On the news that the Pentagon reportedly instructed the US Military to conclude preparations for potentially resuming "major combat operations" in Iran, oil is bouncing strongly this morning, and is looking to break out. I know there are a lot of macro factors involved here, but realistically, if that was a tech stock, the whole of X would be clamouring on how amazing a breakout set up that is, so the objective bet has to be that this goes higher. 

https://preview.redd.it/l1sio0rbq8uh1.png?width=1400&format=png&auto=webp&s=c186ebcb1b7f57f6d239f6fc689f90867d8e36df

Especially when you look at this data:

https://preview.redd.it/c6glbt7cq8uh1.png?width=1400&format=png&auto=webp&s=a78c44c638f200e1f916b75b9dce15bc504edbaa

We have a disconnect there, and the more likely resolution is that oil needs to move higher in order to play catch up. 

If we look at diesel, it is as similar, and just as ugly picture:

https://preview.redd.it/ml7065mdq8uh1.png?width=1400&format=png&auto=webp&s=6478929ff929ea3c030af8fd949779629ca3a13e

A breakout off previous resistance, flipped to support. Again, if that was a tech stock, that would be a textbook breakout retest. 

Although crude oil is flowing through the strait (at a still heavily reduced pace), the diesel shortage continues to worsen. 

https://preview.redd.it/5ul9gvkeq8uh1.png?width=802&format=png&auto=webp&s=e4522d8e6de045b3ab246033152b0b1fcec6344e

With that the case, we have this constant bid on the USD, which has broken out nd continues to move higher through the 101.23 resistance. 

https://preview.redd.it/zo6rk6ufq8uh1.png?width=1400&format=png&auto=webp&s=20ecde615493d6b4fb2c78f583e732354f2fe9d8

All of this is a negative for gold, which positioning reflects:

https://preview.redd.it/epsb7ioiq8uh1.png?width=1400&format=png&auto=webp&s=db80c4131f1394026380c953601dfbab31619ba1

The main support zone is here in green. 

https://preview.redd.it/h4mpbo9kq8uh1.png?width=1400&format=png&auto=webp&s=07e0c6e1c68ffc1c8e1fc6fbda4dd4d10d0305aa

• Revenue: $567M, +68% YoY

• Adj. EPS: $1.00, +133% YoY

• Adj. EBITDA: $93M, +115% YoY

• Operating income: +458% YoY

FY27 guidance RAISED:

• Revenue midpoint: ~$2.43B (+40% YoY). Note they previously guided to 30% growth, now they are talking about 40% growth. 

• Adj. EPS: $4.45 (+55% YoY)

AI Infrastructure is accelerating:

• 6 new AI infra customers in Q4

• 4 are neoclouds

• 36,000-GPU AI factory deployment in Norway

• New customer with $10B in contracted comput

Firstly, these were my thoughts pre-earning:

https://preview.redd.it/jjum4tysj1uh1.png?width=602&format=png&auto=webp&s=d4e8d321469feeb246253e2a2c7c927073ba1975

My modelling suggested that the true FY2027 EPS was more likely to be something in the range of 4-4.5 vs the street consensus of 3.4. 

They guided to 4.45, so pretty much exactly in my range. 

So those street estimates need some upgrades, so do not be surprised to see some positive coverage on PENG tomorrow. 

Only 7 analysts cover PENG based on the Webull data, so I don’t think it’s going to be many firms but yes, I would expect some positive upgrades. 

I actually think they have sandbagged guidance again here, and I actually think they beat and raise again next quarter, with the guide being increased likely to above 4.75. Basically a quarterly occurrence at this point for the company. 

Gross margins came in at 29%, which as above consensus, and the neocloud contracts that they spoke about suggest to me that they can and likely will come in above that next quarter as well, because those are normally high margin contracts. 

AI business was up 141% YoY, thats the segment that kind of matters. 

Note also that the negative cash flow was flagged by some as a concern, but it is because of inventory build of memory, and theyr’e selling full racks which is pretty expensive. I wouldn’t let that cloud what was otherwise clearly a very bullish earnings report. 

From what they described,  Neocloud demand was better than I expected and from what they described in the earnings Q&A, it was better than they expected to. That’s basically a welcome benefit.

What tehy are basically offering their neocloud customers is an end-to-end build and operating the factories on their behalf. They will design and source the hardware and then manage the data centers for 3-5 years along with ClusterWare software. This is very similar to what they do for their enterprise customers anyway.

Just 2 of those neocloud wins amount to over $13B in multi year contracts. 

Pipeline is rock solid. They said the memory business is executing and growing well and the AI infrastructure is providing a nice upside boost. They noted specifically on the Q&A that margins on memory are better than expected. They noted however that since they have a bunch of hardware wins, the gross margin going forward may be slightly lower, but it’s the result of product mix more than anything else. 

Backlog was amazing, extending out 4 quarters. 

They didnt share specific details on how much neocloud demand is within the guide and the backlog, but did specify that the backlog was extremely strong across all areas of the business. 

My main bull case is the fact that fast inference is clearly something that customers are willing to pay for and frontiers are keen to provide. Tokens for fast inference sell for 6–10× standard prices, and despite that demand far exceeds supply. CBRS does have valuation concerns, but the main case for CBRS is the fact that it is absolutely the purest public way to own exposure to fast inference.

Here are the range of views I found on how Institutional Research desks are seeing the TAM of Fast inference:

• Mizuho Sell side Note: fast-inference TAM of $550B by 2030E, a 291% CAGR, equal to about 20% of all AI workloads.
• Bloomberg Intelligence: total inference TAM grows from $66B in 2025 to $292B in 2029.
• Citi (Atif Malik): fast inference worth $130B by 2030.
• McKinsey: 71.5GW of global inference capacity demand by 2029.

The consensus, however, is that there is a lot of upside in the growth of fast inference.

Firstly, let's discuss the WHY. WHY are people willing to pay for fast inference?

1. The opportunity cost of speed is waiting, and sometimes idle waiting costs more than teh tokens, which is why the willingness to buy the tokens is still so high despite the higher prices. Customers already pay steep premiums for identical model weights served faster. Examples are Anthropic's fast mode (about 6× the price for about 2.5× the speed) and Cognition charging for a Cerebras-served tier while giving away a slower one. The logic is that for expensive workers, idle waiting costs more than the tokens.

2. Agents: A chatbot typically is able to hide latency (to an extent) behind human reading time. However, an agent's steps often depend on the previous result, so per-call delay adds up across hundreds of steps. Speed becomes pretty critical as far as agents are concerned.

3. For many, faster inference leads to higher quality products: Within a fixed time budget, faster inference leaves room to sample, verify, critique and retry.

