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These Stocks Could Win as Wall Street Looks Beyond AI Software
Reported by Jeffrey Neal Johnson. Article Posted: 7/4/2026.
Key Points
- Investors may look beyond crowded AI software trades if first-half momentum fades and market breadth improves.
- Joby Aviation, Archer Aviation, Rocket Lab, Intuitive Machines and AST SpaceMobile offer exposure to aviation, space infrastructure and satellite communications.
- FuelCell Energy gives investors a speculative AI infrastructure angle as data centers search for faster on-site power options.
- Special Report: Everyone wanted SpaceX. Smart money wants this.
The first half of the trading year typically unfolds around a dominant market narrative. Over the past six months, that narrative has favored massive artificial intelligence (AI) and compute infrastructure rallies. By July, those storylines can begin to lose momentum as investors reassess crowded trades and look for the next source of market breadth.
As Q3 institutional window dressing concludes, portfolio managers have already locked in their first-half performance for client statements and are actively resetting their risk models. Some institutional investors may be looking for a specific setup right now: asymmetric risk-reward in sectors starved of capital.
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Reserve your free seat for the Zero-Dollar Trade Advantage session nowInstitutions may be quietly cutting dead weight, locking in gains from crowded technology sector trades, and positioning ahead of the next major market rotation. The goal for investors is to front-run this institutional capital flow by targeting fundamentally sound companies anchored by large backlogs, concrete government contracts, and technical mean-reversion setups.
Multiple Compression: The Math Catching Up to Tech
Mega-cap technology and pure-play AI software trades are historically crowded and mathematically overextended. The momentum concentrated in these names has relied on late-stage multiple expansion that cannot sustain itself indefinitely.
When a software business trades at 30 times forward sales, investors demand perfection in operational execution just to maintain current price levels. Any slight miss in forward guidance or revenue acceleration can trigger margin compression.
Capital allocators recognize this structural vulnerability. Any broadening of market breadth leaves these hyper-valued names susceptible to rapid pullbacks. Funds are rotating out of these exhausted narratives to find hard assets in the physical economy, hunting for tangible value over speculative growth.
Taking Flight: Assembly Lines Replace R&D Dreams
The advanced aviation sector is shedding its origins in speculative research and development to become a heavily capitalized, federally certified manufacturing industry. Institutional capital favors operational milestones over conceptual designs.
Joby Aviation (NYSE: JOBY) recently provided a strong catalyst for scaled commercial production. Filings from late June formalize a strategic manufacturing alliance with Toyota Motor Corporation (NYSE: TM).
Toyota Motor Corporation now holds a 13.1% beneficial ownership stake and established a 51% controlling interest in the newly formed preparation enterprise dedicated to manufacturing Joby Aviation aircraft. Backed by a $500 million direct investment, this capital structure de-risks the commercial scale-up process. The transition shifts Joby Aviation from a visionary concept to a tangible operating business with an automotive sector giant helping run the factory floor.
Conversely, Archer Aviation (NYSE: ACHR) presents a textbook technical mean-reversion setup. Despite a 35% year-to-date drawdown, Archer Aviation's underlying balance sheet is a fortress. Archer Aviation retains $1.78 billion in cash and short-term investments, yielding a current ratio exceeding 18x.
Institutional capitulation often signals a technical bottom. Prominent growth funds recently offloaded heavy blocks of Archer Aviation shares near 52-week lows, flushing out weak hands. Rapid progress through Federal Aviation Administration type certification and government integration programs validates the operational timeline, making the current discount an attractive accumulation zone before regulatory clearance is fully priced in.
Monopolizing Orbit: The New Vertical Space Race
The commercial space economy is transitioning from niche experimental launches to scaled telecom and infrastructure duopolies. Billions in government subsidies and mergers are permanently altering sector valuation models.
Rocket Lab (NASDAQ: RKLB) recently announced an $8 billion cash-and-stock acquisition of Iridium Communications. The broader market has yet to fully price in the extent to which this alters the Rocket Lab corporate valuation model.
By acquiring Iridium Communications, Rocket Lab vertically integrates into a space services powerhouse, securing high-margin recurring telecom revenue to offset the cash burn traditionally associated with launch segments. Supported by a 63.5% year-over-year increase in Q1 top line to $200.3 million and a record $2.2 billion backlog, Rocket Lab is mispriced following recent broader technology selloffs.
A unique market dynamic is unfolding for Intuitive Machines (NASDAQ: LUNR). Short sellers frequently target capital-intensive space equities, assuming management will heavily dilute shareholders to fund operations. Currently, 28.85% of Intuitive Machines' public float is sold short.
However, Intuitive Machines recently secured a firm-fixed-price NASA Commercial Lunar Payload Services contract valued up to $148.3 million. Securing a large non-dilutive government contract to deliver lunar payloads provides a predictable revenue floor that weakens the bearish thesis. The technical setup currently favors short-squeeze mechanics driven by forced institutional covering on operational execution.
