Good afternoon. QQQs flat after a fairly uneventful Fed day where Fed increased its policy rate by 25bps in a unanimous vote, a move that was widely expected. The dots weren’t as hawkish as feared with consensus dot anticipating on more 25bps hike this year and none in 2027 while market is pricing in 32bps worth of hikes this year. Oil -3%.
VK had his take on a net hawkish presser that created pressure on stocks late in the day: “Warsh noted that the economy appears to be “strengthening” and (as he stated at Jackson Hole) and that one would be hard pressed to describe current financial conditions as restrictive (Warsh was asked a couple of times about how he would describe policy at this moment but didn’t really provide an answer)….On prices, Warsh said that “this summer’s inflation readings do not tell me that underlying trends have meaningfully improved…too many categories are still posting increases on both a 6-month and 12-month basis of 3%+”, and he went on to call inflation risks as being “skewed to the upside”
In Tech, a relatively slow day news wise. Pretty bifurcated tech tape today: AI infra/optical led hard, with Optical +4.8%, Neoclouds/Miners +3.3% and Network Equip +2.4%, led by LITE +10%, CRDO +7%, COHR +7%, ALAB +7%.
Meanwhile Software -0.9% / Internet -1.4% lagged. Factor-wise, momentum dominated (+4%), while Bitcoin-related/high-short-interest names were the clear losers.
Let’s get to it…
AI/SEMIS
NBIS +1% and +4% after the close as news of more pricing hikes being passed around:
GPU rental prices continue to go up:
NVDA +1%: IR was out talking to sell-side and investors. One of the key takeaways passed along to me from the calls was that IR was more specific on the vendor financing mechanics: NVDA’s residual value guarantee is capped around 25% — vs AVGO’s first tranche at "80% plus" and its most recent at "maybe 70%." Collateral is revalued monthly by a trustee, NVDA covers up to 25% of the residual shortfall, and the other 75% is unguaranteed (the owner does take the loss.) The six-partner private credit arrangement is still only an MOU with nothing signed. On rev share, Firmus is the template: agreed baseline rate, a higher market rate today, and NVIDIA captures about 50% of the delta with the stated downside that if demand stops and the partner cannot sell the compute, NVDA pays for it. Said they’re being very selective. Other interesting tidbits: part of the reason they gave the ‘28 guide was that it was aimed at TSMC to get better wafer allocation and GMs not completely covered if input prices continue to ramp up significantly.