5. Some products NEED speed to even exist. The main use case that comes to mind is voice agents. Here, security checks in the decision path, real-time ad and recommendation ranking, literally NEED fast inference to even exist at all.

6. Fast inference can help to resolve the disconnect between teh fact that demand increases immediately, whilst capacity needs chips, memory, power and buildings which creates a lag. Low-latency serving uses hardware less efficiently, because it means smaller batches and more dedicated capacity. So fast inference helps to better make use of constrained hardware capacity.

CBRS

Valuation

• Market cap of $40B.
• That's 11.2× EV to 2027 consensus revenue of $2.95B.
• Essentially, CBRS is really expensive. yes, it has sold off and sits at the bottom fo the traidng range, but in terms of valuation metrics, we don't have any profitability to trakc P/E, but evne in terms of P/S, we are really really high here.

This does make re-rating harder obviously. If we take FIVN as an example of the other side, it was priced so cheap that a re-rating higher essentially became a base case.

Here we don't have that. WE need solid execution. We need those TAM forecasts to come to fruition. But despite that, I think fast inference IS so important to AI, and CBRS will be a winner there.

I'd like CBRS at a cheap price. God, if we had a market crash, CBRS would be right on my list to buy as at a cheaper valuation this is basically a no brainer in my opinion, but even here, with a tight risk, I think the stock's narrative is extremely compelling.

Financial backdrop (Q2)

• Core revenue was $210M (+103%): cloud $128M (+287%) and hardware $82M. GAAP revenue was $180M.
• Core gross margin was 40.6% vs 14.2% GAAP. Core operating margin was –16% vs –265% GAAP. The gap is mostly customer warrants and stock compensation, which are real equity costs, so we do need to track both.
• Six deals over $30M were signed in the quarter, and there are several late-stage hardware opportunities worth hundreds of millions.

Backlog and concentration

• Backlog is $25.4B: about 22% recognised within 24 months and 43% in the 24 after. It includes some pass-through and excludes any hyperscaler business.
• OpenAI has a firm 750MW commitment for 2026–28 plus an option for 1.25GW more by 2030, for a contractual path to about 2GW.
• The top two customers were 66% of Q2 revenue.

Guidance:

• Management expects revenue to more than triple in 2027, with 600MW+ live or contracted by end-2027, a pipeline measured in gigawatts and manufacturing up more than 10× in 2026. The Finland site scales to 165MW on seven-year contracts.

The demand for CBRS is already pretty obvious:

• OpenAI Ultrafast (firm 750MW plus option): the anchor customer, with up to 14× faster inference on CBRS. Jane Street, Podium, Basis and Rogo use it, and OpenAI wants Ultrafast to become the default.
• Direct cloud (live): Cognition and Lovable on dedicated capacity, plus Block, Figma, AlphaSense, GSK, IBM, Mistral, Notion and Mayo Clinic. G42 and MBZUAI are significant customers.
• AWS (targeting Q1 2027, not in backlog): Trainium handles prefill and Cerebras handles decode, inside Bedrock. It runs on a multi-year lease with purchase options, and AWS could become a material share of revenue.
• AMD (targeting Q4 2026): Helios handles prefill and Cerebras handles decode, at up to 5× more tokens per watt. Cerebras owns the racks and keeps the cloud revenue.
• Meta (speculative): there's the Llama API precedent, and Muse targets agents and coding. Mizuho in a sell side note has already flagged Meta as a likely next inference customer.
• CrowdStrike and security (live, value undisclosed): powers Falcon AI Detection and Response, allowing 5–10× more inspection in the same time window. Armis (ServiceNow) is another case.
• Defence and government (early, unquantified): Sandia's Kingfisher system, national lab research, a DOE memorandum of understanding, and Carahsoft and DoD Tradewinds procurement channels.
• Distribution partners (no disclosed values): General Compute, Gimlet Labs and Callosum.
• Google and others (no revenue modelled): MLIR compiler support, serves Gemma 4, and progress with other hyperscalers.

Long term outlook

Mizuho Note

• $13.5B of revenue in 2029E, driven by fast-inference data center deployments.

My case is probably slightly more bullish than this:

• OpenAI has already committed to 750MW and has an option for another 1.25GW, which together make 2GW.
• This could go higher too Management says more than 600MW is live or contracted by the end of 2027, with plenty more in the pipeline.
• New sites like Finland, and manufacturing growing more than 10× also add upside optionality to that 2GW figure.
• However, if we do take the 2GW figure, we can take as a baseline that each MW secures 15-20M in revenue. This is actually probably conservative, because Nebius gets $20–25M per MW and CoreWeave about $40M.
• However, taking 15-20M, we get to around $30–40B of revenue in 2029: 2GW × $15–20M of annual core revenue per MW.
• At the midpoint, that's about 12% of BI's 2029 TAM, about 27% of Citi's 2030 fast-inference market, and about 2.8% of McKinsey's 2029 capacity.
• I think that's realistic, but gives a lot higher revenue potential into 2029 than Mizuho.

Firstly, the fundamentals, and then we will come onto the trade set up here for STRL:

SO this stock popped on my radar back in May when it popped 50% on these incredible earnings:

https://preview.redd.it/u252wpocauth1.png?width=814&format=png&auto=webp&s=8e71675b6a82d2855698592253d0b2f66deefcfe

Since then, it has faded the entire move, and now sits below the previous close before that massive earnings move.

First question obviously is why did it fade that move?

1. Valuation became frothy after the big move and we know that June saw a massive momentum unwind on anything that was even slightly frothy, so STRL got hit.
2. Q2 margins looked weaker because of mix.
3. Political and regulatory risk around Texas data centers is rising.

However, with that, the bar is pretty low:

Fundamentals remain compelling: 2026 guidance has been raised twice since February, with the adjusted EPS midpoint up from $13.75 to $20.00. Backlog has more than doubled YoY to $4.33B. The stock specific bad news is also arguably priced in at this point: Management flagged soft Q3 awards, a possible backlog dip and mix-driven margin pressure in August, so a weak Q3 would not be a major surprise here.

Upcoming catalysts in the short and medium term:

• Oct 19: TCEQ compliance report to the governor.
• Ongoing: ERCOT audit, the route to lifting the freeze.
• Jan 2027: The Texas legislature convenes, with Abbott pushing to remove data center incentives.
• Late Feb 2027: 2027 guidance, expected alongside Q4 results.

How to enter the trade on the stock:

Trade trigger: Entry now, or with a trigger of a close above the confluence of the 50d EMA and the 200d SMA. Ideally we clear the red zone as well.

https://preview.redd.it/rm9fjsvhauth1.png?width=1400&format=png&auto=webp&s=6f733fe675b6a943b36924a58df1e73b2f11c2fb

Where then to set the stop?

