TMTB Morning Wrap

Good morning. Futures -40bps softer to start the day. BTC -1%. Asia saw mixed px action overnight: TPX +0.13%, NKY -0.14%, Hang Seng +0.18%, HSCEI +0.19%, SHCOMP -0.39%, Shenzhen -0.47%, Taiwan TAIEX -0.3%, Korea KOSPI +0.81%.

The CRWV results brought along with it two things that are relevant to the broader AI trade. First, on the topic of useful life, which is a main driving factor in how cheaply “compute” can be financed (Longer lives boost lower WACC, higher LTV; shorter lives tighten financing yet accelerate replacement cycles). It was a concern Burry brought up in a tweet yesterday:

CRWV had this to say in a mic drop yesterday:

“Demand for AI cloud technology remains robust across generations of GPUs. For example, in Q3, we saw our first 10,000-plus H100 contract approaching expiration. Two quarters in advance, the customer proactively recontracted for the infrastructure at a price within 5% of the original agreement.”

Does that settle the argument for good?