Memory Stocks Get Crushed By ANOTHER Breaking News.

All right, before I record the intro to this video, I wanted to tell you all that about 30 minutes ago, I was recording the intro to this video and I was saying, "What's up, everyone? Welcome back. It's a Thursday and it's a rainy day in Texas." And the second that I said, "It's a rainy day in Texas," lightning smashes the tree directly outside my window, shuts all the power down in my house, all the power down in the neighborhood, and I was just sitting here in the dark for like 30 minutes waiting for it to come back. So, that's the reason why this video is a bit later than I expected, but it was some of the funniest timing that I've ever experienced before. I wish the recording would have saved. You guys would have found it absolutely hilarious. All right, what's up, everybody, and welcome back to another Thursday here in the stock market. Well, it's a bit of a rainy day here in Texas. Just making sure my power doesn't go out again. And it is a bit of a rainy day in the stock market as well. As you can see, most markets are currently down as we did get some breaking news just a couple hours ago that sent the stock market and the AI sector specifically in a bit of a downward spiral. As we can see, Nvidia is currently down 1.7% pre-market trading, Micron down about 5%, AMD down about 3.6%, and SK Hynix down about 7.5%. Again, all in pre-market trading as a result of this news that we got just this morning. And so, because it has a been a bit of a rougher morning, to say the least, what I wanted to do for you all today is just break down everything that's going on. We're going to talk about what this breaking AI news was, why the stock market responded how it has, why the AI sector specifically has responded how it has, what I'm expecting from these stocks moving forward into the future as a result of this news, and what I'm doing in my own portfolio right now as a result of this little red day that we're seeing. So, we have a good bit to get into today and I don't want to keep you all too long on a Thursday, folks. So, let's go ahead and let's jump straight on in. Now, I will remind you all that if you're watching this video on Thursday in just a few hours from now, I am going to be hosting that live seminar over in TH Capital. I'm doing a seminar on how I respond to stock market corrections. I'm basically giving my entire framework for how I respond when I see either the whole market falling or individual stocks that I hold falling. Walking you through the guidelines that I have, again, the framework that I have, what I do, what I don't do, my rules, my principles. And these are some of the principles that have allowed me to accumulate in some of the best moments here in the stock market and push a portfolio up over $70,000 over just the last year. So, if that's interesting to you, if you are in TH Capital, please do make sure to tune in at 11:00 a.m. Central Standard Time. I will send out the link shortly. And if you're not in TH Capital, now could be a good time to sign up in order to make sure that you join this bad boy live. So, make sure to check it out. I think this is a a good one to talk about, especially on a day like today, where we are seeing the market in a bit of a corrective phase. But, with that in mind, again, let's talk about what happened. So, when it comes to the breaking news, what we got this morning was the Q2 earnings report from TSMC. Now, if you don't know who TSMC is, this is the Taiwan Semiconductor Manufacturing Company. They're currently the world's largest contract chip maker. They don't design the chips. They don't sell the chips, maybe like an Nvidia. They're the ones who manufacture them for everybody else. So, do you remember last night I told you all about that company ASML and I said ASML is the company who creates these big $400 million machines. They sell those machines to chip makers and then chip manufacturers are the ones who actually make the chips for companies like Nvidia. Well, ASML sells their machines to TSMC. So, this is kind of like one step down the line as well. And TSMC is again the world's largest chip maker. So, any of these chips that you're seeing from most of these companies are coming from TSMC. As we can see here, they currently maintain around 70% plus of the total advanced foundry share or just market share in the chip making sector. They currently have a market cap of $2.2 trillion, making them one of the largest companies in the world at the number six spot. And they are currently the number one most valuable company outside the United States. Roughly three out of every four advanced chips on Earth comes out of their fabs or just their machinery. There is no real alternative at the leading edge. If you want the best chip in the world, you get in line at TSMC. So again, this isn't a small company, this isn't a small piece of news, this isn't a small earnings report. This is a major company, a major piece of news, and a major earnings report that had a pretty negative impact on the market today. Now, some of you are going to be confused by that because the truth is they smashed it. It was an absolutely fantastic earnings report. Revenue came in at 4.2 billion which was at the top side of their forward guidance for this quarter. Their earnings per share came in at $4.31 which was a beat by 14%. Their gross margin came in at 67.7% which topped their forward guidance previously, and their net income year-over-year shot up to plus 77% at 22 million. Again, their gross margin broke above their own guidance range and is up 9.1 points year-over-year, Y over Y. Operating margin is at 60.3% against 58.6% expected. That makes nine consecutive quarters of double-digit growth. So TSMC is just going bang, bang, up and up and up and up. The train's not stopping. This thing is continuing to grow, continuing to accelerate, continuing to move forward. And whenever we talk about moving forward, their forward guidance was a big raise. Previous, their fiscal year 2026 forward guidance was above 30%. Now it is currently above 40%. They guided Q3 to 44.6 to 45.8 billion which is a 12% jump off of a 40 billion dollar quarter. They are guiding to accelerate, not cool off in the slightest. This isn't even This isn't even a slight cool off. Some people responded a bit negatively about the fact that their revenue wasn't above their their guidance, but I mean basically everything else was. And so with with with any