TMTB Weekly

Hyperscalers vs. Semis

Happy Sunday. Well, that was quite a month and quite a week. The AI trade is now one of the only secular growth stories I’ve witnessed where accelerating fundamentals end in a big margin call. Every week brings something new and unexpected; it’s fun, but would be a lot more enjoyable if our PnL was back at end of June levels.

A lot of what was important this week was concentrated late in the week. Here’s how we framed things on Thursday:

Over the last 24 hours we have gotten 3 pieces of really good news: 2 of the arguably most important KPIs to the AI trade — Hyperscaler ROI and Labs ARR — have come in better than expected (OpenAI, MSFT, AMZN), and the “Leopold Low”

Let’s dig into those in reverse order. We found out midweek that the biggest driving force behind the disorderly selloff, which began the prior week, was Leopold getting into trouble with his levered book. That was likely compounded by others selling into the unwind as rumors of his demise floated around early in the week. …