The AI Oracle Got Liquidated

 

Good evening, and happy Friday. The market closed higher and green for the week after an intense tech/ macro report session.  Megacap cloud winners overwhelmed weakness across small caps and seven of 11 sectors. Amazon and Alphabet did the heavy lifting, while Apple’s guidance miss made this less a tech rally than a public audition for AI returns.  That sorting process turned violent below the index level. The famous Situational Awareness’s leveraged momentum-based AI book lost 67% in July, forcing a portfolio sale to Citadel this week, demonstrating how calm benchmarks can hide a historic factor crash. Rising crude added the other warning: Iran-war supply risk is still feeding inflation and Big Oil profits.  Stocks stayed focused on the messier edges. Retail bought weakness in Novo Nordisk and Fermi, chased Ambarella’s takeover report, and largely ignored the megacaps steering the indexes.  Today's Briefing: Powered by Stocktwits Community API. After the Bell: Exxon and Chevron converted war-driven energy prices into $26.6B of combined quarterly profit.  Stocks: Amazon, Alphabet, and Microsoft won the week’s AI spending trial while Apple, Meta, and infrastructure trades lost.  Hedge Fund News: Situational Awareness’s 67% July collapse turned a crowded AI trade into a forced liquidation.  What's Trending Now on Stocktwits  Is Big Tech’s AI trade becoming a revenue contest instead of a spending contest?

AFTER THE BELL War Premium Pays Big  Exxon Mobil and Chevron, the integrated oil producers and refiners, reported surging second-quarter profits Friday as the Iran war lifted crude and fuel prices. Both benefited from constrained Middle East supplies, but an earnings beat sent Chevron higher while Exxon slipped on a refining-driven miss.  The RIP:  $CVX ( ▲ 2.35% )  +2.4%, $XOM ( ▼ 0.98% )  -0.9%. Chevron: $12.07B profit vs. $2.5B; adjusted EPS $6.06 vs. $5.56; revenue $70.06B vs. $62B. Exxon: $14.53B profit vs. $7.08B; adjusted EPS $3.52 vs. $3.60; revenue $116.02B vs. $97.8B.  Chevron was the cleaner trade. Its refining profit increased sixfold to $4.9B, global production rose 20% to 4M barrels per day, and U.S. output reached a record 2M. Exxon still produced 4.5M barrels per day, but volatile refining prices left adjusted EPS $0.08 short.  The next quarter still runs through the war. Chevron CEO Mike Wirth warned that falling inventories and disruptions spreading from the Strait of Hormuz to the Red Sea leave global energy markets with less room for another supply shock. Any ceasefire could remove the crude-price premium just as quickly.  The Community Read: The $CVX room is 60% bull after the beat, track the reaction ->

STOCKS Sector Rotation Watch Money didn’t leave tech this week. It crowded into companies proving their AI bills can pay rent. Alphabet, Amazon, and Microsoft added about $1.5T in combined value.  $XLY ( ▲ 3.29% )  Consumer Discretionary +6.1%: Amazon’s +15% Friday surge did most of the talking after AWS growth accelerated to 37% and management lifted 2026 capex to $220B. $AMZN added more than $400B in value this week, turning discretionary into a cloud trade with shopping attached.  $XLC ( ▲ 1.56% )  Communication Services +1.8%: Alphabet added more than $400B after strong cloud growth, while Meta’s 8% post-earnings drop erased about $85B because investors couldn’t connect higher spending to outside demand. $GOOGL beat $META by selling compute instead of merely promising smarter feeds.  $XLK ( ▼ 0.22% )  Technology -0.3%: Microsoft added more than $600B and rallied 15% Thursday, but Apple lost over $350B and fell 7% Friday after guiding 9% to 11% growth versus 12% expected amid memory constraints. $MSFT proved AI spending can convert into revenue. $AAPL proved avoiding the capex arms race doesn’t guarantee safety.  $XLI ( ▲ 0.81% )  Industrials -1.5%: AI’s second derivatives missed the party. Industrials slipped and utilities sank 4.2% as forced deleveraging hit the power and buildout trades, while $FIX finished nearly flat despite remaining up 85.3% this year. The market preferred cloud revenue now over infrastructure earnings later.  Watch into next week: $AMD reports Tuesday with shares down 8.8% this week but up 122.3% this year. Its data-center outlook will show whether investors still want the broader AI supply chain or only the trillion-dollar toll collectors.