We have a few options.

1. You can play the tightest possibel stop which would be any close below the 200d SMA. Very little wiggle room for volatility. you risk getting stopped out numerous times before the move hgiehr can ensue, but you can always re-enter.
2. Alternatively, you can set a stop just below the 50W EMA, which si at 512.
3. Assuming you enter on the 200d SMA at 540, the risk tehre is 5.5% (remember price can always gap through your stop so that's the ever-present risk).
4. The most wiggle room to allow for some volatility would be a stop below the uptrend on the weekly chart where we see nuemrous candlestick tails have tagged it over the past 5 weeks. This would be below 495. So the risk % there assuming an entry at 540 is 8.4%. Still pretty contained and clearly defined risk parameters incase the market rolls over.

The wider you allow your stop, the smaller you have to size the position.

https://preview.redd.it/jbiibx2hauth1.png?width=1400&format=png&auto=webp&s=864123a4cd6d2df84ae8453a1301d075a922af0c

On Supply/Demand imbalances:

“Even with additional industry DRAM clean room space plans, with robust demand trends including new upside requests from customers, we do NOT have line-of-sight to when supply and demand will return to balance.”

“We expect fiscal 2027 to be even better. Industry demand has strengthened since our last earnings call, and we expect memory and storage supply-demand conditions to be much tighter in fiscal 2027 and 2028 than they were in 2026.”

basically guiding for consistent growth until the end of the decade.

Supply-demand conditions will tighten until 2030.

Does not sound cyclical. 

ON Physical AI:

Micron says Level 4+ autonomous vehicles require over 200GB of memory & multiple terabytes of storage, each more than 10x today’s L2+/3 vehicles.

Mu expects humanoids to have comparable memory & storage needs, implying similar 200GB+ memory & multi-TB storage needs per robot.

“Physical AI can become a significant driver of memory and storage demand by the end of this decade.”

Micron says several physical AI customers are already sampling its next-generation products.

On Gross margins:

“We anticipate Q1 to be the floor for gross margins in FY27.”

“We expect higher gross margins beyond Q1 for the remainder of FY27, with a more moderate rate of price increases.”

MU also expects revenue to increase sequentially in every quarter of FY27.

CAPEX increase:

“We plan to increase our CAPEX in fiscal 2027 versus prior plans.”

FY26 capex: $27B  

FY27 H1 capex: $25B  

FY27 H2: expected to be higher than H1

“A majority of the increase is for construction CAPEX, most of which is to help accelerate clean room space availability in late calendar 2028 and beyond.”

On long term agreements:

now has 26 multi-year take-or-pay agreements covering more than 35% of expected revenue through 2030.

RPO tied to its long-term customer agreements have increased to roughly $150B from $100B last Qtr.

Customer financial commitments have increased to $32B, from $22B last quarter, with the vast majority in cash deposits.

Some agreements now extend into 2031.

“We have completed agreements for the vast majority of our calendar 2027 HBM bit supply with significant price increases year over year, narrowing the gross margin gap with conventional DRAM.”

https://preview.redd.it/f1vs1bsg99sh1.png?width=898&format=png&auto=webp&s=9e352e461ad5e7c9c92bf3c2a6aefe8f4ebdcab6

A lot of speculation that OpenAI is pushing much deeper integration of Ultrafast and its vision for a truly personal AI assistant and is set to announce the more colour around the roadmap at tomorrow's DEvDay. Note that at SuperNova, OpenAI literally said it wants Ultrafast to become the default. Tibo: “We would love for Ultrafast to just be the default.”. 

SO the expectation would make sense. Thinking about this, and actually tying it to the Call buying we saw on Friday, I think the main winner of this boost in speed would be CBRS. By extension down the supply chain probably VICR, but less directly. 

https://preview.redd.it/moxs5mtf99sh1.png?width=764&format=png&auto=webp&s=78ca693914ac4a5bbaaa155803f326fa3c7d6c7b

Ultrafast is essentially run on CBRS hardware. The speed comes from Cerebras' wafer-scale chip, which keeps model weights in 44GB of on-chip SRAM instead of shuttling them to off-chip memory as GPUs must. Token generation is memory-bandwidth-bound, so that's where it wins.

This report breaks down the research by theme, and then subcategorises by the research desk. 

This one was relatively brief, as I only managed to get through a handful of Sell side reports this weekend, but hopefully gives you some valuable content.

I have been asked for the original reports as they are not readily available. Unfortunately, I can't share the original reports because I think I will land myself in hot water from these Research desks for copyright infringement. I know Morgan Stanley were cracking down on it, so have to just go for these summary reports for now. The takeaways are more readable like this anyway. 

Takeaways include:

Bullish confirmation on Ai infrastructure generally

Memory bullish takeaways on durability of trneds

Power demand massively outstripping supply

Was a bit more moderate on power semis. 

Overall AI infrastructure:

BofA:

Overall stance: After attending the 2026 AI Infra Summit (Nvidia, AMD, Intel, OpenAI, Meta, AWS, Google, Credo and others), BofA stays bullish — top picks: NVDA, MRVL, AMD, AVGO, MU, LRCX.

Six key takeaways: (1) AI infra spending remains solidly on track across chip vendors, labs and datacenter operators; (2) inference compute is fragmenting into specialized types, but flexibility still matters; (3) memory, power and interconnect remain tight — 2027 could be even worse; (4) training scaling laws still hold, with ROI now visible (e.g. GPT-6 Astra); (5) GPUs are lasting nearly 10 years — well past typical depreciation schedules; (6) software/optimization is becoming a bigger lever for performance-per-watt.

Inference is splitting, but not fully specializing: Chips are increasingly being split into "prefill" vs. "decode" optimized silicon as inference workloads grow. But because agentic workloads are diverse and fast-changing, both vendors and datacenter operators are wary of over-specializing hardware. Expected split: general-purpose GPUs keep ~70-75% share, specialized ASICs/XPUs take the rest.

Three bottlenecks tightening:

1. Memory — the most widespread constraint, expected to get even tighter into 2027.
2. Power — the next binding constraint; vendors, labs and operators are co-designing for efficiency (e.g., the 8GW OpenAI/SB Energy/Nvidia Ohio site). Nvidia's new DSX MaxLPS tech reportedly squeezes 40% more compute/output from the same power budget.
3. Interconnect — increasingly a bottleneck in networking fabric (not the chips themselves), pushing the industry toward optical/CPO interconnects, though reliability isn't fully proven yet.

