TMTB Morning Wrap

Good morning. Futures -60bps to start the day. Asia very weak overnight:: TPX -2.88%, NKY -3.22%, Hang Seng -1.72%, HSCEI -1.65%, SHCOMP -0.81%, Shenzhen -1.04%, Taiwan TAIEX -2.52%, Korea KOSPI -3.32%,. Memory names particularly weak: Kioxia-8%, Phison-7.5%, Nanya/Hynix-3.5%, Samsung-2%. BTC close to $90k.

MSFT Ignite and Wells Fargo TMT Summit start today. Gemini 3 rumored to be released today or tomorrow with some good-looking initial (and unverified) benchmarks being passed around X (below).

Let’s get to it…

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NET -3.5%: Cloudflare says global network experiencing issues this morning

Cloudflare said that it is aware of, and investigating an issue which potentially impacts multiple customers.

CLOUDFLARE $NET: ‘WE ARE SEEING SERVICES RECOVER’ FOLLOWING ISSUES

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MSFT: Rothschild & Co Redburn Cuts Microsoft to Neutral, Lowers PT to $500

Rothschild & Co Redburn moved Microsoft to Neutral from Buy and trimmed its target to $500, arguing that “a more cautious stance on the hyperscalers” is now warranted. The firm says its work shows the underlying unit economics are “meaningfully weaker than assumed,” noting that GPU-driven buildouts require roughly 6x more capital to generate the same “cloud 1.0 value”—with the risk profile now tilted to the downside. The analyst adds that investors are giving hyperscalers “too much benefit of the doubt” by valuing today’s capex as if it delivers legacy cloud returns, despite “no clear path back to those economics.” Rothschild also downgraded Amazon alongside MSFT and points to softer earnings expectations plus sharply higher capex needs as the drivers behind the Microsoft call.

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GOOGL: Alphabet upgraded to Buy from Hold at Loop Capital

Loop Capital analyst Rob Sanderson upgraded Alphabet (GOOGL) to Buy from Hold with a price target of $320, up from $260. The firm its concerns regarding the sustainability of the company’s search revenue growth under artificial intelligence cannibalization and transition risk is no longer a concern shared by investors. Google’s search results “remain as healthy as ever” while traffic share to Gemini has doubled year-over-year, and the position of Google Cloud and size of opportunity for its proprietary artificial intelligence processors “is becoming better appreciated,” the analyst tells investors in a research note. Loop upgraded Alphabet after significantly raising its growth outlook for Google Cloud.

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GOOGL: Gemini 3 (unverified) benchmark results being passed around X this morning look good