The Real Reason Behind the AI/Tech Selloff

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What’s in Today’s Report:

  • The Real Reason Behind the AI/Tech Selloff
  • Composite PMI Takeaways – A Goldilocks Print
  • How Silver and Copper Prices Suggest the AI Angst Is “Real”

Futures are modestly higher this morning as tech shares show signs of stabilizing (Nasdaq futures up ~0.5%) ahead of notable semiconductor earnings from MU due out this afternoon while oil prices continue to favorably decline.

Economically, the German Ifo Survey’s Business Climate headline rose 0.6 points to 85.6 vs. (E) 85.5 helping ease economic worries triggered by yesterday’s Eurozone PMI release.

Today, there are no Fed officials scheduled to speak and just one economic report to watch in the U.S. with New Home Sales (E: 640K) due out shortly after the open.

The Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 5-Yr Note auction at 1:00 p.m. ET; if demand for either is weak, yields could turn higher again which could act as a renewed headwind on equity markets.

Finally, there are a few noteworthy earnings releases today with PAYX ($1.31), JEF ($1.09) and most importantly MU ($20.81) all due to report quarterly earnings. Given the recent volatility has been concentrated in tech/semis, the market will be looking for strong results and guidance from MU after the close today to help the market continue to stabilize.

 

That Will Cause Some Upset For Markets Tom Essaye Tells Barron’s

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For something that has been working really well for markets, that will cause some upset, Tom Essaye tells Barron’s.

S&P 500 Drops 1.2% After Warsh Hints of Fed Changes

Sevens Report Research’s Tom Essaye told Barron’s the market reacted to the “litany of changes that Warsh is proposing” that could lead to uncertainty and less communication from the central bank.

“The Fed was not hawkish, nor was Warsh hawkish,” Essaye says. “What he said was that ‘I’m exploring changing everything. And for something that has been working really well for markets, that will cause some upset.”

Also, click here to view the full article published in Barron’s on June 17th, 2026. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

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Tom Essaye Says Cheap AI Stock Valuations Could Signal This

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Tom Essaye said that cheap AI stock valuations could signal that investors are growing fearful that the data center boom could come to a halt.

‘Exactly how the dot-com bubble burst’: A market research firm says keep an eye on this AI warning sign

Tom Essaye, the founder of Sevens Report Research, said in a note on Wednesday that cheap AI stock valuations could signal that investors are growing fearful that the data center boom could come to a halt.

Typically, investors are willing to assign higher valuations to growth stocks because of their high future earnings potential. So the fact that some AI stock valuations are so low today means investors are skeptical that earnings potential will ever come to fruition, Essaye said.

“Think of it this way: GOOGL (to use one as an example) cancels building 10 data centers because it’s going to cost too much money and the return isn’t there,” he wrote. “That will result in massive order cancellations at NVDA, MU, AVGO, SNDK, etc., because no one needs the chips, networking, memory, or processor power,” he added.

A recent example of investor uneasiness, Essaye said, is the recent decline in Oracle stock. Shares of the company have tumbled about 25% since June 1 as it’s poured money into the AI buildout.

“To be fair, this fear has been around for several months, and it isn’t appearing yet. However, it’s not without precedent because this is exactly how the dotcom bubble burst,” he said.

“While people connected to the internet, their connection wasn’t nearly as profitable as quickly as everyone assumed,” Essaye continued. “Because of that, the buildout stopped.”

Also, click here to view the full article published in Business Insider on June 19th, 2026. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

Tom Essaye Has Raised Caution For Investors

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Market research company warn of AI stocks selling cheap; say they point to a ‘dangerous sign’

Market research company, Sevens Report Research founder Tom Essaye has raised caution for investors that the relatively cheap valuations of several high-flying AI stocks may not be the buying opportunity they appear to be. According to a report by Business Insider, in a note, Eassye said that the low forward price-to-earnings (PE) ratios could reflect the growing fears that the data center boom may stall. For comparison, the S&P 500 trades at a forward PE of 21.5. Essaye noted that growth stocks typically command higher multiples because of their future earnings potential. The fact that AI stocks are trading at relatively low valuations suggests skepticism about whether those earnings will materialize.

