Is AI Cracking – or About to Break Out?

Listen to the audio version of this article (generated by AI).

Why this AI pullback isn’t the top… a trading system flashing on Bitcoin miners… grading Eric Fry’s copper call at the halfway mark…

As I write on Monday morning, AI stocks are jumping, a welcome change from last week’s selling pressure.

Still, AI has felt different recently. At last Thursday’s close, the AI-heavy Nasdaq 100 had fallen more than 4% since mid-June, and many AI darlings were (and some remain) down double digits.

Over this stretch, the bears have grown louder. For instance, even this morning as tech stocks move higher, CNBC features an article titled “Semiconductor stocks are flashing warning signs of a possible top. What to watch.”

So, let’s revisit the question we must ask periodically: Is this the start of the crash?

According to our hypergrowth expert, Luke Lango, editor of Innovation Investor, no.

Here he is to explain:

The mechanics of today’s price action are classic end-of-half, beginning-of-half repositioning.

Portfolio managers are rebalancing — trimming positions that have run dramatically in H1 to harvest gains and redeploy into underperforming names that look cheap on relative valuation metrics.

This is not driven by fundamental analysis of AI infrastructure demand…

The rotation changes none of that. It only changes the price at which you can buy in to it.

Legendary investor Louis Navellier made the same point about portfolio managers rebalancing.

Here’s Louis from a Growth Investor Special Market Podcast last week:

The market is rotating…

We’re now on holiday trading. So, traders have largely cleaned out their inventories and are in the Hamptons or somewhere else for the weekend.

It’s unfortunate they take the winners and have to punish them from time to time, but they’ll bounce right back.

Louis sent out another Special Market Podcast this morning. As tech pushes higher, he tells his readers:

All last week was, was just normal profit-taking headed into the holiday weekend. And now it’s time to focus on earnings.

***Still, such pullbacks can be hard to stomach, so an analogy might help investors worried about the bubble popping

Imagine two balloons: one fully inflated to the point of bursting, the other only half-full. Which one’s easier to pop?

Obviously, the fully inflated one.

Periodic flushes in the AI trade like the one we’ve seen in recent weeks work the same way – air releasing, letting pressure escape before it builds to a popping point.

And when AI stock prices fall while AI earnings keep rising (which they are, as we’ve highlighted in recent Digests), it takes pressure off forward valuations.

While that’s the technical benefit of these selloffs, there’s also a sentiment-related benefit…

Recall last Wednesday’s Digest where I made the point that market tops are almost always marked by rabid greed, FOMO, and a widely held belief that the party will never end. Do these recent headlines sound like that to you?

• “S&P 500 to 5,600? Gareth Soloway says the AI trade is cracking” –The Street
• “‘Yet another way in which 2026 is looking like 1999’: Top analyst fears bubble popping with investors and Wall Street out over their skis” –Fortune
• “A VC Says the ‘All Your Eggs in the AI Basket’ Trade Is Finally Cracking — Here’s Where the Money Goes Next” –24/7 Wall Street

Paradoxically, the late-cycle selloffs that spook investors are part of what keeps a bull market running longer than the bears expect.

So, is the AI trade cracking?

While nobody knows for sure, it’s highly unlikely.

Here’s Luke’s bottom line – and what to do now:

Rotation days are not warnings. They are invitations…

The last time we had price action this extreme — AI stocks down hard, beaten-down software names ripping — SMH was 8% higher within days.

The rotation resolved, the fundamentals reasserted themselves, and the investors who used the flush to add were rewarded.

Today’s rotation is the same pattern…

The second half of 2026 is just getting started. Use the dip.

This brings us to veteran trader Jonathan Rose, who’s been making great use of dips in recent weeks.

Jonathan’s “Convergence Trigger”: the results, and where it’s flashing now

Could I interest you in roughly 900% returns in about a month?

At the end of May, Jonathan and market veteran Marc Chaikin went public with something they’d spent months building together: a system called the Convergence Trigger.

Both Jonathan and Marc’s systems follow institutional money, but from different angles…

Jonathan’s Unusual Trading Activity tool reveals what big players are doing before the move happens. Chaikin’s Money Flow measures the actual flow of capital in or out of a stock in real time.

Together, they create a more complete picture of where institutional money is really going.

And when both signals align on the same trade – resulting in this “Convergence Trigger” – the results from nearly 200 back-tested trades are striking: an 81%-win rate and a 147% average gain. And critically, the combined signal helped avoid two out of every three losing trades.

We’re now roughly one month after Jonathan and Marc debuted the Convergence Trigger. So, how’s it actually performing in real portfolios?

Here are some results shared by Jonathan’s readers:

• “243% gain! With next week being a shortened trading week, now seemed to be a good time to print some money for me!” –Jeff R. (not this Jeff R.)
• “In for $0.20, out for $4.32 — up 2,060%! Thank you!” –Ernie H.
• “JR, I am new but jumped into BFLY. It is flying today and my return has gone parabolic… my return on a relatively large position for me is at least 5X.” – David H

Here’s more from Jonathan:

Readers have reported gains of 505%… 745%… and even 920% – all just in the weeks since our event. You could have seen the same gains yourself if you’d been paying attention.

