CNBC The Exchange
2026-08-07 · Hosted by Kelly Evans · CNBC
Executive Summary
The Exchange opened with a deep dive into memory-stock volatility: Susquehanna's Mehdi Hosseini said Sandisk and Western Digital are going through a "normalization" process where elevated margins are peaking but the market doesn't yet know where they'll settle, and pushed back on reports that Nvidia is reducing memory in its next-gen Rubin Ultra chip, arguing the networking and rack-level engineering challenges are the bigger bottleneck. Manulife's Matt Miskin said he's rotating toward "value" tech like Microsoft and software broadly, calling 2026 potentially "the greatest rotating market" of his career, while trimming semiconductor and memory exposure given hyperscalers' rising cost of capital.
Key Stories & Changes
1. Memory Stock Whipsaw: Sandisk and Western Digital
Sandisk fell as much as 10% after earnings before settling down about 4%; Western Digital was down as much as 16% before paring losses to about 10%
Susquehanna's Mehdi Hosseini: neither company missed on earnings or outlook, but "whisper numbers" (unofficial, higher expectations) were too high to clear
Hosseini reiterated a call from a prior appearance that late summer would offer a better entry point for memory names as margin "normalization" plays out
His Sandisk price target was revised to $27.45 (previously as high as $3,000/adjusted figures cited on air were corrected mid-segment); he does not expect gross margins to stay at 85% but also doesn't expect a collapse to 50-60%, seeing normalization more likely in the 75-80% range
Sandisk's analyst day is next Thursday and expected to offer more clarity on normalized margins
2. Nvidia's Rubin Ultra Memory Report Disputed
The Information reported Nvidia is weighing a design change to reduce memory in its next-gen Rubin Ultra chip to stay on production schedule amid an HBM (high-bandwidth memory) shortage
Hosseini pushed back, arguing the bigger issue is a "networking wall" and rack-level optimization challenges at ODMs like Foxconn, not a deliberate memory de-specing decision
He noted the industry transitions to new AI platforms roughly every 18-24 months, and that each transition requires significant new engineering work that takes multiple quarters to resolve
3. Value Rotation in Tech: Matt Miskin's Case for Software Over Semis
Manulife/John Hancock's Matt Miskin favors "value" tech names like Microsoft, calling software newly attractive after a year of underperformance and citing PE ratios under 10x for parts of the semiconductor space as evidence of a broader valuation reset
He is trimming semiconductor/memory exposure, citing hyperscalers' rising cost of capital (having already issued equity and increasing debt issuance) as a risk to their AI capex "blank checkbook"
Called 2026 potentially "the greatest rotating market" of his career; also favors industrials, citing the ISM manufacturing index reading of 55 this week showing broad-based strength in new orders and employment
Biggest risk flagged: a Fed that hikes more than once this year, which would drain liquidity; noted Neel Kashkari and Brian Moynihan have both floated the possibility of three hikes
4. Google's Compute Allocation "Fork in the Road"
Bloomberg's Mackenzie Sigalos reported Google researchers are frustrated they can't get enough TPU capacity to compete at the AI frontier while Google Cloud commits that same infrastructure to outside customers, including Anthropic, a direct Gemini rival
A source said Alphabet allocates TPUs systematically years in advance across research and cloud, though capacity can shift within days as priorities change; CEO Sundar Pichai has said on consecutive earnings calls that "DeepMind comes first"
Alphabet returned to the bond market for another $25 billion, on top of $50 billion in debt already raised this year and $85 billion in equity, after posting negative free cash flow (cash left after running and investing in the business) last quarter and pausing its share buyback
Google Cloud posted 82% year-over-year growth in both backlog and booked revenue, cited as strong evidence of AI-spending ROI
Sam Lessin (Slow Ventures): argued Google can and should do both cloud and frontier research, framing the robust external compute market as a valuable "put option" that lowers the cost of capital for hyperscalers generally
5. Labor Market: Soft ADP Print and the "Five Postings Per Hire" Problem
ADP showed private payrolls grew just 44,000 in July, below expectations
Revelio Labs' Evan Sioutas: it now takes five job postings to produce one hire, versus two pre-ChatGPT (dated to October 2022); the "yield" on a job posting fell from 50% to 20%
AI-exposed roles (financial analysts, coders) are down roughly 43%, with junior-level roles hit harder than senior roles
Wage growth for job-switchers is running around 7% year-over-year (ADP/Bank of America Institute data), suggesting continued labor-market tightness despite soft headline hiring
