U.S. Stock Outlook | Three Major Index Futures Mixed, Samsung's Earnings Report Weighs on Tech Stocks Again

Pre-Market Market Trends

1. As of July 7 (Tuesday), U.S. stock index futures are mixed before the market opens. As of the time of writing, Dow futures are up 0.30%, S&P 500 futures are down 0.18%, and Nasdaq futures are down 1.11%.

1. As of the time of writing, the German DAX index is down 0.73%, the UK FTSE 100 index is up 0.33%, the French CAC40 index is up 0.25%, and the Euro Stoxx 50 index is down 0.55%.

1. As of the time of writing, WTI crude oil is up 0.73%, priced at $69.05 per barrel. Brent crude oil is up 0.89%, priced at $72.63 per barrel.

Market News

Samsung's earnings report fails to please investors, and the weakness in tech stocks resurfaces. Samsung's second-quarter profit surged 19 times year-on-year due to strong demand for AI, but it only exceeded analyst expectations by 6%. Its stock price listed in Seoul plummeted by 10% at one point, dragging down peers like SK Hynix and Japan's Kioxia. Disappointment spread in pre-market trading in the U.S., with stocks of Micron Technology, SanDisk, and other semiconductor companies falling as investors reassessed expectations for companies related to the AI spending boom.

U.S. stocks face a "dual bubble" nearing extremes: the combination of earnings and price bubbles may trigger a 30%-50% correction. The investment frenzy surrounding AI continues to drive U.S. stock performance, with major indices like the S&P 500 repeatedly hitting new highs. In this context, some market bulls view forward price-to-earnings ratios as a key indicator, believing that current valuations have not entered bubble territory. This judgment is based on rapid upward revisions of expected earnings for the next 12 months. Despite significant stock price increases, Wall Street's expectations for corporate profits have risen even more rapidly. As the second-quarter earnings season approaches, expectations for profit growth remain strong. According to FactSet, S&P 500 constituents are expected to achieve double-digit profit growth for the seventh consecutive quarter, with analysts currently forecasting an overall profit growth rate exceeding 23%. However, whether this growth can be sustained in the long term remains in question. Some analysts point out that current profit growth has significantly deviated from historical trends, while overall valuation levels remain in extreme ranges. From another valuation perspective, market risks are more pronounced. Measured by the Shiller CAPE ratio, the S&P 500 is currently valued at about 41 times earnings, nearing the historical highs set during the internet bubble. They further analyze that, unlike the internet era when corporate profit growth was relatively moderate, current earnings per share growth has exceeded the long-term trend by 1.8 standard deviations If profits are adjusted back to a level closer to normal, the CAPE ratio will rise to 67.6 times, which is 4.6 standard deviations above the long-term trend. Analysts wrote that this would exceed the peak of all asset bubbles in U.S. history. Based on this calculation, the report points out that the current market is not only overvalued in terms of price but also has exceptionally expanded profit expectations, approaching a state of "price bubble combined with profit bubble."

U.S. Treasury internal report sounds alarm: If the AI industry repeats the internet bubble, it could trigger systemic economic shocks. According to a draft of an internal report from the U.S. Treasury obtained by relevant media, although the Trump administration has spared no effort in publicly supporting the artificial intelligence (AI) industry, the professional analysts under its Treasury Department have issued a stern warning: AI companies are now more deeply embedded in the U.S. economy than internet companies at the turn of the century. If the AI market repeats the scenario of the internet bubble bursting, the resulting shockwaves will sweep through the entire economic system. Analysts wrote, "Once the AI industry experiences a downturn, it will affect the stock market, the private credit market, companies financing data center construction, cloud service providers, chip manufacturers, and utility companies," and the chain reaction will "trigger shocks throughout the entire economic ecosystem." The report believes that current AI investors are taking on extremely large risks, to the extent that the stability of the entire financial system largely depends on whether AI can achieve the expected leap in productivity and profit realization.

