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The “Memory Wall” and Why It’s Driving the Latest AI-Rally

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What’s in Today’s Report:

  • The “Memory Wall” and Why It’s Caused the Latest AI-Driven Rally

Futures are higher with tech and small caps leading as oil and yields retreat amid firming optimism for a U.S.-Iran ceasefire deal after an otherwise quiet night of news.

Economically, Chinese Industrial Profits rose 2.7% to 18.2% in April, the fastest pace since November of 2023 with “Computing/Electronics” profits more than doubling Y/Y helping bolster AI-enthusiasm.

Looking into today’s session, there is one “second-tiered” economic report: the Richmond Fed Manufacturing Index (E: 4.0) which is unlikely to materially impact markets (however “hot” price figures could rekindle inflation worries).

Additionally, there is a 5-Yr Treasury Note auction at 1:00 p.m. ET which could shed light on the sustainability of the recent rebound in bonds, so the stronger the demand, the better for fixed income markets and risk assets alike today.

There are also two Fed speakers, both late in the day with Cook scheduled to deliver remarks at 3:55 p.m. ET, and Jefferson on the calendar to speak after the close (8: 00 p.m. ET). Regarding the Fed speak, the less hawkish/more accommodative the tone, the better.

Finally, some late-season earnings will be released today with DKS ($2.87), PDD ($2.03), BNS ($1.46), CRM ($2.30), MRVL ($0.61), SNOW (-$0.59), HPQ ($0.72) all due to release Q1 results. Barring any noteworthy disappointments, particularly from the tech companies reporting, a strong earnings season should remain a tailwind for market into the end of the month.

 

Tom Essaye Warns AI-Fueled S&P 500 Rally Risks Dot-Com Style Downside

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Sevens Report’s Essaye flags downside risks tied to semiconductors

Bank of America Warns S&P 500 Tops Dot-Com Bubble on AI Stock Surge

Bank of America strategists warn that the S&P 500 has surpassed dot-com era valuations, fueled by an AI-driven surge in tech leaders. Industry analysts echo similar concerns, including Tom Essaye of Sevens Report Research, who points to semiconductor indices as a key risk factor.

Essaye cautioned in remarks cited by Business Insider that if economic resilience falters, the sector could drag the broader market lower. His outlook: “considerable downside” in coming quarters, especially if inflation reaccelerates or geopolitical tensions disrupt supply chains.

Adding to the vulnerability, passive investing trends may be amplifying bubbles. With index funds funneling capital into overvalued leaders, market corrections could be sharper when momentum unwinds.

Also, click here to view the full article on Webpronews.com published on August 15th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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