TMTB EOD Wrap

Good afternoon. QQQs +1% as breadth was good: semis continued to act strong while internet and software decided to join the party today. Non-profitable and highly shorted were the factors that outperformed today as heard a lot of short-covering across street.

Regarding software, showed this chart in the chat that speaks to indecision we are seeing from investors if they want to continue to bid up expensive names. Today’s price action showed a 99% correlation between valuation and what 1D change:

Now a lot of this could just be the short covering today as names with cheaper valuations typically are ones most at risk of AI disruption, but the high correlation is stark. As I have been writing, it’s still TBD whether this is a new normal. The glass half full view is that tech investors have short memories, especially when it comes to their love affair with the best growth stories and narratives. Glass half empty is we’ve never seen anything like AI before and the terminal value fog is here to stay somewhat. I think we probably land somewhere in between and the market still trying to find some sort of equilibrium first. Take it a day at a time.

---

---

INTERNET

• NFLX +2.6% and another +1% after the close as WBD said PARA boosted bid to $31/share with a $7B termination fee (NFLX gets $2.8B break up fee; WBD gets $7B if deal doesn’t close)l. Still TBD if they see its a “superior bid” but all signs point to the board likely deciding that. We think it’s unlikely NFLX goes above and they’ve dodged a bullet, but who knows…Here’s Ted a few days ago: