Memory Stocks Crash HARD After Shocking Breaking News

All right, what's up everybody? And welcome back to another Wednesday here in the stock market. Well, we are off to a pretty wild start to the day to say the least as we did get a piece of breaking news earlier that triggered an absolute avalanche in the world of AI, especially in the memory sector. As you can see here, I mean Nvidia is down 1.3%. Micron's down 8%. AMD's down 5%. Intel's down 5%. SanDisk is down 12%. Dell is down 12%. SK Hynix, which was up over 25% yesterday, now that thing's down about 11%. I mean, it has been a rough morning for AI and a pretty solid morning for the Magnificent Seven. And so, because this has been such a wild start to the day, what I wanted to do for you all in today's video is just break down everything that's going on. We're going to talk about what the breaking news was that triggered all of this crazy movement, why memory stocks are getting beat up even worse than everything else as a result of this news, what I'm expecting from the market moving forward as we are seeing a bit of a clear capital rotation happening today, and exactly what I'm doing in my own portfolio as a result of everything that we talk about today. So, we have a good bit to get into and I don't want to keep you all too long on a Wednesday, folks. So, let's go ahead and let's jump straight on in. So, first and foremost, what was this news? What happened? Because a lot of people, they saw these stocks start falling, they went check the news, and there was nothing to point to directly to say, "This is the reason why stocks are selling off." You know, you could say, "Oh, people are just selling just to sell." You know, a lot of people can't pinpoint something, but I believe there's a very clear reason as to why we are seeing a bit of a sell-off, especially in the memory sector, and it actually comes down to ASML's earnings that came this morning. Now, if you're in the know in the world of AI, you're going to say, "Wait, what? ASML released very good earnings, and it is a very good thing for the AI market. That wouldn't be true That wouldn't be something that could trigger a bit of a cascade like we've seen today." Give me a second. Give me a few minutes cuz I'll explain my reasoning. I think we are seeing a fundamental reason as to why the market's pulling back or the AI market specifically is pulling back, especially within memory, and a technical reason as well. It'll all come together in a second. So, let me just explain to you what happened and then I'll explain to you why it's having this impact. So, earlier today there was a company named ASML who released their Q2 earnings report. Now, if you don't know who ASML is, they're a Dutch company that builds the machines that print the circuits onto silicon. Or, in simpler terms, they're not the company who's actually manufacturing these chips that are being used in the AI wave, they're the company who's creating these big $400 million machines, selling those machines to the chip manufacturers, and then the chip manufacturers are manufacturing the chips. So, without their machines, this whole AI wave doesn't even exist. And I don't mean that dramatically or kind of hyperbolically, no, I mean it. ASML has a genuine monopoly over this machinery. They currently have 100% of the EUV market. They are the only company on Earth that makes EUV machines, especially at this magnitude. They're not the biggest, they are the only one. There's no fierce competition, there's no really alternative, there's no second source. And this is the exact reason as to why they have reached the heights that they have. If you go look at ASML right now, they are currently the 21st largest company in the world right now with a $677 billion market cap. Again, based out of the Netherlands, and it is because the machinery that they have is incredibly, incredibly important for this whole AI wave. For the most part, every AI chip on Earth starts here in some capacity. And so, when they release their earnings, it can and will have some sort of massive impact on the AI market. So, again, they're the company that released their earnings. Now, in this earnings, it isn't actually what you would expect. Because I'm sure you might have started to think that I was about to say, "And they came out and had a terrible earnings report." No, it was actually a really good earnings report. If we look at the the metrics and the data, I mean, they beat across the board. Net sales was 9.3 billion, in which expected was roughly 8.4 to 9. Their gross margin climbed up towards 54%, in which it was expected to be around 51 to 52% I mean their net income was 2.9 billion, which is a solid profit margin, especially for a company this size, with earnings per share at 7.59. So, for the most part, all of the data in which we were looking for came in better than expected across the board. Now, in addition to that, their forward guidance also came in way better than expectations and way better than their previous guidance. Their old fiscal year 2026 guidance was 36 to 40 billion. They raised it to 43 to 45 billion, meaning that they are expecting to get even more sales moving forward than they originally thought of just a couple months ago. And so, all in all, this was a fantastic earnings report. This was fantastic guidance and a great sign that this whole AI wave isn't even really close to slowing down right now. Matter of fact, if we go look at what they're expecting over the next few years, they're expecting this to continue to ramp up. I mean, if we're looking at 2027, the CEO said that they're close to having all the orders they need, even