If you looked at your screen today and saw a sea of red, you weren't alone.
It was one of those days where the momentum we’ve enjoyed lately seemed to evaporate, leaving the S&P 500 gasping for air as it surrendered its entire year-to-date profit.
A clear signal that the market is reassessing the "price of admission" for the AI revolution while simultaneously grappling with a Federal Reserve that refuses to budge.
The AI Paradox: Winners, Losers, and the Margin Squeeze
The most striking story of the day has to be Cisco (CSCO | -12.32%). On paper, they had an excellent quarter, but the market is a forward-looking beast, and it didn't like what it saw in the crystal ball.
In a cruel twist of irony, the very AI boom that is driving demand for Cisco’s networking gear is also making the memory chips (DRAM) they need more expensive. When costs rise faster than a company can hike its own prices, margins suffer and investors flee.
We saw a similar "AI anxiety" hit AppLovin (APP | -19.68%), which cratered despite beating expectations because of fears that traditional software firms might be disrupted by new giants like Anthropic, now valued at a staggering $380 billion.
Luckily, it’s not all doom and gloom in the chip sector. Applied Materials (AMAT | -3.38%) initially fell in regular trading but soared over 9% after-hours after reporting a massive beat and a very bullish outlook for chip-making equipment. It seems the "picks and shovels" of the AI gold rush are still in high demand, even if the miners are feeling the heat.
A Safe Haven in Value and "The Golden Arches"
While tech giants like Apple (AAPL | -5.00%), Amazon (AMZN | -2.20%), and Meta Platforms (META | -2.82%) were being dragged down by growth concerns and reports of Siri delays, a very different story was unfolding in the consumer sector.
McDonald's (MCD | +2.74%), the fast-food giant, hit a record high today after proving that its "value" menus are working. By focusing on affordability, they are successfully winning back lower-income consumers who are tightening their belts.
It’s a classic defensive play: when the economy feels uncertain, people trade down from expensive dining to the Big Mac. In contrast, Restaurant Brands International (QSR | -6.15%) struggled, hampered by losses in its Chinese operations despite decent revenue.
Breakthroughs and Long-Term Logistics
Beyond the headline-grabbing tech names, some fascinating moves occurred in specialized sectors that I think deserve your attention.
Novocure (NVCR | +19.33%) provided a massive shot in the arm for healthcare investors after the FDA approved its Optune Pax treatment for pancreatic cancer. This is a significant turnaround for a stock that had lost half its value over the past year. It’s a reminder that even in a macro downturn, individual clinical successes can still drive parabolic returns.
Meanwhile, in the logistics world, FedEx (FDX | +0.63%) laid out an ambitious roadmap. They are targeting a massive revenue jump to $98 billion by fiscal year 2029. While the broader market was selling off, this long-term optimism provided a floor for the stock.
We also saw some resilience in the travel sector; Airbnb (ABNB | +-3.00%) rose in after-hours trading despite a dip in quarterly profit. The company is aggressively investing in new "Experiences" and international expansion, which seems to have satisfied those looking for growth outside of the traditional Silicon Valley bubble.
Defying the Trend: Memory Chips and Market Resilience
It’s also worth noting that not every "chip" story ended in heartbreak today. While Cisco fretted over DRAM prices, the actual producers like Micron (MU | +0.88%) and Sandisk (SNDK | +5.16%) found some buyers.
Micron’s leadership was able to soothe nerves regarding intense competition, proving that there is still a selective appetite for the hardware that makes modern computing possible. This divergence between the users and the producers of chips is something I’ll be watching closely in the coming weeks.
On the geopolitical front, we’re seeing rare internal friction within the Republican party.
Six House members broke ranks to block import tariffs on Canada, prompting a veto threat from the President. This kind of political instability, combined with an 8% drop in existing home sales - partly due to severe winter weather - is keeping investors on edge and fueling the volatility we saw in Coinbase (COIN | -%), which also struggled with a brief service outage today
Conclusion
The "AI lift" is no longer a rising tide that lifts all boats; instead, investors are scrutinizing margins and execution more than ever.
While the S&P 500 has hit a reset button on its yearly gains, the strength in names like McDonald's and Novocure suggests there is still plenty of capital looking for a home, it’s just becoming a lot more selective about where it stays.
Kristoff - ChartMill
Next to read: Breadth Takes a Hit as Sellers Return in Force