Scaling laws holding up, hardware lasting longer: GPT-6 Astra (first model trained at scale on Blackwell) shows scaling still delivers returns. OpenAI even ran it on the newer Vera Rubin stack and got a ~3x throughput boost with minimal tweaks, plus another ~2x from just 72 hours of light optimization — underscoring Nvidia's software/tooling edge. Meanwhile, GPUs are staying useful far longer than expected: AWS still rents 2017-era V100s, Google Cloud rents 2020-era A100s, and Google runs 6-10 year-old TPUs internally — all well beyond normal amortization.

Tracking the Frontier AI labs (BofA):

Intelligence: Claude Fable 5.1 and GPT-6 Astra tied for top spot (score 53). Meta's MuseSpark 1.3 ranked 5th, closing the gap; BofA stays Buy on Meta.

Usage vs. spend: DeepSeek leads usage (46% share), but Anthropic leads spend (52%, though down from 64% in Aug). OpenAI: 12% usage, 22% spend (rising).

Pricing: Token price index up 5% m/m to $2.41 (prices stabilizing after Aug dip); expenditure index down 11% to $0.98.

GPU/memory: B200 rental up 1% m/m to $5.68; H100/A100 down slightly but up strongly y/y. DRAM flat, NAND down 1% m/m but +437% y/y.

Overall: Demand healthy, pricing firm, Meta narrowing the frontier gap, open models gaining usage share. 

Memory:

BofA:

BofA now expects global DRAM+NAND sales to hit $2.0tn by 2030 (up from their earlier $1.8tn call) — roughly 10x where the market sat back in 2018 and 2025. At a 13x earnings multiple and 50% operating margins, that implies the memory industry could be worth around $10tn.

Memory sales are already running above a $1tn annual pace as of Q3 2026. Prices this year have jumped 3-4x even though volumes only grew about 20% — and BofA thinks today's high prices will mostly hold through 2030 because supply stays tight while AI chip demand keeps climbing. They're also not expecting chipmakers to cut back on memory content — if anything, next-gen GPUs need more of it (Nvidia's Rubin Ultra could pack 1,000GB vs. ~288GB today).

Pricing: Q3 DRAM prices are up 20-30% quarter-over-quarter, NAND up over 15%. Notably, hyperscalers have already agreed to pay even more for DRAM in the first half of 2027 than they're paying now. Despite the shortage, PC and phone production has barely dipped (down only ~10%).

Forecast adjustments BofA nudged 2027-28 DRAM/NAND price estimates up 8-12% and 2-3% respectively. They do expect a dip in 2028 (DRAM -5%, NAND -13%) — but frame it as a brief breather before growth resumes in 2029-30 as AI chips get even more memory-hungry.

Power Semis:

Goldman Sachs: 800VDC rollout slower than expected, but traditional architecture stays dominant

• 800VDC adoption pushed back: Now expected to power only 21% of new US datacenters by 2030 (down from 25%) and 17% in Europe (down from 20%). Main reason: AI inference workloads are growing faster than expected and don't need the same power density as AI training, so there's less pressure to switch. Nvidia's Kyber NVL144 racks (built for 800VDC) have slipped to 2028 — over a year late.
• Traditional architecture isn't going anywhere: Non-AI datacenters will still dominate in 2032, with Microsoft's own buildout plan (targeting 38GW by 2032, ~20% CAGR) as the proof point. By 2032, non-AI datacenters still make up two-thirds of that installed base. This is good news for traditional power-equipment makers like Legrand.
• Vendors are hedging their bets on the 800VDC transition: Delta Electronics is piloting solid-state transformers (SSTs) in Asia; Eaton is sampling its own SST by 2026; Schneider, Vertiv and ABB are focused on intermediate products (transformer rectifiers, DC rectifiers, MV UPS) rather than jumping straight to full 800VDC tech. Even GE Vernova and startup Heron Power (seen as furthest along) aren't expecting real products until 2027.
• Solar companies eyeing the space, but face real barriers: Enphase and SolarEdge are trying to get into SSTs (using GaN and SiC respectively), but lack the mission-critical redundancy and field-service track record hyperscalers require.
• Hyperscalers are testing, not buying yet: SST pricing is still high (~$400-500k/MW) due to limited manufacturing scale. Hyperscalers are running vendor pilots now, but mass deployment realistically won't start before 2029.
• Next bottleneck: solid-state breakers. 800VDC needs breakers that react in microseconds vs. milliseconds for traditional systems — expensive to develop (~$600k/MW, 5x current breaker costs). This pushes total powertrain cost per MW for AI training up to ~$4mn by 2030 (from $1.7-1.8mn in 2025); AI inference to $2.6mn (from $1.4mn).
• Catalysts to watch: OCP Summit (Oct 12-15) and Nvidia GTC (Oct 20-22) — key venues where new datacenter power tech gets showcased.

Server Market:

Goldman Sachs:

Global server spend is set to grow to $1.5tn by 2030 — a blistering 39% CAGR over five years.

AI servers are growing at 46% CAGR, hitting roughly $1.3tn by 2030 — meaning AI alone will make up the vast majority of total server spend. 

By 2030, Hyperscalers lead total server spend at $683.3bn, with Tier 2 Cloud/Service Providers close behind at $641.4bn — together these two groups dwarf Enterprise spend, which trails at $166.3bn.

Data Center Power:

KB securities:

Global data center power demand capacity jumps from 122.9 GW in 2025 to 161 GW in 2026 — a huge one-year jump.

AI and its impact: AI servers' share of the total is set to exceed 40% by 2027, while general-purpose servers shrink from roughly 40% historically down to just 25.6% by 2027.

AI's power footprint growing even faster than its server share: AI servers used about 25% of total data center power capacity in 2025, jumping to 33.4% in 2026 — power demand is scaling ahead of unit share, reflecting how much more energy-hungry AI hardware is.

Demand Gap: By 2030, the global data center power supply-demand gap is estimated at 268 GW — meaning demand is expected to significantly outstrip what the grid and available capacity can actually deliver.

U.S. specifically: The domestic shortfall alone is projected to exceed 170 GW by 2030 — over 60% of the global gap sitting in the U.S., pointing to grid infrastructure and power generation as a binding constraint on the AI buildout, not just chips or memory.

MLCC:

Morgan Stanley:

Global MLCC shipment value forecast to grow at a 20.3% CAGR from 2025-31, roughly tripling from $14.67bn to $44.45bn — with AI servers and data centers the main driver.

Near-duopoly at the top: Murata leads market share at 40.8%, followed by SEMCO (22.5%), Taiyo Yuden (11.3%), TDK (6.9%), and Yageo (5.4%). But at the high end — the AI-grade MLCCs — Murata and SEMCO alone control ~85%, protected by serious barriers to entry (some parts need 1,000+ dielectric layers and pass strict qualification).

