Good morning, investors. Last night the US military announced it launched a new series of strikes against Iran in response to Iranian attacks on ships in the Strait of Hormuz.

Brace for more volatility stemming from uncertainty in the Middle East.

But that chop was already showing up in the AI trade before the latest round of strikes.

Record earnings suddenly no longer impress shareholders of AI memory stocks. 

Micron, SK Hynix and Samsung — the three largest global memory names — have officially fallen into bear market territory, each 20% below recent highs, despite Samsung reporting its best quarter in history Tuesday with $58.4 billion in operating profit.

The AI bulls have spent the last two years positing that fundamentals were outpacing asset prices and that earnings justified higher multiples. 

Samsung was the latest company to vindicate that claim yet the sector sold off anyway.

Micron, meanwhile, has shed nearly $300 billion in market cap since its late-June high.

It closed Tuesday roughly 25% lower from those levels.

Applied Materials similarly has declined 23% from its June 30 high and the Philadelphia Semiconductor Index (SOX) remains 13% below its highs.

It’s no accident that AI hyperscalers have started to push into the proprietary silicon business. Markets are picking up on the fact companies like OpenAI, Anthropic and even China's DeepSeek are trying to figure out custom chips. 

If the biggest buyers of memory-heavy GPUs become competitors with memory companies, those specialists will take a hit.

That said, Micron remains up 250% year-to-date and SK Hynix has soared 770% over the last twelve months. Samsung, too, is still up 140% this year.

A 20% pullback after triple-digit runs could represent straightforward profit-taking. 

For the moment, it looks like the AI trade has decoupled from the AI companies.

But if investors keep seeing evidence of blowout memory demand, there’s a good chance stocks should adjust accordingly. 

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🛢 Oil ticked higher after Iran fired missiles at commercial vessels near the Strait of Hormuz. Crude prices moved higher after at least two attacks were reported on ships transiting the strategic waterway. (Yahoo Finance)

🤖 DeepSeek is building its own inference chip. The Chinese AI startup has been developing the silicon for about a year and is now speaking with foundries and memory suppliers as part of a push to cut its Nvidia dependence. (Reuters)

📉 SpaceX stock tumbled on its first day of inclusion in the Nasdaq 100. Meanwhile a slate of Wall Street firms published bullish outlooks for the stock, with JPMorgan publishing a $225 price target. (Yahoo Finance)

I sat down with veteran strategist Lou Basenese to unpack his three highest-conviction stock picks, his process for finding under-the-radar investment ideas, and the opportunities in biotech that look set as acquisition targets.

Tune in on Spotify, Apple Podcasts, or YouTube.

🗓 July 8, 1889: Charles Dow and Edward Jones printed the first issue of The Wall Street Journal, sold for two cents a copy. It was four pages long.

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