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Matt Phillips & Luke Kawa

Memory, optical, and AI-construction stocks dive as embattled SaaS stocks rebound

Memory stocks sank on Monday, continuing a sell-off that began last week with new details about a potentially more memory-efficient AI algorithm from Google Research.

Western Digital, Micron, Seagate Technology Holdings, and retail favorite Sandisk all tumbled.

Industry publication Wccftech flagged that some memory chip prices have seen a “significant drop” recently across multiple US retailers.

A new, upbeat initiation for Seagate by JPMorgan analysts — they rated it “overweight,” basically a buy, on “opportunity for significant upside” — couldn’t help Seagate shake off the slump in the broader data center trade.

Optical stocks — recent high-flyers — also got slammed, taking down Applied Optoelectronics, Corning, Lumentum, Coherent, and Ciena Corp. . The group may also under particular pressure in light of reports that Samsung is entering the silicon photonics market.

AI construction trades like Emcor, Vertiv Holdings, and Sterling Infrastructure also sank.

Meanwhile, traders seemed to be scurrying back to securely profitable software-as-a-service (SaaS) and cybersecurity stocks as a place to wait out the market mayhem.

ServiceNow, Zscaler, CrowdStrike, Salesforce, and Atlassian were all solidly in the green in midday training.

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Luke Kawa

Meta rallies after being named a “top pick” by Morgan Stanley

Meta is off to a strong start to the week after being named a new “top pick” of Morgan Stanley’s internet analysts.

Their case: the social media giant is cheap and commands an ever-increasing amount of eyeballs, which it’ll leverage to make money from its massive AI capex through nascent opportunities like agentic shopping and assistants.

“META sentiment has troughed due to GenAI ROIC and long-term positioning fears, and more recently macro ad market and regulatory question marks,” wrote analyst Brian Nowak. “In all, META now trades at ~15X our ’27 $36 EPS, 1 standard deviation below the long-term average, which creates a strong buying opportunity, in our view.”

Reported job cuts would also be “a bullish development” that boosts earnings, he added.

Even so, Nowak trimmed his price target on the stock to $775 from $825, which still represents upside of about 50%.

The hyperscalers have come under persistent pressure as investors remain reticent to bet that this capex binge will have a happy ending. Per The New York Times, Meta recently delayed the launch of its new model because of performance issues.

(That being said, the company’s latest earnings report did show that its ability to use AI tools to grow its top line remains impressive, even if its models aren’t best in class.)

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Matt Phillips

American aluminum stocks rip following strikes against Gulf’s giant smelters

Aluminum stocks soared Monday after Iran attacked major smelting operations in the Gulf region over the weekend.

Alcoa and Century Aluminum both surged Monday, after strikes Saturday hit aluminum plants in Bahrain and the United Arab Emirates. New York aluminum futures were up about 4% shortly after 11 a.m. ET.

Bloomberg reports that the Gulf is the source of roughly 9% of the world’s aluminum supply, which was already imperiled by the closure of the Strait of Hormuz.

Iran’s Revolutionary Guard Corps said the combined drone and missile attacks on the plants were justified by the aluminum producers’ links to the US military and aerospace industries in the region.

Producing aluminum is highly energy-intensive, and the Gulf has emerged as a center of the industry in recent years due to its energy assets. Emirates Global Aluminum, for example, is one of the world’s largest producers of the lightweight metal.

The attacks on the plants only add to the upward pressure on prices, as it can take months to restart closed smelters.

Emirates Global Aluminium Says Smelter Site Damaged in Attack

Emirates Global Aluminium Says Smelter Site Damaged in Attack

Bloomberg reports that the Gulf is the source of roughly 9% of the world’s aluminum supply, which was already imperiled by the closure of the Strait of Hormuz.

Iran’s Revolutionary Guard Corps said the combined drone and missile attacks on the plants were justified by the aluminum producers’ links to the US military and aerospace industries in the region.

