Yesterday was an eventful session, but after the close, news and developments hit like a whirlwind. Technology (XLK) keeps trying to turn the tables, helping the NASDAQ post a solid session and leading the S&P 500 (SPX) higher.

Semiconductors Shake It Off

The semiconductors-versus-software (SMH:IGV) battle shifted back to the former, and artificial intelligence (AI) infrastructure names staged a strong rally, riding on Vertiv Holdings Co.'s (VRT) coattails (even though GE Vernova, Inc. (GEV) slumped on capacity constraints). Intriguingly, these key tech components have become an “either/or” trade.

Semiconductors were crushing into summer, and SMH has retraced 50% of its move against IGV. Equal-weight software (XSW) recently broke out, suggesting more upside, but after the close, whispers of a software-as-a-service (SaaS) apocalypse have returned.

Superintelligence Trade Returns

AI infrastructure was hammered over the summer, so the stage was set for good news to be good news.  It finally happened.

VRT's earnings results were phenomenal, putting to rest any notion that the trade is over. Political risk remains, and so does uncertainty about what could happen after the midterm elections. I think rhetoric could be thick, but there will be little action.

The Defiance AI & Power Infrastructure ETF (AIPO) underscores the extent of the selloff and potential upside from here.

Oracle Corporation (ORCL) Investors Day was explosive. Management sees $225 billion in total revenue for fiscal year 2030 (FY30), free cash flow of $30 billion in fiscal year 2029 (FY29), and only one more round of funding this year: $20 billion.

Earnings Reaction Turns Harsh

Coming into the week, earnings beats mostly got a free pass. That changed last night.

Hammered

Alphabet (GOOGL) moved down 8% after posting results.

GOOGL

Highlights: Cloud revenue & operating income

Glaring Red Marks:

• Reported earnings
• Operating income

Search and ads came in a little short, suggesting superintelligence might be chipping away at its fortress. 

Alphabet posted back-to-back quarters of negative free cash flow.

SaaS Apocalypse Redux:

• ServiceNow, Inc. (NOW) -22%
• Fortinet (FTNT) -23%

Here are ServiceNow’s key metrics.

Microsoft

Microsoft (MSFT) shares climbed 3% in after-hours trading.

Optical News

Reports that Marvell Technology, Inc. (MRVL) is looking to buy Lumentum Holdings, Inc. (LITE) sent the latter’s shares higher. They are in a great position to command a hefty premium. The optical trade has been hot, but it will get even hotter in the next few years.

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