Good afternoon. Risk on continues as QQQs +2.4% with strength across the board led by semis +3.4%. Long end fell 6-9 bps across the curve as reduced long-end JGB issuance caused some to speculate there would be more demand for long-end treasuries. One of the strongest parts of the bearish market narrative was that yields were spiking so this was added fuel to the bull narrative, which had already gained strength last week as the admin said they were going to run the economy hot instead of trying to cut the deficit. Some dovish data also helped move yields lower. The market continues to price in 50bps worth of cuts.
All eyes on NVDA tomorrow.
Let’s get to the recap…
Post-close, OKTA -12% as cRPO of +14% was 1-2ppts light of where buyside was and smaller than their typical beat. Q2 cRPO guide of 10.5% was below street and below buyside bogey which was slightly above street. Call ongoing…
Internet
ETSY +6% the big winner today: Recall Yipit was out last week calling out improving GMS data (May improved to -1.5% in May from -dd in April and now tracking in line as comps get easier through the rest of the quarter.)
Daily and monthly chart looking better here
Don’t really have any explanation for the improvement in GMS data but it is what it is, and it’s confirmed by credit card data as well. But if somehow 3p data shows GMS turning positive y/y that would be a big positive rate of change for a stock that has done nothing for a long time and remains v underowned and unloved. GMS comps also get 4 ppts easier over the next couple of quarters. What’s the bull vs bear narrative? Bulls will call out the easier comps, say a sleeker, AI-driven app can rekindle positive GMS growth once macro headwinds ease; they’ll highlight record app mix, steadily rising take-rate, robust free-cash-flow conversion and negligible direct tariff exposure as levers to return margins to 27 %-plus by 2026 (aided by some help from Elliott). Bears counter that every buyer cohort is still shrinking, constant-currency GMS erosion has yet to bottom and management just guided margins lower to fund pricier marketing and compute, signaling initiatives remain costly and unproven.
Don’t have a strong view on this one, but we took a small long last week on the improving 3p data. Hard to make it bigger than just a small position unless we hear a more compelling narrative (if you have one, let us know...)
RBLX +4% continues to rip to new highs…3p continues strong (no effect from Fornite release yet)..we’ve talked about our love affair with the medium-term story here…stock riding that 10d like a champ
RDDT +4% being patient on re-adding on this one after taking some profits last week. Have to be careful in a market this strong especially since top line #s will likely come in better than expected
SHOP +5%: We think bull case here interesting: rising attach rate plus operating-expense leverage can push FCF margins above 20 % over the next few years. Partnerships with META and OAI should drive increased GMV going forward. In addition, we think they are uniquely positioned to take advantage of AI search to become a platform for buyer discovery. Risk here is China tariffs stay high.
Travel strong: EXPE +4%; BKNG +2%; ABNB +2%
UBER +1.4% lagged as TSLA’s FSD Austin release gets closer
GOOGL +2.5% continues its nice run - lots of bullish option flow here
AMZN / META +2.5%
TTD +3% as Citi had some positive takes after adtech conference saying that investors expecting Amazon DSP to impact TTD's 2H25 budgets "will be waiting longer than expected," as Amazon DSP revenue appears to come from existing Amazon allocations rather than TTD-bound spending.
SEMIS
NVDA +3% after announcing new China chip and ahead of the print…Here’s where expectations settling out for the print tomorrow (from our weekly yesterday):
CRWV +20%: say it with me: never short a tech mo stock on a valuation downgrade (barclays in this case…)…New ATHs…Liked this from our friend @JaredKubin on the increasing big moves we see in retail-driven stocks (especially one like CRWV which is highly shorted/low float):
Also have to give props to our friend (you know who you are) who pitched this to us before earnings (we passed along in our weekly to our Pro subs a few weeks back)
Other AI stocks ripping - our AI vibe meter continues to hover at highs we haven’t seen since before summer of 2024: MU +3%; VST +3.6%; AMD +4%; MRVL +5%; ARM +5%; VRT +5.5%; TSM +3%
ALAB/CRDO +3%
SOFTWARE
INFA +6% / CRM +1.5% as CRM announced they were going to acquire INFA for $8B (5x TTM revs). Here’s BofA on the rationale: Specifically, the combination of Informatica's data integration, data quality, data governance, and other offerings will establish a more unified data infrastructure for agentic AI.
