☕️ Is it time to buy the chip dip?

Howdy! 👋 

I trust this email finds you well where it, well… finds you! 😀 

I’m going to keep it brief while we recover from Shindig ’26, our annual One Bar Ahead® client meeting this past weekend. 

Nearly 200 folks flew in from around the world for yet another amazing get together filled with laughter, learning and all sorts of new exciting investing research. Thank you for making the trip – if you’re one of ‘em – and here’s to seeing you soon if you’d like to attend in the future! 💯 

And if you’d like to learn what they learned, I’d love to toss my hat in the ring. People tell me regularly that One Bar Ahead® has changed their lives. 

Now, back to business… or at least the markets anyway. 

Big Tech earnings are the story this week — Tesla, Alphabet, Intel, IBM all report. Wall Street's raised expectations for all of them and “prove it” is the mood. 

So far so good. 

Here’s my playbook. 

1 – Prove it or lose it 

Roughly 10% of S&P 500 companies have reported Q2 2026 results so far which means we’re still early days. Of that 10%, roughly 88% have delivered positive EPS surprises while 85% beat on revenue. 

Better still, the blended year-over-year earnings growth rate for the index is tracking at 24.7% for Q2. If that holds, it'll mark a second straight quarter of earnings growth above 20% — and the seventh straight quarter of double-digit earnings growth according to FactSet. 

Read that again. 

Seven consecutive quarters of double-digit growth. 

Why’s that matter? 

Try this on for size. 

Earnings and price have a 98% correlation over time which means if earnings are still rising, take a guess at what’ll follow eventually? 

Exactly. 

You know what to do. 

Keith’s Investing Tip: Prices and value occasionally divorce, and many anxious investors blow a gasket when that happens because they let their emotions get the better of ‘em. Smart investors, on the other hand, tend to wade in when they see great companies put on “sale.” 

2 – Time to buy chip dip? 

I sat down with the venerable Stuart Varney ahead of this morning’s opening bell and he asked me whether it's time to buy after the chip index is down ~20% from its high in June.  

We also spent a moment on what I expect from Google, Tesla and Intel – all of which are reporting this week. (Watch) 

3 – Leverage: Great until it isn't 

South Korean investors piled a net $9.4 billion into leveraged ETFs tied to Samsung and SK Hynix, chasing the AI chip boom. (Read) 

Then the trade reversed. 

One of those leveraged funds — designed to double whatever SK Hynix does in a day — is down about 70% from its June high. Down roughly 50% since it launched. 

The forums are full of investors begging for their money back.  

I get it but here's the thing nobody tells you when leverage is working… it's the same math on the way down. 

Leverage doesn’t give a rip if you're right about the story. 

AI chips are a very real trend with unprecedented long-term demand… none of which matters if you bought it 2x levered and the markets decide to take a breather first. 

Regulators are already stepping in; Korean authorities just raised the minimum cash requirement to trade these products tenfold.  

Shame it took a 70% drawdown to get there. 🤦‍ 

MyPOV: There's a reason I repeatedly tell you to avoid highly leveraged ETFs like the plague — except in a handful of very specific cases, and even then, only with exceptionally disciplined risk management. There's no such thing as a free lunch. Leveraged ETFs can make sense for a sophisticated short-term trader who understands exactly what they're signing up for. The problem is too many investors go in without understanding the risk, chasing a hot trend, and end up getting burned exactly like this. Don’t be stupid or you will get what’s coming! 

4 – Oil, hero or zero? 

Well, what d’ya know.  

The market had gotten comfortable with the Iran conflict as background noise — only to be reminded that it isn’t. (Read) 

I get asked often what the play is here.  

Simple. 

Buy the best, ignore the rest!® 

Chevron is one of those names.  

• Global footprint, great dividend growing at 5.8% over the past decades.  
• Super-efficient balance sheet. 
• Can be profitable at ~$30 a barrel.      

5 – Google pops, but that’s a little too convenient for my taste 

Shares have popped this morning on news that the company is developing a more efficient AI chip. (Read) 

I think the company faces some unique risks at the moment, not the least of which is a one-time valuation associated with its stake in Anthropic. 

Bank of America has picked up on the same thing. (Read)

And knowing how big money traders play the game, I’ve got to wonder if they’re engineering a rug-pull ahead of earnings. 

Trade idea: If I’m right, the play will be to create FOMO ahead of earnings then create short sharp drop after great numbers to wash out the momentum players, trigger trailing stops and resting orders. 

Bottom Line 

Aspiring investors obsess about being right but smart investors focus on being profitable even if they’re wrong. 

Think about it. 

Now and as always, let's MAKE it a great day and start the week strong. 💯 

You got this — I promise! 

Keith 😀