every stretch of the imagination, this was an absolutely fantastic earning report. Now, another piece of this that some people aren't paying enough attention to is also the fact that they announced that they're are to do a record capital expenditure raise. Their previous 2026 CapEx was 52 to 56 billion. Their new 2026 CapEx is 60 to 64 billion. And if you don't know what that means, it just means that they were going to be spending roughly 10 to 12 billion dollars more this year in infrastructure and build out than they had previously anticipated. This is a 14% increase and an all-time record by a far. Matter of fact, their CFO said that CapEx over the next 3 years will be significantly higher than the last three. As they are also going to be weighing another 100 billion dollars into their US fabs over in Arizona. So, again, by every stretch of the imagination, this has been fantastic. Their previous quarter, amazing, better than expected. Forward-looking, amazing, better than expected. Massive raise in CapEx, massive investment into infrastructure and build out. And so, all in all, if you're a TSMC stockholder, shareholder, if you're in the AI space in general, this is fundamentally good news. Because what it says is AI is not going anywhere. And I know I've gone down this rabbit hole several times over the last week. So, I'm not going to go down it again. But, in general, it goes to show it's another notch in the belt that says, "Look, we're not going anywhere. AI is not going anywhere." And it's not even really cooling off right now. It is still continuing to ramp up. And so, all in all, the AI trade is alive and well. And this is very good news. Now, I know, once again, you're going to be like, "Hold on. Hold on, T-Hill. Something doesn't line up here. Great news. AI is not going anywhere." But, then you go look at Nvidia, down. Micron, down. AMD, down. SK Hynix, now why is why are the AI stocks down? Well, again, it comes down to the way in which this market is thinking right now. You have to understand the perspective that the market has even on good news. You see, the market doesn't trade on what happened. It trades on what's next. And right now, people remain concerned about the future of the AI trade past the next 1 year, past the next 2 years, into 3 years, 5 years. So, yeah, they see TSMC doing well, and that's exciting, that's cool and all, but the tape does not care. The market doesn't care. People are convinced that we are in some sort of AI bubble that's about to pop. And so, although we get great news, and although TSMC literally says themselves, this thing isn't slowing down whatsoever, people don't care. Emotions are in control of the market right now. >> [snorts] >> And when it comes to memory stocks specifically, it's very clear as to why they're seeing a pullback, and they're probably going to see the worst result from this earnings report of the rest of them. You know why? Because when they see $64 billion of capital expenditure and another $100 going into fabs, they think one word, oversupply. They think that TSMC is going to use this infrastructure buildout as an opportunity to be able to produce enough chips to kind of cancel out the scarcity even more in order to, of course, get the the supply out there to match that demand. Now, TSMC said themselves that they don't believe that they're going to be able to match the demand anytime soon, and that supply is going to be constrained for years. But people don't care. Again, people don't care. They're just The emotions of the market are very strong right now. People are convinced that the future of AI is going to be much dimmer than it previously has been. And so, as a result of that, in a moment like this where they see 64 and $100 worth of capex and going into fabs, they're like, "Oh my goodness, they're going to spend all this money. They're going to overproduce these chips. It's going to lead to a commoditization, and you know, cyclicality is going to take back into effect, especially in the memory sector. That's going to bring down things like Micron, SK Hynix, SanDisk, etc." And next thing you know, they're coming down, that's going to pull down the AI space. AI is going to slow down. It's all going to You see what I mean? You see what I mean? That's the state that the the market's in right now because the AI sector is a very very emotional sector right now. And it's a it's reasonable, you know what I mean? It's reasonable. I mean, think about it, right? Whenever we're talking about a Micron, Micron literally only went straight up for a while. I mean, we're talking about from April 2025 to now, this thing went from $65 to $1200. We saw this thing put in gains of what's this? How I don't even know how much that is. 1,900% and so naturally when you get such a parabolic move like this, guess what that's going to do? It's going to trigger a ton of emotions and it's going to put the market in a very emotional position. But the reality is folks, the thing that people are missing is that this little corrective period that we're in right now in the world of memory and and AI in general, we've seen this multiple times before. You want to know what's funny? Look at this. Look what happened here. Micron for example, back in June of 2025, we saw it pull back 20% before continuing. Then after that, we saw it pull back roughly, let's see, 25 No, even more than that. Hold on now. I think 26%, 27% if I remember correctly. Yep, 26%. Then after that, we saw Micron pull back what is this? March? Yeah, March of 2026, we saw it pull back 34% and this time we are now seeing Micron currently down roughly 32%. So matter of fact, this isn't even the biggest pull back that Micron's had this year. Right? But it's just the emotions. The higher we go, the more emotional this market's going to get and so any sort of news that makes the market think, "Oh, that could be bad for the future." they are going to sell and you're going to see a repricing when they factor in the risk of commoditization, cyclicality, etc. And that is again why you're seeing memory stocks like this falling. It's the reason why you're seeing an SK Hynix down. It's the reason why it's starting to spread into some of your more based plays such as, you know, your chip your semis like AMD or an Nvidia. It's just making the market nervous, right? It's just making the market nervous because the market's already nervous. The market's already emotional. And so what I try to remind you all