The overnight session delivered a tale of two markets: optical networking and memory chips accelerated sharply on AI infrastructure demand, with LITE (+15%), COHR (+12.3%), GLW (+10.3%), and the memory complex (MU +6.6%, WDC +6.9%, STX +5.7%) leading gains. Meanwhile, growth and healthcare names faced broad pressure—ISRG, IDXX, and ZTS each fell 5.9–7.4% despite earnings beats, signaling that strong results no longer override investor concerns about forward guidance and margin outlooks. Retail struggled with DG (-8%), TGT (-5.6%), and ROST (-5.6%), while analysts trimmed targets on TTD (-7.5%), CHTR (-5.2%), and WDAY (-5.2%), citing valuation excess and slower growth trajectories clashing with AI hype.
Buy the AI infrastructure play—optical networking (LITE, COHR, GLW) and memory (MU, WDC) are holding momentum on genuine capex tailwinds from hyperscalers, making them tactically attractive into any dips. Avoid catch-falling-knife temptation on beaten-down healthcare (ISRG, IDXX, ZTS) and growth SaaS (WDAY) until earnings revisions stabilize and guidance improves. Retail (DG, TGT, ROST) remains a headwind; stay neutral unless valuations compress further.