AI trading cooled and oil sank. A closer look at Wall Street’s volatile week
Wall Street has spent the week debating who the biggest winners and losers from artificial intelligence development will ultimately be. Memory chipmaker Micron’s earnings boosted demand for computing resources, but also led investors to question whether the AI buildout is too expensive for the hyperscalers it’s financing. The tech-heavy Nasdaq Composite fell 4.6% for the week, while the S&P 500 fell 1.95%. The Dow Jones Industrial Average bucked the trend, up 0.6%, as lower oil prices benefited economy-sensitive names and the AI shift boosted health care stocks. Here’s a closer look at what drove the market this week. Micron reignites AI trade – a day Semiconductor stocks were under pressure Tuesday after a brutal selloff in South Korea’s Kospi Index spilled over into Wall Street. Shares of Korean memory giants Samsung and SK Hynix plunged overnight, dragging down AI stocks on Wall Street and fueling concerns that the chip trade has finally gone too far, too soon. Micron fell nearly 13% on Tuesday alone, while the Nasdaq Composite fell 2.2%. Those fears eased Wednesday evening when Micron reported earnings. The company delivered a blockbuster quarter, quadrupling revenue from a year ago and issuing guidance for the current quarter above Wall Street’s expectations. Micron also announced 16 long-term supply agreements that include data center operators, automakers and other customers, giving investors greater confidence that memory upgrades will continue for years to come. In response, Micron surged 16% on Thursday, topping peers across the memory and storage space. That includes chip makers SanDisk and Western Digital, as well as companies that make the equipment used to build the chips, such as Applied Materials and Lam Research. The report reinforced one of Jim Cramer’s major themes in this market : AI-related companies with product shortages continue to benefit from unusual demand and pricing power, boosting profits. The excitement extended to Club hold Corning, whose fiber-optic products have become critical to AI data centers. The stock rose to new records on Thursday, prompting us to reduce a small portion of our position and realize a gain of nearly 160% on shares purchased in October 2025. The stock also had a strong day on Wednesday for reasons we cannot fully explain. We remain bullish on Corning’s long-term prospects, but our discipline is to take some profit when the stock’s upside appears to outpace current fundamentals. The enthusiasm for many chip stocks did not last. A basket of chip stocks fell more than 5% on Friday after reports that OpenAI is considering delaying its initial public offering until next year raised new questions about the strength of funding for AI infrastructure growth. Investors are worried that postponing one of the market’s most anticipated IPOs could make it harder for AI companies to finance their big investment plans. Micron fell 6.7% on Friday and ended the week down 0.15% – covering the week’s volatility. Broader semiconductor trading fared worse, with Club names Nvidia , Broadcom , Intel , and Arm ending the week down 8.6%, 12.3%, 4.2% and 23.9%, respectively. Hyperscalers hit a brick wall If Micron’s earnings show who’s winning from the AI boom, Apple highlighted who’s paying for it. Shares of the iPhone maker fell 6.1% on Thursday after the company announced price increases for all MacBook and iPad models, citing rising memory and storage costs. It marked Apple’s first official move to pass on higher prices to consumers after CEO Tim Cook admitted last week that the company could no longer accommodate the increase. Apple was not alone. All members of the “Magnificent Seven” ended the week in the red as investors continued to shy away from companies that fund the creation of AI and the businesses that provide it. That’s exactly what Jim argued in his Sunday column : hyperscalers have encountered a hardware bottleneck. Amazon, Alphabet, Microsoft and Meta have the financial resources to continue to invest heavily in artificial intelligence, but the increase in demand has created a shortage of supplies that is driving the cost of inputs like memory very high. Earlier this year, Microsoft and Meta both cited rising component costs as contributing to their massive AI spending, while Apple’s price hikes show that even the world’s most valuable consumer company is not immune. During that time, the companies that provide those key components have become some of the most successful in the market. At the moment, Jim thinks investors are better off owning sellers than buyers – although our long-term investment horizon prevents us from trading in and out of names. Still, until supply and demand become less imbalanced, the companies selling the picks and shovels of the AI boom seem to be in better shape than the companies writing the checks. Oil slump helps inflation picture While technology is struggling, falling oil prices have boosted economically sensitive stocks. Even after President Donald Trump accused Iran on Friday of violating the ceasefire agreement by launching attack drones on commercial vessels in the Strait of Hormuz, the oil market did not change. US standard West Texas Intermediate crude ended Friday at around $69 a barrel, while international benchmark Brent hovered around $72, erasing almost all of the gains caused by the conflict earlier this year. Traders last week instead focused on signs that tanker traffic is returning to a key route for moving global energy and chemicals. Indeed, the wrinkle came after the market closed on Friday, when the US military revealed that it had attacked Iran in response to “unnecessary aggression against commercial transport by Iranian forces.” It remains to be seen how the market will digest that news next week. But last week, at least, lower oil prices helped ease inflation worries, pushed Treasury yields lower and eased fears that the Federal Reserve would need to raise interest rates several times later this year. That gave sectors sensitive to economic growth – including industrials, financials, and travel stocks – higher. Gains at Sherwin-Williams, Caterpillar and Home Depot helped the Dow Jones Industrial Average hold on to modest weekly gains even as the tech-heavy Nasdaq remained under pressure. Health care stocks like Club Name Johnson & Johnson and UnitedHealth were another source of strength for the blue-chip index. IJ & J ended Friday at a record close, as did our two other health care stocks in Eli Lilly and Cardinal Health. The oil backlash made last week’s earnings from FedEx and FedEx Freight more important because both companies spent more on fuel and used more fines to offset recent increases. The decline in economic activity associated with energy shortages is dangerous for them. On Tuesday night, FedEx started to sell off after issuing what some considered disappointing guidance, but we believe investors missed the big story with the loud print. The company exceeded Wall Street’s expectations for both revenue and earnings, while management pointed to continued momentum in high-margin businesses such as healthcare, aerospace, automotive and AI-related data center services. We took advantage of the post-lead weakness to build our position in Wednesday’s session. FedEx Freight recently released a report Thursday night. While the quarter itself contained few surprises, executives were bullish on the commodity market, saying demand was beginning to stabilize after a multi-year slump. The stock’s decline following earnings created an opportunity for us to buy more FedEx Freight shares. (See here for a full list of stocks from Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling stock in his charity portfolio. When Jim talks about a stock on CNBC TV, he waits 72 hours after issuing a trade warning before making a trade. THE PRIVATE INFORMATION OF THE BURNING CLUB IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AND OUR PRIVACY POLICY. NO LEGAL LIABILITY OR OBLIGATION EXISTS, OR IS CREATED, BY YOUR ACCEPTANCE OF ANY INFORMATION PROVIDED BY CONTACTING THE INVESTMENT CLUB. NO PARTICULAR RESULT OR INTEREST IS GUARANTEED.
