CNBC Halftime Report
2026-07-29 · Hosted by Scott Wapner · CNBC
Executive Summary
The Investment Committee debated whether the semiconductor selloff — triggered by an overnight crash in South Korean markets and now down as much as 25% average drawdown across SMH components — represents a healthy deleveraging or a warning sign for the broader AI trade. Joe Terranova argued it's pure positioning unwind, noting 12% of the S&P 500 hit new 52-week highs Tuesday in decidedly non-tech names like JPMorgan, Visa, and Best Buy, and that he does not believe the CapEx (capital spending) cycle is over given hyperscalers are expected to spend as much as $1.6 trillion next year. Josh Brown called it "the bull market you'd pray for," pointing out that every SMH component is now below its 50-day moving average with an average RSI of 39, yet the broader market remains within a percent or two of record highs — a sign the pain is contained rather than systemic.
Key Stories & Changes
1. Semiconductor Selloff: Deleveraging or Warning Sign?
SMH-tracked semiconductor sector down as much as 3.8% intraday before paring losses; every SMH component now trades below its 50-day moving average
Average 52-week drawdown across SMH components is 30%; average RSI has fallen to 39 from euphoric levels in June
Triggered by a South Korea market crash overnight tied to unwinding leverage in memory/AI trades
Joe Terranova: hyperscalers spent ~$800 billion this year and could go to $1.6 trillion next year; does not see the CapEx cycle as over
Stephanie Link initiated a new position in Nvidia (18x earnings, cheapest since 2019) and added to Micron after its 30% drop; also holds Broadcom (21x vs. 28x long-term average, high of 45x)
2. Apple Nears $5 Trillion, Becomes the "Anti-CapEx" Trade
Stock approaching its highest valuation of the iPhone era, trading at 35 times earnings
Reports Thursday after the close; estimate of $1.89 EPS on $108.9 billion revenue
Only 62% of analysts have a buy rating, with a 12-month price target of $323 against a $339 share price — unusually tepid for a mega-cap at all-time highs
KeyBank reiterated an underweight rating with a $250 price target, citing pressure on the iPhone upgrade cycle
Josh Brown: Apple offers managers "reprieve" from AI CapEx uncertainty while still offering a hardware-cycle growth story ahead of the iPhone 18 and new CEO John Ternus taking over in September
3. Boeing Beats on Cash Flow, Reaffirms Guidance
Wider-than-expected net loss for Q2, including a $280 million charge tied to new Air Force One production
Free cash flow of $631 million, beating the street's expectation of negative free cash flow
Reaffirmed full-year free cash flow guidance of $1-3 billion; CEO Kelly Ortberg said uncertainty around production rates and certification is narrowing
Defense segment revenue up 13% year-over-year, still a drag but improving
Stephanie Link: management reiterated a $10 billion free-cash-flow target over the next couple of years, calling it "super important"
4. Corning Plunges on Weak Guidance
Stock fell sharply on weaker-than-expected revenue guidance, breaking below its 200-day moving average
Down nearly 60% from its June high of $271, despite still being up 38% year-to-date
Joe Terranova: disappointing given Corning's strong relationships with AI-fiber customers like Meta; recommends not adding to the position until it "proves itself" in a future report
5. Union Pacific-Norfolk Southern Merger Progressing
Adding new commitments to win regulator approval; deal approval not expected until 2027
Canadian National's endorsement last week seen as a positive signal for winning over other rail regulators
Stephanie Link holds Union Pacific, calls underlying fundamentals "really strong"
6. IBM and Software Names in Focus
Stephanie Link added to her IBM position after the stock fell 25% on disappointing pre-announced guidance, calling the drop overdone relative to the modest guidance cuts (total revenue growth trimmed to 4-5% from 5%)
Stock now trades at 18x forward estimates, down from 26x
CrowdStrike initiated as a buy with a $230-350 price target range across analysts; up 55% year-to-date after a 4-for-1 split
Joe Terranova cautioned the software rotation (Palo Alto, Fortinet, CrowdStrike rallying while Oracle/Adobe/Salesforce lag) reflects repositioning, not a fundamental shift
Trends Identified
1. Market Breadth Is Absorbing the Semiconductor Pain
Unlike prior narrow-leadership bubbles, strategists noted the broader market can absorb a severe semiconductor drawdown because strength elsewhere (financials, industrials, healthcare) is genuinely broad-based, with earnings growth across sectors far above the historical 5-7% average — a dynamic Josh Brown called "exactly the description of the bull market you would ask for."
2. AI Beneficiaries Beyond Tech Are Emerging as a New Earnings Story
Josh Brown highlighted a growing class of non-technology companies (e.g., insurer Allstate) citing AI-driven cost savings and productivity gains directly in earnings calls, suggesting the AI investment thesis may be validated by broad corporate profit gains rather than concentrated in chipmakers alone.
3. Hyperscaler Earnings Fatigue Is Setting In
Joe Terranova noted that hyperscalers now face a bar where merely beating estimates isn't enough — they must exceed even the highest "whisper numbers," and that 60-80% growth rates cannot be sustained indefinitely, creating built-in disappointment risk even for genuinely strong results.
4. Apple Is Becoming the De Facto Tech Safe Haven
As doubts swirl around hyperscaler CapEx and OpenAI's financial durability, large-cap and growth managers are rotating into Apple as a lower-uncertainty way to maintain tech exposure, a dynamic reinforced by its hardware cycle and lack of heavy AI infrastructure spending. ---
Sentiment Analysis
Overall Market Sentiment: Resiliently Bullish
Despite acute semiconductor weakness, the committee largely framed the broader market as healthy, with strong breadth and earnings supporting continued gains.
Risk Factors Highlighted
Semiconductor deleveraging spillover: A South Korea-driven crash spilled into US chip names; further unwind could pressure the broader market if it worsens.
Hyperscaler earnings fatigue: Rising bar for "beat and exceed the whisper number" raises the risk of poor price reactions even to genuinely strong results this week (Microsoft, Meta, Apple).
Apple valuation risk: Trading at 35x earnings with only 62% analyst buy ratings and a price target below the current share price, some analysts (KeyBank) see meaningful downside.
CapEx guidance shock: Meta's expected CapEx could rise toward $250 billion next year, which Stephanie Link warned "is not going to go well for the stock" if realized.
Corning's credibility gap: A weak guide despite AI-fiber tailwinds suggests even "picks-and-shovels" AI plays aren't immune to disappointment.
Rail merger regulatory risk: Union Pacific-Norfolk Southern approval isn't expected until 2027, leaving prolonged uncertainty.
SpaceX earnings and lockup volatility: Implied volatility of 122% ahead of Tuesday earnings and a share lockup expiration two days later could produce outsized swings.
This episode was covered in today's [The Market Signal — 2026-07-29](https://marketsignal.beehiiv.com/p/the-market-signal-2026-07-29), a cross-source synthesis of multiple podcast reports.