I would stay invested in AI and semiconductors, but avoid aggressively adding at these levels. The macro backdrop has improved, but the market has already priced in a lot of good news.
The S&P 500 is coming off another record close, while July retail sales fell 0.6%, the first decline in nine months. Combined with benign CPI/PPI and weaker employment, this strengthens the case for a September Fed hold.
My preference would be:
1. Keep AI/semis: The secular earnings story remains strong, although valuations and expectations are high. Applied Materials' 5% drop despite good guidance is a reminder that even strong AI-related results can disappoint when expectations are extreme.
2. Gradually rotate into financials/consumer: Not a wholesale switch, but these sectors offer diversification if the economy achieves a soft landing.
3. Wait for the FOMC minutes before making a major move: The three dissenting members favouring a hike make the minutes particularly important. The market wants to know whether that hawkish minority is isolated or indicative of broader concern about inflation.
So, hold core AI/semiconductor positions, selectively add elsewhere, and keep some cash available. I would rather buy a pullback than chase the S&P 500 immediately after another record. The current setup is bullish, but increasingly dependent on the Fed remaining supportive and earnings continuing to justify elevated valuations.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
- blinky·08-17 13:12I’m not cutting semis here, AMAT down 5% after that guide is exactly why I’d rather sit tight than overthink valuationLikeReport