnings stop backing up the story, not when the headlines get loud. We get the first real test of that tomorrow with Micron. My honest expectation is that the earnings growth story holds up for a while yet, but that is the scoreboard I am watching, not the day to day swings. The danger for retail is almost never the technology. It is reacting at all. Panic selling the scare and FOMO buying the bounce are two sides of the same mistake.
Micron Tomorrow: The Real Test
Everything funnels toward tomorrow night. Micron sits at the center of the memory expansion, and after a roughly 297% run this year against the semiconductor index up 102%, expectations are sky-high. As I wrote yesterday, the stock looks cheap on forward earnings, near 10 times, but it looked cheap in 2000 too, right before DRAM prices collapsed and it lost over 98%. The entire question is whether these earnings are cyclical or structural. I believe they are structural, driven by real and immediate AI demand, but I hold that with humility because the commodity bears make the one argument that deserves respect.
Today's selloff actually raises the stakes. A market this jumpy, with the leaders already breaking down, sets a treacherous stage for the print. Remember that Micron has risen the day after earnings only once in its last six reports. The bar is the enemy and even a strong report could draw a volatile or counterintuitive reaction, especially into this kind of tape. The guidance, particularly on HBM as a share of DRAM revenue, will tell us whether the memory boom is the structural story I believe it to be. This is the scoreboard reading that matters.
The Google Inversion
Amid the tech wreckage, one development genuinely interests me. Alphabet fell more than 5% yesterday after two of the world's most important AI researchers left the company, Noam Shazeer to OpenAI and Nobel laureate John Jumper to Anthropic. The market also remains unsettled by Google's enormous $180 to $190 billion capex guide for 2026 and a first-quarter free cash flow that fell 47%.
At current levels, Alphabet trades at roughly 24 times forward earnings against Apple's 31 times, even as Google's profits are accelerating nearly four times faster, with one-year earnings growth of 82% against Apple's 22%. The market that spent years treating Apple as the safe-haven trade among the Magnificent Seven has now inverted the premium. Investors are signaling that Apple's brand is worth more than Google's growth trajectory, and that a company with no clear AI strategy deserves a higher multiple than the one losing its leading AI scientists.
I think that math is wrong, and I will say it plainly, I believe Google is the leader in AI. The talent departures are real and worth watching, but the company has been losing top technical minds for three years, from Geoff Hinton in 2023 to Mustafa Suleyman in 2024, and it nonetheless turned Gemini into a top three model and remained one of the best investments of the AI era. Google Cloud's backlog nearly doubled in a quarter to $462 billion. Search and YouTube remain world class businesses. The capex worry is legitimate, and overspending could eventually prove a problem, but paying more for Apple than for Google at these growth rates strikes me as the market mispricing the leader. The next twelve months will settle who is right, and I would rather own the accelerating compounder at the lower multiple.
This fear around Google brings me back to when I was saying AI wouldn't cannibalize Google's search business but enhance it, which was very unpopular at the time.
Oil Keeps Falling, but It's Not Over
Crude fell to the $74 range yesterday as the risk premium evaporates, and the Strait of Hormuz is seeing ships pass through again, though only about a quarter of the typical 100 per day pre-war traffic. The US waived sanctions on Iran for 60 days from Monday, with Trump warning Tehran he will "do what I have to do" if it does not stick to the agreement. That license to sell oil internationally has been a lifeline keeping the peace talks alive.
Things are clearly not back to normal, and as the analysts keep reminding everyone, it is not over until it is over. The direction is unambiguously positive for the consumer and for inflation, but I would just add a note of caution that I have raised before. The full benefit of falling gas prices takes time to reach the frustrated American consumer and to show up in national data.
Interestingly, the CEO of e.l.f Beauty gave a signal on price sensitivity this week saying that cutting one product from $18 to $14 drove almost 85% more sales. The demand was there, but consumers were simply waiting for a deal. As relief filters through at the pump, that latent demand could prove a meaningful tailwind for the consumer economy in the back half.
The Political Cloud Over AI
One theme worth flagging because it could matter more over time. Microsoft's Satya Nadella has been increasingly vocal about the political dangers of AI concentration, writing that if all the value accrues to only a few models, the political economy will not tolerate it, and that there is no societal permission for an AI future that hollows out entire industries. His comments are colored by Microsoft's position as a hub that benefits from commoditizing the frontier model companies, and it is considering bringing in DeepSeek to further shake up the price war. Between this and the data center backlash building around the country, the political angle is going to play a critical role going forward. It connects to the token-economics question I raised yesterday. The pressure to keep AI costs down and spread the benefits is real, and it could reshape the competitive landscape.
Where I Net Out
This is the speed bump, and it is arriving with force. I have been calling for a 5% to 10% pullback this summer, and we may now be in the thick of it. The semiconductors that led the market higher are leading it lower, positioning was stretched, the liquidity impulse is slowing, and the Warsh uncertainty hangs over everything. None of this surprises me, and none of it changes my long-term view.
Let me be emphatic here, the long-term bull market is intact. Earnings are growing over 25% this year on the strength of agentic AI, oil is falling and cushioning both the consumer and inflation, and the structural demand driving the AI buildout is real and immediate rather than speculative. A 5% to 10% drawdown is the normal rhythm of bull markets, something we see several times a year, and it does nothing to break that thesis. If anything, it does the opposite. It clears froth, resets stretched positioning, and creates better entry points for patient capital.
The investors who come through episodes like this best are not the ones who guess right on each wobble. They are the ones who own AI at a size set by an actual plan, so they can sit through both the scares and an eventual real drawdown without being forced to act at the worst possible moment.
So I am watching this with opportunity in mind, not fear. If the selling deepens into the 5% to 10% range I have flagged, I would be a buyer of quality into that weakness, not a seller into the panic. The discipline I have preached all summer, harvesting losses at lows, rebalancing at highs, and keeping powder dry, is exactly what positions you to act when others are forced to react.
Final Thought
Red mornings test conviction, and this one will test it broadly given how global and how violent the selling has been, but a pullback I have explicitly forecast is not a reason to abandon a sound long term plan. The scoreboard that matters is earnings, and we get a critical reading tomorrow night from Micron. My honest expectation is that the growth story holds for a while yet, even if the reaction proves volatile given how high the bar sits.
Stay invested, stay disciplined, and remember that the path to the back half and the midterms was always going to run through exactly this kind of summer chop. The destination remains constructive. The journey is simply doing what journeys in markets do. If today's volatility has you questioning whether your portfolio is built for your goals rather than for the headlines, that is precisely the conversation I would love to have with you.
Best regards,
Dan Sheehan [email protected]
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Market Pulse with Dan Sheehan is a personal market commentary newsletter and is independent from my employer. The content is provided for informational and educational purposes only and reflects my views as of the publication date, which may change without notice. Nothing contained herein should be construed as personalized investment, legal, tax, or financial advice, or as a recommendation to buy or sell any security. Any positions discussed represent my own views and may not be suitable for every reader's objectives, financial situation, or risk tolerance. Information is derived from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Readers should conduct their own research and consult their own professional advisers before making financial decisions.