1. Trading Strategy
This week, I continued to maintain a selective, cautious and disciplined approach.
The major U.S. indexes remained near record highs, but performance beneath the surface became increasingly uneven. Some AI and technology companies continued to attract capital, while several previously crowded sectors experienced significant volatility.
The most important change in the market is clear:
The AI investment cycle is not over, but the market is redefining who its real winners will be.
During the earlier stages of the AI trade, simply having exposure to GPUs, memory, data centers or optical networking was often enough to attract investors.
The market is now paying much closer attention to firm orders, earnings quality, cash flow and the durability of future growth.
This week, we focused on two tactical trading products: $LITZ and 07709.HK.
Our objective is not to chase everything that is already moving. It is to identify where capital may rotate next and wait for opportunities with more attractive risk-reward profiles.
July & August 2026 Global Stock Market Investment Portfolio
2. Trading Logic
The U.S. Consumer Price Index rose 3.4% year over year in July, down from 3.5% in June. Core CPI increased 2.5%, compared with 2.6% in the previous month.
The report eased concerns about an immediate resurgence in inflation and provided some support for growth and technology stocks. U.S. Bureau of Labor Statistics
U.S. Bureau of Labor Statistics
However, one relatively benign inflation report does not eliminate market risk.
Interest-rate expectations, Treasury yields, energy prices, corporate earnings and the sustainability of AI capital expenditure are still shaping the market.
I believe U.S. equities have entered a new phase:
High-level consolidation, greater structural divergence and continuous repricing.
Strong indexes do not mean that every stock will rise with them. Even if the broader market continues setting new highs, capital is likely to become increasingly selective.
The market is moving from buying AI exposure to identifying companies that can convert AI demand into measurable financial results.
That means a company can report excellent earnings and still see its shares decline. Investors are no longer evaluating only the latest quarter. They are asking how long elevated growth can continue and how much optimism is already reflected in the valuation.
SanDisk earnings provided a clear example of this shift.
3. SNDK Earnings and the AI Storage Thesis
One of the week’s major events was SanDisk’s fiscal fourth-quarter 2026 earnings report.
The headline results were very strong:
- Quarterly revenue reached $8.97 billion, up 51% sequentially;
- GAAP net income was $6.90 billion;
- Non-GAAP diluted earnings were $39.25 per share;
- Data-center revenue reached $2.98 billion, up 103% sequentially;
- Full-year revenue reached $20.25 billion, an increase of 175%.
For the first quarter of fiscal 2027, SanDisk expects revenue of $10.3 billion to $10.8 billion and non-GAAP diluted earnings of $44 to $46 per share. SanDisk earnings release
The revenue outlook still implies sequential growth and was above some consensus estimates. Nevertheless, SanDisk shares initially declined after the announcement.
The market’s concern was not primarily about the quarter that had just ended. Investors were debating whether NAND pricing, profit margins and the current growth rate could remain at unusually strong levels.
Some investors interpret any possible moderation in growth as evidence that the cycle is ending. I believe that conclusion is too simplistic.
The more important disclosure may have been the continued expansion of SanDisk’s New Business Model, or NBM, agreements.
At the time of the earnings release, SanDisk had signed 10 NBM agreements. Five had previously been announced in April. Of the five additions:
- Three involved new customers;
- Two expanded previously signed agreements.
At its subsequent Investor Day, SanDisk said the agreements covered eight customers and represented approximately 50% of fiscal 2027 bit shipments and about two-thirds of fiscal 2028 bit shipments. SanDisk Investor Day release
SanDisk Investor Day release
The agreements are based on committed volumes, minimum financial guarantees and structured pricing mechanisms.
For SanDisk, this model may provide greater demand and revenue visibility, more efficient capacity and inventory planning, improved cash-flow predictability and less exposure to traditional NAND-cycle volatility.
Customers may sacrifice some purchasing flexibility, but in return they receive greater security of supply.
This indicates that multiyear purchasing arrangements are moving beyond the experimental stage and becoming an increasingly important part of SanDisk’s business model.
These agreements do not guarantee profits. Pricing, customer performance, manufacturing capacity and technological changes can still affect the final outcome.