"early cycle": MLCCs are being framed as still in the early innings of AI adoption — the analogy is to picks-and-shovels investing, where you profit from the buildout regardless of who wins the AI race.

NVDA Rubin Impact: Nvidia's next-gen Rubin (VR200) rack needs ~570,000 MLCCs vs. ~320,000 for the current GB300 — pushing MLCC dollar content per rack up 166%, from $4,664 to $12,411.

----

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r/tradingedge

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AMZN blocked Muse yesterday from shopping on their platform. The reason cited was safety concern, but the real reason is likely the fact that Muse doesn't see ads and AMZN made $76 billion in the last 12 months on advertising. They are clearly trying to protect that. 

Interestingly META hosts Muse using AWS, so AMZN is winning from that side whilst protecting their own business model. I would also suggest that the block on Muse suggests that AMZN is working on their own AI agent for E-commerce. And given the fact that this move by AMZN clearly sets a precedence that AMZN will block other companies' agents from shopping on AMZN, and given the fact that most people shop on AMZN and want to shop on AMZN, surely this builds a very strong moat around whatever AMZN will end up building. To me, that's significant. 

The 10y and oil are tracking higher again, effectively undoing the minor beneficial effect of Trump's very active tweeting yesterday. 

This comes as Iran says that Tehran has no interest in striking a deal with Trump. 

On the other hand, reading between the lines, we have Iran set to meet China. We also know that Xi is set to come and see Trump next week. Perhaps those meetings will be conducive for China striking a deal with the US. 

Into this weeks' FOMC, we have the 3 month bond yields sharply higher, suggesting that the Fed will hike and needs to hike.

https://preview.redd.it/pipz086ieoph1.png?width=1400&format=png&auto=webp&s=e1152ecfd3c11c6820d718ba9d8c40ba7290b830

This is very similar to the analog I have been sharing with the 2 year. We know hikes are coming, more like than not not just 1. 

This week, rate hikes are now priced at above 90%. While there is still some speculation amongst retail as to whether the Fed will hike or not, the chances are very likely in my mind that they will and that the market has forced the Fed's hand here, which is a view similar to what Goldman says. 

Whether or not Warsh would want to, we have to remember that whilst Warsh is the Chair of the Fed his vote is equal to other members' votes. Most of the committee is the same personnel as under Powell. Under Powell, we saw that the Fed absolutely did NOT want to spook markets and when the market priced an outcome at above 60% into the meeting, the vote always went that way. 

I expect that even if Warsh votes no, the committee as a whole will vote yes. This might be what is needed to reaffirm Fed credibility and to get long end yields down. 

Into the meeting, we see that put buying is increasing on HYG. 

https://preview.redd.it/idjzrswieoph1.png?width=1400&format=png&auto=webp&s=56290c27997562bd97e17c76a155fe29cba691b0

This signals hawkish expectations into the event. 

I think the dot plot probably will be hawkish like the last, but Warsh can stem the hawkishness in his conference.

Overall, the market does not bet against a dump, but bets that if there is a dump, it gets bought back sharply on Thursday into EOW. 

The positions favour a vol down, index supported path once Wednesday is behind us, so that is what I am looking for. 

Vix tear structure is still in contango, but the front end is rising, especially compared to the dotted line that shows 2 days ago. 

We are notably higher on the front end. 

https://preview.redd.it/5uqb65gkeoph1.png?width=1400&format=png&auto=webp&s=d5e6cab8875a6c43817d0fcf96f747f1be3b8f7f

This tells us that The market basically is pricing increasing risk on the near term. 

Part of that was the weekend events regarding the Ai narrative. Remember that AI is critical to the US economic growth. If we did see a meaningful slowdown in AI spend and development, which we won’t, but if we did, that would have detrimental effects on the US economy.

Then secondarily, part of it is normal pricing into the FOMC. 

I don't believe in technical analysis on VIX, but if I did, you'd see a clearly resistive trendline:

https://preview.redd.it/hxgadb3leoph1.png?width=1360&format=png&auto=webp&s=51a10c30f736cc2be83018255a5d4fa88f534819

More, we see that the market is suppressing vix with volatility selling, masking th overall threat of the 10Y being so elevated etc. 

Key levels from positioning. 19, 20. 

https://preview.redd.it/201vg0rleoph1.png?width=1400&format=png&auto=webp&s=4e5b0338fdec154319cdf79ddc712e17b66f1ab4

I think that after the FOMC, we may get an initial vix spike, but a lot of the event risk will come out after the FOMC, which will help. 

Looking at the overall index, US500 continues to trade within this bull flag.

https://preview.redd.it/zarqhgdmeoph1.png?width=1250&format=png&auto=webp&s=7d7a9504701a9a0e2297272a935fd67f11871979

I mentioned we were getting close to the bottom of that flag in premarket, and the 1 SD low of the range for today which was at 7575, and we have seen a bounce on cue. 

With NDX, we trade above 29k, and within the flag that's building there also. 

https://preview.redd.it/m48cdz2neoph1.png?width=1400&format=png&auto=webp&s=3dab763e6eaaf4004ad7a67dad8012a77148dd3d

IT has been a game of hot potato between sectors, but the more lasting beneficial price action continues to be in software. In the AI hardware trade, interest has been temporary and fleeting, but fundamentals continue to support the fact that this sector should see a recovery over time. But for now, near term expectations and longer term expectations of the sector continue to remain disconnected. 

I draw the parallel to NBIS last year where it traded down 50%, before exploding higher in 2026. The whole AI trade is a beach ball under water, but until the 10Y comes down, it will remain a difficult trade. The FOMC could help, and even if the dot plot is hawkish, we have to recognise this is against expectations of 3 rate hikes over the next 2 quarters. So a lot of hawkishness has already been priced. However, we do need to see Iran resolve to really see interest return.

New lows are at peak levels:

https://preview.redd.it/vai9clxneoph1.png?width=1240&format=png&auto=webp&s=5c7a28bbffb9d6abd0439f9e25a0e2c8019c2089

Typically preceding rallies higher, but we have to see with FOMC. The worst case outcome In my opinion is a surprise hold, which contrary to many expectations online, would lead to an explosion in the 10Y and likely a negative reaction in the market.

---

I post write ups like this daily on my subreddit r/Tradingedge. Feel free to follow me there for more.

Following the stronger than expected jobs report on Friday, we had a day of choppiness on the index level, but strength in the AI trade, which was reflected in Friday's flow.

Overall, we had 100 bullish orders logged in the database, with only 7 bearish orders.

