Micron's profit surge revives AI. The dollar's just getting started.

Transcript

Tom Buddy, if you thought AI was cooling off, think again. Micron just posted a FIFTEEN-fold profit surge, and the dollar is ripping higher on hawkish Fed vibes. It's a market split right down the middle. Let's get into it.

Marie Good morning and welcome to Investment Flash, London Edition for June twenty-fifth. I'm Marie, joined by Tom and Gerald. Alright, boys, Micron's blowout earnings are the headline, but the real story might be the cratering debasement trade.

Tom Cratering? Marie, that's a strong word. Let's start with the party: Micron's quarterly profit up fifteen hundred percent, no, seriously, fifteen-fold. They're seeing insatiable AI memory demand, and the whole semiconductor complex is catching fire. The SMH ETF is up sixty-six percent this year, and SK Hynix just filed to raise twenty-nine billion dollars in a US listing. That's not caution—that's ALL-IN conviction.

Gerald Sixty-six percent year-to-date, Tom? Come on. The SMH is trading at over forty times trailing earnings. When a stock or ETF is up that much, I start checking my watch. The good news might be priced in, been in the FT for days.

Marie But see, Gerald, the catalysts ARE fresh. Micron's beat isn't just a number—it's a signal that enterprise AI spending is holding up. Plus, the SK Hynix listing is huge. I mean, twenty-nine billion? That's a capital raise that says 'we're building for the next decade.' You don't do that if you think demand peaks this quarter.

Tom Exactly, Marie. This is the kind of news that lifts all boats. Nvidia, AMD, the Korea ETF—all ripping. I'm looking at the SMH, just eight percent from its all-time high, and I'm thinking, new records incoming.

Gerald You sound an awful lot like you did yesterday, Tom, when you were buying the Semiconductor ETF. Up another three percent today, yeah? I half-expect you to start naming your children after these tickers.

Tom Ha! Fair point. But my Accenture call from yesterday is sleeping while semis run wild. Sometimes you just ride the wave, buddy.

Marie Alright, but let's talk about the other side of the coin: the debasement trade is absolutely unwinding. Gold down eight percent this year, silver down twenty-one percent, bitcoin tumbling. The dollar is suddenly the anti-debasement play, up over three percent.

Gerald Now THIS is my favorite chart. The Bloomberg piece pins it on Kevin Warsh—the likely next Fed chair—being a card-carrying hawk. Markets are repricing rate expectations, and that's poison for gold and crypto. I've been saying the dollar had room to run; the DXY could rally another six percent to its fifty-two-week high.

Tom Wait—so you're telling me a guy who isn't even confirmed yet is single-handedly crushing the debasement trade? I find that a little hard to believe, Gerald. Positioning was just crowded.

Marie No, Tom, it's not just him. It's the idea that the Fed might actually tighten again. The whole thesis of buying gold to hedge against currency debasement falls apart if real rates are heading higher. That's structural—it's not just a Warsh bet.

Gerald Oh, it's real. Gold is down five-point-eight percent just this week. The Bloomberg piece literally calls it 'the unraveling.' And you know how much I love when analysts use the word 'unraveling.'

Tom Ha—only Gerald gets a kick out of a thesaurus entry in a selloff.

Marie Alright, but here's the thing: the Mag Seven stumble is actually connected. Yesterday we said 'Mag Seven to Lag Seven,' and today Microsoft is down twenty-two point seven percent year-to-date, Apple is up just eight. The one-decision trade is fracturing.

Tom No way, Marie. That's way too broad. Nvidia is still the AI outlier. And look, the Micron beat directly lifts Nvidia. They're up five percent year-to-date, sure, but they could pop big on this. The Mag Seven isn't dead—it's just narrowing.

Gerald Mate, Tom, even Nvidia is sixteen percent below its high. The rotation out of these mega-caps is real. When the 'one decision' stocks stop being one decision, you get dispersion, and that's where active management earns its fees.

Marie Hold on—I want to push back on the Mag Seven narrative a bit. The WSJ is making a valuation gravity argument, but they're missing the fact that AI capex is still flowing. That money lands somewhere, and the pure-play chip names are the direct beneficiaries. Maybe we should be watching the Mag Seven to see who pivots hardest into AI infrastructure.

Tom That's exactly what I'm saying, Marie! Nvidia's growth narrative is revived. AMD up a hundred thirty-two percent year-to-date—I mean, that's not a stumble, that's a sprint.

Gerald AMD's forward P-E of thirty-nine, Tom. A sprint into what, a brick wall? Fair enough, the earnings are there, but I'd rather buy banks at eleven times earnings. Which, by the way, just aced the Fed stress tests—can we talk about that?