The key question is whether the agreements ultimately translate into sustainable revenue, earnings and free cash flow.
4. Rotation Within the AI Hardware Trade
SanDisk’s results also demonstrate that AI demand is no longer limited to GPUs.
As AI inference and data-center deployments expand, demand is spreading across the infrastructure stack:
Compute → Data centers → High-speed networking → Optical communication → Power and cooling → Storage → Software
Each segment trades on a different fundamental driver:
- Memory trades on data growth, pricing and supply;
- Semiconductor equipment trades on new production capacity and capital expenditure;
- Optical communication trades on AI bandwidth requirements;
- Software must demonstrate that AI can increase productivity, reduce costs or generate new revenue.
Optical-networking stocks experienced considerable volatility this week.
Long-term demand for high-speed AI connectivity remains strong. At the same time, investors are reassessing risks involving indium phosphide materials, supply-chain restrictions, manufacturing costs and product deliveries.
Because some optical stocks had already recorded significant gains and reached demanding valuations, their margin for error had become very small. Any development that could affect orders, costs or gross margins was capable of triggering profit-taking.
We will therefore continue monitoring:
- Orders and shipment trends;
- Availability of upstream materials;
- The effect of costs on gross margins;
- Management guidance;
- Evidence of renewed capital inflows following the correction.
The AI hardware thesis remains intact, but the market is no longer willing to reward every related company equally.
The next opportunities are more likely to emerge among companies with real orders, earnings growth and durable cash flow.
5. Portfolio Update
This week, we focused on LITZ and 07709.HK.
It is important to clarify that these are not ordinary stocks. Both are high-risk daily leveraged trading products.
LITZ is a daily-reset inverse leveraged ETF designed to deliver approximately twice the inverse of Lumentum’s daily performance. LITZ fund information
07709.HK is a daily-reset leveraged product designed to deliver approximately twice the daily performance of SK hynix. HKEX product information
These instruments can be affected by daily compounding, volatility decay, tracking differences and market liquidity.
They are better suited to tactical strategies with clearly defined entry levels, risk limits and holding periods than to passive long-term investing.
Our interest in these products does not represent a permanent, one-directional view on optical communication or memory. The strategies are based on short-term capital flows, market sentiment and technical conditions.
Our core principle remains unchanged:
Being bullish on an industry does not mean buying at any price. Using leverage makes disciplined risk management even more important.
6. Plan for Next Week and Long-Term Perspective
Going into next week, I will remain cautious about chasing the broader market.
The indexes remain near record levels, but participation is still uneven. Some companies continue reaching new highs, while many others remain below their previous peaks.
This suggests that the rally remains highly selective.
Next week, we will continue monitoring:
- The execution of SanDisk’s NBM agreements;
- NAND and DRAM pricing and supply conditions;
- Optical-networking orders, costs and guidance;
- AI infrastructure capital expenditure;
- Semiconductor-equipment demand;
- Treasury yields and interest-rate expectations;
- Technology companies whose fundamentals remain intact after meaningful valuation resets.
If the market experiences another pullback, we will look for opportunities where the underlying fundamentals remain healthy, selling pressure has eased and capital is beginning to return.
The market still offers opportunities, but the way investors make money is changing.
The previous phase often rewarded broad exposure to AI. The next phase is more likely to reward investors who:
Select the right companies, wait for disciplined entry points and monitor whether earnings can justify expectations.
The winners of one stage are not necessarily the winners of the next.
The first stage focused on scarcity in GPUs, HBM, DRAM and computing capacity. The next stage may focus more heavily on data-center construction, high-speed networking, optical communication, storage, power, cooling and software monetization.
We do not need to chase all of yesterday’s winners.
We need to understand where the next wave of capital may go and prepare before the market completes its repricing.
Investing is a marathon, not a sprint.
Stay patient. Stay disciplined. Manage risk. Follow the capital.
— Laura Martin
For Those Who Want to Go Deeper
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Risk disclosure: This article is provided for market discussion and educational purposes only. It does not constitute personalized investment advice or a guarantee of returns. Leveraged and inverse products involve substantial risk and may not be suitable for long-term holding. Securities investments can result in loss of principal, and past performance does not guarantee future results.
