The rotation that hardened last week broadened this week. The equal-weight S&P 500 is now beating the cap-weighted version for the first time in an AI-driven rally. That means the 493 stocks outside the Magnificent Seven are collectively carrying more weight than the top seven.

The AI trade split cleanly. Chips won. Software lost. Semis surged Thursday. Salesforce (CRM) got demolished on a KeyBanc downgrade. Microsoft (MSFT) logged its worst month since the dot-com bust. Anthropic committed to a 20-year lease. Meta (META) signaled excess capacity. Two of the largest AI spenders cannot both be right about the same infrastructure cycle.

Iran fired at ships Monday. Trump declared the ceasefire over Wednesday. Iran called seeking a deal Thursday. WTI spiked above $74 then eased back toward $72. Fed minutes showed a tied committee. SK Hynix priced above range at $25.7 billion, second-largest US listing after SpaceX (SPCX).

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Thursday drew the line. Semis surged. The iShares Semiconductor ETF (SOXX) gained more than 5 percent. Micron (MU) jumped 7 percent on a $3 billion US supply chain investment. Sandisk (SNDK) popped 12 percent. SK Hynix priced its US ADR at $25.7 billion with the book seven times oversubscribed.

Software went the other way. KeyBanc downgraded Salesforce to sector weight from overweight. The note was blunt. Customers said their data was not organized enough to do meaningful AI work. Agentforce was not landing. IBM (IBM) and Palantir (PLTR) fell in sympathy. Microsoft closed its worst calendar month since the dot-com bust and kept falling.

The market is drawing a line between hardware that is generating AI revenue and software that is still trying to prove it can. AI infrastructure is monetizing immediately. AI applications are still proving conversion.

Execution Bias

Microsoft reports July 29 and Salesforce reports in late August. Those are the specific prints that test whether software can convert AI capex into AI revenue. Until then, the hardware layer holds the tape and the software layer stays under pressure.

Anthropic signed a 20-year lease with TeraWulf (WULF) for a Kentucky data center campus worth over $19 billion in expected revenue. First power delivery in the second half of 2027. TeraWulf, CoreWeave (CRWV), and Iren (IREN) all surged.

A 20-year infrastructure commitment is not a capex cycle. It is a generational bet. Anthropic said AI inference demand will require dedicated physical infrastructure for two decades. Meta signaled the opposite last week, pitching excess AI capacity to the cloud market.

Both cannot be right at the same time. Alphabet (GOOGL) reports July 22 and Microsoft reports July 29. Those two prints decide which read the market backs. Capex guidance matters more than revenue beats.

Investor Signal

Physical AI infrastructure with contracted long-term tenants is the most durable layer of the AI trade. TeraWulf's 20-year Anthropic lease is exactly the profile that survives capex anxiety. The buildings outlast the chips inside them.

The Fed released minutes from Warsh's first June meeting Wednesday. Brief but not simple. The committee is split down the middle. That is not a divided committee leaning one direction. It is a tied vote with no tiebreaker.

Waller flagged the risk flip in Rome Monday. Kashkari penciled in a hike. The Torsten Slok bear case entered institutional consensus. But the doves have equal standing in the document. The July PCE print is the first data that breaks the tie. Energy disinflation gives the doves their case. Services inflation above 4 percent brings the hawks back in September with more data behind them.

Watch Signal

The July PCE print is the first data point that breaks the tie. Watch that number more than any Fed speaker between now and September.

Gold sold off during a war escalation. That almost never happens. Trump declared the Iran ceasefire over Wednesday at the NATO summit. WTI jumped 6 percent above $74. Dow futures fell 500 points before the open. The Kospi entered a bear market. The 10-year Treasury yield jumped to 4.58 percent.

Thursday morning, Trump said Iran called seeking a deal. The market bought the possibility of negotiations before there was a signed deal. Chips bounced. The Kospi recovered. WTI held near $73.

The tape treated the escalation as cyclical rather than structural. The gold selloff tells you the market believed the ceasefire framework would eventually rebuild even while Trump was declaring it over.

Execution Bias

Energy stays bid until a deal is signed. Airlines are the cleanest short in a war-risk environment. The ceasefire framework is technically dead but the market is pricing another rebuild.

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SK Hynix priced its US ADR offering Thursday night at the top of range. The book was seven times oversubscribed. The final raise was $25.7 billion, making it the second-largest US listing in history after SpaceX. Baillie Gifford Overseas, Coatue Management, and Situational Awareness Partners each committed up to a combined $7 billion.

Samsung confirmed HBM is sold out through year-end. Micron gained. The Roundhill Memory ETF (DRAM) recovered after its worst week since launching. Kioxia jumped as much as 11 percent Thursday on news Bain Capital sold its entire stake at record returns.

The memory trade got the clearest institutional validation of the AI cycle. Institutional appetite survived last week's selloff, the Samsung split print, the Iran escalation, and the tied Fed. Every source of doubt failed to break the demand.

Investor Signal

Own HBM-exposed names. SK Hynix, Micron, and Samsung all benefit from AI capex commitments that extend years out. The demand is locked in. The supply is not. The pricing power is the trade.

PepsiCo (PEP) missed earnings Thursday. Revenue beat but the CEO cited North American consumer budgets tightening due to inflationary pressures. General Mills (GIS) cut prices last week and gained 8 percent. Nike (NKE) beat with a tariff refund attached but the core numbers were softer than the headline.

This is the K-shaped consumer story getting stress-tested. The Conference Board's jobs hard-to-get index hit its highest since 2021. Consumer inflation expectations hit a three-year high Tuesday. Constellation Brands (STZ) and Microsoft's Xbox division added to the compression signal.

A softening consumer argues against hikes. WTI above $71 argues for them. Both things are true at the same time.

Earnings Signal

Watch premium airline demand, luxury retail, and cruise. Every name priced for the top of the K holding through the fuel move gets tested through Q2 earnings.

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Four weeks ago the market demanded proof of cash. Three weeks ago it sorted AI into infrastructure and labor. Two weeks ago the rotation hardened into a regime. Last week the regime broadened. This week the AI trade finally split in two.

The chip layer is generating revenue and getting rewarded. The software layer is spending and getting punished. The equal-weight S&P is beating the cap-weighted version for the first time in an AI-driven rally. That is what a broadening looks like when the top narrows.

The tests are set. Alphabet reports July 22. Microsoft reports July 29. Meta and Amazon follow. Every one of those prints answers the Anthropic-versus-Meta question and the software-monetization question at the same time. The July PCE breaks the tied Fed. The Iran deal either rebuilds or does not.

The AI trade split in two this week. The next two weeks decide whether it stays split.