📊 Market Overview
U.S. index futures are trading higher this morning, led by tech, following a sharp recovery in chip stocks and stabilization in Korean markets. The biggest driver is a one-two punch of soft inflation data — yesterday’s CPI (Consumer Price Index) was followed today by a weaker-than-expected PPI (Producer Price Index), reinforcing the idea that price pressures are fading. The number to watch today: the 10-year Treasury yield sitting around 4.60% — if it drops meaningfully, it signals the bond market believes rate cuts are closer.
📊 Market Snapshot
Inflation is cooling at every level of the supply chain, and the companies building AI infrastructure are backing it up with real orders — not just hype.
📈 The Big Picture
June’s PPI came in well below expectations: the headline index fell 0.3% month-over-month (analysts expected no change), and the annual rate landed at 5.5% versus a 6.2% forecast. Core PPI — which strips out volatile food and energy — rose just 0.2% monthly and 4.7% annually, both softer than predicted. This means price pressures are weakening not just for consumers but earlier in the production chain too, which lowers the odds of another rate hike and keeps a September move on the table.
Meanwhile, the real story isn’t just friendlier inflation — it’s what chip equipment companies are telling us. ASML Holdings (ASML) raised its full-year sales forecast to €43–45 billion and announced massive capacity expansions for its lithography machines through 2028. That means customers aren’t just expressing interest — they’re placing binding orders for the equipment that makes every advanced chip. For your portfolio, this confirms that AI spending is durable and expanding, not a passing trend.
📖 Term of the Day
PPI (Producer Price Index): A measure of the average change in prices that manufacturers and producers receive for their goods — think of it as inflation before it reaches your shopping cart. Why you care today: June’s PPI came in much softer than expected, reinforcing that inflation is cooling even at the factory level, which makes future interest rate cuts more likely.
💼 Watchlist: 3 Stocks to Know Today
ASML Holdings (ASML) — “The Capacity Builder”
ASML reported quarterly revenue of €9.3 billion (versus €8.9 billion expected), a 54% gross margin, and raised its full-year forecast. The company is expanding EUV machine capacity by roughly 30% for 2027 and exploring even more for 2028 — a clear signal that AI chip demand is accelerating.
Aehr Test Systems (AEHR) — “The Breakout Story”
Quarterly bookings exploded to $60.7 million, up from $11.1 million a year ago, and the company’s backlog crossed $100 million. AEHR now expects $130–150 million in revenue for fiscal 2027 — roughly 160–200% growth — driven by a major AI customer shifting to wafer-level testing.
Intel (INTC) — “The Cautious Comeback”
Reports suggest Intel’s 18A manufacturing process has improved yields to roughly 85%, up from about 65% last quarter, and the company may produce 80–90% of its Nova Lake chips in-house instead of outsourcing to Taiwan Semiconductor (TSM). This is promising but unconfirmed — the market still needs official proof before fully pricing in a turnaround.
💬 Esther’s Take