Many of those bullish orders were AI or semiconductor related.

This includes, broadly:

https://preview.redd.it/6b7ffmndjaoh1.png?width=816&format=png&auto=webp&s=94af59e44970a788e3f810a8686624d3f3241869

Strong memory flow:

https://preview.redd.it/ms9l3b1ejaoh1.png?width=808&format=png&auto=webp&s=d397d706a08a5f238d91bf6883bf6f36ca838628

This reflects what the Aion Analytics terminal is showing us:

https://preview.redd.it/5lnnrhiejaoh1.png?width=764&format=png&auto=webp&s=193af526bb1eb634ff6318ffb9bc3750ac65c61d

Accelerating interest and momentum in these sectors.

This is dynamic data and does shift, but points to improving positioning in semiconductors, as SMH breaks out:

https://preview.redd.it/f31upt3fjaoh1.png?width=1246&format=png&auto=webp&s=689099ea173b8b78adbb2e89fb2dea2754b73f7b

The 578 level which is the ATH VWAP is the main resistance, before 600.

Memory names look incredible:

MU here.

https://preview.redd.it/r1xq7k0gjaoh1.png?width=1288&format=png&auto=webp&s=b790ebb971ef6e3a861d67cd7904d7418b31fa5a

SNDK also:

https://preview.redd.it/umsjjdpgjaoh1.png?width=1400&format=png&auto=webp&s=f455cfa913bab17919216eea358b869506a50db1

DRAM heat map showing 70 as a strong point of reference in dealer positioning.

https://preview.redd.it/q8oeo8nhjaoh1.png?width=844&format=png&auto=webp&s=d557e542c264ee5d1072f0f704f7399a21fd1652

And we saw that being hit:

https://preview.redd.it/klkcau7ijaoh1.png?width=838&format=png&auto=webp&s=4d2c715573d3af987918e7ac859081edd6b6f30e

Strong flow across neoclouds including IREN, NBIS and APLD.

But I am flagging this on APLD:

https://preview.redd.it/k812rywijaoh1.png?width=870&format=png&auto=webp&s=4153951131770a05aef10c7e0ef167f796c8ef55

Exceptionally large size.

Weekly chart has reverted back to the long term trendline.

https://preview.redd.it/ozuf8zejjaoh1.png?width=1400&format=png&auto=webp&s=37338c6e90baa8e8c419b440e71cb6e02424680a

Bullish positioning on 25 and 30.

https://preview.redd.it/9ra9nl3kjaoh1.png?width=1400&format=png&auto=webp&s=1b34b3d151cf44522586cad4b0964ccd6809a98b

OTm flow on 30,40.

https://preview.redd.it/7dl395nkjaoh1.png?width=790&format=png&auto=webp&s=83d3988d0ff24337dadf6c6b443b837a9cc25341

CRWD - strong flow as it rides its upward channel:

https://preview.redd.it/b34aer9ljaoh1.png?width=892&format=png&auto=webp&s=14b1b610964e76514f10bdceba78e123ad8cfc50

https://preview.redd.it/jkxzfsxljaoh1.png?width=1378&format=png&auto=webp&s=6b9e59cef0a58b7d691c69e98fbf37d62f058068

One of the highest quality names in cybersecurity, and I flagged this positive catalyst last week:

153 million U.S. drivers licenses were leaked in a KYC hack.

Bullish for the sector. Wait for it to revisit the bottom of the channel for a reversion long:

Heatmap bullish 230,240.

https://preview.redd.it/g0eu1mhmjaoh1.png?width=826&format=png&auto=webp&s=21f92e98a214f92a87205ef65b5c580b63dfdac1

CBRS:

Was flagged in the last update:

https://preview.redd.it/rgmz3g9njaoh1.png?width=804&format=png&auto=webp&s=3f7120623906ebd2774dd3441bbd5d6f30e0d6d9

We are seeing this come to fruition with more bullish flow and a continued bounce off the bottom of the box:

https://preview.redd.it/06ui6msnjaoh1.png?width=1354&format=png&auto=webp&s=3b3a8b04196cef97b3e513202c597c925c80163d

Should again go from bottom of the box to top of the box within 4 sessions, to keep up the run:

Top of box is clearly a resistance at 220, above that dealer positioning is

starting to for higher.

https://preview.redd.it/tl9jwpgojaoh1.png?width=774&format=png&auto=webp&s=c2b8d4564bd63de26c371e6ffa0114f50788a397

https://preview.redd.it/kibzruelmaoh1.png?width=1400&format=png&auto=webp&s=0adf1be093d2c863e866adb6d2dc471e363f2211

https://preview.redd.it/2nk2wo5pjaoh1.png?width=1400&format=png&auto=webp&s=7527e1c13bfb6c37a1667c3df1c4a67718ebcd13

200 flips to put support.

INTC put selling, technicals breaking out:

https://preview.redd.it/ladeil6xjaoh1.png?width=756&format=png&auto=webp&s=059dc77c194f4e78091027728e32b7bfeb38ff50

Note that these reports go out daily for Trading Edge subs.

For more of my daily content, follow me for free on r/TradingEdge

Major News:

• Yemen's Tehran-backed Houthis attacked four cities in the south of U.S. ally Saudi Arabia on Tuesday, wounding more than 70 people and setting oil installations ablaze in what appeared to be a major expansion of the six-month-old Middle East war. They used ‌drones and missiles to strike a Saudi airbase in the southern city of Khamis Mushait, and targets belonging to Saudi Arabia's state oil company in nearby Abha, Najran on the Yemeni border and Jazan, a major Red Sea port city that houses a large refinery and power plant. Reuters
• The war in Iran has now cost U.S. consumers $100 billion in higher energy prices, and the bill is rising another $1 million about every two minutes, per a real-time estimate from Brown University as of Monday morning. Inflation shows up across the entire economy, and the recent surge in diesel prices threatens to have a dramatic impact on freight and travel in the weeks and months to come. Axios
• In offices across the military and in the intelligence community, there have been recent quiet discussions about cutting the number of people and facilities typically stationed in the Middle East if the Trump administration succeeds in ending the Iran conflict. CNN
• New Canadian tariffs targeting roughly $20 billion in U.S. imports officially snapped into place on Tuesday, the latest escalation in an increasingly costly trade war that has ensnarled two longtime allies. NYT
• Japanese workers’ nominal wages rose at the fastest pace in nearly three decades on the back of strong corporate earnings and a tight labor market, in data likely to keep the Bank of Japan on course for further monetary tightening. BBG
• Two hawks on the Bank of Japan's monetary policy board are calling more strongly for the central bank to accelerate its interest rate increases, pushing it to do more to rein in inflation before their terms end next July. Nikkei
• China’s export growth accelerated in August, swelling its trade surplus near $806 billion for the year. Its surplus with the US surged almost 44% to more than $29 billion. BBG
• China's car exports stayed robust in August as BYD and ‌other automakers shipped a record number of vehicles overseas, in sharp contrast to a sluggish domestic market where their sales fell for the 11th month in a row. Passenger vehicle exports jumped 77.5% from a year earlier to 894,000 units in August, easing from an increase of 88.2% a month earlier. Reuters.
• Goldman raised its oil price outlook by $5 a barrel, forecasting Brent at $85 by December and $80 in 2027 on expectations Middle East shipping disruptions will persist. BBG

