Software Jumps, Momo Slumps, & AI Dumps Most Since 'DeepSeek'; Bonds & Bullion Bid

Tl;dr: Huang & Hegseth dominated markets today. NVDA reversing dramatically (dragging the entire AI stack lower) as software stocks squeezed higher for the 3rd day amid Anthropic tensions with DoW. Momo melted down. Oil was very choppy as traders parsed competing headlines on the status of negotiations between the US and Iran. Dollar rallied along with bonds. Crypto slipped with the tech wreck. PMs were mixed.

First things first, NVDA was pumped and dumped after beating-and-raising like a champ...

This was very much institutional selling as Vanda Research pointed out that they saw the biggest retail net buying on record (back to 2012) into that selling...

Additionally Vanda noted that they saw retail activity pick up in other names too – AVGO, IGV, SOXX are all seeing spillover buying. 

AI Beneficiaries suffered their biggest loss relative to 'At Risk from AI' names since DeepSeek...

 The threat of Anthropic being 'blacklisted' by Pete Hegseth (as we detailed here) left Software stocks primed for a massive short squeeze. 

Goldman's Prime Book data has continued to show the drastic positioning in software. Short exposure at a seven year high, while long exposure at a seven year low.

...and that prompted Software stocks to massively outperformed the rest of tech today...

...with Software outperforming Semis with one of the biggest jumps this decade...

Momentum was monkeyhammered lower...

With TMT momo names mullered most...

All of which left the Nasdaq as the day's biggest loser and Small Caps the biggest gainer. The Dow ended unch...

The 180bps outperformance of RTY over NDX was among the biggest of the last year...

The Mag7 was the big drag on markets while the S&P 493 was unchanged...

Goldman's trading desk said it was around a 5 out of 10 in terms of overall activity levels and skewed 5% better for sale across the floor

• LOs are skewed better for sale led by supply in macro products, info tech, consumer discretionary, and hcare versus demand in materials, and comms svcs

• HFs are skewed much better for sale with the majority of supply in macro products, followed by industrials and fins versus demand in info tech (covering primarily in software), consumer discretionary, and hcare

Nasdaq could not hold on to its 50/100DMA...

While VIX was higher on the day, equity risk remains notably decoupled from credit risk...

And before we leave equity-land, we wanted to note that while index vol is higher on the day, single-stock vol is falling rapidly - unwinding the dispersion trade...

Treasury yields were all lower on the day by 3-4bps (no significant perturbation in the curve)...

The equity weakness trumped jobless claims strength and pushed rate-cut expectations (dovishly) higher...

The dollar ended the day higher despite a late-day sell-off...

Precious Metals were mixed with Gold outperforming on the day...

Gold chopped between $5150 and $5200 all day...

Oil swung wildly intraday as traders parsed competing headlines on the status of negotiations between the US and Iran...

Bitcoin tracked big-tech lower on the day, falling back below $68k...

Finally, circling back to where we started, why is NVDA underperforming after a strong beat-and-raise?

Goldman's Chris Hussey suggests 'sell the news' dynamics, profit taking, and market rotation after several quarters of rotating into Semis and out of Software...

Mutual funds had reduced exposure to Software prior to the recent sell-off

Source: FactSet, Goldman Sachs Global Investment Research

Hedge funds increased long exposure to Semis and cut exposure to Software

 
Source: FactSet, Goldman Sachs Global Investment Research
 
Another culprit - and the more likely - is the now familiar concern about hyperscaler capex, not just how much are they spending, but also the sustainability of spending growth, and perhaps a little bit of 'is this too good to be true?' when it comes to NVDA.

On the capex front, analysts expect AI hyperscaler capex will total $667 billion in 2026, implying capex growth of 62% yoy in 2026, compared with 73% growth in 2025. And while we expect capex growth to peak later this year, we still expect some further upward revisions to consensus 2026 estimates driven by the imbalance between the demand for and supply of compute, substantial balance sheet capacity of the largest capex spenders, and the precedent from past investment cycles. As for NVDA and the semis more broadly? Current spending intentions and data center demand, plus memory bottlenecks, are good for now. Focus on 2027 as bottlenecks ease and hyperscaler capex likely peaks.

Big picture...some might argue nothing has changed, but as we noted earlier, Goldman's top macro trader, Bobby Molavi, noted that it feels like several tectonic plates are moving at the same time. Growth, Employment, Rates, Geopolitics, Politics and Market leaders. In spite of all the angst and beneath the surface pain…the S&P sits around 2% from its all time high. Solid GDP growth, Fed easing, High employment, Consumer behaving and tailwinds from Fiscal, Monetary and Regulatory.

That being said, there are cracks forming and something feels ‘off’. What will Supreme court decision around Tariffs mean for GDP? To what degree will Agentic AI 'search and destroy' start to make consumers nervous and shift to saving rather than spending. If and when AI efficiencies result in faster and more layoffs?

Names that a few weeks ago were heralded as AI winners suddenly becoming AI at risk. The US Equity markets that have given so much to so many over the last few years...now the clear underperformer globally with a broadening and rest-of-world tilt to flows and regional exposure. 

How much longer can KOSPI keep climbing vertically?

For now, capital continues to rotate from West to East… toward the physical world and asset heavy balance sheets, and away from asset light incumbents.

There are infinite hot-takes on AI’s asset impact… Goldman's Delta-One desk-head's net view remains: good for GDP, tougher for multiples.

Goldman's Bobby Molavi highlights that we now live in an era where market access lives in your pocket. An iphone coupled with….fractional trading. Zero day options. 24/5/or 24/7 trading. Prediction markets. Atomic settlement. Tokenisation. Just some of the things that have and/or could change financial markets. At the centre of some these themes is the growing relevance of retail in driving the markets and the growing game-ification of markets and trading. As meme and theme become primary factors...and retail moves from a side show to a larger and larger % of daily traded volumes we see who owns markets and what moves markets structurally changing.