Good afternoon. QQQs +1.2% bounced back after last week’s -6%, with semis +1.7% leading and software +1.6% not far behind. Memory and storage led the way (WDC +6%; SNDK +5.5%; SKHY +4.7%; MU +3%), along with semicap (LRCX +3%; TER +3%) and analog (ALGM +5%; MPWR +3.5%), while neoclouds faded from the open as CRWV gave back a +7% pop on GS’s upgrade amid talk its ATM was live (CRWV -44bps; NBIS +3%). Software was broadly bid with DDOG leading on Bernstein’s upgrade (DDOG +5.4%; TWLO +5.3%; RNG +5%; PLTR +4.4%), and AMZN +5% led megacaps after MS made it a Top Pick while META -55bps lagged into Wednesday’s print on mixed MS/Clev mentions and concerns over an equity raise. On the other side, EMS/servers gave back early gains (FLEX -3%; CLS -1%; DELL +73bps) and SE -5.7% was the worst name on my screen on weaker 3p data.
Not a lot of trust in the bounce in TMTB Slack here (it was a narrow bounce: ~70% of S&P stocks were down, with only tech and discretionary green.) We think we likely reached the nadir of sentiment and de-grossing on Friday/last week, but semis have a lot of work to do to rebuild bulls’ trust and we think earnings will help with that. That said, last week’s washout wasn’t entirely wasted pain. When you kick over a rock in the backyard, all the ugly bugs scatter into the sunlight: Anthropic’s ARR adds slowing, a wall of AI debt still to come in the face of rising yields, circular backstops pushing CDS wider (AVGO the poster child), CRWV bonds yielding near 15%, price cuts muddying the ARR-per-GW math, etc. And with the 10Y north of 5% and Iran/Oil still in the headlines, the sun’s been brutal. It’s unpleasant to look at, and it makes you jump back for a second, but now that the rock is flipped, the market doesn’t have to guess what’s hiding underneath anymore. A few of the bugs are even smaller than they looked in the dark: hey, CRWV’s pure unsecureds only $10B!
I know: rocks and bugs. Doesn’t sound massively bullish, and that’s the point, but overall we think it was a necessary step as AI bulls continue to figure out a cleaner narrative moving forward. One step at a time.
Talk of the day was CRWV again. GS upgraded it to Buy this morning after the ~43% drawdown, arguing credit fears overstate the funding risk: its checks suggest new debt would cost only ~100-200bps above CRWV’s blended rate, even with the unsecureds at ~13.5-15%. The stock opened +7%, but the talk quickly turned to supply: word that a 35M-share ATM could start today, then by ~10am that it was working. By the close it had round-tripped the whole move (low -3.5%). Not a lot of confidence in the GS upgrade in TMTB Slack, SkinnyBundle saying “usually skeptical of equities upgrades on names that are going down on credit fears. The credit guys know the terms much better and they're choosing to raise the yield to 15%+.” and rb noting the GS analyst hosted a call on it and valuing it at 10x doesn’t make sense for “company with defined cash flow streams and limited if any residual value” arguing figuring out a range of values of contracts with 0 residual and then assumed 3-5 years of residual makes more sense.
Credit wasn’t buying it.. CRWV’s converts now trade at the same price as the straight bonds, which some read as someone unwinding. All this with the IG market on hold for META’s debt deal, which usually comes the day after its print, although I’ve heard some chatter of a possible equity deal as well (50/50 among investors I talk - some think equity is more a ‘27 story).
After Anthropic’s Sept ARR # had many scratching their heads and questioning demand last week, IFR reported that it plans to file publicly with the SEC on 10/26 and go public in mid-November, and The Information says it’s preparing a new model that’s better at reasoning and intuition than anything available commercially.
In macro land, the long end gave back some of last week’s rally: 10Y +6bps to 5.15%, the 2Y +3bps to 4.77% and the 30Y +5bps to 5.48%, after the 10Y’s -16.5bps last week, its biggest weekly drop since August 2025. TLT broke below its post-PPI lows. The Fed is in blackout ahead of the 10/27-28 meeting, with hike odds at ~17%, down from ~21% a week ago and ~58% a month ago; December is ~75-90% priced for a hike (~20-25bps for the rest of 2026), with roughly another ~45bps priced through 2027. Crude round-tripped: down ~2% early after Trump’s Friday order waiving sanctions and tariffs on Russian fuel, then bid midday after Iran said it had no choice but to assert control over Hormuz, finishing +2.4%. BTC +1.4% to ~$82K after touching $83K overnight.
Let’s get to the good stuff…