HEDGE FUND NEWS The Wedding Margin Call  Leopold Aschenbrenner’s wedding guests were arriving in Carmel just as his Situational Awareness hedge fund was forced to unload most of its public-stock portfolio. According to the Wall Street Journal, the 24 year old Ai investing savant watched as his empire collapsed this week, during the chip downturn. Frankly, the indexes looked calm, but for a hedge fund trading at 3 or 4 to one leverage on private shares, even a slight pullback meant disaster.  “These dynamics are essentially similar to a bank run: vulnerability begetting more vulnerability,” Leopold Aschenbrenner, Situational Awareness founder, wrote to investors Thursday. The RIP: Leopold’s fund ‘Situational’ grew to roughly $45B, gained 270% after fees through May and more than 1,000% since inception, then fell 67% in July. It borrowed $3 to $4 for every $1 of capital. Key holdings dropped 50% to 78%. Morgan Stanley’s Momentum Index fell 17.4% in four sessions. The fund sold out positions to Ken Griffin’s Citadel, selling the portfolio at a discount exceeding 10%.  “There is no other way to put it, we just witnessed the largest/fastest momentum crash in modern history,” Jonathan Krinsky, BTIG chief market technician, wrote in a note. The contradiction practically writes itself: the investor who ranked survival first borrowed up to $4for every $1 of capital. Looking at public equities Stocks retial can track, $MTUM is the factor proxy, while individual fund favorites $NBIS, $BE, $SNDK, and $CRWV remain exposed to post-liquidation rebounds or another rush for the exits.

POPS AND DROPS  $NVO -8.7% | Novo Nordisk 31.4K WATCHERS · 76% BULLISH · NORMAL ACTIVITY Novo Nordisk sank after its 6,376-patient ZEUS Phase 3 trial found ziltivekimab did not reduce major cardiovascular events, forcing a third-quarter impairment despite no change to its adjusted 2026 profit outlook. The bullish room treated the failed expansion bet as noncore, while bears saw another pipeline setback before next week’s earnings.  $FRMI -15.7% | Fermi 5K WATCHERS · 58% BULLISH · HIGH ACTIVITY Fermi slid even after taking delivery of three Siemens turbines with 780 megawatts of combined capacity for its Project Matador AI power campus in Texas. The bullish room is betting physical construction brings an anchor tenant closer, while skeptics see expensive infrastructure arriving before the company has secured enough contracted demand.  $OMER +0.6% | Omeros 11.5K WATCHERS · 77% BULLISH · HIGH ACTIVITY Omeros completed the repurchase of $14.5M in principal from its 9.5% convertible notes, bringing July’s debt retirements to $30.5M. The bullish room viewed the premium-priced buybacks as confidence ahead of YARTEMLEA reimbursement catalysts, while skeptics questioned how aggressively the commercial-stage biotech should spend its cash.  $TU -11.3% | Telus 1.5K WATCHERS · 61% BULLISH · HIGH ACTIVITY Telus plunged after reporting a C$1.8B quarterly loss, recording a C$2.1B impairment, cutting its dividend 55%, and reducing full-year guidance. The surprisingly bullish room argued the reset finally prioritizes debt reduction, while longtime income investors questioned whether management’s AI spending can replace the dividend thesis it just broke.  $AMBA +16.2% | Ambarella 16.7K WATCHERS · 71% BULLISH · EXTREMELY LOW ACTIVITY Ambarella jumped after the Financial Times reported that NXP Semiconductors was discussing an acquisition of the roughly $3B edge-AI chip designer. The bullish room sees a strategic fit across automotive vision and industrial computing, but the unusually quiet stream reflects the remaining risk that preliminary talks end without a deal.