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Back when American Express (AXP) lost nearly half its value over the course of weeks, a young unknown investor put roughly 40% of his capital into AXP stock. Two weeks later, AXP doubled. That investor was Warren Buffett.
His real skill wasn’t simply picking winners. Buffett had a knack for telling the difference between a hurt business and a hurt stock price. More than that, Buffett had the conviction to act on that distinction.
Do you have Warren Buffett’s conviction?
We just wrapped an incredible first half of 2026, with the S&P 500 up around 10% and the Nasdaq up about 12%, built almost entirely on chips, memory, and AI infrastructure names. Then July hit, and the market rotated hard. The leaders of the last six months got sold, the laggards got bought, and financial media started asking whether the AI trade has finally run its course.
Look, a 20% pullback in a stock you love never feels good. But nothing about the power buildout, the falling cost of inference, or the tightening memory market actually broke in the last two weeks. If anything, the case for owning this trade got stronger, not weaker.
So while the crowd wrings its hands over a rotation, I want to point you toward two sectors that recently started breaking out while everyone else was busy panicking. One is rebuilding the telecom industry from orbit. The other might be the most underappreciated corner of the entire AI boom…
These 2 Sectors Are Breaking Out While Wall Street Panics
You can call this a technical rotation. You can call it mechanical profit-taking. What you cannot call it is a fundamental shift in the structure of the U.S. economy or in the dynamics powering this market, because nothing structural changed.
Meta Platforms (META) is building its own cloud business to monetize excess GPU capacity, which flips the “hyperscalers are overbuilding with no return” bear case on its head entirely. Excess capacity becomes high-margin, monetizable inventory, not stranded capital expenditure.
Bloom Energy Corp. (BE) just expanded its AI infrastructure power partnership with Brookfield Asset Management Ltd. (BAM) from $5 billion to $25 billion, a fivefold increase in nine months.
Power has now joined chips, networking, and memory as a core structural bottleneck in the AI buildout, and when one of the largest infrastructure capital pools in the world quintuples its bet on that exact bottleneck, that is not speculation. That is return-driven allocation, plain and simple.
Add in OpenAI’s inference breakthrough, which reportedly cuts inference costs by roughly 50%, and you get a textbook Jevons paradox: cheaper inference does not shrink demand, it explodes it. Lower the barrier to entry and adoption floods in. More models, more spending, more everything.
All of this points to a market working through sentiment while the earnings keep growing underneath it. These are stocks that rip 100%, give back 20% to 25%, then rip another 100%. Right now, you are sitting in one of those pullbacks, and that is a buying opportunity, not an exit sign.
Space Stocks: The SpaceX Junior Trade
The recent SpaceX (SPCX) IPO cooled off the broader space sector, and that cooldown is not a red flag either. Rocket Lab Corp. (RKLB) just posted first-quarter revenue growth of 64% year over year with a record $2.2 billion backlog. Planet Labs PBC (PL) grew revenue 42% year over year with its own backlog up 72%. Money keeps pouring into this sector: Amazon.com Inc. (AMZN) just launched its Leo satellites, Charter Communications Inc. (CHTR) is reportedly in talks with SpaceX, and Verizon Communications Inc. (VZ) and AT&T Inc. (T) are scrambling to counter Starlink.
Rocket Lab is becoming SpaceX Jr., transforming from a rocket-launch company into a vertically integrated space AI player after its acquisition of Rocket Lab National Security. AST SpaceMobile Inc. (ASTS) is chasing a different prize entirely: the telecom industry itself. Reports suggest AST SpaceMobile secretly unveiled a new device to investors during its roadshow, and if Elon Musk is building his own phone to pair with satellite spectrum bought from EchoStar, he is not just trying to kill Starlink’s competitors. He is trying to own the entire stack, the same way he wants to own AI compute through xAI and semiconductors through TeraFab.
That kind of ambition forces AT&T, Verizon, T-Mobile US Inc. (TMUS), and even Apple Inc. (AAPL) to spend defensively on space infrastructure, and that spending is a tailwind for the whole sector.
As for Apple: the company generates enormous free cash flow and chose not to build its own AI compute infrastructure the way Meta, Amazon, Alphabet Inc. (GOOGL), and Microsoft Corp. (MSFT) did. That restraint now looks like the mistake, not the discipline, because you do not grow a company by refusing to invest in it.
Biotech Wakes Up
The SPDR S&P Biotech ETF (XBI) is not merely on the verge of a breakout. It already broke out, climbing from roughly $130 on June 10 to $160 by July 6 in what amounts to a near-vertical line on the chart. Biotech is one of the most rate-sensitive sectors in the market, because its companies are valued on cash flows a decade out, and the macro backdrop just turned constructive. Inflation indicators are falling fast, oil has dropped from more than $100 to under $70, and the path toward a Fed rate cut looks increasingly clear.
The AI and biotech convergence is one of the most underappreciated stories in this entire boom. Medicine generates massive volume, variety, and velocity of data, exactly what AI models need to perform well, and the market is only beginning to price that in.
Be like Warren Buffett. Own these two fundamentally solid sectors while the crowd is still distracted by a rotation that changes nothing.
We break this down in far greater depth, charts and all, on this episode of Being Exponential. Drop your questions in the comments for a future show, or send them here.