AST SpaceMobile (NASDAQ: ASTS) offers a high-beta momentum play as it nears the commercialization of its direct-to-cell satellite constellation. AST SpaceMobile maintains a strong liquidity profile with roughly $3.5 billion in cash runway. A recent $926 million subsidy from the Japanese government to deploy a domestic satellite network with Rakuten (OTCMKTS: RKUNY) validates the technology on a sovereign level. Capital rotation into space-based telecom will continue driving upward price pressure for AST SpaceMobile.
Plugging In: The Backdoor AI Infrastructure Play
Data centers require immense amounts of uninterrupted baseload power. Traditional energy grids are effectively tapped out, creating an urgent macro tailwind for grid-independent energy solutions. FuelCell Energy (NASDAQ: FCEL) is well-positioned as a backdoor play on artificial intelligence infrastructure. The narrative surrounding FuelCell Energy has shifted from legacy green energy to essential hyperscaler baseload power.
The emergence of 12.5 MW standardized energy block demand for data centers, paired with a $49 million U.S. EXIM Bank financing package, fundamentally transforms FuelCell Energy's balance sheet.
Recent forced index buying catalyzed double-digit percentage spikes following the addition of FuelCell Energy to the Russell 2000. Heavily beaten down in the first half of the year, FuelCell Energy now offers a technical mean-reversion setup backed by critical physical demand.
Act Before the Crowd: Finalizing a Hardware Strategy
Positioning portfolios for the back half of the year requires identifying structural shifts before they dominate financial headlines. The transition away from overextended software multiples and toward tangible hardware, government backlogs, and de-risked manufacturing joint ventures offers a highly favorable asymmetric profile.
Allocating capital toward fundamentally sound businesses anchored by technical downside protection remains an effective strategy for capturing the impending Q3 institutional rotation. Let the smart money show you where the physical economy is heading, and act confidently before the window closes.
The AI Chip Sell-Off Looks Scary, But the Real Story May Be Liquidity
Reported by Jeffrey Neal Johnson. Published: 7/7/2026.
Key Points
- South Korea’s sharp KOSPI sell-off pressured global chip stocks, but the move appears tied more to leverage and valuation resets than collapsing AI demand.
- NVIDIA and Broadcom remain central AI hardware holdings because of data center demand, custom silicon and networking exposure.
- Taiwan Semiconductor and ASML remain critical infrastructure names because advanced AI chips still depend on leading-edge foundry capacity and EUV lithography.
- Special Report: Everyone wanted SpaceX. Smart money wants this.
Global equity markets woke up to another severe shock on July 7, 2026. The South Korean KOSPI index dropped approximately 8%, triggering market-wide trading halts for the second time in the past few months. By mid-morning in New York, the contagion had crossed the Pacific.
Major U.S. semiconductor equities endured steep intraday declines. Investors watching foundational assets bleed red are rightfully asking whether the artificial intelligence (AI) hardware supercycle has finally fractured. The answer may lie in market plumbing, not corporate fundamentals.
One webinar worth putting on your calendar. (Ad)
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Reserve your free seat for the Zero-Dollar Trade Advantage session nowConsecutive trading halts in Seoul have ignited a cross-border margin cascade, compressing valuation multiples across the global technology sector. This aggressive deleveraging cycle can force mechanical capitulation, temporarily detaching equity pricing from underlying demand. Investors with cash and patience could have a rare opportunity to acquire dominant hardware names at liquidity-driven discounts before fundamentals reassert themselves.
Epicenter: The Anatomy of a Liquidity Quake
Understanding the sudden collapse in U.S. technology valuations requires separating the physical semiconductor supply chain from the mechanics of global leverage.
The current sell-off appears to originate largely in the latter. South Korean retail investors heavily utilize margin debt to gain outsized exposure to domestic index heavyweights. When early macroeconomic pressures triggered a regional pullback, leveraged accounts quickly breached their maintenance margin requirements.
When volatility strikes, brokers do not wait for a market recovery. They reduce exposure, tighten margin availability, and liquidate vulnerable accounts when needed. This can create an artificial supply glut on the open market. The clearest evidence of this disconnect is when Samsung Electronics (OTCMKTS: SSNLF) issued record forward operating profit guidance, only to watch its stock price drop alongside the broader KOSPI index.
When Samsung Electronics forecasts record preliminary operating profit and the market responds with an 8% sell-off, it would appear as though momentum capital has exhausted its purchasing power.
In an overleveraged environment, forced liquidation inevitably manifests first at the most vulnerable point of leverage. This describes the current state of the South Korean markets, where involuntary selling appears to have taken control of near-term price action. A localized Asian liquidity crisis can rapidly infect United States equities through algorithmic arbitrage and exchange-traded fund (ETF) redemptions.
South Korea represents a heavy weighting in global technology funds. Widespread trading halts trap institutional capital. Facing immediate redemption requests from panicked investors, portfolio managers must raise cash instantly. Unable to sell their frozen South Korean assets, these managers often blindly sell their most liquid and profitable U.S. holdings.