Essaye further warned that if AI adoption falls short, companies could cancel large-scale data center projects, leading to “massive order cancellations” for chipmakers and hardware suppliers. He cited Google as an example: “If GOOGL cancels building 10 data centers because the return isn’t there, that will result in massive order cancellations at NVDA, MU, AVGO, SNDK, etc.”

Also, click here to view the full article on MSN.com published on June 22nd, 2026. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

SpaceX Thoughts: TSLA on Steroids

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What’s in Today’s Report:

  • SpaceX Thoughts: TSLA on Steroids

Futures are lower, led by tech (Nasdaq futures down ~3%) as a heavy selloff in Asian chipmakers including in a ~10% drop in the South Korean KOPSI index, is dragging broader equity markets lower amid valuation and capex worries.

Today, focus is likely to be on whether the pre-market selloff in tech stocks accelerates or stabilizes as trading gets underway on Wall Street, however there are also a few noteworthy economic reports to watch, including the Flash Composite PMI (E: 51.2), and the Richmond Fed Manufacturing Index (E: 8.0).

There are no Fed officials are scheduled to speak today which will leave fixed income markets primarily focused on the economic data and the 2-Yr Treasury Note auction at 1:00 p.m. ET this afternoon.

Finally, there are a few important earnings releases due to be released today including: CCL ($0.34), FDX ($5.91), and CBRS (-$0.14).

Regarding the economic data, investors will be looking for “Goldilocks” data with healthy growth and cooling inflation and strong earnings in order for the market to stabilize from the pre-market rout.

 

Tom Essaye Notes That The Sustainability Worries Are Still Valid

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Practically, I don’t think this means anyone needs to reduce tech exposure today, Tom Essaye tells Barron’s.

Tech Stocks Are Cheap? That’s a Problem Too.

Essaye notes that the sustainability worries are still valid, highlighted by Oracle’s recent report.

“Using simple math, it appears that Oracle will have a close to 100% sales/capex ratio in 2027,” writes Essaye. “To keep things simple, that means Oracle will spend all of its revenue on capex, the vast majority of which will go into AI infrastructure. That means that Oracle will almost certainly have negative free cash flow and that is only sustainable for so long, even for a company like Oracle.”

Here is where the dot-com bubble comes back into play, Essaye notes, because the current AI buildout could wind up being similar to the widespread effort to build fiber access to the internet to homes across the country in the late 1990s. That demand turned out to be unsustainable, as connecting people to the internet wasn’t as profitable as initially hoped.

“Practically, I don’t think this means anyone needs to reduce tech exposure today,” Essaye concludes. “But this situation (i.e., are earnings gains sustainable?) is something that needs to be watched, so ensuring one isn’t too overweight tech and has proper balance remains important.”

Also, click here to view the full article published in Barron’s on June 17th, 2026. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

Market Update: Trading One Source of Uncertainty for Another

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What’s in Today’s Report:

  • Market Update: Trading One Source of Uncertainty for Another
  • Weekly Market Preview: Another Test for AI Enthusiasm (Micron Earnings on Wednesday)
  • Weekly Economic Cheat Sheet: First Real Look at June Economic Growth This Week

Futures are slightly lower on digestion of Thursday’s rebound and some volatile (but not negative) geopolitical headlines over the weekend.

U.S./Iran headlines were volatile over the weekend but we ended it with the ceasefire still in place and negotiations on a nuclear deal ongoing (meeting market expectations).

Geopolitically, UK PM Starmer announced he will resign and that could put more upward pressure on global yields (which isn’t needed right now).

Today there are no economic reports and while Iran headlines will remain plentiful and likely conflicting, it should continue to fade as a market influence as neither side wants to escalate.

For today, that leaves a speech by the Fed’s Waller (9:00 a.m. ET) as the potential market moving event and if he comes out as hawkish or hints at possible rate hikes, that should put at least a mild headwind on stocks.

 

What the Warsh Fed Means for Markets

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What’s in Today’s Report:

  • What the Warsh Fed Means for Markets (Hawkishness vs. Uncertainty)

Futures are bouncing solidly as markets further digested new Fed Chair Warsh’s press conference and after the U.S. and Iran signed the ceasefire agreement.

