The AI trade 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 of the AI boom will ultimately be. Memory chip maker Micron’s blockbuster earnings reinforced the feverish demand for computing resources, but it also led investors to question whether AI fabrication was becoming too expensive for the hyperscalers funding it. The tech-heavy Nasdaq Composite fell 4.6% for the week, while the S&P 500 lost 1.95%. The Dow Jones Industrial Average bucked the trend, rising 0.6 percent, as lower oil prices benefited economically sensitive names and the shift away from artificial intelligence boosted healthcare stocks. Here’s a closer look at what’s moving the market this week. Micron revives AI trade – Semiconductor stocks remained under pressure on Tuesday after a sharp sell-off in South Korea’s Kospi Index spilled over onto Wall Street. Shares of Korean memory giants Samsung and SK Hynix fell overnight, pulling AI shares lower on Wall Street and raising concerns that the chip business is finally moving too far, too fast. Micron fell roughly 13% on Tuesday alone, while the Nasdaq Composite fell 2.2%. Those fears were eased Wednesday evening when Micron announced its earnings. The company delivered a blockbuster quarter, more than quadrupling its revenue from a year ago, and issued guidance for the current quarter well above Wall Street’s expectations. Micron also announced 16 long-term supply agreements covering data center operators, automakers and other customers; This gives investors more confidence that the memory upgrade will take years to come. In contrast, Micron rose 16% on Thursday, beating its peers in the memory and storage complex. This includes chipmakers SanDisk and Western Digital, as well as companies that make the equipment used to make chips, such as Applied Materials and Lam Research. The report reinforced one of Jim Cramer’s biggest themes in this market: Companies facing a shortage of AI-related products continue to benefit from extraordinary demand and pricing power, boosting profits. The excitement has spread to Club conglomerate Corning, whose fiber optic products are increasingly critical for AI data centers. Shares climbed to new record highs on Thursday, causing us to cut a small portion of our position and realize a gain of approximately 160% on shares purchased in October 2025. The stock also had a strong day on Wednesday, for reasons we can’t fully explain. We remain optimistic about Corning’s long-term prospects, but our discipline is to take some profits when a stock’s rally exceeds its current key levels. Interest in many chip stocks didn’t last long. A basket of chip stocks fell more than 5% on Friday after reports that OpenAI was considering delaying its initial public offering until next year raised new questions about the durability of financing for the AI infrastructure boom. Investors worried that delaying one of the market’s most anticipated IPOs would make it harder for AI companies to finance big spending plans. Micron fell 6.7% on Friday and eventually finished the week down 0.15%; This summarizes the volatility of the week. The broader semiconductor trade worsened further; Nvidia, Broadcom, Intel and Arm club names finished the week down 8.6%, 12.3%, 4.2% and 23.9%, respectively. Hyperscalers hit brick wall If Micron’s earnings show who’s gaining from the AI boom, Apple has highlighted who’s paying for it. Shares of the iPhone maker tumbled 6.1% on Thursday after the company announced price increases on several MacBook and iPad models, citing rising memory and storage costs. This was Apple’s first official move to pass on higher component prices to consumers after CEO Tim Cook acknowledged last week that the company could no longer afford the increases. Apple wasn’t alone. Every member of the “Magnificent Seven” finished the week in the red as investors continued to steer clear of companies funding AI development and the businesses that deliver it. That’s exactly what Jim discussed in his column on Sunday: Hyperscalers have hit a hardware bottleneck. Amazon, Alphabet, Microsoft and Meta have the financial resources to continue investing aggressively in AI, but the surge in demand has created supply shortages that have sharply raised the cost of inputs like memory. Earlier this year, Microsoft and Meta noted that rising component costs were contributing to a surge in AI capital spending, while Apple’s price increases showed that even the world’s most valuable consumer electronics company is not immune. Meanwhile, companies supplying these critical components have also been among the market’s biggest winners. For now, Jim thinks investors are better off owning suppliers rather than buyers; However, our long-term investment horizon prevents us from taking and naming names. However, until the imbalance between supply and demand diminishes, companies selling the picks and shovels of the AI boom appear to be better positioned than companies writing checks. Falling oil helps inflation chart While technology is struggling, falling oil prices have supported some economically sensitive stocks. The oil market barely flinched even after President Donald Trump accused Iran on Friday of violating the ceasefire agreement by launching attack drones at commercial ships in the Strait of Hormuz. U.S. benchmark West Texas Intermediate crude closed Friday at around $69 a barrel, while international benchmark Brent hovered around $72, erasing almost all of the gains sparked by the conflict earlier this year. Traders last week focused on signs that tanker traffic was returning to the vital shipping route for global energy and chemicals supplies. Of course, there was a wrinkle after the market closed on Friday; The US military announced that it launched an attack on Iran in response to “unwarranted aggression by Iranian forces against commercial shipping”. Time will tell how the market will digest this news next week. But last week, at least, falling oil prices helped ease inflation concerns, causing Treasury yields to fall and easing fears that the Federal Reserve might need to raise interest rates more than once later this year. This gave rise to sectors sensitive to economic growth, including industrial, financial and transportation stocks. Gains in Sherwin-Williams, Caterpillar and Home Depot helped the Dow Jones Industrial Average cling to modest weekly gains even as the tech-heavy Nasdaq remained under pressure. Healthcare stocks such as Club name Johnson & Johnson and UnitedHealth were another source of strength for the blue-chip index. J&J finished Friday with a record close, as did two of our other healthcare stocks in Eli Lilly and Cardinal Health. The oil environment made last week’s earnings for FedEx and FedEx Freight particularly important as both companies were spending so much on fuel and had imposed surcharges to offset the recent rise. Slowing economic activity due to the energy crisis poses a risk for them. FedEx on Tuesday night initially sold off after some issued disappointing guidance, but we believe investors missed the bigger story in the noisy print. While the company beat Wall Street’s expectations for both revenue and earnings, management noted continued momentum in high-margin businesses such as healthcare, aerospace, automotive and AI-related data center logistics. We took advantage of the post-earnings weakness to improve our position during Wednesday’s session. A report was recently published that FedEx Freight reported on Thursday night. While the quarter itself contained a few surprises, management struck an encouraging tone in the freight market, saying demand was starting to stabilize after a multi-year decline. The stock’s pullback following earnings created an opportunity for us to purchase some additional shares of FedEx Freight. (See here for a complete list of stocks in Jim Cramer’s Charitable Trust.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. 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