Friday's jobs report was projected around 79,000, roughly in line with consensus
6. Panama Canal Emerges as a New Shipping Chokepoint
New weight restrictions take effect next week ahead of an expected "super El Niño," with canal traffic already up 12% (BIMCO) amid Middle East disruptions
Fuel-product transits (diesel, gas, jet cargo) are up 40%; LNG transits up 74%; auction prices for transit slots have hit $2.5-3.7 million, versus a typical ~$100,000
Rising diversions around the Cape of Good Hope add roughly three weeks to transit time, requiring more vessels and raising freight costs
Tanker stocks (Scorpio Tankers, International Seaways, TK Tankers, Ardmore) are all up more than 50% year-to-date
7. Footwear Fragmentation: On Running Stands Out
Morgan Stanley's intern survey (530 respondents) showed On Running jumped to a #2 brand ranking, improving five times more than any other surveyed brand
Nike hit a survey low, its largest share decline in the survey, despite management claiming its North American turnaround is furthest along
Lululemon also hit a survey low, its third consecutive year of share declines
Morgan Stanley's Alex Straton flagged fashion-adjacent entrants (Urban Outfitters, Free People, American Eagle's Offline brand) as a bigger competitive threat to legacy athletic brands than niche performance players like Alo or Vuori
Trends Identified
1. Memory Margin "Normalization" Is a Multi-Quarter Process, Not a One-Time Reset
Analysts framed the current memory-stock volatility not as a bust but as the market working through where elevated post-shortage margins will ultimately settle, with clarity expected only after upcoming analyst days — a nuance that separates this cycle from a simple boom-bust narrative.
2. AI Compute Allocation Is Becoming an Internal Corporate Fault Line
Google's cloud-versus-research tension exemplifies a broader dynamic across hyperscalers: as external demand for compute becomes a legitimate, monetizable business, internal research teams increasingly compete with paying customers for the same scarce resource, creating retention and morale risk even at well-resourced companies.
3. Value Investing Is Making a Genuine Comeback Within Tech
Matt Miskin's software-over-semis rotation call, paired with cheap semiconductor valuations and a compressed style gap between growth and value, suggests a structural shift is underway rather than a temporary rotation — though he cautions this depends on hyperscalers' capex discipline holding.
4. AI Is Reshaping Hiring Mechanics Before It Reshapes Headline Job Counts
The five-postings-per-hire data point suggests AI's labor-market impact is currently showing up in hiring *process* efficiency (resume writing, application submission) and in a divide between junior and senior AI-exposed roles, rather than in an overall hiring collapse — a more nuanced read than either "AI is taking jobs" or "AI isn't affecting jobs."
5. Shipping Chokepoints Are Multiplying Beyond the Middle East
The emerging Panama Canal congestion, driven by El Niño-related drought restrictions and diverted Middle East-related traffic, shows that resolving the Strait of Hormuz situation would not fully resolve global shipping and fuel-cost pressures. ---
Sentiment Analysis
Overall Market Sentiment: Mixed, Rotational
Guests broadly agreed the market is in a rotation phase — away from momentum semis and memory, toward value tech, software, and industrials — without a strongly bullish or bearish overall tone.
Risk Factors Highlighted
Memory margin uncertainty: Analysts don't yet know where "normalized" margins for Sandisk/Western Digital will settle, creating valuation ambiguity.
Rack-level engineering bottlenecks: Networking and optimization challenges, not just HBM supply, are complicating next-gen AI chip rollouts.
Hyperscaler cost of capital: Rising debt and equity issuance could eventually constrain the "blank checkbook" funding AI capex, pressuring semiconductor demand.
Fed liquidity risk: More than one 2026 rate hike (three floated by some officials) could drain liquidity and pressure the rotation-driven rally.
AI research talent attrition: Compute allocation tension at Google reflects a broader retention risk across AI labs as researchers compete internally for scarce resources.
Panama Canal congestion: New weight restrictions and El Niño-driven disruptions add a second major shipping chokepoint alongside the Strait of Hormuz.
US refining and shipping cost pass-through: Diversions around the Cape of Good Hope add transit time and vessel demand, feeding into broader inflation risk.
Legacy footwear brand erosion: Nike and Lululemon both hit survey lows, with fashion-adjacent entrants creating a broader competitive threat than previously assumed.
This episode was covered in today's [The Market Signal — 2026-08-07](https://marketsignal.beehiiv.com/p/the-market-signal-2026-08-07), a cross-source synthesis of multiple podcast reports.