while adding 30% more EUV capacity. And this is going to be very, very important when I explain why memory stocks are falling. Please don't forget, while adding 30% more EUV capacity, I'm going to come back to that. They're building more machines and they're already spoken for. Looking into 2028, they're already holding a large number of EUV orders and looking at another 30% capacity increase on top of the other 30% capacity increase. So, upwards of 60% capacity increase right now. So, when we're talking about 2027, 2028, they're expecting this to only ramp up and for themselves to only create more and more of these massive, massive machinery. So, again, across the board, this was a fantastic earnings report, fantastic guidance. Now, I know, I know what you're thinking. Okay, well, something doesn't line up here. ASML reported great earnings, it goes to show that the AI wave is still continuing, people are still needing these machines. Of course, if these companies need machines, it means they need to make they need the machines to make the chips, right? So, if this is the case, why is the market falling? Why whenever I go to the S&P 500 map, am I seeing Nvidia down and the memory sector specifically taking an absolute beating? Because memory is what's really down. You know, whenever I look at something like Nvidia, you can chalk this move up from Nvidia to just technicals, which we are going to talk about in a little bit here. You could say, "Okay, the reason Nvidia's falling is just because of the technicals." Or the reason AMD's falling is just because of technicals. It's just bouncing between a buy zone and a sell zone. But memory is taking a beating. SK Hynix, Micron, these companies are taking a beating. Why is that? Well, you have to think about the nature of memory stocks in general. Remember, the reason why companies like Micron, the reason why companies like SK Hynix is another great example, or the the memory department within Samsung, the reason why these memory companies have performed so well isn't because they're some major, amazing, phenomenal companies. Well, I mean, they are, but you get the point, right? Like, they're not some sort of massive company that is doing something no one else can do. No, for the most part, any major company who has the right team and enough money can produce memory chips, right? That's the reason why SK Hynix and Micron and Samsung, you can kind of just switch between what chips you're using for the most part. They're very commoditized, right? So, the reason isn't because they're unique or or anything like that. No, it's because they're scarce. The reason why memory companies are making so much money right now is because there are not enough chips. There is a mass mass shortage of these chips being produced by these chip manufacturers, especially whenever it comes to memory chips right now. It's the reason why Micron is running an 85% gross margin. That is not normal for a company like Micron. That's what happens when customers are desperate, when there's no alternative. You can just kind of just charge whatever you want. In these sort of scarce moments, people will pay whatever they want. It's like being at the airport and you're thirsty. You're going to pay $9 for that bottle of water just cuz it's your only option. That's why memory chips specifically have performed so well up into this point. But when you have this sort of news, right, that ASML is going to be producing more of these machines, think about the downward effect, right? If ASML comes out and produces 30% more of these machines, then another 30% more of these machines, what are those machines going to do? Those machines are going to produce what? More chips. When those machines produce more chips, what that does is it drives the commoditization cycle in the world of in the world of memory especially, which drives down prices and profit margins because that scarcity it becomes more of a non-factor. And next thing you know, you're in a position in which although this is great for ASML and great for the core foundation of AI as a whole, it goes to show that AI is out about, it's great, people want it, it's not good for memory because the one thing that's causing them to really fly like they have been is being tampered with. The more the more of these chips that get made, in essence, the worse it is for a Micron, the worse it is for an SK Hynix, because they're losing their scarcity factor, which is just going to drive prices and premiums down, which is going to reduce their profit margin and demand demand a lower price multiple. Now, is it going to be something that, you know, is this specific news going to be something that immediately crashes them all? No, of course not, but people see this and go, "Damn, dude, ASML's making more machines, that's going to drive the premiums down for Micron. That means 2, 3 years from now this scarcity that's gotten us where we are now, it might not be such a factor, and so I'm not willing to hold Micron at such a high multiple or [snorts] hold SK Hynix at such a high multiple. I'd rather go invest into something else." And so what you're seeing is that people are leaving things like Micron, they're leaving things like you know, SK Hynix whatever, and they're just going by other stuff. They're going by Google, they're going by Microsoft, they're going by Apple, they're going by Amazon. And that's why you're seeing the memory sector taking an absolute beating today. It's taking a real real beating. Now, I want to make one thing very clear. This does not mean that the AI trade is over and and memory stocks are never going to come back and this