TMTB EOD Wrap

Good afternoon. QQQs +1.3% despite >40% of constituents in the red as semis +4% leading the way higher again at the expense of both internet and sw. In macro land, oil slumped 3-4% as Trump and co downplayed yesterday’s flare up in the Middle east as the ceasefire remains in effect (at least for now).

In Tech, it’s May and the early HOT AI Summer continues in full force (or as someone in TMTB Slack put it “Anything AI but NVDA Hot Summer.”) We wrote about the strong price action still being displayed in semis last Thursday without many signs of cracks, and that’s only continued in the last few days. Charts are being bought aggressively on any mini-pull back (AVGO, LITE, AMD), plenty of names breaking out to new highs, beats are following through to the upside (NOK, STX, QCOM, WDC, TXN, VRT, INTC), and misses are being bought up (CLS, TER, GLW, ON, AMZN) with some names going red to green post-earnings very quickly post-open (SNDK, WDC, ON). Memory names continue to lead the way higher with SNDK/MU up double digits as INTC +13% gets close to meme territory following news AAPL is looking to potentially use them as a foundry partne. Stocks are no longer even waiting for T+1 to go red to green - just check out AMD price action in the post this afternoon. Plenty of stocks extended with very high RSIs.

DOCN is a good example of how AI sentiment has changed over the past 3 months. When they reported Q4 numbers, stock was down 10% as investors were more focused on the higher spend required for the better growth guide — the ROI debate was still front and center; now that debate is way in the rear view mirror. Today’s price action was much different when they raised top line guide on the back of a 60mw expansion: +40% (not a typo). And that’s despite mgmt saying capex/mw on the incremental 60mw was going to be higher. Price action in AI semis continues to be as strong as anything I’ve seen in a long time as the right tail case in AI continues to play out. One of the few stocks not acting well is NVDA, which ironically helps the rest of the space from a flow perspective.

At this point in the cycle, most of the questions I hear are around 1) “why is [insert AI stock] up so much today?”; 2) “what level should I sell [insert ai stock]” and 3) “how do I psychologically deal with the massive fomo I feel.”

Post-close:

Mainly focused on AMD (+9% post-close), where numbers were good enough (better revs, GM slight miss vs bogeys), but more importantly is that Lisa is doing here best early-cycle Jensen impression with a bullish earnings call, saying they are going to exceed $20 EPS target, confident in tens of billions in GPU revs next year. On server CPU TAM, was guided to initially grow 18% , now she is saying Server CPU TAM grows 35%+ annually to $120B by ‘30 with their Server CPU revs up 70% YoY in 2Q, with growth continuing in 2H and into ‘27. All good stuff.

Key quote:

“We have a world-class supply chain and are making significant investments to expand capacity and execute at scale. With the momentum we are seeing across the business and the expanding market opportunity, we see a clear path to exceed our long-term financial targets including delivering more than $20 in EPS over the strategic timeframe…“we see a path to really get to exceed our original targets of greater than 80% CAGR.”

Hard to say stock expensive at <20x that $20 #, which is sounding more like a floor after today…