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The AI Trade Has Been More Volatile Advises Tom Essaye

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The AI Trade: How to Navigate Today’s More Nuanced Tech Boom

The AI trade has been a more volatile influence on markets so far in 2026 – and this price action reveals the it’s starting to become more nuanced. Understanding that nuance is now important for understanding if the market can still rally without AI leadership, advises Tom Essaye, president of the Sevens Report.

Prior to 2026, the AI trade was basically a rising tide that lifted all tech boats regardless of their position in the AI/tech value chain. However, that’s changed. Now, there are three distinct groups/subsectors within the AI trade and they do not all trade together.

In fact, there’s growing evidence they may trade inversely to one another (at least partially and from time to time). Right now, the AI sector in the markets can be loosely grouped into three distinct buckets:

* Receivers of Capital (ROCs). These are the AI/data center infrastructure industries such as memory, semiconductors, networking, cloud storage, computing power, etc. These sectors have surged for most of 2026 as they are “receiving” the hundreds of billions of dollars being spent by the hyperscalers to build out AI data centers.

* Spenders of Capital (SOCs). These are the hyperscalers. They are the ones spending the hundreds of billions of dollars to build and manage AI data centers and create computing and memory capacity to support the rollout of AI across the economy.

* Software/Disrupted Sectors (SaaS). These are the sectors that may be at risk of having their business models “disrupted” (which is just financial media speak for damaged). AI could potentially replace these software solutions and skills and damage these companies’ long-term prospects.

Bottom line: Take stock of tech allocations to make sure they aren’t dramatically overweight semiconductors, memory, SaaS, hyperscalers, etc. Instead, have balance across the various parts of the AI value chain, including ROCs, SOCs and SaaS. That way, as the AI trade continues to evolve, you have balanced exposure to whichever part is taking a leadership role at that time.

Also, click here to view the full article on Moneyshow.com published on July 15th, 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

Evolution of the AI Trade: ROCs, SOCs and SaaS

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What’s in Today’s Report:

  • Evolution of the AI Trade: ROCs, SOCs and SaaS

Futures are flat and bonds are steady despite a continued rise in oil prices amid ongoing geopolitical tensions between the U.S. and Iran with focus on control of Hormuz.

Economically, the NFIB Small Business Optimism Survey firmed to 97.4 vs. (E) 95.6 in June.

Today is a busy and important day of data, Fed speak and earnings.

The key economic report today is CPI and expectations are as follows: -0.1% m/m, 3.8% y/y, Core CPI (E: 0.2% m/m, 2.9% y/y).  Put simply, an in-line to better than expected number should pressure yields and help stocks while a “hot” number will push the 10-year yield towards a new YTD high (and pressure stocks).

On the Fed front, the key event is Chair Warsh (10:00 a.m. ET) but there are several other speakers including Barr (12:40 p.m. ET), Goolsbee (1:00 p.m. ET), Cook (1:30 p.m. ET) and Bowman (2:55 p.m. ET).  The less concerned they are about inflation, the better (especially Warsh).

Finally, on earnings, the banks kick off the Q2 reporting season and key reports today include: JPM ($5.52), GS ($14.47), BAC ($1.13), C ($2.72), WFC ($1.73).

 

The Canary in the Coal Mine for Memory

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What’s in Today’s Report:

  • The Canary in the Coal Mine for Memory
  • Advisor Advantage: 12 Ways to Save Money on Gas This Summer (Client Material)

Futures are slightly lower following tit-for-tat missile/drone strikes between the U.S. and Iran.

The U.S. and Iran traded limited missile/drone attacks although the moves were “defensive” and ceasefire expectations remain intact.

Barring a ceasefire agreement or major escalation between the U.S. and Iran, the focus today will be on economic data and the key reports are, in order of importance: Core PCE Price Index (E: 0.3% m/m, 3.3% y/y), Durable Goods (E: 2.8%), Jobless Claims (E: 213K), Q1 GDP (E: 2.1%),  New Home Sales (E: 662K).  For these economic releases the key is solid activity and stable prices, as that will push back on stagflation concerns.

Today also brings numerous Fed speakers including Williams (8:55 a.m.), Musalem (10:15 a.m.) and Barkin (3:00 p.m.).  Of the three, Williams is the most important because he’s part of Fed leadership and if he hints at an openness to rate hikes it will be a headwind on stocks.

Finally, on the earnings front, the key report today will be DELL ($2.79) because it pertains to AI but two notable consumer reports are BBY ($1.22) and COST ($4.91).  For these earnings the stronger, the better for markets.

 

Alpha Report: The AI Trade Is Evolving Beyond Chips and Mega-Cap Tech

The AI trade is no longer just about semiconductors and the “Magnificent Seven.” In this week’s Alpha Report, we examine how AI spending is beginning to ripple through other parts of the economy and market, creating potential opportunities beyond the obvious names that have already surged.

Specifically, we break down where AI-related capital spending is flowing next, which sectors and industries may quietly benefit from the second-order effects of the buildout, and how investors can think about positioning if the AI trade broadens from here.

The report is designed to help you move beyond the headlines and better explain to clients where the next phase of the AI investment cycle may emerge.

👉 Access the full report and analysis here: Sevens Report Alpha

Tom Essaye Interviewed on Yahoo Finance To Discuss The AI Trade

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Yahoo Finance Interview

Why the AI trade could change in 2026

Artificial intelligence will continue to be a key pillar of market gains in 2026. We speak with Sevens Report research founder Tom Essaye, Epistrophy Capital Research Chief Market Strategist Cory Johnson, and TECHnalysis Research, LLC President Bob O’Donnell about the AI trade and what to expect in 2026.

Also, click here to view the full video preview published on YouTube.com on December 29th, 2025. 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.