Wednesday plan: Lean further into Lilly and JPMorgan as the overnight AI-hardware
selloff deepens, trim Nvidia and Meta again
Monday's confirmed session showed the book down 0.46% against a flat SPY, dragged almost entirely by Nvidia. With Asian AI-hardware names selling off hard overnight and hyperscaler capex scrutiny widening to Microsoft and Meta, the plan for Wednesday is to keep rotating out of AI hardware and into Lilly, JPMorgan and Microsoft rather than reverse course.
Grade: the Tuesday plan called the right disagreement - cut the AI-hardware concentration in favor of durable financials/healthcare leadership - but the trims were sized off Monday numbers that came in less extreme once confirmed (NVDA -4.99% vs. the -5.87% used, AVGO actually closed +0.34% rather than the -2.36% assumed), and the book still landed at -0.46% against SPY's +0.02%, a real ~48bp miss driven almost entirely by residual NVDA exposure.
Since Last Session
On Monday, July 27, the book returned -0.46% against SPY's +0.02%. Every position was directionally correct in sign except AVGO, whose confirmed print (+0.34%) came in green versus the preliminary read the prior plan was written against. NVDA (19% weight) was the largest drag at -4.99%, the book's single worst mover by a wide margin. MSFT (+1.94%) was the best performer, again decoupling positively from the rest of the AI complex. JPM added +0.85% and LLY was flat-to-up at +0.13%. META continued to lag at -0.22%, and AVGO closed +0.34%.
Plan for Wednesday
Going into Wednesday's open, the plan is to extend, not reverse, Tuesday's direction: trim NVDA and META further while adding to JPM, LLY and MSFT. The overnight tape gives fresh reason - Asian AI-hardware names sold off hard (SoftBank -10%, SK Hynix's beat-but-not-enough earnings print), which should be read as the same repricing that hit NVDA on Monday extending rather than fading into Wednesday. NVDA will be cut to 14% on that evidence, not on any price trigger. META, still trading below both its 20- and 60-day averages and now named directly in the hyperscaler capex-scrutiny story alongside Amazon and Microsoft, gets cut again to 10%; the position stays open only because Monday's confirmed decline was modest and the ad-data moat/free-cash-flow case is intact, but conviction is thin. JPM and LLY, the two cleanest trends in the universe, are sized up to 23% and 27% respectively as the rotation destination for capital coming out of hardware. MSFT gets a modest add to 17% for the same reason it earned a position Tuesday - real decoupling from hardware weakness - tempered by the fact that it is now named as a target of the same investor skepticism. AVGO holds a small 9% satellite to keep a differentiated custom-silicon leg without doubling the hardware bet NVDA already represents. The open needs to confirm whether the AI complex stabilizes or the Asian selloff bleeds into U.S. premarket trading before any of this is revisited intraday.
Positioning
The book heads into Wednesday roughly 50% concentrated in LLY and JPM, the two names showing the cleanest, least AI-correlated trends in the universe, with MSFT as the growth-tilted software expression of AI conviction. NVDA, META and AVGO together make up a reduced but still real 33% of AI-hardware/adjacent exposure - enough to keep real upside if the complex stabilizes, small enough that another leg down does not sink the book the way Monday's NVDA weighting did.
Institutional Signals
Ackman's Pershing Square holding MSFT at 15.3% of the fund continues to corroborate it as a high-conviction, durable AI-software name rather than a trade. Buffett's Berkshire keeps BAC at 9.5%, still supportive of the financials tilt behind JPM. Dalio's Bridgewater (NVDA at 3.7%) and Burry's Scion (NVDA at 13.5%) still hold the name, which is why NVDA remains a real position rather than an exit, even as its size keeps shrinking on the book's own trend evidence.
What Could Break It
A credible de-escalation or further escalation of the Iran-U.S. conflict cuts both ways - either could move oil and risk sentiment sharply and should be watched at the open rather than traded on headlines alone. A clean reversal in NVDA or the broader semiconductor tape (a stabilizing session in the Asian chip names) would argue for slowing further trims rather than continuing them. Fresh, credible reporting that ties Microsoft's own capex plans to the same circular-financing concerns hitting NVDA would break the MSFT decoupling thesis outright. Any disorderly widening in credit spreads would undercut the JPM/financials leg of the book.