all the time is that the market doesn't always have to do what it's supposed to do. Just because the market should respond positively to a piece of news that fundamentally does inject more value into a certain sector, stock or just the market as a whole, it doesn't have to. Sometimes you see one of the best earnings reports possible and then a stock will fall for four months afterwards. It's just the way that it goes. You have to understand that emotion is a catalyst in the market that has a major impact on stock prices. And you can't really predict emotion. People are going to respond how they're going to respond. It's up to us to manage our emotions properly in order to counter that emotional trading. Does that make sense? So, in a moment like this in which we all see stocks falling yet we got a fantastic piece of news, you have to understand that it's emotions taking over in the market right now. It's worry and fears taking over in the market right now. And that is called divergence. Divergence occurs when one study or one element goes in one direction and a separate element goes in the opposite direction or a different direction. And so what's happening right now is that we are seeing fundamentals of the AI space improving. This is objectively true. We're seeing massive CapEx. We're seeing continued acceleration in overall revenue and expenditure. We are seeing all of these things moving in the right direction. A few hiccups along the way, a few cracks in the foundation for sure, but in general moving in the right direction. But although we are seeing things moving in the right direction, prices are falling. So, we're seeing fundamentals go this way, prices go this way. Divergence here in the stock market is what creates opportunity. And that is what I look for as a stock investor. I want divergence. I want to see something fundamentally growing in value while its price doesn't reflect that growth. Because divergence or that spread, that difference between where it is and where it's priced is where the value is. Now, don't don't get me wrong. We did for sure see some of these stocks getting too high, right? We did see some of your AI stocks getting a little bit over overextended to the top side. So, I'm not saying this whole pullback we're seeing right now is irrational. I'm not saying that it should be flying up all the time. No. But I do believe that we are getting to a point in which we're seeing a Micron and and some of these other ones, maybe even an SK Hynix a little bit hard because it just had its ADR, right? Um but I believe they're being beaten down almost unfairly at this point. And that sort of thing is what I look for when I determine if I'm going to actually buy stocks. And so, interestingly enough, as a as a result of what we're seeing right now, I am actually planning on going in and potentially looking to add to my individual AI bags pretty soon here. And this is something I haven't even done in my public portfolio before because I started building this public portfolio in March. It wasn't a great time to be looking to add AI stocks to that portfolio. Not at that time. There were other plays that I thought made more sense. You know, for example, one I talk about a lot is Robinhood. Robinhood's one of the ones where I noticed divergence. Robinhood's fundamentals were growing, but the price was going down. I was like, this is a stock that clearly is showing divergence. So, I went in. I invested into this, for example, put in a 25% gain, $1,700. So, I've been focusing on some of these other places, but if we continue to see this pullback happening, even though the fundamental value of the AI sector continues to climb, I may go in and start adding to my AI bags in my private accounts, my retirement account, which does have a bit of Nvidia. And I also may add some to the public portfolio. Or maybe I'll trade it. I might add a start a bit of a trade on some of these. I'm not sure yet. So, I'll keep you updated, but we are moving in the direction in which I am feeling like we are entering buy territory for some of these stocks, especially in memory that are being beaten down. Although fundamentally this is good news, okay? And so, with that in mind, when you see a moment like this again, I don't want you to panic. I when you see a stock market start falling, I want you to understand that again, in these sorts of moments in which we are seeing prices fall as a result of emotion, there's nothing you can do to control that. You couldn't predict it. No amount of analysis would have told you that it was coming. It's just a part of the game. You can't have super high highs without super low lows. You can't have great moments without bad moments. And so, in a moment like this, it's not a good idea to get all wrapped into it and freaked out and screaming mad at the market. No, understand that in order for again, Micron to be able to push up to $1,000 after being at $70, it's going to have to see a 20-30% correction. You're going to need to see AMD slow down. You're going to need to see Nvidia go from 250 to 200. You're going to need to see those things. But it doesn't mean that the AI trade is dying. It doesn't mean that the AI trade is dead. It just means that it is repricing and it is correcting. And we are seeing clear divergence, which means that that correction and repricing could be an opportunity. There could be a spread opportunity there that many might want to capitalize on. And so, I'll continue to update you as I do, of course, monitor these charts, look for potential opportunities, and maybe make some moves in my own portfolio as a result. If you guys have been enjoying the content recently, I would greatly appreciate if you could subscribe. I think we're like 15 subscribers away from 15,000 subscribers, which is insane. I only started this channel like 4 months ago. So, for those of you who have been a part of the journey, thank you so much. And I will remind you all that if you do want to join our seminar later today, it will be in TH Capital. For all you members, I sent you an email with the link. I posted the link also on Discord as well. It is available there for you. If you're not able to make it, the live replay will be posted over on the Womp. And if you're not in TH Capital, the link to that to check it out will be down below. But, with that in mind, of course, I hope you guys did enjoy today's quick video, and I can't wait to see you all in the next one. Peace out, everybody.