Goldman Sachs: Earnings of capital-intensive stocks are expected to lead the rally, with funds rotating into a "prolonged battle." Goldman Sachs Group strategists believe that capital-intensive companies are expected to deliver robust earnings this earnings season, further outperforming their lighter asset counterparts that rely more on human labor or digital assets. Led by Guillaume Jaisson, the Goldman Sachs strategist team pointed out: "Investors are still under-allocated in a world where physical assets, infrastructure, and industrial capacity have regained strategic importance." Jaisson noted that the "HALO" trade—i.e., "Heavy Assets, Low Obsolescence"—is currently entering a "more sustainable phase," where earnings-driven rather than valuation-driven growth will become the main force in the market. He stated that even within the capital-intensive sector, the divergence between winners and losers will further widen. Jaisson emphasized: "We are not bearish on AI or light assets; we just believe that the current relative valuations and capital flows are excessively overstated. The core logic of the HALO trade is that as the scarcity of physical assets is re-priced by the market, the premium for earnings certainty will continue to exist."

Former Federal Reserve official Bullard: High probability of interest rate hikes within the year, with September as a key window. Jim Bullard, current dean of the Purdue University Mitchell E. Daniels School of Business and former president of the St. Louis Federal Reserve, recently stated that even if the Federal Reserve chooses to remain steady at its July meeting, it is still highly likely to initiate tightening operations later this year. Bullard believes that current inflation levels remain high, and the September meeting is a key window for the next round of interest rate hikes. He also questioned whether the productivity improvements brought by AI could quickly reverse the main line of the Federal Reserve's monetary policy. He pointed out two favorable factors that could alleviate inflationary pressures: the bond market pricing reflects that the peak of inflation has passed, combined with the recent continuous decline in international oil prices, which will gradually transmit the related cooling effects to inflation statistics in the coming months Leave a buffer period for the Federal Reserve to observe. However, Bullard emphasized that two types of short-term benefits are not enough to replace active interest rate adjustments.

The net long position in the dollar has expanded to nearly $40 billion! Interest rate differential logic dominates the foreign exchange market. Global traders' optimism about the dollar's prospects has reached its highest level since 2015. As the market bets on the Federal Reserve maintaining high interest rates for a longer period, the dollar has emerged from a month-long continuous upward trend—rising 2% in June, making it one of the best-performing months of the year. The Commodity Futures Trading Commission (CFTC) released a position report on Monday showing that as of June 30, the net long position in the dollar approached $40 billion, the highest level in over a decade. The core catalyst for this round of dollar strength comes from Federal Reserve Chairman Waller's statement, in which he clearly committed to stabilizing prices, directly boosting market expectations for interest rate hikes. Compared to other major central banks globally, the market generally anticipates that the Federal Reserve's tightening policy will far exceed that of its overseas counterparts, with the relative interest rate differential continuing to support the dollar's rise.

WTI briefly fell below $69! Saudi Arabia's "cliff-like" price cuts set a 26-year record, and the alarm bells for oil supply surplus are ringing. Under the combined impact of OPEC+'s moderate production increase, the resumption of navigation in the Strait of Hormuz, and a temporary peace agreement between the U.S. and Iran, the global oil market is facing significant supply surplus pressure. Saudi Aramco, the state-owned oil producer of Saudi Arabia, has lowered the official selling price of Arab Light crude oil for next month to Asia by $11 per barrel, adjusting it to a discount of $1.50 compared to regional benchmark prices. This is the first time this grade of crude oil has been sold at a discount since the price wars of 2020 and 2015. This price adjustment also marks the largest single-month official price drop since 2000. This adjustment follows the decision by OPEC+ member countries, including Saudi Arabia, to increase production quotas for next month, further reinforcing expectations of a supply surplus.

Individual Stock News

U.S. chip stocks and optical communication stocks fell sharply before the market opened. On Tuesday, before the U.S. market opened, as of the time of writing, Western Digital (WDC.US) fell nearly 7%, Seagate Technology (STX.US) fell nearly 6%, Micron Technology (MU.US) and SanDisk (SNDK.US) fell over 5%, AMD (AMD.US) and Intel (INTC.US) fell nearly 4%, Broadcom (AVGO.US) and Qualcomm (QCOM.US) fell nearly 3%, and NVIDIA (NVDA.US) fell over 2%. In the optical communication sector, Astera Labs (ALAB.US) fell over 5%, Marvell Technology (MRVL.US) fell nearly 5%, Credo Technology (CRDO.US), AXT Inc (AXTI.US), and Tower Semiconductor (TSEM.US) fell over 4%, Coherent (COHR.US), Lumentum (LITE.US), and Corning (GLW.US) fell over 3%, and Nokia (NOK.US) fell over 2%.

