QQQs -57bps as Deepseek and META capex dominated news flow today (see below for more details). Yields fell 2bps across the curve as flash PMIs revealed a slowdown in services sector - fed expects still holding steady around 40bps worth of cuts.
Internet
META +1.75% to new highs: Zuck guided 2025 capex at $60-$65 to support AI build out which is inline with buyside expects and above street at $51B (JPM was street high at $64B). That’s +61% at the mid point, an acceleration from 45% capex growth in ‘25.
META CEO Zuckerberg:
Why the rally? Investors took it as one of the overhangs in front of the print being out the way - as our vol friends like to say “knowledge is vol compressing.” Also the psychology of why would he release this early? My read on it is he likely feels good on the q…also who is the big winner if AI compute becomes a lot more efficient? I would argue META is one of the co’s that has the most to gain as means less capex outlay going forward and more efficient/faster AI progress = more $’s from one of the few co’s that is showing significant ROI from current spend already
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