To The Moon

Mid-Term whitewash of the Republican Party.  As expected, after an early market drop, there was a reversal jump. But it was not across all stocks. Mainly staple, Dow, etc. Tech AI's went down further at overnight trading.  But I will caution against using one brush to sweep all stocks. For sure, Datacentres linked stocks will be seeing some value correction. But look at those which are essential to the AI ecology. Especially those with reasonable capex commitments supported by solid cash growth. I actually like the MRVL/Lumenon story. I think it has challenges but it is also presenting an opportunity at an early stage to get into a future state for the AI core.

Blue Sweep at the US Election. US midterms: AI data centre boom is set for upheaval after US election rout. The Democrats having a landslide victory at the mid-term election bodes a bad scenario for all the companies supporting the roll out of infrastructures. And alongside, all the chip and neocloud companies as well.  Get ready for a red wave at the market today when it opens. 

The timing is bad. The market players have been spooked by the heavy CAPEX spending, in a period of high cost of funding.  For MRVL and Lumentum, though it is a pure merger with no money up front, it's purely falling victim to an avoidance of anything AI. 

US Mid Term Election. Generally speaking, a Democrat victory will not be good for Nasdaq. Trump has a lot of money riding on AI and a Democrat victory will not be good for him. At the moment, exit polls seems to suggest it will be a clean sweep in Congress for the Democrats.

$Marvell Technology(MRVL)$   There are Positives and Negatives I am seeing. Positive. 1) It's not being paid in cash. This no additional debt abd funding costs. 2) They are both in the essential new tech to provide the connections between chips to run AI compute. 3) When running together, they may win more share of the business from Broadcom. Possible even become the dominant eventually. Negatives: 1) Share dilution, though the shares being issued to Lumentum holders may be from treasury, thus no new shares issued? 2) Not sure about the equity of 4.5 MRVL shares for each Lumentum share. Is the fair? All in, my take is it needs more studies and anlysis. But present market reaction is overdone. Probably we will see some rebound later

NeoClouds Biz Model. Neoclouds like NBIS and CRWV buys AI chips and rents out to hyperscalers like OpenAI and Anthropic. Their claimed forward revenues seems positive.  But I see problems with this biz model. Firstly, they borrow huge amount of cash to buy the chips.  Secondly, cost of capital is rising.  Thirdly, the chips they are bought are current or even past models. And technology is fast evolving with faster and better chips being developed every day.  Fourthly, the forward revenue, or order books, are mostly not guaranteed. The customers may not go ahead with the purchases.  This Is a bit like buying a piece of land, engaging a contractor to build a shopping centre, based on the promise that the entertainment operator will come and open a complex at your pr

$NEBIUS(NBIS)$  Very high risk situation for NBIS now. Not just for them, but all AI sub businesses in NeoCloud and Data Centre investments.  Whereas there is truth that AI will fuel the next big idea, it is also true to note that valuations for many of the participating companies is way stretched.  Go back to 2000. Internet is real. And everyone needs internet now. But look at what happened to most of the companies that were the dotcom stories then. Not many survived beyond a year after the burst. So how many AI stories will be around at the end of 2027?

$Intel(INTC)$   Puking big time. More than 30% in a single trading session.  Amazon, Alphabet, Tesla, and especially all those AI and Crypto stocks. (Wonder what this means for the US with Trump's money-pump into Intel to rescue them).  I feel the AI bubble is about ripe. And with the US debt now at more 4 trillion $, how is this going to impact global economy?

Reported today in an article on Bloomberg.  Credit and thanks to Mr.David Fox for writing this very timely article. A big warning to everyone. A bruising selloff in technology shares, sparked by a few days of disappointing tech firm results, drove the Nasdaq down about 10% from its peak, near a technical correction. It closed 2.9% in the red. Intel plummeted 29% — the most in over four decades — as its outlook missed estimates. That news came on the heels of Alphabet’s biggest-ever market plunge the day before, in which it saw half-a-trillion dollars in market capitalization go up in smoke. And Amazon became the latest firm to face a sharp post-earnings selloff after the company reported greater capital spending than anticipated and the slowest growth in its core e-commerce business i

Global Tech Plunges. Is today going to be a Blackiest Friday? After the spectacular AI related collapse yesterday, everyone is waiting for the market open with baited breath. As it is, at overnight and pre-market trading, things does not look encouraging.  What is on people's mind now is if what Elon Musk predicted about most AI companies dying like guppies will come true. Is this the start of the repeat of 2000? The AI version of the Dot.com bust?