When this happens, foundational businesses like NVIDIA (NASDAQ: NVDA) and Broadcom (NASDAQ: AVGO) can absorb significant collateral damage simply because they serve as highly liquid cash registers for global funds.
Broadcom still benefits from highly lucrative custom silicon networking contracts, and NVIDIA continues to see unprecedented data center demand.
Their forward earnings trajectories do not appear to have materially deteriorated solely due to Samsung’s sell-off.
The selling pressure is best viewed as a mechanical reaction to redemptions from emerging market funds, which could be entirely detached from the underlying health of the semiconductor sector.
Rolling Aftershocks: Why Tomorrow Dips Again
Navigating a hyper-leveraged market requires understanding the timeline of a margin washout. Systemic deleveraging rarely resolves in a single trading session. Standard settlement cycles, overlapping broker maintenance thresholds, and portfolio risk limits can push selling pressure over multiple days.
Retail capital typically accumulates heavily around specific volume-weighted average price clusters during a prolonged bull run. When an index slices through those price nodes, it triggers overlapping stop-loss orders, margin calls, and automated risk-reduction trades. A steep drop today can set up additional forced liquidations in the following session. When the opening bell rings the following morning, brokers instantly execute the next tranche of automated sell orders. This structural reality creates secondary and tertiary gap-downs.
Investors may want to watch for intraday volatility and sudden market-wide drops over the coming days, not as anomalies, but as possible aftershocks of the same deleveraging cycle. These downward spikes represent the visible exhaust of global leverage as it flushes from the system.
Hyperscaler capital expenditure cycles and global wafer fabrication schedules are not directly determined by retail margin calls in Seoul. The physical infrastructure build-out continues at an aggressive pace, even when the mechanical plumbing fails.
Rebuilding: Acquiring Moats in the Rubble
Surviving a global margin cascade requires unleveraged capital and a clear distinction between liquidity pressure and business deterioration.
Portfolios reliant on margin debt or short-term options remain structurally vulnerable to the forced liquidation cycle currently unwinding across the Pacific. Risk parameters should shift toward capital preservation and low-leverage positioning.
Once leverage is reduced or eliminated, the current macroeconomic volatility can offer a rare, systematic entry window. The strategic imperative requires abandoning high-beta momentum trades in favor of defensive, monopolistic infrastructure. Capital deployment should target the primary lithography suppliers and tier-one fabricators operating under non-cancelable, multi-year supply contracts.
Consider the underlying physical constraints driving Taiwan Semiconductor Manufacturing (NYSE: TSM). Next-generation artificial intelligence models require exponentially larger compute pools and are heavily reliant on high-bandwidth memory (HBM).
Fabricating HBM requires three times the physical wafer space of conventional standard memory.
This dynamic creates a supply vacuum across the global silicon ecosystem.
Taiwan Semiconductor Manufacturing commands a dominant market share in sub-5-nanometer nodes and retains significant pricing power over fabless designers.
A broad market sell-off driven by South Korean retail liquidations creates a profound pricing dislocation for Taiwan Semiconductor Manufacturing, a business whose calendar-year 2026 capacity is already sold out.
A similar structural moat protects ASML Holding N.V. (NASDAQ: ASML).
Operating as the exclusive global supplier of extreme ultraviolet (EUV) lithography systems, ASML holds a dominant position in EUV lithography, giving it one of the strongest moats in the semiconductor equipment market, even though it remains exposed to broader chip-cycle fluctuations.
Advanced neural compute architecture cannot scale without ASML's hardware, and competitors face a technological barrier that will take decades to overcome.
The extreme ultraviolet lithography machines produced by ASML are the only tools capable of printing the microscopic circuits required for next-generation artificial intelligence chips.
The current multiple contraction provides access to this foundational infrastructure moat at a steep liquidity discount. When global ETF liquidation forces ASML shares lower, it creates a rare opportunity for unencumbered capital to purchase a critical semiconductor infrastructure supplier at a better price.
Solid Ground: Building Long-Term Positions
Experienced investors do not need to attempt to catch the absolute bottom of a rolling margin cascade. Institutional funds execute systematic, predefined tranche acquisitions.
By phasing capital into the market while forced liquidations wash through the system, cautious investors can quietly accumulate dominant semiconductor infrastructure. Securing these assets during a mathematically driven liquidation cycle can improve long-term return potential, but the opportunity still requires discipline.
The best targets are companies whose demand drivers remain intact despite the sell-off: NVIDIA for AI accelerators, Broadcom for custom silicon and networking, Taiwan Semiconductor Manufacturing for advanced foundry capacity, and ASML for lithography.
If global margin pressure eases and AI infrastructure demand remains firm, today’s forced selling may look less like the end of the hardware supercycle and more like a temporary reset in the price of its strongest suppliers. Investors may want to monitor whether the next round of earnings confirms the same message: weaker stock prices, but still healthy demand for the companies building the AI hardware stack.
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