Good afternoon. QQQs -30bps as Citi/GS Conferences, META +6.5%, and AAPL iPhone, and Brent Oil cruising past $100 dominated the day.
In Tech, semis outperformed as the MS OpenClaw Muse basket back in vogue after a 6 month hiatus with many names below outperforming.
Not sure why AAPL is in there, but the bull case is that more Muse adoption creates demand for the infrastructure around inference, not just the GPUs: a single instruction can trigger browser sessions, API calls, code execution and retries, creating incremental CPU, server DRAM and storage/NAND demand as workflows become longer and more concurrent. NET through Workers, sandboxes and browser infrastructure & AKAM through cloud compute. The compute bulls will say consumption and infra grows multiples of MAUs as agents do more work on each user’s behalf. More thoughts on Muse and impacts on the landscape below in Internet section.
We also got the Duo flip phone launch from AAPL, which is priced at $1,999, with bigger increase in prices for higher storage tiers, helping offset some of the memory prices people are worried about. Siri AI is also launching as well as the same old a new Apple watch.
The Verge got its hands on it and said it feels impressively polished: smooth hinge, near-invisible crease, IP68 durability, and a matte 7.6-inch inner display that handles glare well. The wider, passport-like form factor is better suited to video, reading and multitasking than many rival foldables, while Apple adds fluid screen transitions and useful laptop/tent modes.
Another busy with lots of companies at GS and Citi. Jensen is key guy on the docket tomorrow at GS. We had full recaps in TMTB Slack and included some snippets below for many.
Lots to get to, so let’s get to it…
AI/SEMIS
MRVL +4.3% as CEO Matt Murphy at Citi put the FY27-28 outlook at $30bn versus the $20bn framed a year ago, with data center at $15-16bn next year and supply flexed up 50%. New: Teralynx switching on track for $1bn-plus, next year’s NPO/CPO revenue framed well above the prior zero-to-$300m range, connectivity growing 70%-plus this year and next, and the Google warrant cast as XPU-attach with other undisclosed customers behind it. Gross margin stays flat-ish next year despite custom doubling.
LRCX -1.4% as CFO Doug Bettinger at Citi promised nothing new and held CY26 WFE in the low $150bn range, calling clean-room space the industry’s binding constraint through 2027, with 2027 a growth year and 2028 ‘probably a pretty decent year.’ Incremental: served market above 36% of WFE this year, ahead of plan; the ~$8bn-of-WFE-per-$100bn-of-AI-capex rule raised by $1-2bn; NAND wafer starts ending 2026 about 20% below peak; DRAM de-speccing ‘a red herring.’ Gross margin of 52% is a 20-year high.
STX -2.0% as CFO Gianluca Romano at Citi said the supply-demand gap is widening, with POs covering the next 4-5 quarters and 2-3-year LTAs in which customers keep asking for more volume. New: an exabyte CAGR of at least 25% for 2-3 years on flat units via the HAMR ladder (50TB quals start in about a year), KV cache framed as warm storage whose lower tiers can use HDD with no flash partnership needed, and one high-interest note left before buybacks step up further.
WDC +1.0% as CFO Kris Sennesael at Citi said revenue is gated by supply, not demand: exabyte demand compounds well above 25% while supply grows only 22-23% between product transitions. Price per TB rose 18-19% y/y last quarter with more room, most of 2027 is under LTA and customers want 2030-31 terms WDC has not signed, and he sees no gross-margin ceiling from the mid-50s. HAMR is in qual with four hyperscalers for 1H27; High-Bandwidth drives sample at five customers, aimed at flash’s KV-cache tier.
GLW +1.5% as CFO Ed Schlesinger at Citi said the $20bn Springboard run rate lands a quarter early in Q3, Q3 is at the high end or better with Q4 sequentially bigger, and high-teens growth runs into next year. The Verizon long-haul/DCI deal plus Lumen and Zayo bring the $1bn/yr DCI opportunity ‘much sooner’ than end of decade and bigger; photonics is a $10bn CPO/NPO build from zero with first revenue hoped for next year but the inflection 4-5 years out.
ALAB +4.0% as CEO Jitendra Mohan and CFO Desmond Lynch at Citi said Scorpio X engagements grew from 10 to the high teens with several design wins expected by year-end for 2027 ramps, and Scorpio becomes the largest product family this quarter with X overtaking P. Content per XPU is near $1,000 (from under $100 at IPO). The optical roadmap got dates: aiXscale component sales as first 2027 revenue, NPO initial revenue in 2H27 and a full year in 2028, then 400G CPO in-house.