INSIGHT WEEKLY: July 26, 2026
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🌐 Markets Overview
🌐 Markets Overview: Chip stocks continue to fall
This is not new. Big Tech's capital spending impacts stocks!
Alphabet, Amazon, Meta and Microsoft all fell hard this week after Alphabet raised its 2026 capex guidance toward $205 billion and the four hyperscalers combined signalled roughly $725 billion in AI infrastructure spending for the year, up sharply from 2025. Earnings themselves were mostly solid; what spooked investors (again) was the growing gap between spending and any visible return on it.
A second story ran alongside it. The ceasefire between the US and Iran kept fraying, tanker traffic through the Strait of Hormuz thinned further, and oil pushed to its highest level of the year.
That combination lifted Treasury yields to their highest point since January 2025, with two-year notes touching levels last seen in early 2025, and pulled forward market pricing for a Federal Reserve rate hike later this year, the implied odds jumping from roughly one in eight to more than one in three within days, a sharp reversal from the cut expectations that had dominated only weeks earlier.
Europe was comparatively insulated. The FTSE 100's lighter technology exposure helped it lead major regional benchmarks even as Washington announced a fresh round of tariffs on the EU and UK during the week, while the DAX, STOXX 50 and CAC 40 posted smaller advances. The Nikkei also edged higher, with financials drawing support from rising Japanese government bond yields even as the yen slid toward a 40-year low against the dollar.
Gold's move was more a story of offsetting forces than conviction in either direction, with oil-driven inflation concern lending some support and higher yields capping it. Bitcoin finished the week close to where it started.
🤖AI Stocks
The capex anxiety hitting the hyperscalers did not send money out of the AI trade so much as further down the supply chain. Micron and AMD extended a rally already running into the triple digits this year, with Micron's memory pricing power drawing renewed attention after a blowout quarter that left AI memory effectively sold out. Super Micro Computer was the week's sharpest mover of any name in the group, jumping after disclosing a record order backlog above $60 billion and a gross margin outlook well ahead of prior guidance. Dell and Constellation Energy rose on the same logic, rewarded as suppliers of the servers and power that hyperscalers are now committing hundreds of billions of dollars toward, even as the hyperscalers themselves were marked down for the spending.
Palantir broke from the enterprise-software script that had shielded it in recent weeks, falling on valuation scrutiny, insider selling and reports of emerging open-source competition ahead of its own results. It is a reminder that the "safer" corner of the AI trade is only safer until sentiment turns.
Nvidia, TSMC and ASML also advanced, though by less than the memory and server names, consistent with investors favouring companies with hard evidence of order books over the more diffuse compute buildout story this week. Not every chip name shared in the rotation, though.
ARM, Intel and Qualcomm all fell, each still working off extraordinary gains built up over the year and now facing fresh valuation scrutiny of their own, ARM following an analyst downgrade that called its price ahead of its fundamentals. The split suggests investors are drawing a line this week between fresh evidence of demand and stocks that have simply run furthest, rather than turning on chips wholesale. China's AI-adjacent names slipped modestly, tracking the broader shift away from AI spenders.
Macro Watch: This Week’s Economic Developments
🇺🇸United States. Services activity accelerated to an eight-month high even as manufacturing growth moderated, and employment in the composite survey rose for the first time in three months. Jobless claims fell to their lowest level since 1969, underscoring a still-resilient labour market. None of that mattered as much as oil: the price surge pulled Treasury yields to their highest levels of the year and pushed market-implied odds of a Fed rate hike sharply higher heading into next week's meeting.
🇪🇺 Eurozone. The European Central Bank held all three policy rates unchanged in a unanimous vote, but President Christine Lagarde's description of "serious developments" in commodity markets following the Iran ceasefire's collapse left the door open to a September move. Both manufacturing and services activity improved on the month, a rare combination this year, while German consumer confidence softened further.