Producing aluminum is highly energy-intensive, and the Gulf has emerged as a center of the industry in recent years due to its energy assets. Emirates Global Aluminum, for example, is one of the world’s largest producers of the lightweight metal.

The attacks on the plants only add to the upward pressure on prices, as it can take months to restart closed smelters.

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Matt Phillips

British government weighs removing Palantir from NHS data systems

Officials in the British government are exploring ways to eject defense, intelligence, and AI software company Palantir Technologies from data systems used by the National Health Service, the government-funded health system.

The Financial Times reports:

“The US company was awarded a seven-year £330mn contract in 2023 to create a data platform that collates health waiting lists, patient information and other sensitive data.

Its role has become an increasing source of controversy, given its ties to the US defence sector and its co-founder and CEO Alex Karp’s vocal support for Donald Trump’s immigration crackdown. MPs, NHS staff and medical trade unions have voiced concerns about Palantir’s suitability for managing data in national health systems.”

While Palantir’s AI software services business — aimed at corporate customers — is a fast-growing business line, the US government remains Palantir’s single largest source of revenue, accounting for $1.9 billion in sales in 2025. That’s almost as much as Palantir’s entire commercial division, which logged $2.1 billion in revenue in 2025.

But the company’s close ties to the US government — including providing services to US agencies such as Immigration and Customs Enforcement amid the Trump administration’s mass deportation program, as well as US intelligence and military services — have created resistance to growth in some other areas.

For instance, Switzerland repeatedly rejected Palantir systems, according to recent reporting from Swiss magazine Republik, after officials there raised concerns about data sovereignty and risks data could be accessed by the US government and intelligence services.

Ministers explore triggering break clause in Palantir’s NHS contract

Ministers explore triggering break clause in Palantir’s NHS contract

“The US company was awarded a seven-year £330mn contract in 2023 to create a data platform that collates health waiting lists, patient information and other sensitive data.

Its role has become an increasing source of controversy, given its ties to the US defence sector and its co-founder and CEO Alex Karp’s vocal support for Donald Trump’s immigration crackdown. MPs, NHS staff and medical trade unions have voiced concerns about Palantir’s suitability for managing data in national health systems.”

While Palantir’s AI software services business — aimed at corporate customers — is a fast-growing business line, the US government remains Palantir’s single largest source of revenue, accounting for $1.9 billion in sales in 2025. That’s almost as much as Palantir’s entire commercial division, which logged $2.1 billion in revenue in 2025.

But the company’s close ties to the US government — including providing services to US agencies such as Immigration and Customs Enforcement amid the Trump administration’s mass deportation program, as well as US intelligence and military services — have created resistance to growth in some other areas.

For instance, Switzerland repeatedly rejected Palantir systems, according to recent reporting from Swiss magazine Republik, after officials there raised concerns about data sovereignty and risks data could be accessed by the US government and intelligence services.

Luke Kawa, David Crowther
5h
War and AI doubts have fueled an unprecedented divergence between stock prices and earnings estimates

The S&P 500 has never been down this much when earnings estimates have risen by this much, based on data going back to Q2 1990.

A protester waves the upside down U.S. flag during the
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Max Knoblauch

Alaska Air lowers its Q1 profit forecast due to surging fuel costs

Alaska Air ticked down in premarket trading on Monday, following the carrier’s announcement that it has lowered its first-quarter profit guidance.

The airline now expects an adjusted loss per share of between $1.50 and $2 in Q1, deeper than its prior guidance range of a $0.50 to $1.50 loss per share.

Fueling the update is, what else, fuel costs. Alaska Air says that the refining margins for its cheapest jet fuel — sourced from Singapore and representing about 20% of overall supply — have spiked 400% since February, from an average of $0.45 per gallon to about $2.25 per gallon. Jet fuel refining margins have surged industrywide to 20-year highs amid the war in Iran, which in turn is sending fares higher.

Alaska said it’s seeing “encouraging revenue trends” heading into the peak summer travel season, despite severe flooding in Hawaii and reduced demand to Puerto Vallarta due to increased cartel violence.

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