Top 9 AI Stocks For July

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☕️ GM Munchers! I spent all day yesterday travelling, and my flight had the same energy as the market: a smooth start, sudden terror in the middle, and a landing that made everyone clap out of pure relief.

On today’s menu:

• 📈 Stocks Dipped, Then Shrugged. Classic.

• 🏦 The Fed Spoke, And It Said The Quiet Part Out Loud

• 🍿 Tasty Movers & Shakers

• 💄 Estée Lauder: Falling Knife Or Hidden Bargain?

• 🥇 Gold Is Officially Negative For The Year

Yesterday’s numbers:

BREAKING NEWS

📈 Stocks Dipped, Then Shrugged. Classic.

Here we go again. The market opened scared yesterday morning after Trump declared the Iran ceasefire "over," and stocks fell right out of the gate. But by the closing bell? Most of the losses had vanished. The Dow finished down about 1% but the S&P 500 barely budged and the Nasdaq actually turned green. That’s a remarkable comeback from a morning that looked ugly.

This is the pattern we keep telling you about. Traders have nicknamed it the "TACO trade," and the market has basically decided the Iran drama is background noise. It gets scared for a few hours, then remembers it has seen this rerun a dozen times and buys the dip anyway.

But here is the one place the fear stuck:

• 🛢️ Oil did not shrug. Crude spiked, with Brent briefly touching $80 before settling around $78. Iran sits next to the world's most important oil highway, so any threat there keeps energy prices jumpy no matter how calm stocks stay. Trump even posted that things will get "much worse" for Iran if ships get hit again.

Why the calm might not last: The reason stocks kept their cool is simple. Everyone remembers that the last few Iran scares blew over fast, so nobody wanted to be the sucker who panic-sold right before the bounce. But that oil spike is the crack in the calm. If crude keeps climbing, it stops being a war story and starts being an everybody story, because pricey oil sneaks into gas, groceries, and shipping.

The Munch Take: The market has learned to tune out the war, and honestly, the track record says that is not crazy. But don’t confuse "stocks stayed calm" with "nothing happened." Oil at $80 is the tell. That is the market quietly admitting this could still get expensive, even while it pretends to yawn. Watch the oil, not the headlines. The scary tweets come and go, but the price at the pump is what actually shows up in your life.

🏦 The Fed Spoke, And It Said The Quiet Part Out Loud: AI Is Making Things Pricier

The Federal Reserve, the group that sets interest rates for the whole country, released the notes from its last meeting. The big takeaway? For the first time, the Fed pointed a finger at AI as one reason prices are climbing.

Here is what you need to know:

• 🤖 AI is now part of the inflation story. All that spending on chips, data centers, and electricity to power AI is pushing up costs, and those costs are landing in the prices you pay. The Fed named it right alongside tariffs and the oil situation.

• ⏸️ Rates are stuck, and a cut is not close. The Fed left rates right where they have been all year and gave zero hints that relief is coming soon. A few members even want to raise rates, not lower them.

• 🤷 The big irony. Some Fed members think AI will eventually make things cheaper by making workers faster. But they admitted that payoff is years away, while the higher prices are here right now.

What this means for the market: Higher rates for longer is the single biggest threat to the sky-high AI stock prices everyone has been cheering all year. It is a weird loop when you think about it. The same AI boom lifting the market is also helping keep the Fed from cutting rates, and no rate cuts is exactly what could eventually cool the boom off.

The Munch Take: Here is the tangle in plain English. The market desperately wants lower rates, but the thing driving the market higher, AI, is part of why rates are not budging. The economy is basically fighting itself, and the Fed just admitted it out loud. When the referee tells you the game is complicated, do not expect a clean, easy win. Expect choppy, and keep some dry powder ready.

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MARKET OVERVIEW

🍿 Tasty Movers & Shakers

📱 $AVGO Broadcom climbed 4.83% after Apple beefed up its chip partnership with a multiyear deal worth more than $30 billion. When Apple hands you a check that big, the market tends to notice.

🐧 $PENG Penguin Solutions surged 25.13% after earning "Nvidia AI Factory Specialized Partner" status. We have no idea what that title actually means, but slap the word Nvidia on almost anything these days and watch it fly.

💉 $MRNA Moderna slipped 7.48% even after Morgan Stanley raised its price target. A thumbs-up from Wall Street usually helps, so when a stock drops on good news, it tells you folks are nervous about the bigger picture.

🧴 $BBWI Bath & Body Works fell 5.97% on a Goldman Sachs downgrade. The worry is that selling through other stores could steal sales from its own shops, which is the classic trap of competing with yourself. My wife is heartbroken.

🏠 $Z $RKT Zillow sank 1.46% and Rocket lost 3.21% after a judge sent both real estate companies to trial against the FTC. Nothing spooks investors quite like the word "trial," and today they voted with their feet.

STOCK OF THE DAY

💄 Estée Lauder: Falling Knife Or Hidden Bargain?

Estée Lauder, the beauty giant behind Clinique, MAC, and La Mer, just cannot catch a break. The stock dropped again yesterday after the company admitted its big turnaround plan will cost more than expected, now $1.75 billion, up from $1.55 billion. The stock is down 23% this year and a brutal 75% over five years.

Let's peek at the actual numbers, because they tell a mixed story. Over the last twelve months the company technically lost money, about $178 million. But the last two quarters both turned a $162 million profit, so the bleeding may be stopping. It sits on a comfy $3.1 billion in cash, but also carries a hefty pile of debt, roughly two-thirds of the whole company's value. The good news? Its profit margins on each product are still a luxurious 74%. This is a rich business with an expensive problem, not a broke one.

Here is the juicy investor twist. Michael Burry, the "Big Short" legend, once loved this stock so much it became his entire portfolio. Then he quietly sold every share and started betting against AI instead.

The Bull Case (why it could be a bargain):

• 🧴 The brands are still gold. La Mer and Clinique are iconic, and those 74% margins prove people still pay up. Iconic names rarely die, they just nap.

• 🔧 The turnaround is working. Two straight profitable quarters, China actually grew, and management just raised its full-year outlook.

• 💰 The wallet is healthy. With $3.1 billion in cash, the company has plenty of time and money to fix itself.

The Bear Case (why it could keep bleeding):

• 📉 The bill keeps growing. Turnaround costs went up again, and "it costs more than we thought" is never comforting.

• 🏦 The debt is heavy. Owing that much means a lot of cash goes to lenders instead of shareholders.

• 🚪 Smart money left. Burry bailed on his top pick, and Wall Street is stuck on a lukewarm "Hold."

The Munch Take: Warren Buffett has a famous rule that fits perfectly here: "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." That is the whole Estée Lauder debate in one sentence. Nobody doubts the brands are wonderful. The question is whether the price is fair or whether the debt and the slow turnaround make it a value trap wearing designer lipstick. The encouraging part is those two profitable quarters and the cash cushion, which suggest a real business fixing itself, not a melting ice cube. But a falling knife looks like a bargain the entire way down. If you buy here, buy because you believe people will keep splurging on the makeup, not just because a famous name is on sale.

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TRADING SUCCESS

🤑 Thursday Motivation

🚀 Pre-Market Fuel

1. 🤑 Get your free advanced AI engine (Ad)

2. 🇨🇦 Meta just announced plans to invest $10 billion into Canada.

3. 🥇 Gold is officially negative for the year.

4. 👀 Nvidia is now the cheapest it’s been since 2019.

🍪 Munchy Memes

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