TMTB EOD Wrap
TMTB Vacation schedule:
No posts this Wed through Friday (June 24 - 26).
Only Morning Wraps next week June 29th through July 2nd
No posts July 20th - July 24th
Good afternoon. QQQs -25bps as Semis +2% led the way higher on the back of the some of the usual suspects: Memory & semi cap. Optical even joined in on the fun today with names rallying on the back of several positive sell side notes/meetings with mgmt. Internet and software big losers today weighted by large cap.
Main talk was hyperscaler weakness today with GOOGL/AMZN -5%, META -2%+ and MSFT -3%. From a high level, net flows from investors have turned negative over the last month on the back of worries around FCF, ROI, and equity raises (first from GOOGL, then META’s rumored raise and some chatter around MSFT doing the same). Also increasing debate around the puts and takes of whether a shift to increasingly capable opensource models is positive for the group. Maybe some weakness around Mega Cap issuance from SPCX an in front of the labs as well. It’s hard to point to one specific catalyst that flipped the switch from ROI = good to ROI = questionable over the last month, but we think there are additional micro and macro forces at play here. Investors have increasingly been putting $ to work in the places where those large capex checks are being written to. In our weekly yesterday, we wrote about a mindset shift underway among investors. For 15+ years, being long Mega Cap Tech was the easy call, but the first half of the year has put the opportunity cost of that trade front and center: