A simple recap
I wrote this piece today 7/20 because I had friends over during the weekend.
What I’m watching
Broadly speaking this coming week the focus will be on the start of big tech earnings. We will be getting TSLA and GOOG earnings this week, which will be a first glimpse into how tech companies are thinking about the CapEx for AI. TSLA is a smaller player in this space with a projected capex of $25bn in 2026 for AI training infrastructure, chip design, Terafab, expanded Optimus manufacturing capacity, robotaxi operations, and supply chain investment in batteries, energy, and AI silicon. GOOG is obviously a much larger player with about $180-190bn CapEx guidance in 2026. The key thesis for the market rotation in July is perhaps that the large cap tech companies might slow down its capex growth. This could be a sell-the-rumor-and-buy-the-fact event.
We also get IBM official earnings. IBM was hammered last week on a bad preview guidance. There is also GEV earnings, which is picks-and-shovels adjacent, benefiting from the AI capex in building data centers. NOW is also slated to report. THe stock has been beaten down since the start of year (really since a year ago), on fears that AI will take the cake from these SaaS companies. The key is to see if that is actually true or not. INTC earnings will be on Thursday, but for these chips stocks generally I find it likely that they will continue to say that demand is strong and not seeing any let up in the foreseeable future.
A position or thesis
I entered a small position of IBM on the 25% sell-off last week. This is a more tactical position to target a bounce back to about 230 or 240. From the preliminary earnings they released last week which triggered the sell-off, it seems to be saying that it is merely a delay in recognizing the profit due to delays in certain large contracts, not outright cancellation resulting in a loss of earnings. This seems to me to be an overcorrection.
What I got wrong or updated
I exited SOXS on Friday earlier in the day. The correction in SOXX seemed likely to need to take a breather. I’m still of the view that this is not going to be the end of the correction in chips, but due to the daily leveraged nature of SOXS, I decided to exit and wait for a reset, perhaps this week, to reengage in the position.
20260720 9:40PM CDT
The Ephemeral Tourist 