MAG 7 NEWS:

• AAPL ACQUIRES BRAIN-SENSING STARTUP SONERA

OTHER Company Specific News:

• Following names added to S&P 500: $BE, $P, $ILMN
• AI names and SMH higher on Astra release.
• Anthropic is now expected to begin marketing its IPO in mid-October at the earliest, with the listing targeted for days before the U.S. midterm elections in November, per Reuters. Its public prospectus, previously expected as soon as next week, is now likely to come in late September.
• INTC REPORTEDLY PLANS ANOTHER 10% PC CPU PRICE HIKE IN OCTOBER The increase is aimed at improving gross margins rather than gaining market share, according to DIGITIMES, as global PC shipments are expected to fall to roughly 250M units in 2027.
• INTC - Northland upgraded Intel to Outperform from Market Perform with a $120 price target.
• ASML and TSMC launched an industry initiative to move EUV lithography from today’s 6-inch photomasks to 12-inch masks. The plan targets a 12-inch mask pilot line by 2031 and advanced-node production using 12-inch High NA EUV by 2033. TSMC also plans to adopt ASML’s High NA EUV in high-volume manufacturing from 2030.
• NBIS - Palantir and Nebius are partnering to bring Nebius compute and inference directly inside Palantir’s enterprise environment. Eligible Palantir customers will be able to run and adapt open models on Nebius infrastructure while keeping control of their data, compute and models.
• UBER - UBER President and COO Andrew Macdonald bought 70,000 shares of the company for about $5.31 million. The purchases were made at prices around $75.65 and $76.44 per share.
• IREN - IREN’S 2GW SWEETWATER HUB CONDITIONALLY INCLUDED AS BASE LOAD IN ERCOT BATCH ZERO Sweetwater 1 accounts for 1.4GW and Sweetwater 2 for 600MW, both part of IREN’s broader 5GW+ global data-center development pipeline. At Sweetwater 1, the high-voltage substation is already energized, with 300MW of gross data-center capacity under construction and targeted for delivery in Q4 2027.
• RGTI, QBTS - U.S. GOVERNMENT BACKS $RGTI & $QBTS WITH UP TO $200M FOR QUANTUM COMPUTING R&D
• HOOD - Robinhood has struck a multiyear agreement to add prediction contracts backed by Crypto.com’s newly spun-out OG.com platform and will take minority stakes in both Crypto.com and OG. Terms were not disclosed. Crypto.com and OG were valued at roughly $15B and $5B, respectively, following Citadel Securities investments in July.
• HOOD - Robinhood has joined the underwriting group for Oura’s upcoming IPO, which is expected to value the smart-ring maker at more than $11B.
• IONQ - RAISES 2026 REVENUE OUTLOOK TO $450M-$460M FOLLOWING SKYWATER ACQUISITION
• CRCL - has agreed to acquire Singapore-based B2B payments firm Tazapay, which processes more than $25B in annualized payment volume. About 60% of Tazapay’s volume already involves stablecoins.

1. This is now an XPU company with an Ethernet side business. Custom AI chips made up 73% of AI revenue and grew north of 3x year-on-year, while AI networking grew over 2.5x. Broadcom guided both to roughly triple again in Q4. Everything else — legacy semis, software, VMware — is basically a stable annuity bolted onto a fast-compounding AI core.

**2.**Google's locked into a multi-year, multi-tens-of-billions annual TPU commitment, with Ironwood ramping and a new inference-focused chip (TPU v8i) coming. Anthropic is scaling from 1GW of Ironwood in 2026 up to 5GW in 2027 and another 10GW in 2028, putting them on track to become Broadcom's biggest XPU customer within two years. OpenAI's custom chip (Jalapeño) goes from 1.3GW in 2027 toward 5GW+ in 2028, with two more chip generations already behind it. Meta's running three generations of its own chip, aiming for 3GW by 2028. Six customers total, four of them large enough to move the whole business.

3. Custom silicon is starting to beat merchant GPUs on Broadcom's own claims. Jalapeño reportedly beats Nvidia's Grace Blackwell Ultra on power efficiency, latency and throughput, running OpenAI's workloads at half the GPU cost. TPU v8i is being pitched as on par with or ahead of Nvidia's next-gen Vera Rubin for inference. CEO Hock Tan's framing — that a chip co-designed for your own model just wins — is effectively Broadcom arguing customers can walk away from Nvidia.

4. Demand isn't questioned, it's mostly the buildings and geographical footprint: Hock said flatly they could ship over $115B in 2027 if buildings, power and land were ready in time — demand already exceeds what they're guiding to. Stacking up the disclosed gigawatt commitments gets you close to 30GW across 2027–28, and that's without assuming every site actually gets built. They're also opening new substrate capacity in Singapore specifically to unblock one supply chokepoint, and — echoing what Lumentum said elsewhere — optical laser supply (EML/CW) is running well behind demand industry-wide, so they're more than tripling laser and VCSEL manufacturing capacity.

5. Fewer chips per gigawatt, but way more dollars per gigawatt. Newer chips draw more power, so a fixed power budget fits fewer of them — but each one carries a higher price tag and more memory content, so total dollar content per GW is climbing (Broadcom pegs it at $20–30B per GW now). You can see it in the margins: gross margin actually beat guide at 75% in Q3, easing slightly to ~73% in Q4 as chip and memory mix shifts, while operating margin holds near 67% — the business is absorbing a richer, lower-margin mix without losing operating leverage.

6. Networking is a real second growth engine, not just an accessory. Their Tomahawk 6 switch is their fastest-ramping ever, shipping into essentially every major AI hyperscaler — including ones that don't buy Broadcom's chips. They're pushing Ethernet into "scale-up" territory (the ultra-tight, low-latency GPU-to-GPU connections inside a rack) via a new switch called Tomahawk Ultra, historically Nvidia's turf with NVLink — and uptake has already beaten their own expectations. A next-gen 200Tbps switch is already taped out. Management says networking revenue should grow just as fast as chip revenue for years to come. On the optical side specifically: 100G and 200G-per-lane parts are ramping together, meaning older 800G optical transceivers keep growing even as 1.6T ramps in behind them — no one generation is cannibalizing the last just yet, and Broadcom is investing in copper, optical pluggables, and tighter-integration approaches (near-package and co-packaged optics) all at once rather than betting on one winner.

