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AI’s Second Wave: From Silicon to Infrastructure · The SPY Trader

• 0:00
  Welcome to another edition of Spy Trader , the podcast where we keep your portfolio bright even when the charts look a little cloudy .
• 0:07
  I am your host , Sunny SideUp , and it is 2:30 pm on Thursday , June 25th , 2026 , here in sunny California .
• 0:17
  We are halfway through a wild week , and the markets are giving us quite a bit to digest as we wrap up today's session .
• 0:24
  It was a classic tale of two cities today .
• 0:27
  We saw a mixed finish with the Dow Jones Industrial Average rising pointonefour percent to finish at 51,920.62 .
• 0:36
  On the other hand , the S&P 500 was essentially flat , slipping just pointzeroone percent , while the Nasdaq Composite took the biggest hit , falling nearly half a percent to 25,358.60 .
• 0:51
  The big story is this twospeed economy we are living in .
• 0:56
  While your favorite software giants might be feeling the heat , the folks building the physical world are having a party .
• 1:02
  Let's look at the news items driving these moves .
• 1:05
  The big cloud over the market today was the May Personal Consumption Expenditures data , or PCE .
• 1:12
  Inflation spiked to 4.1 percent , a threeyear high .
• 1:16
  We can point the finger at rising energy costs coming out of the Middle East and those persistent disruptions near the Strait of Hormuz .
• 1:25
  Because of this , the new Fed Chair , Kevin Warsh , is keeping the market on its toes with a hawkish pause .
• 1:31
  While rates stayed between 3.50 and 3.75 percent last week , the signal is clear : a hike is coming later this year .
• 1:40
  This has pushed the 10Year Treasury Yield to 4.39 percent , which is making highgrowth names like Palantir very nervous , as it hit a 52week low today .
• 1:51
  On the company side , we saw some massive moves .
• 1:55
  Micron Technology was the absolute star , surging 16 percent to a record high after a triple beat on earnings , revenue , and guidance .
• 2:03
  It seems the world has an insatiable hunger for AI memory chips .
• 2:07
  Meanwhile , Caterpillar reached a record high of over 1,047 dollars after landing a huge powergrid deal .
• 2:14
  It turns out the AI revolution needs more than just code ; it needs heavy machinery and electricity .
• 2:20
  On the flip side , Apple tumbled 6 percent .
• 2:24
  Why ?
• 2:25
  Well , they are raising prices on MacBooks and iPads to cover hardware costs , and investors are worried customers might just close their wallets .
• 2:34
  Also , a bit of history in the making : Alphabet is set to replace Verizon in the Dow Jones Industrial Average this coming Monday .
• 2:42
  Now for some analysis .
• 2:44
  We are seeing a major rotation .
• 2:46
  Investors are moving out of the Magnificent Seven and into defensive or cyclical sectors like Industrials and Healthcare to hedge against these high tech valuations .
• 2:57
  It is the second wave of AI infrastructure .
• 3:00
  The first wave was all about the chips , but this second wave is about the power and storage needed to run those chips .
• 3:07
  That is why Caterpillar is flying high while consumer tech is struggling .
• 3:12
  So , what should you do with your hardearned money ?
• 3:15
  Here are a few recommendations based on today's action .
• 3:19
  First , look at the second wave of AI infrastructure .
• 3:23
  Consider the Industrial Select Sector SPDR Fund , ticker XLI , or even Caterpillar itself , ticker CAT .
• 3:32
  These companies are in a supercycle of data center builds and have much more reasonable valuations than the big software names .
• 3:40
  Second , if you are worried about sticky inflation , play defense with Healthcare .
• 3:46
  The Health Care Select Sector SPDR Fund , ticker XLV , or a steady name like AbbVie , ticker ABBV , performed well today because people still need healthcare no matter what the Fed does .
• 3:59
  Third , if you want to handle these high interest rates , look at the banks .
• 4:03
  JPMorgan Chase rose 2.7 percent today because higher rates help their margins .
• 4:09
  You might look at the Financial Select Sector SPDR Fund , ticker XLF , for some stability there .
• 4:16
  Finally , for tech exposure , stay picky .
• 4:19
  Use the weakness in the Nasdaq to look at hardware leaders like Micron , ticker MU , or the VanEck Semiconductor ETF , ticker SMH .
• 4:29
  The demand for hardware is real and backed by billions in preorders .
• 4:33
  Overall , focus on businesstobusiness infrastructure rather than consumer products for the rest of 2026 .
• 4:41
  Companies that can pass costs to other businesses are winning , while those passing costs to you and me , like Apple , are getting a timeout from investors .
• 4:50
  That is all for this afternoon's update .
• 4:53
  Stay informed , stay relatable , and keep those portfolios sunny .
• 4:58
  I am Sunny SideUp , and this has been Spy Trader .