TMTB EOD Wrap

QQQs +75bps to finish a wild week. If we were already seeing big paradigm shifts heading into this week regarding the AI trade, this one brought arguably the biggest one of all since the initial launch of ChatGPT: Gemini 3’s stellar launch that has catapulted GOOGL back into the leadership position. Similar to what we wrote last week in our paradigm shift piece, GS expressed it well EOD today: “We are at the point in the AI cycle where the market is increasingly looking for datapoints on returns on AI spend vs. more evidence that the spend is high & growing.”

We’ll have more thoughts this weekend...

Treasuries saw modest gains with yields falling 1-3 bps across the curve. The odds of a 12/10 Fed cut rose from the 30s to low 60s following Williams remarks this week and market got a bit of a boost mid day with the news Trump was internally floating the idea of allowing sale of H200s to China.

Let’s get to it…

INTERNET

• Housing names outperformed as existing home sales data was strong and rate cut hopes buoyed the sector: Z +6%; W +7% although rate sensitive CVNA -1% despite DB’s positive initiation

• GOOGL +3.5% continues to outperform. CNBC reported that AI infrastructure boss told employees at an all hands meeting earlier this month that GOOGL must double AI serving capacity every 6 months to meet demand, and saying: “Google’s job is of course to build this infrastructure but it’s not to outspend the competition, necessarily…We’re going to spend a lot" adding that the real goal is to provide infrastructure that is far “more reliable, more performant and more scalable than what’s available anywhere else.” Great week for Googl and co. Still, Gemini hasn’t overtaken ChatGPT in the app charts — as a reference: Gemini was released on Tuesday. It took SoraAI only 3 days to top the charts despite it being invite only. It took Gemini 2 weeks for it to finish #1 on the charts in early Sept after the initial NanoBanana release went viral. . At this point, I think it’s consensus Gemini will overtake ChatGPT in the charts, so if Monday comes around with ChatGPT still at the top, would be a surprise to many.