Good afternoon. QQQs +1.3% opened +41bps and ground higher most of the day as the AI vibes kept rebuilding after Monday’s S-1, with Semis +3.9% leading for a second straight session while software +35bps got left behind again. As we wrote yesterday, we think the ST semis trade set up was cleaned up a bit following a better received Anthropic S-1, tea leaves pointing to a good Oct ARR #, along with positive financing news from META, AVGO, and SPCX all of which helped remove some uncertainty from the Lab ARR and funding debate, the two issues weighing most heavily on the trade in recent weeks.
More broadly, as we discussed this weekend, the past few weeks have forced investors to better understand the reflexivity of the AI trade, with Lab ARR at the center of it all. Even after two strong semis sessions, the vibe feels different from past rebounds: less exuberance, more appreciation for dependencies across the AI ecosystem that aren’t going away. We think that’s healthy and mature.