one piece of news means that Micron is going to be within a fully commoditized market, and it's all of its profit margins are going to evaporate, and it's going to go all the way back down. It does not mean any of that. I see all the tweets. I see all the YouTube titles. I see it all. Everyone's saying that is the case, or many people are saying that is the case. I don't believe that to be the case whatsoever. Remember, companies like Micron, company like SK Hynix, the memory department at Samsung, they are essential in the world of AI, and they are going to maintain their essentiality, especially when it comes to agentics, which has not taken its full form yet, and robotics, which hasn't taken much taken much of a form whatsoever, right? They're going to be very important for that, and they're going to be around in the future, and money will be made with those stocks, in my opinion. I just think that people are realizing that the one thing that really made them run, the scarcity factor, it's changing, and it's probably not going to be as much of a fuel for the next wave of AI, or for the next wave of memory, as it was before, because that scarcity may start to replenish over time. And so, all people are doing right now is they are correcting course. They're This is a corrective period for AI. People are repricing. They're seeing where they think that new fair valuation shall be, and that is why you're seeing things like Micron pulling back. It's why you're seeing a little bit of a correction for SK Hynix, or even some of your other ones in AI, right? Like a SanDisk, or an Nvidia, or an AMD. It's just a corrective period, folks. That's all it is. It does not mean that the whole AI trade is over. You got to stop buying those big headlines. Now, one thing that I will say, outside of the world of AI, is that what we are actually seeing in the market right now is great for stocks in general. You know, I think sometimes here on the channel we do bottleneck a little bit, and just focus on AI, but when you zoom out of AI, the reality is that the fact that we are seeing these worries and these fears in the world of memory, in the world of chips in general, having such an impact on the AI space, yet that liquidity is flowing out of AI, like I imagine this as if it's just flowing out of these and into these other ones, right? You're seeing it flowing out into Microsoft, into Apple, into Google. I mean, look at how they're performing. Google's up 3.6, Amazon's up 3.6, Microsoft's up on 3.6, Apple's up 3.8%. JP Morgan and the banks are continuing upwards finding their great earnings. I mean, consumer defensive is flipping a little bit positive right now, right? The fact that we are seeing this liquidity flowing out of AI into other places is a good thing. You want to see investors willing to stay in the market. You want to see investors willing to stick around, take their profit from one place and move it to the next place and move it to the next place because it's what creates these broadened bull markets to where you see all of these sectors being able to generate gains, all of the liquidity available to the market, and that usually will continue to allow the whole tide of the whole market to rise, not just the AI tide, all the tides to rise. And that can also find its way into crypto and precious metals and all of these other things. What would be more worrying is that if AI started to fall because of these worries and everything just crashed as well. Every the hyperscalers are down, the Mag 7's down, the banks are down, asset management's down, consumer cyclicals down, just everything starts falling. That would be much more concerning because what that says is that, yeah, all of this movement we've seen in the market is being boosted up by a sector that is very volatile, and that means that the second that things start to get bad, the whole market's going to be get bad and everyone's going to take a loss as a result of it. That's not what we're seeing. People are just rotating out right now as they're repricing in the risk of a lack of scarcity based on today's news. That's all that it is. It's not this big, terrible thing. The good thing for us is, right, like we've been positioning for these sorts of things. You know, whenever I started my public portfolio a couple months ago, I told you all, you know, I'm not going in and buying a bunch of AI plays in my public portfolio in March because the I guess March I was actually April. And the reason why I didn't do that was because I was like, "Look, guys, this is just a bit too risky to be adding brand new shares of AI stocks in my portfolio right now. I already have a $140,000 worth of exposure in this portfolio to AI stocks." Well, I guess it's a little bit lower now, like $130,000, but still, I have enough exposure to AI. I'm going to go in and I'm going to position for that capital rotation. I'm going to position in some of these sectors that I think are going to perform well even if AI does start to go down. One of those was Fintech. It's the reason why again we are buying something like Robinhood. And now you look at the Robinhood gain. While AI is down, I'm up 26% on Robinhood taking my total current return to $1,850 over the course of the last few months. I mean, that's the sort of thing that makes me feel good. Whenever I see the AI sector going down and I know it's just a correction, I'm still being able to generate gains in other places as a capital rotation occurs. A capital rotation is a good thing because this liquidity that flooded out into these other places will find itself back in the second that there's a good enough narrative to