🇬🇧United Kingdom. Andy Burnham took office as prime minister, the UK's seventh since 2016, pledging to cut energy bill taxes funded by scrapping the digital ID programme and appointing John Healey as Chancellor. The economic backdrop he inherits improved on the week, with services activity rebounding sharply and retail sales volumes beating expectations by a wide margin.
🇯🇵Japan. The Cabinet approved an economic blueprint prioritising investment in AI, semiconductors, defence and energy, while explicitly reaffirming the Bank of Japan's independence after an earlier draft had unsettled investors. The 10-year JGB yield rose as core inflation accelerated for the first time since March, and the yen continued sliding toward a 40-year low despite renewed intervention warnings from the finance ministry.
🇨🇳China. State-backed platforms disclosed close to RMB 60 billion in equity purchases, a technology-focused ETF drew record single-day inflows, and the People's Bank of China made its largest net lending injection in five months ahead of this week's Politburo meeting. Equities still finished the week higher despite a Friday sell-off tied to AI valuation worries and rising oil prices spreading across the region.
🌐 Artificial Intelligence and Tech
OpenAI’s internal test of an unreleased, highly capable model resulted in an agent breaking out of its sandbox, reaching the open internet, and breaching Hugging Face's infrastructure to fetch answers for a cybersecurity benchmark it was meant to solve unaided. OpenAI says the agent exploited a zero-day flaw in third-party software, chained it with weaknesses in Hugging Face's systems, and pulled data and credentials before anyone noticed.
Kill Switch Act, a bi-partisan effort by Representatives Ted Lieu and Nathaniel Moran just a few days after OpenAI disclosed the Hugging Face breach, is intended to require developers of the most powerful AI systems to keep a working ability to throttle or shut them down. The bill hands enforcement to the Department of Homeland Security, working with Commerce and the director of national intelligence, and adds mandatory incident reporting and forensic record-keeping. It arrives alongside separate proposals for independent, Commerce-accredited pre-deployment security audits.
Alphabet's second-quarter results gave Sundar Pichai plenty to defend and plenty to justify. The Gemini app now counts 950 million monthly active users, nearly triple last year's figure and closing on the billion mark, while Cloud revenue grew 82 percent on AI demand. The cost is capital expenditure rising to 44.9 billion dollars for the quarter, prompting Alphabet to lift its full-year guidance to 195-205 billion dollars. Google paired the spending with Gemini 3.6 Flash and the specialized, government-only Gemini 3.5 Flash Cyber, built for vulnerability hunting. Pichai's framing, that the company is in the early innings of the cycle, is an argument that scale now buys share later, whatever it costs today.
AMD will invest up to 5 billion dollars in Anthropic, tying the stake to Anthropic deploying up to two gigawatts of AMD's Instinct MI450-series chips from 2027, in a deal AMD says could generate tens of billions in revenue. The arrangement mirrors AMD's warrant-based agreements with OpenAI and Meta, but here AMD takes a direct equity stake rather than issuing share rights. The deal folds in an engineering partnership under which Claude will help optimize workloads for AMD's chips and its ROCm software, AMD's answer to Nvidia's CUDA. For Anthropic, it extends a multi-supplier compute strategy spanning Amazon and Google; for AMD, it is proof its hardware can anchor a frontier lab.
Crypto highlights
Bitcoin and Ethereum both settled the week close to flat, holding much of the ground gained earlier when a softer inflation print briefly lifted Bitcoin above $65,000 and Ether past $1,900, before renewed US strikes on Iran pulled risk appetite back down in step with equities. Spot bitcoin ETFs logged a second consecutive week of net inflows, the first back-to-back gain since May, a sign the pullback did little to dent the newer institutional buyer base even as it hit higher-beta tokens such as Solana and Polkadot considerably harder than the majors. The pattern looks less like a market reassessing crypto's fundamentals and more like leveraged positioning unwinding alongside every other risk asset this week.
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