Marie Right, the stress tests. US banks would lose seven hundred billion in a severe crash, but they passed easily. JPMorgan and Bank of America can now boost dividends and buybacks. The bank ETF is at a fifty-two-week high.

Tom And the financials ETF is still down two percent year-to-date, trading at a discount. That's a catch-up trade written all over it. I'd be buying JPMorgan here, four percent year-to-date and cheap.

Gerald I'm with Tom on this one. The stress tests were a layup—pre-released scenarios, gentle assumptions—but it removes a risk overhang. These banks are swimming in capital, and now they can return it. A 14 times forward P-E for JPMorgan is a steal.

Marie Okay, but were the stress tests really that meaningful if everyone knew they'd pass? It's a checkbox exercise. The real test is credit quality if we actually go into a downturn, and with rates high, that's not off the table.

Tom Fair, but the capital return catalyst is real. Now let's switch gears—the robotaxi race is heating up. Uber just wrote half-billion-dollar checks to lock in autonomous fleets, and the stock surged six percent last session.

Marie Wait, Uber is still down eleven percent year-to-date, Tom. The market isn't fully convinced this robotaxi strategy pays off. Tesla and Waymo are chasing the same dream, but execution is everything.

Tom That's exactly the opportunity, Marie! The spending spree is underappreciated. Uber positions itself as the gatekeeper, and that's a re-rating story. Tesla, on the other hand, is down fourteen percent and needs to show real autonomous progress.

Gerald Waymo is a footnote inside Alphabet. Until there's a spin-off, it's just noise. But speaking of quick stock moves, the earnings movers are wild today. Cerebras plunged to a fifty-two-week low on margins—a stark reminder that not all AI plays win.

Tom Yeah, brutal. But then you've got Wendy's soaring twenty-five percent on a short squeeze. Reddit's finest are back, buddy. Twenty-three percent short interest—that's a tinderbox.

Gerald A short squeeze on a fast-food stock? The investment criteria of 2026: 'Does it have waffle fries and 23 percent short interest?' That's a buy signal now.

Marie Ha—fair enough. But Arm Holdings is up two hundred thirteen percent year-to-date on agentic AI demand, while Take-Two popped on GTA 6 presales. There's some real earnings momentum mixed in with the chaos.

Tom FedEx slid on spin-off disappointment, but honestly, the short duration bond trade is the macro call that matters. T. Rowe Price says buy short-duration because inflation risk is underestimated. The TLT barely positive, vulnerable.

Marie This is the underrated story. The bond market isn't pricing in enough inflation persistence. If the Fed is actually hawkish, we should see a steeper move in yields. TLT only eked out a one-point-four percent gain last session, and the silence is deafening.

Gerald I'm parked in short-duration SHV and I'm sleeping fine. The long end is a trap if T. Rowe's right. And here's an odd one: Dassault Aviation won an EU court case saying private jets can be environmentally sustainable. Only in Europe, but it lifts a regulatory cloud.

Tom Private jets now green? The EU has a funny way of defining sustainability. But Dassault is up five percent and nineteen percent below its high—a re-rating story if I've ever seen one.

Marie It's a niche regulatory win, but it speaks to the broader split: AI and select cyclicals are finding catalysts, while the macro pessimism hits gold and long bonds. Our view is a market in two halves.

Tom Exactly.

Gerald That's the split.

Marie One hundred percent.

Tom And the cleanest expression of this? A pair trade: long the SMH semiconductor ETF against short the GLD gold ETF. Isolate AI versus debasement, no need to bet on rates or dollars directly.

Gerald I'll take the other side of that pair trade if I could. But fine—the bear case: Micron's beat is priced in, SMH at forty times trailing, and gold could snap back if inflation data surprises later this week.

Marie Right. And the missing piece is the Treasury market. Yields haven't spiked, so the bond market isn't fully buying the hawkish Fed story. If inflation comes in hot, the whole dollar trade could reverse hard.

Tom But for now, momentum is with AI and the dollar. I'm buying the Nasdaq ETF too—up sixteen percent year-to-date and flirting with new highs.

Gerald Of course you are. As always, none of this is investment advice. We're just three people who talk too much about markets.

Marie Speak for yourself, Gerald. I talk just the right amount. If you're just finding us, hit follow on Spotify or check investmentflash.com for the full digest with charts.

Tom And that's a wrap. We'll be back with the New York Edition later today at nine a.m. New York time. Lots more to discuss.

Gerald Hopefully not another 15-fold profit—I need a breather.

Marie Goodbye, everyone.

Tom See ya!