TMTB Morning Wrap
Good morning. Futures +35bps bid early as Oil -1% drifting sideways to lower. Main news on the war front was SoH slowly beginning to open up (15 ships have passed through in past 24 hours with Iran’s permission) and Axios report saying that US allies are pushing for a 45 day ceasefire with Iran, although Iran doesn’t seem receptive to whatever proposal is on the table. Yields +2-3bps across the curve. BTC +3%
Favored AI semi sectors leading the way up early with Memory/HDDs +3% on a slew of Asia/sell-side datapts and Optical +3-5% helped by AAOI announcing more orders. Memory names were strong overnight as well with Samsung +6% and Hynix +3%.
Lots of stuff to get to this on this beautiful Monday Morning. We’ll hit some OpenAI stuff first then onto the usual…
OpenAI: Sam Altman May Control Our Future—Can He Be Trusted? | The New Yorker
Long Piece in the New Yorker dropped this morning (h/t Tae). Haven’t gone through it, but some quotes:
Senior Microsoft executive, on Altman: “He has misrepresented, distorted, renegotiated, reneged on agreements.” … “I think there’s a small but real chance he’s eventually remembered as a Bernie Madoff- or Sam Bankman-Fried-level scammer.”
Altman, on bubble risk: “Someone is going to lose a phenomenal amount of money.”
Board member, on OpenAI’s balance sheet: “The company levered up financially in a way that’s risky and scary right now.”
Jan Leike, in email to board: “OpenAI has been going off the rails on its mission. We are prioritizing the product and revenue above all else, followed by AI capabilities, research and scaling, with alignment and safety coming third. Other companies like Google are learning that they should deploy faster and ignore safety problems.”
Former OpenAI executive, on Gulf data centers: “The truth of this is, we’re building portals from which we’re genuinely summoning aliens. The portals currently exist in the United States and China, and Sam has added one in the Middle East. I think it’s just, like, wildly important to get how scary that should be. It’s the most reckless thing that has been done.”
OpenAI: CEO and CFO Diverge on IPO Timing
According to The Information, OpenAI CFO Sarah Friar has privately expressed concerns about the company’s aggressive spending plans and Sam Altman’s push to go public as soon as Q4, questioning whether OpenAI’s slowing revenue growth can support over $600 billion in server commitments. Friar was also moved out of reporting directly to Altman last August and has been excluded from some key financial conversations, highlighting tensions between the CEO’s ambitious vision and the financial realities his CFO is navigating.
OpenAI: An Inside Look at OpenAI and Anthropic’s Finances Ahead of Their IPOs
According to WSJ, OpenAI and Anthropic are preparing for record-breaking IPOs by year-end while facing massive profitability challenges driven by soaring AI model training costs. OpenAI projects spending $121 billion on computing power in 2028 with $85 billion in losses that year despite nearly doubling sales, while both companies show mounting training expenses that dwarf historical precedent. Both firms expect significant negative free cash flow through 2030 and are relying on IPO proceeds to fund their operations, with bankers seeking rule changes from index providers to accommodate their capital needs.
TECH RESEAERCH/NEWS
NFLX: Goldman Sachs Upgrades to Buy, PT $120; Ads, Pricing & FCF Drive Re-Rating
Goldman Sachs upgrades Netflix to Buy with a $120 PT, citing improving risk/reward and multiple growth levers. The firm sees sustained revenue growth driven by paid subs, ARPU expansion, and scaling ad revenue, alongside ~250bps annual margin expansion and strong FCF conversion (~70–75%). GS adds capital returns (buybacks) could resume at scale, supporting upside. Net, the analyst sees improving fundamentals and ad momentum driving a re-rating from current levels.
CVNA: BofA Downgrades to Neutral, PT $360; Macro + Competitive Pressures Weigh Near-Term
BofA downgrades Carvana to Neutral (PT $360), citing a more balanced near-term risk/reward amid rising rates, competitive intensity, and gas price pressure on demand. The firm notes higher 2-yr yields could compress loan spreads, while aggressive pricing from competitors may weigh on GPU recovery. BofA also flags softer near-term unit acceleration and sensitivity of CVNA’s younger customer base to higher gas prices. That said, the analyst remains constructive longer term, highlighting share gains, path to becoming the largest independent dealer (~7.5% share), and strong SG&A leverage.
AMD/ADI: Citi adding to 30day Catalyst watch
AMD: KeyBanc Raises Estimates, Reiterates OW/$330; AI GPU Outlook Lifted to ~$16.5B
KeyBanc turns more positive on AMD after several constructive data points: CoWoS supply up to 80K interposers (from 70K) with ~70% growth expected in 2027, AI GPU outlook raised to ~$16.5B (from $14.5B), price increases across both server and PC CPUs, and outsized server CPU demand. The firm raises estimates accordingly.
AMD: Erste upgrades to Buy on strong data center demand and margin expansion potential driven by next-gen MI450 GPUs. The analyst sees sustained momentum in AI infrastructure as a key growth driver for the company.
AVGO, NVDA: KeyBanc Stays OW on Both but Flags Negatives; Mediatek TPU Wins Pressure AVGO, HBM4 Delays Hit NVDA
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