TOP STORY
📈 Intel and Micron Soar Despite 80% of Fund Managers Calling It 'A Crowded Trade'

🗓️ This week the new Fed chair held interest rates, the Strait of Hormoz reopened (and then reclosed), Intel ($INTC) popped 11% after a deal with Apple (despite 80% of fund managers called it the most crowded trade in history), and Snapchat ($SNAP) crashed 13% after releasing ‘disastrously uncool’ $2,000 AR glasses… there’s a lot to cover, so let’s dive in!

🛳️ Ships Start Sailing Through The Strait:

✍️ Big news on the US-Iran war front: an official agreement was finally signed, leading to a reopening of the Strait of Hormuz and sending Oil prices down 8% to $80/barrel.

🚢 After the signing, ships finally started moving through the Strait, but this may have been short-lived as Iran declared it closed again on Saturday following Israeli strikes in Lebanon. However, the US military denied that claim, reporting that over 17 million barrels had sailed through on Saturday alone.

📈 Even so, the news was enough to keep the markets rallying, with both the S&P 500 and the Nasdaq-100 jumping this week:

• The S&P 500 rose +0.93%

• The Nasdaq 100 rose +2.60%

• The TSX fell -0.23%

😬 Now it’s worth noting this peace is anything but stable, with one economist saying that traders are ‘pricing in perfection’:

🕊️ But in any case, things finally seem to be moving in the right direction.

🏦 Kevin Warsh Creates a “New Fed”

💸 The other big macro news this week was the Fed meeting, where new Fed chair Kevin Warsh announced he would be keeping interest rates steady at 3.50%-3.75%

😳 This rate decision was expected, but Warsh did make a few surprising changes, most notably getting rid of ‘forward guidance’ aka the early indications of what the Fed plans to do next.

😰 Markets fell sharply Wednesday on the news. The dollar hit a one-year high as traders began pricing in a 40% chance of a rate hike as early as September, a dramatic reversal from the cuts markets were hoping for just a few months ago. Reuters put it plainly: "Investors brace for less predictable Fed under Chairman Warsh."

👎 As a reminder, investors dislike interest rate hikes (as they increase the cost of borrowing and make stocks less attractive than bonds), and they dislike uncertainty even more.

👀 Luckily, the Strait reopening helped the markets shake off Wednesday’s losses, but this ‘New Fed’ definitely seems less investor-friendly than many were hoping for.

🚀 The Chip Market Soars With Intel and Micron Leading the Charge

💻 Another big factor boosting markets this week was chip stocks (aka semiconductors), with the Philadelphia Semiconductor Index hitting an all-time high this week, helped by Intel ($INTC) surging 11%, and Micron ($MU) rising 17%, with shares of the two companies up 240% and 297% year-to-date, so let’s take a look at what happened this week…

🤯 Intel Rises 11% After Apple / Intel Partnership

📖 Back in April, I covered Intel's incredible 24% single-day earnings surge, its best day since 1987, as new CEO Lip-Bu Tan's turnaround finally started to show up in the numbers, the US government committed $8.9 billion to Intel's foundry business, and Tesla signed on as a manufacturing customer.

💡 The thesis was simple: Intel is the only US company that can both design and manufacture leading-edge chips, and if it can prove itself as a credible alternative to TSMC, it becomes one of the most important companies in America.

📱 Well, fast forward to Wednesday night, and that thesis may be starting to play out, with Trump posting on Truth Social that Apple ($AAPL) had agreed to work with Intel to design and build chips in the United States, sending Intel shares up 11% the next morning to an all-time high (ironically, Intel and Apple have declined to comment on this 😅).

💬 And while certainly good news, some analysts think the market is getting ahead of itself, with one pointing out that any early foundry relationship with Apple would likely be low-volume focused on less-important parts to build trust:

📈 Micron didn’t get a Trump tweet this week but also jumped 17%, likely in anticipation of its Wednesday earnings, with expectations that the company will once again blow past its targets like it did last quarter.

⚠️ And while chip stocks continue to soar, some on Wall Street are setting off warning bells, with a recent survey showing that 80% of fund managers think Semiconductors are the ‘most crowded trade in the market’ right now.

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TOP STORY CONT.
💥 80% of Fund Managers Say Semiconductors Are ‘The Most Crowded Trade’ in the Market

😰 The surge in chip stocks is making Wall Street nervous, with Bank of America’s June Global Fund Manager Survey finding that 80% of global fund managers now call “long global semiconductors” the most crowded trade in the market.

🥶 And yet nobody is selling. BofA's Michael Hartnett titled this month's report "Frozen Bulls": fund managers know the trade is historically crowded, they express discomfort about it, and they hold anyway.

👀 The reason is partly rational: 56% of managers still believe AI stocks are in the "boom" phase, where prices gain momentum, and FOMO attracts more participants. Only 21% think the sector has entered dangerous "euphoria."

