TMTB: EOD Wrap

Interesting action in the QQQs -57bps today led lower by semis -3% (SMCI - 31%; QRVO -26%; AMD - 10%) and helped by internet +1% (RDDT +43%, GOOGL +4%; AMZN +1.5%; SNAP +15%). We pointed out some charts this weekend that pointed to some weakness in semis and we are seeing that now as rotation shifts to internet. Some pointing to the flat GOOGL capex #s for Q4 as part of the reason for semi weakness, although they guided to something along the lines of +30-45% for next year (although that’s still a decel in rate of change terms from 23 —> 24). The levels I’m watching are NVDA $140, TSM $193, MRVL $85 AVGO $180. These are all the previous highs for the AI semi leaders and all of them are sitting roughly around those prices still. If we go below then I’d assume more semi weakness on the horizon, and if they can stay above then the opposite.

In terms of earnings reactions, consensus longs continue to act fine on beats and beats are being rewarded while misses getting punished causing a bigger bifurcation between winners and losers. I would say RDDT and GOOGL were tilted long by the fast money pod crowd and both up today while AMD and QRVO which are more shorted down a fair amount on guide downs

In terms of macro, yields up today with 2 year yields up 77bps following some hotter econ data and 10 year 2.5% again getting lose to 4.3%. Crude +2.5% as reuters report about how OPEC+ could defer its planned Dec production hike. BTC -65bps taking a breather from yesterday.

We got a slew of earnings after the close and I’ll be here to send you initial takes and any key follow-ups. See you all after the close.

Ok let’s get to the recap…

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Internet

• GOOGL +4% on a strong print with GCP accel and margins the clear standouts while Search and YT inline

• RDDT +44% monster today with a huge rev and ad rev beat, better EBITDA, better GMs, better guide, better engagement etc etc and a bullish call. We had pitched this to our Pro Tier readers back at $60. We took some off the table at $80 before earnings and taking a little more off today, but we think stock can continue to work.

• SNAP +15% as investors liked that impressions up 19% y/y and CPMs dn 7% which is a good signal they can monetize better. Rev and EBITDA #s look pretty conservative.

• AMZN +1.5% as investors liked the read-through from GCP accel’ing 6ppts to 35%. We’ll see tomorrow night

• SPOT +80bps continues to hit highs

• NFLX -60bps taking a breather

• CHWY -20bps as roaringkitty said he exited the position

• Housing strong despite higher yields: Z +2%; RDFN +6%; OPEN 3.6% although W - 75bps can’t catch a bid

• CVNA +90bps ahead of earnings

• ROKU +2.3% ahead of earnings

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Semis

• SMCI - 33% as EY resigned and then they filed an 8k saying the Chair of the Audit Committee discussed with Ernst & Young the reasons for EY's resignation. The company has begun the process of identifying a successor independent registered public accounting firm. The company will authorize EY to respond fully to the inquiries of the successor independent registered public accounting firm, once selected. The company does not currently expect that resolution of any of the matters raised by EY, or under consideration by the Special Committee will result in any restatements of its quarterly reports for the fiscal year 2024 ending June 30, 2024, or for prior fiscal years. EY resigned while conducting the audit for the company's fiscal year ended June 30, 2024, EY's first audit on the company's behalf…. Shorter summary: oof.

• AMD -10% as stock had rallied into the print, the guide was weaker, and print did nothing to change the narrative that co is behind vs. NVDA

• QRVO -27% on a big guide down; SWKS - 8% / QCOM - 4% in sympathy

• AI names mixed: ANET - 1%; TSM - 1.5%; NVDA - 1.5%; ARM - 2%; MRVL - 2.6%; MU - 4%

• Analog also weak: ADI - 2%; TXN/ON - 1.5%; MCHP -4%

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Software

Slow news day here

• MSFT +70bps/ORCL +1% and Cloud names o/p’d on GOOGL’s Cloud numbers: MDB +3%; SNOW +50bps; CFLT +60bps; DDOG -20bps

• PLTR - 3% being weighed down by AI semis — we took the name off our long sw list this weekend as 1) hitting ATH resistance and 2) facing tougher comps going forward after 7 straight q’s of easier comps. Potential accel to decel flip on a a very expensive stock in tech = no bueno so we stepped aside after a nice run.

• Cyber names weak: PANW - 1.5%; CRWD -70bps