invite that sort of risk on investment mindset. And so no, this isn't the end of AI or any of that BS nonsense. It is simply a corrective period as people reprice based on new risks, especially when it comes to scarcity in the memory space. That's all that is. Now, in addition to the fundamental side again, you are also seeing technical reasons as to why the market is doing this and why some of these AI stocks are doing this. Remember, AMD is bouncing between a buyer zone and a seller zone. We were in the seller zone yesterday. So guess what happens? People sell and the price comes back down. It's normal. Look at what happened with um Micron for example. Micron's price gave a pretty decent rally back up towards the top side, but what did I tell you all on yesterday's live stream? I said, "Listen, be very careful. Micron is now back at the golden zone and is struggling to get above it. If it fails here, the sellers are going to step in and force that price down." Boom, here we are. Look at something like Nvidia. I told you all out this red box for Nvidia on yesterday's live stream. I said, "While Nvidia is at this red box, it is risky because this is where the sellers are going to step in and try to force the price down. So be careful." And that's what the sellers did. So all of this movement that we're seeing in the space right now, although influenced and encouraged by the ASML news for sure, is just normal price action, normal rejections, normal corrections while they are in a macro corrective period. That's all this is. And so I don't think that we should be freaking out screaming and worried about it. I think we just need to accept, yeah, this is what it is. And like I told you in that video, when I was sitting in my car, the future of AI will look different than the past it. And you need to be able to adjust to it and adapt to it in order to, of course, continue to make money from it in these sorts of moments. So, no, this isn't a bad thing. This isn't something to be super worried about. This isn't something to be scared about. It is what it is. It's just the nature of the market, especially when it comes to memory stocks. Anytime there is any sort of news that threatens the scarcity of memory stocks and encourages the potential of the commoditization of the memory sector, you will see memory stocks perform bad as a result of it. You will see them start to fall. And then, once that gets countered and it seems as if it's not so much a worry, you're going to see them go back up. Memory is scarcity is one of the fuels that causes pumps and dumps in the memory sector. You just got to get used to it. But, history has shown that in these sorts of moments where you're seeing memory stocks pulling back and they're going through these corrective periods, these have been great times to dollar cost average. So, if you were someone who was buying Micron at $1,235, yet you're not buying it right now at $888, you might want to consider like, "Hey, now that Micron, for example, is down 30% from its all-time high, this is now those opportunities that can be, you know, opening up for possible buys." Not to say for certain that it's going to go back up, but you get the point. You want to go against the grain here. Go against your emotions and recognize this is not that bad. It's just the nature of the market. It's technical rejection mixed with fundamental catalyst, which will cause a moment just like this. But, at the end of the day, I do think the ASML news in general is good for the AI sector. I think it means that AI is continuing to develop. It's continuing to move forward and there is still a lot of demand for it. And so, I believe that all in all, it's a sign that AI is still moving in the right direction. And one corrective period, like we're in right now, isn't going to change my mind on that. I just do like the fact that we are seeing money rotating cuz it'll find its way its way back in AI once the narrative is right, okay? So, hopefully, this does give you some insight and answers your questions as to why the AI space is pulling back, specifically the memory sector as well. It's just having a negative pull on the entire market of AI basically. And uh yeah, kind of what I'm expecting and what I'm doing right now. When it comes to my own personal portfolio, no major moves or anything today. Uh if we do continue to see the S&P 500 pulling down, I will use it as an opportunity to accumulate. Got a couple hundred bucks left from June that I want to throw in. So, I go in with some buys, but as of now, nothing too crazy. Um before we go, one thing I did want to remind you all is that tomorrow, I am going to be doing an exclusive seminar over in TH Capital. Um tomorrow's the lesson is going to be responding market corrections. I'm going to talk to you all about exactly what I do when either the market itself is correcting or my positions are correcting. So, if this pullback and correction that we're in right now is scaring you, I'm literally doing a seminar tomorrow talking to you all about how I handle it and what I do in these sort of moments. So, if you're not in TH Capital, the link to it will be down below if you want to sign up. If you are in TH Capital, make sure to set your reminders for this uh seminar tomorrow, Thursday, 11:00 a.m. Central Standard Time. So, feel free to check that out. Keep a very close eye on it. I'll keep you guys updated as all this plays out. We also did do our very first live version of the podcast Open Wallets earlier today, so I'll leave that link down below if you want to check that out as well. And I can't wait to see you all in the next one. Peace out everybody.