New Fed Chair Warsh injected uncertainty into Fed operations/policy, but there were no substantial changes made yet and that’s helping stocks rebound this morning.

Geopolitically, the U.S. and Iran signed the ceasefire, two days earlier than expected, ending the conflict.

Today focus will return to economic data and the key reports today are:  Jobless Claims (E: 225K), Philly Fed (E: 10.0) and Leading Indicators (E: 0.1%).  Given rising hawkish Fed concerns, the more Goldilocks the data (solid activity/low prices) the better for markets.

 

Sevens Report Alpha Webinar: Updated Macro Outlook (Post Iran War)

Yesterday marked the first Fed decision under Chair Warsh, while markets continue to digest a rapidly changing outlook for rates, inflation, and growth. At the start of the year, investors expected rate cuts, easing inflation, and steady economic growth. Today, the conversation has shifted toward the possibility of no rate cuts, persistently elevated inflation, and a hotter-than-expected economy.

In today’s Alpha Webinar, we will break down what the latest Fed decision means for markets, assess the current outlook for inflation and growth, and outline the key bullish and bearish scenarios investors should be considering as we enter the second half of 2026. If you want a clearer understanding of the macro forces likely to drive stocks and bonds in the months ahead, this is a webinar you will not want to miss. Learn more and register here: Sevens Report Alpha

Why Are “AI Stocks” Trading at Such Low Multiples? Ask ORCL (The AI Bear Case)

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What’s in Today’s Report:

  • Why Are AI Semiconductor and Memory Stocks Trading at Such Low Multiples? Ask ORCL (The Bear Case)

Futures are slightly higher in cautious pre-market trade as investors await the first Warsh-led FOMC decision today with oil holding near 3-month lows while the 10-Yr yield hovers near a 1-month low after mostly benign inflation data overnight.

Economically, Japanese Machinery Orders rose to +15.6% vs. (E) +9.9% y/y while U.K. CPI held steady at 2.8% vs. (E) 3.1% y/y and EU HICP met estimates at 3.2% y/y.

Looking ahead to today’s session, focus will be on consumer spending data early with Retail Sales (E: 0.5%) due to be released ahead of the bell.

Data on Business Inventories (E: 0.5%) and Pending Home Sales (E: 0.9%) will also be released shortly after the open which could impact markets but not likely meaningfully ahead of the Fed decision this afternoon which will likely result in quiet, choppy trading through the middle of the day.

Regarding the FOMC meeting the meeting statement will hit the wires at 2:00 p.m. ET before focus turns to Fed Chair Warsh’s first press conference at 2:30 p.m. ET. The more dovish the tone and favorable the commentary on the economy is in the wake of this week’s Fed meeting, the better for markets with the potential for a volatile move in either direction given the uncertainty risk surrounding the stance of the new Trump-appointed leader of the FOMC (“Fed Independence” remains a simmering source of concern).

 

FOMC Meeting Preview

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What’s in Today’s Report:

  • FOMC Preview
  • Empire State Manufacturing Survey & Industrial Production Takeaways

Futures are flat this morning as traders continue to digest the U.S.-Iran peace deal news from the weekend and a 25 bp rate hike from the BOJ to the highest policy rate since 1995 (1%) amid disappointing global economic data.

Economically, Chinese Fixed Asset Investment fell -4.1% vs. (E) -2.3% y/y and Retail Sales dropped -0.6% vs. (E) -0.3% while the German ZEW Survey headline fell to -81.0 vs. (E) -77.5.

Looking into today’s session, there are two economic reports to watch in the U.S. between Housing Starts (1.430M) and Import/Export Prices (E: 1.3% m/m, 2.0% m/m). However, with the FOMC meeting getting underway in Washington today, the data should not materially impact markets.

Aside from the data, the Treasury will hold a 6-Week Bill auction at 11:30 a.m. ET and a 20-Yr Bond auction at 1:00 p.m. ET.

Given the Fed has been in their “blackout period” for the last two weeks, any signs of overly strong (dovish) or materially weak (hawkish) demand in the Treasury auctions could spill over and impact stocks, but otherwise today should be a relatively quiet day with a sense of “Fed paralysis” likely to begin to grip markets ahead of Warsh’s first Fed decision due tomorrow.