Quick Hits

• Records and Red Flags: The S&P 500 and Dow hit fresh all-time highs with the Nasdaq surging 3%, even as the "Buffett Indicator" flashes a 230% valuation warning and Michael Burry predicts a 1987-style crash.
• GLP-1 Juggernaut: Eli Lilly (LLY) revenue skyrocketed 48% on massive demand for Mounjaro and Zepbound, prompting analysts to raise price targets.
• Semiconductor Whiplash: AMD reported 50% revenue growth and doubled data center sales, yet the stock sank after a major customer defected to a rival for AI chips.
• Retail Takes the Reins: JPMorgan warns that hedge funds heavily bruised by July's tech selloff are stepping back, leaving everyday traders to drive market momentum.

Markets Overview

The market's relentless summer rally pushed indexes to new heights, with the Nasdaq exploding for a 3% gain and the S&P 500 touching another all-time high. However, the soar is accompanied by stark macro warnings. Famed "Big Short" investor Michael Burry cautioned that the recent S&P 500 surge could precede a 1987-style fall, maintaining his bearish tech stance.

Valuation metrics are also flashing neon. The "Buffett Indicator" has surged past 230%, prompting Warren Buffett to recently label current investor behavior as "gambling." Underlying this volatility is a structural shift in market participants: JPMorgan strategists note that major hedge funds took heavy losses in the July tech selloff and are significantly pulling back from tech stocks. This dynamic is increasingly leaving the trajectory of the market at the mercy of retail traders.

Earnings Reports

It was a chaotic day for corporate earnings, defined by massive beats met with skepticism. Eli Lilly (LLY) was the standout, posting a 48% jump in revenue fueled by insatiable demand for its GLP-1 weight-loss and diabetes drugs, Zepbound and Mounjaro. Analysts responded by upping their price targets, noting the stock still has room to run.

Conversely, Advanced Micro Devices (AMD) sank despite reporting that Q2 revenue climbed 50% and data center sales doubled. The dip was triggered by news that a major customer plans to purchase AI chips from a rival. Memory chip maker Sandisk also slumped 9% in premarket trading after issuing disappointing forward guidance.

Elsewhere in the tape:

• SoftBank exceeded earnings expectations without relying on its OpenAI stake, with its prescient investment in Intel acting as the day's savior.
• Upstart (UPST) saw its stock rally after AI model upgrades improved borrower risk assessment and drove a pickup in loan growth.
• Gogo missed badly on both ends (GAAP EPS of -$0.01 vs. $0.07 est.; revenue of $222.8M vs. $229.35M est.), while Appian and Composecure managed to beat top-and-bottom line estimates.

Hot Sectors

The semiconductor sector is experiencing a violent divergence between fundamental performance and capital flows. Retail investors sold semiconductor and memory stocks at 20 times the two-year average weekly pace in late July. This marks the third weekly sale in four weeks following a massive 10-week buying streak. The aggressive exodus comes despite record memory prices and reassuring commentary from Elon Musk, who recently alleviated concerns about AI capex sustainability and the threat of semiconductor oversupply.

Meanwhile, the cloud computing and AI infrastructure space remains highly competitive. Recent earnings revealed that Amazon (AMZN), Alphabet (GOOGL), and Microsoft (MSFT) all delivered soaring cloud growth directly tied to AI integration, though analysts remain divided on which Magnificent Seven member is the superior hold going forward.

Stock News

• Activist Positions: Billionaire Bill Ackman’s Pershing Square Capital revealed a $2.1 billion stake in Microsoft (MSFT), established earlier this year when the stock slid.
• SpaceX Lockup Dynamics: Insiders at SpaceX got their first chance to cash out, but a recent stock slide severely limited the opportunity. While up to 911.5 million shares became available for sale Thursday, a separate tranche of up to 455.8 million shares remains locked up due to the weak price performance.
• Chipotle (CMG) shares slipped after the chain temporarily pulled jalapeños from Minnesota locations due to a potential link to a salmonella outbreak.
• AGNC Investment (AGNC) is drawing attention for trading 28% above its $8.58 book value, a premium supported by its massive 13.5% dividend yield.

Fed & Economic Data

Macro headwinds remain a focal point for investors navigating the late-summer rally. The July jobs report, set for release soon, is expected to show a soft pace of hiring. According to MarketWatch, the labor market isn't necessarily worsening, but it isn't improving for job seekers either.

Simultaneously, the Federal Reserve's initial August inflation forecast has arrived with what analysts are calling a glaring red flag for Wall Street. Persistently high living costs are also impacting consumer budgets; current predictions indicate an estimated Social Security cost-of-living adjustment (COLA) of roughly 3.9% for 2027.