Better still, we now have a state-of-the-art, AI-powered tool scanning the market for these opportunities for readers 24/7… which is why I expect many more similar gains going forward.

So, where are the latest opportunities?

The Convergence Trigger just flagged a new setup, and it’s an odd one

Bitcoin (BTC) is down nearly 30% this year. But Bitcoin miners, historically glued to Bitcoin’s price, are up around 56%.

Jonathan just dove into this seeming inconsistency, explaining that AI’s endless hunger for power ran into a wall of substations, transformers, and grid connections that take years to build.

So, hyperscalers went looking for companies that already own energized, grid-connected industrial sites. That’s Bitcoin miners.

What are the specific stocks that are benefiting?

Jonathan flags Cipher Digital Inc. (CIFR) and TeraWulf Inc. (WULF). I’ll note that WULF is soaring nearly 14% as I write on news that Anthropic has signed a 20-year lease on a TeraWulf data center in Kentucky.

But even with this news, there’s a third play that Jonthan likes even more:

IREN Ltd. (IREN) remains my favorite.

The company has partnered directly with Nvidia Corp. (NVDA), continues expanding its power footprint, and — something I really like — has deliberately avoided turning itself into another leveraged Bitcoin proxy.

It’s focused on building an AI infrastructure business.

I’ll note that it’s also up about 15% today as I write.

If you want the full walkthrough of how the Convergence Trigger works, click here to watch Jonathan and Marc’s encore presentation. We’re making it available for free again for only a limited time.

Circling back to Bitcoin miners, here’s Jonathan’s bottom line:

I’m not telling you to run out and buy every Bitcoin miner you can find. Some will execute this transition well, but plenty won’t.

The opportunity is in knowing which companies big institutional investors – the “smart money” – are quietly accumulating before everyone else starts telling the same story.

Finally, Eric Fry’s copper call – checking the scorecard at the halfway mark

Every January, our global macro expert Eric Fry, editor of Fry’s Investment Report, publishes a “Forecast Issue” laying out his boldest calls for the year ahead.

Now that we’re through the first half of 2026, he’s circling back to grade his own homework – and one call in particular stands out.

Back in January, Eric told his readers:

Copper prices will reach at least $7.50 per pound sometime in 2026 – driven by structural supply constraints and accelerating demand for electrification, AI infrastructure, renewables, grid expansion, and industrial modernization.

So, how’s that playing out?

Copper started the year at $5.70 a pound. It’s since climbed to about $6.20 – still a good stretch from Eric’s $7.50 target. But the metal has notched record highs along the way, and half the year still remains.

Meanwhile, the thesis behind the number hasn’t budged. As Eric put it in April:

Copper has always been the wiring of the world. But now, the world is demanding more wiring than it has at any point in history.

AI infrastructure, electrification, decarbonization, data centers, and EVs are all, at bottom, copper stories – a single hyperscale AI data center alone can consume up to 50,000 tons of the metal.

But the supply side isn’t keeping pace…

The International Copper Study Group expects the refined-copper market to swing into a deficit of roughly 150,000 tonnes this year. Eric says it will take more than $200 billion in new mining investment to close the long-term gap – compare that with the roughly $76 billion the industry actually invested over the past six years.

That combination – surging demand, a widening structural deficit – is exactly why Eric says this remains one of the better ways to play the AI boom without paying up for a household-name AI stock.

Bottom line: Copper hasn’t hit Eric’s $7.50 target – yet.

But with six months left on the clock and the structural case intact, he’s not backing off of it.

So, what’s Eric’s favorite way to play it?

Freeport-McMoRan Inc. (FCX), up over 20% year-to-date, and up about 255% in Eric’s Investment Report portfolio.

FCX is just one name on Eric’s buy list today. He also has a “drop immediately” list that flags many broadly owned stocks he believes are at risk today – some of them AI darlings. You can find his full breakdown in his free Sell This, Buy That presentation here.

Coming full circle

Three stories today, one common thread…

Don’t confuse noise for signal.

AI stocks dipping doesn’t mean the bull market’s over. It means portfolio managers have been doing what portfolio managers will do at the end of a quarter.

Meanwhile, a trading system flashing on Bitcoin miners doesn’t mean you chase every crypto-adjacent ticker. It means smart money is quietly repricing the leaders before the headlines catch up.

And copper sitting at $6.20 instead of Eric’s $7.50 target doesn’t mean the forecast was wrong. It means the thesis is well on its way to playing out with six months left.

In every case, the initial noise/headline grabs your attention. But it’s the ensuing signal that’s more likely to make you money.

We’ll keep tracking all of it here in the Digest.

Have a good evening,

Jeff Remsburg