We liked these takes:
SNOW +3% as acquisition shows value of data later like SNOW and Databricks…
MSFT +2.3% as Cowen raised #s across the board saying they think Azure will be 35% cc in FY26 vs street at 32%. We written about how we think Azure can accel to ~40% in next couple of q’s….Stock now less than 2% from ATHs and up close to 10% from earnings in a few weeks when we pitched it long…ORCL +4% as Cowen also raised numbers here. Both of these trade similar to AI proxies so no surprise they are getting a bid along with semi AIs.
APP +7.5% getting its groove breaking back over that gap fill we called out last week (from the short reports back in Feb):
Source: Bloomberg We find spots like this are good entries to go long a liquid stock like this where we like the narrative/story and think has a good chance of trending up as we can set a stop just 1-2% below this line and hope to ride the 10d/20d up. Breaking above the short report gap shows stock likely ready for another move up….
U+5% see saw continues
INTU +4.5% nice follow through after beating last week
NET +2.3% steady as she goes —> best/cleanest way to play inference/agentic demand in sw..This from o3 helped me understand differences and similarities of NET’s Workers AI vs CRWV model (yes I’m trying to incept the NET is the CRWV of software narrative…):
PLTR flat weird underperformance on a risk on day - stock has been acting weaker as of late and has failed to confirm its breakout to new highs
ADBE +1.3% / GTLB +1% / ESTC +60bps / HUBS +25bps the weak stay weak
ELSEWHERE
TSLA +7% as Elon is back to good Elon!
Also this fortune article on Austin FSD release had some interesting nuggets, which makes it sound like they’re probably have some cars on the road by end of June, despite the skepticism:
“We had initially thought that that launch date was especially optimistic, but I don’t know if that’s the case anymore,” Jordan says. “So I don’t know. I’m kind of guessing along with everybody else, but the details that they have shared were reassuring.”
But key groups—including Austin’s transportation department, Austin’s emergency first responders, and federal regulators—are still missing important information about the self-driving machines set to imminently hit the roads of the Texas capital. Tesla hasn’t hosted trainings with Austin emergency responders. It hasn’t specified what level of autonomy Tesla cars will be using at launch (the industry’s 5-point scale entails everything from cars that require constant human supervision to vehicles with no steering wheels). And, as of last week, Tesla still hadn’t shared first responder plans or guides that the Austin Fire Department and Austin transportation department ask self-driving car companies for and rely on when responding to safety episodes, the departments told Fortune.
On Monday, Tesla conducted live testing with several members of Austin’s autonomous vehicle working group, driving one of its robotaxi cars alongside emergency vehicles on a closed neighborhood street. At the event, Tesla laid out some of their preliminary plans for the launch, according to Andre Jordan, division chief of special operations and homeland security for the Austin Fire Department, who was present.
“I believe them,” he added, saying that the company has been transparent with them and willing to collaborate. “I don’t know if they’ve met all their timelines, but they have done what they said they would do.”
Jordan noted that Tesla has made four modifications to its launch plans—adding specific guardrails or risk mitigations to the service—that have made the Fire Department feel more comfortable, though he repeatedly declined to specify what they were, saying that they were “preliminary” and that it was Tesla’s “business information.”
XYZ +6% as BNP upgraded to buy saying GPV likely to accelerate in Q4 as drags fade. Mizuho was also out noting significant correlation between BTC price and Cash App usage. New admin policy also helps XYZ: the new tax bill includes no tax on tips and overtime which should support lower income households, something that Cash App is exposed to. The small bank deregulation should also help small businesses, which seller biz is exposed to…Remember they missed and lowered in the prev q, but ex leap day/Easter, etc. miss wasn’t as large as headline and guide implied a macro step down which we haven’t seen. This is another one similar to APP that just climbed above the gap down post-earnings. We think this provides a nice entry point near $60 with a stop a couple ppts below that gap fill line. Mgmt was positive at JPM on May/Apr trends; Clev was out last week saying Seller is gaining momentum and potential share gains; Yipit was also out last week confirming better May GOV data. A decent seller acceleration + BTC/proto narrative interesting enough to take a position especially given the good entry point…It’s one of those where a B- idea can turn into an A trade because of the r/r on the entry…
HOOD +4.5% chart looks primed for ATHs…
AAPL +2.5%: you know its a strong green day when even AAPL isn’t in the red…
TTWO +50bps lagging as of late as more exciting stories have taken attention from this “sleep well at night” long
DELL +1.7% weaker than you’d expect ahead of earnings on Thursday given positive Citi catalyst watch and AI strength
DIS +2.4% as FT said their India streaming biz has almost as many subs as NFLX has worldwide - pretty nuts
BULLISH AND BEARISH WEEKLY OPTION FLOW