💬 According to Steve Kolano, CIO at Integrated Partners:

⚠️ But not everyone is bullish or neutral, with the UBS trading desk sending a warning to clients this week urging them to “reduce risk meaningfully” amid crowding in the AI space, especially in chips and semiconductors.

💡 And whether you agree or not, I think UBS’s warning is worth considering if you find yourself heavily weighted into Chip stocks without a clear thesis.

📊 The fundamentals are real: Big Tech has already planned to spend $700 billion this year on AI CapEx, more than double last year, and demand for chip foundry and memory is massive.

‼️ But the eye-watering returns Chip stocks have been posting definitely carry a high degree of risk that continues to increase as the trade gets more crowded and FOMO starts playing a bigger role than fundamentals. So proceed with caution, especially if you’re a beginner to the markets.

📉 Alright, let’s switch gears to our other story this week: Snapchat’s big flop. But first, a quick note about our upcoming event in NYC!

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FLOP OR COMEBACK STORY?
👓 Snapchat’s Push Into AR Glasses

👓 This week, Snapchat ($SNAP) CEO Evan Spiegel walked onto a stage at the Augmented World Expo in California and unveiled “Specs,” the company’s first full standalone consumer AR glasses, priced at $2,195… over 15x the price of Snap’s original $130 Spectacles from 2016.

🎤 According to Spiegel these glasses have been a decade in development, and represent “the beginning of a new era in computing,” but according to the internet they look like “modern 3D glasses crossed with particularly ugly safety goggles,” and have “absolutely no style.”

📉 The market reaction says it all, with the stock falling -10% on the news to end the week -13%.

🪦 A Miscalculated (And “Tried Before”) Bet

📅 Snap has been trying Spec for a long time. Back in 2016, the company launched the original Spectacles as camera-only sunglasses. Then in 2017, they revealed $40 million in losses from excess inventory and canceled orders on that rollout, until releasing updated versions in 2018 and 2019 that also nobody bought.

🔄 It wasn’t until 2021 when Snap pivoted to AR-only, but kept it limited to “select global creators.” And now, 4 years after that limited rollout, we have the new $2,000+ Specs.

💬 According to Jitesh Ubrani, research manager at IDC, considering Snapchat’s user base and current fundamentals, this seems like the wrong product at the wrong time. In fact, one analyst at Guggenheim estimates that Snap has already invested roughly $500 million in Specs development over the past 12 months alone.

🤼 Meanwhile, the competition, mainly Meta ($META) Ray-Bans, has sold over 9 million units since launch, with 7 million in 2025 alone. The product is such a success that Ray-Ban is now in talks to scale production to 20 million units annually by year-end, potentially even 30 million.

😎 But in contrast to Snap's glasses, Meta’s are designed to be worn like everyday glasses, weigh nearly half as much, and cost as little as $350.

📊 What Analysts Are Saying

❌ Opinion on Wall Street is broadly negative, with the consensus rating sitting at "Hold", which sounds mild until you realize that analysts almost never issue "Sell" ratings.

😬 On any given stock, fewer than 5% of analyst ratings are ever an outright "Sell," because the banks and research firms that employ them often have business relationships with the companies they cover. "Hold" is Wall Street's polite way of saying "we wouldn't touch this."

💬 The sometimes-controversial Jim Cramer summed it up:

📉 With this week's -13% drop, Snap now sits at $4.66, down roughly 95% from its $83 all-time high in 2021. The company has lost the benefit of the doubt on Wall Street and now sunk $500 million into an AR product the internet is already mocking. So, needless to say, a lot is riding on these Specs to succeed…

🐂 The Bull Case

🤔 Something that gets lost in the mockery is that Snap's Specs aren't the same product as Meta's Ray-Bans, they're genuinely more ambitious. Meta's glasses are essentially a stylish camera with a speaker, they don't project anything into your field of view.

👓 Snap's Specs are true augmented reality glasses, they can overlay digital content directly onto the real world in front of you, which is the "holy grail" of wearable computing that Apple, Google, and Meta have all been chasing for a decade.

🌍 The bull argument is that Snap isn't launching a consumer product, they're launching a platform. Snap already has 900 million users who engage with AR filters and lenses daily, making it arguably the most active AR user base on earth. And with Lens Studio (their developer platform) already powering millions of AR experiences worldwide, the software ecosystem isn't starting from zero.

💬 As one analyst puts it, the Specs are likely a stepping stone, saying:

🎲 It’s still too early to tell whether AR glasses will become the next great computing platform or another big flop. But if they do (and many of the major tech companies seem to be betting they will) the company that built the developer ecosystem early could matter a lot more than the stock price at $4.66 suggests.

🤷‍♂️ That's the bet Spiegel is making, and whether it pays off (and whether Spiegel can regain investor confidence) is a big TBD…

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