SpaceX (SPCX.US) joins the Nasdaq, and Wall Street's major banks are collectively bullish. As SpaceX's stock price weakens, it coincides with its addition to the Nasdaq 100 index on Tuesday, which is expected to prompt passive and active funds to rebalance their portfolios This aerospace and satellite company has also received a significant number of bullish ratings from analysts after the IPO quiet period ended, with at least six banks, including Morgan Stanley and Goldman Sachs, giving it a rating equivalent to "buy."

"The roadmap is intact!" Nvidia (NVDA.US) quickly refutes rumors of delays in the next-generation AI rack, which Wall Street calls a "publicity stunt." Nvidia denied a report claiming that its next-generation "Kyber" artificial intelligence (AI) rack would be delayed until 2028, with a company spokesperson stating, "Our roadmap is intact." Semianalysis previously released a report stating that the Kyber rack-level architecture designed to accommodate Nvidia's Rubin Ultra chip would be delayed by more than 12 months, pushing it to 2028. Mizuho Securities trading department analyst Jordan Klein also stated on Monday that investors should have seen this kind of scenario many times before, with news of Nvidia's new products being delayed due to manufacturing issues constantly emerging, but this is all just a publicity stunt, pure noise.

Ming-Chi Kuo: Apple's (AAPL.US) foldable iPhone may repeat the "supply shortage" of the iPhone X, with initial shipments possibly below one million units. According to the latest report from Tianfeng International Securities analyst Ming-Chi Kuo, the upcoming foldable iPhone from Apple is likely to repeat the situation when the iPhone X was launched—due to innovative design leading to manufacturing challenges, initial supply will be extremely limited, and the release pace will be affected as a result. Kuo's latest industry survey data indicates that in the second half of 2026, the assembly shipment volume of the foldable iPhone is expected to be around 7 to 8 million units, with shipments in the third quarter only between 500,000 and 1 million units. In contrast, the combined shipment volume of the iPhone 18 Pro and Pro Max during the same period is expected to reach 20 to 22 million units, showing a significant gap.

EDA giant's strategic shift! Reports suggest Synopsys (SNPS.US) is halting the development of key wafer manufacturing software, redirecting resources to high-profit businesses like AI chip design. Multiple insiders revealed that American chip automation design (EDA) giant Synopsys plans to stop providing a set of manufacturing process control software widely used by global semiconductor manufacturers, aiming to redirect resources to higher-margin businesses such as artificial intelligence (AI) chip design. Insiders stated that in April and May of this year, Synopsys had notified more than ten semiconductor manufacturers, including Samsung Electronics, SK Hynix, Kioxia, and Qorvo (QRVO.US), that it would implement a "End of Life (EOL)" plan for related products. This means that Synopsys will no longer release new versions of this software and will only fulfill existing maintenance obligations. This move by Synopsys highlights the changing landscape of the semiconductor software industry. Software vendors are increasing their investment in AI design technology, while some semiconductor manufacturers are also increasingly inclined to develop manufacturing software independently $10 billion for the largest acquisition in history: Vertex Pharmaceuticals (VRTX.US) acquires Crinetics (CRNX.US) at a 100% premium, entering the endocrine field. Vertex Pharmaceuticals has agreed to acquire Crinetics for $10 billion in cash, marking the largest transaction in Vertex's history, aimed at expanding its business into the field of endocrinology. The acquisition price of $85 per share represents a 102% premium over Crinetics' closing price on Monday. Crinetics' core product is a daily medication called Palsonify, used to treat a rare pituitary disease. The company is also developing a therapy for a genetic disorder known as congenital adrenal hyperplasia. Vertex Pharmaceuticals stated that these drugs could provide over $5 billion in annual revenue at their peak. As of the time of writing, Vertex Pharmaceuticals fell nearly 1% in pre-market trading on Tuesday, while Crinetics surged nearly 99%.

Oil price fluctuations bring excess profits! Shell (SHEL.US) Q2 trading business becomes a "money printing machine," hedging production losses. When Qatar's gas plants were halted due to conflict, leading to a nearly 30% drop in overall gas production compared to the first quarter, Shell's trading division delivered an impressive performance. The London energy giant's second-quarter earnings outlook update released on Tuesday showed that oil trading profits remained on par with a strong first quarter, while gas trading performance was "significantly higher." Against the backdrop of a substantial decline in production, the outstanding performance of the trading business laid a solid profit foundation for the formal financial report to be released on July 30. As of the time of writing, Shell rose over 2% in pre-market trading on Tuesday