The State of the Tech Trade: Your Next Move 7/16/26

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Thank you, Carl. Welcome to the Halftime Report. I'm Leslie Picker. In for Scott Wapner today. Front center this hour, tumultuous tech as the roller coaster ride in semis weighs on the sector today. We're navigating the volatility with the Investment Committee. Joining me for the hour, Josh Brown, Shannon Sikosha, Malcolm Epbridge, and Jim Lamenthal. Thank you all for being here. Let's get a quick check on the markets at this hour. The Dow is up about 0.2 percent, the S&P down about 0.2, NASDAQ down about 0.7 percent, and the Russell up by about 0.3 percent. In focus today, guys, is really this rotation out of semiconductors, the potential for the Mag-7 to capture some of that. JP Morgan had a note out about that this morning, saying that retail investors in particular are following that trade with NVIDIA, Tesla, and Microsoft, leading the July buying here.
Josh, you own NVIDIA and Apple. What do you make of this rotation dynamic? How much do you think it has in terms of legs? Look, you could take that JP Morgan retail radar and put it back in the envelope, and I can just Creskin-like predict what that's going to say next week. I'll just look at what happened this week. I mean, there's no information there. It's not important. I think that the key to this market this summer is stop acting like a thirsty lunatic. No more thirst. We're grown men and women, and we need to comport ourselves. The thirst to own the it trade every second of every day, and it's not even enough to just own it. You need to own it 2X in an ETF, and that's not even good enough. You need to own it with a zero-day-till-exploration option. This is what's killing people right now, and if you're not playing that game, your portfolio looks amazing. The median semiconductor stock in the SMH is in a 22% drawdown from its own high right now. 44% of the SMH names are in a drawdown of 25% or worse. That's real money. These are big drawdowns, considering the fact that we're in an S&P 500 That's within a couple of percentage points of record highs. Imagine having put yourself in that position because of how thirsty you are. There are only three semi names right now that are even within 10% of an all-time high. Only three. The rest of them have been knocked out of the box, and people, they feel like, oh, well, I'll do the DRAM. DRAM is in a 34% drawdown. It's actually worse. Micron, 29% below highs. Western Ditch, 36% below highs. SanDisk, a little bit worse. This idea that you have to be all in to whatever's working right this second, is kryptonite for portfolios. I was talking off set just now.
I know a guy that moved a multi-million dollar portfolio just to get the SpaceX IPO, like broke a relationship with his advisor at a major bank, moved all the money to another advisor. I don't know, what did he get? 500 shares? Now it's below the IPO price. Stop acting thirsty. It's gonna kill you in this tape right now. It is not the time for that. You missed that time. It was May, June. Yeah, I know, Shannon, you've been looking at momentum crowding at a 40-year high, concentrated in tech, financials and industrials. When you see indications like that, what do you think, using Josh's analogy, investors should be doing to kind of quench their thirst and move on? Well, I think the challenge is too is that we saw 24 and 25, and there was clearly a very concentrated set of stocks, the Magnificent 7, where you could essentially press that easy button and get access to the front edge of this AI trade. I think what happened in the second quarter is that investors were seeking that next easy button, that next concentrated basket of stocks that would provide them that same type of appreciation and have a longer tail. And the reality is that we're in a very different phase in terms of the AI implementation cycle. We're looking at the fact that we have built a significant amount of capacity. This extended period of capital expenditure is likely to start to broaden into industries, sub-industries, sectors. The companies that are going to implement AI have this innovation really impact and continue to drive earnings and margin over the course of the next six, nine, 12 months. I think the challenge is now is that, to Josh's point, everyone was crowding into that kind of second basket of hardware, you know, chips, CPU, optical.