Good morning, investors. I’m speaking at Future Proof conference this week in Huntington Beach, California, slated to go on stage twice on Wednesday with some of the smartest people I know.

If you are here, come say hi!

The AI trade has never split this dramatically, this suddenly. 

The iShares Expanded Tech-Software ETF (IGV) rose 5% on Monday while the VanEck Semiconductor ETF (SMH) fell 4.8%.

That double-digit divide marked the widest gap on record between the two bellwether funds. 

Embedded in that trade was a rush to safety with the hyperscalers.

Google, Meta, Microsoft rallied more than 2% each and added billions in market cap in the panic.

This unfolded during the first trading session following Anthropic CEO Dario Amodei’s weekend essay calling for frontier labs to slow down technological development. 

Sam Altman and Elon Musk both agreed with the sentiment in public comments, though President Trump and Jensen Huang shrugged them off and reiterated their view of pushing the pace. 

At any rate, investors read it as a negative catalyst for new-age high fliers like Nvidia, Micron and Taiwan Semiconductor.

In addition to the hyperscalers rally, software names including Palo Alto Networks and Hubspot both jumped more than 11%, while ServiceNow and Intuit also gained. 

As dramatic as this constellation seems, ditching semiconductors for software because of what happened Monday is almost surely a prisoner-of-the-moment idea.

Semiconductor stocks are up 45% this year and software names are effectively flat, even with their latest rally.

Day to day, the market is perplexing and scary. Zooming out, as the chart above does, brings context.

And until the actual hyperscalers start to decrease their historic AI spending spree, I wouldn’t take the comments from frontier lab executives as anything beyond marketing.

We talk about the AI race all the time in this newsletter, and everyone has a different take on whether OpenAI, Anthropic, Google, Meta or even SpaceXAI is in the lead. 

Whatever your favorite AI Lab is, there is a way to invest in it through Harbor Capital Advisors’ AI LabsEcosystem ETF Suite. 

These ETFs allow you to invest in the ecosystem behind the AI Lab you believe in most.

Search Harbor AI Labs ETFs wherever you invest, or follow HarborCapital on X to learn more.*

🏦 Bank of America stock fell 5% after CEO Brian Moynihan guided third-quarter investment banking fees to $1.6 billion to $1.8 billion. That’s lower than a year ago and it dragged Goldman Sachs down 4% and Morgan Stanley down 3% into the print. (Yahoo Finance)

🏦 The 10-year Treasury yield briefly hit 5%. Markets are pricing an 90% probability of a 25 basis point Fed hike Wednesday, a full reversal from the rate-cut consensus that held into August. (CNBC)

🎯 14 of the 17 stocks the Trump administration has taken a stake in are trading below their post-announcement price. Analysts call the pattern a "sugar high" as USA Rare Earth, MP Materials, and other portfolio names gave back initial gains within weeks. (Yahoo Finance)

🗓 September 15, 1997: Larry Page and Sergey Brin registered the Google.com domain at Network Solutions. The company would go public seven years later at $85 a share and pass a $2 trillion market cap in 2024.

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*Visit harborcapital.com for a prospectus containing investment objectives, risks, fees, expenses and other important information. Read and consider it carefully before investing. Risks include principal loss and artificial intelligence-related risks. Harbor ETFs are distributed by Foreside Fund Services, LLC.

Harbor is not affiliated with Opening Bell Media, and the funds are not affiliated with, sponsored by, or endorsed by any AI lab.