7. Broadcom is now bankrolling its own customers. Through a joint vehicle with Apollo and Blackstone, they're structuring financing meant to support 20GW+ of buildout by 2028 — a $35B first tranche already closed against Anthropic's 1GW commitment. Management describes this as bridging the gap between what AI labs can fund out of cash flow and what the buildout actually costs. It's a new source of upside and lock-in, but also a new contingent-liability risk sitting on Broadcom's books.

On valuation: the stock had already dropped ~26% off its June high heading into earnings, trading around 19–20x forward (FY27) earnings. Post-print, using management's own $230B FY28 AI revenue target and assuming zero growth from the rest of the company, you land near $278B total revenue and roughly $30 of EPS — putting the stock at about 12x FY28 earnings if that outlook holds. Near-term multiple still prices in a lot of flawless execution; the real re-rating case rests on believing the FY27/FY28 numbers, which now come with actual named customers and gigawatt figures attached rather than vague hand-waving.

1. This is now an XPU company with an Ethernet side business. Custom AI chips made up 73% of AI revenue and grew north of 3x year-on-year, while AI networking grew over 2.5x. Broadcom guided both to roughly triple again in Q4. Everything else — legacy semis, software, VMware — is basically a stable annuity bolted onto a fast-compounding AI core.

**2.**Google's locked into a multi-year, multi-tens-of-billions annual TPU commitment, with Ironwood ramping and a new inference-focused chip (TPU v8i) coming. Anthropic is scaling from 1GW of Ironwood in 2026 up to 5GW in 2027 and another 10GW in 2028, putting them on track to become Broadcom's biggest XPU customer within two years. OpenAI's custom chip (Jalapeño) goes from 1.3GW in 2027 toward 5GW+ in 2028, with two more chip generations already behind it. Meta's running three generations of its own chip, aiming for 3GW by 2028. Six customers total, four of them large enough to move the whole business.

3. Custom silicon is starting to beat merchant GPUs on Broadcom's own claims. Jalapeño reportedly beats Nvidia's Grace Blackwell Ultra on power efficiency, latency and throughput, running OpenAI's workloads at half the GPU cost. TPU v8i is being pitched as on par with or ahead of Nvidia's next-gen Vera Rubin for inference. CEO Hock Tan's framing — that a chip co-designed for your own model just wins — is effectively Broadcom arguing customers can walk away from Nvidia.

4. Demand isn't questioned, it's mostly the buildings and geographical footprint: Hock said flatly they could ship over $115B in 2027 if buildings, power and land were ready in time — demand already exceeds what they're guiding to. Stacking up the disclosed gigawatt commitments gets you close to 30GW across 2027–28, and that's without assuming every site actually gets built. They're also opening new substrate capacity in Singapore specifically to unblock one supply chokepoint, and — echoing what Lumentum said elsewhere — optical laser supply (EML/CW) is running well behind demand industry-wide, so they're more than tripling laser and VCSEL manufacturing capacity.

5. Fewer chips per gigawatt, but way more dollars per gigawatt. Newer chips draw more power, so a fixed power budget fits fewer of them — but each one carries a higher price tag and more memory content, so total dollar content per GW is climbing (Broadcom pegs it at $20–30B per GW now). You can see it in the margins: gross margin actually beat guide at 75% in Q3, easing slightly to ~73% in Q4 as chip and memory mix shifts, while operating margin holds near 67% — the business is absorbing a richer, lower-margin mix without losing operating leverage.

6. Networking is a real second growth engine, not just an accessory. Their Tomahawk 6 switch is their fastest-ramping ever, shipping into essentially every major AI hyperscaler — including ones that don't buy Broadcom's chips. They're pushing Ethernet into "scale-up" territory (the ultra-tight, low-latency GPU-to-GPU connections inside a rack) via a new switch called Tomahawk Ultra, historically Nvidia's turf with NVLink — and uptake has already beaten their own expectations. A next-gen 200Tbps switch is already taped out. Management says networking revenue should grow just as fast as chip revenue for years to come. On the optical side specifically: 100G and 200G-per-lane parts are ramping together, meaning older 800G optical transceivers keep growing even as 1.6T ramps in behind them — no one generation is cannibalizing the last just yet, and Broadcom is investing in copper, optical pluggables, and tighter-integration approaches (near-package and co-packaged optics) all at once rather than betting on one winner.

7. Broadcom is now bankrolling its own customers. Through a joint vehicle with Apollo and Blackstone, they're structuring financing meant to support 20GW+ of buildout by 2028 — a $35B first tranche already closed against Anthropic's 1GW commitment. Management describes this as bridging the gap between what AI labs can fund out of cash flow and what the buildout actually costs. It's a new source of upside and lock-in, but also a new contingent-liability risk sitting on Broadcom's books.

On valuation: the stock had already dropped ~26% off its June high heading into earnings, trading around 19–20x forward (FY27) earnings. Post-print, using management's own $230B FY28 AI revenue target and assuming zero growth from the rest of the company, you land near $278B total revenue and roughly $30 of EPS — putting the stock at about 12x FY28 earnings if that outlook holds. Near-term multiple still prices in a lot of flawless execution; the real re-rating case rests on believing the FY27/FY28 numbers, which now come with actual named customers and gigawatt figures attached rather than vague hand-waving.

Despite Jackson Hole and NVDA earnings last week, we printed the lowest weekly volume since December 2004.

https://preview.redd.it/mmqkjkhzepmh1.png?width=1400&format=png&auto=webp&s=a2b12fc95d78d1b09e5a68f57440a1ed6858039a

This essentially reiterates the fact that no one is really at their desk during this summer period, hence the chop at least on the index level recently, but we should see volume return into September.

At Jackson Hole, I thought that Warsh struck a slightly hawkish tone, but it was pretty much him reiterating the same points as the July FOMC meeting. I didn't really get too much that was new in his rhetoric.

He continued to reiterate that it's the committee's goal to get PCE back towards 2%, and said that the economy remains healthy, citing the UER which is currently at 4.1%.

The key point I would say was the fact that he mentioned that the current financial conditions are not necessarily restrictive, which does leave the door open to further tightening, if the inflation data turns higher or the labour market scantiness to show the strength to accommodate a hike.

One interesting tidbit into this week as we have the NFP data, was the fact that Warsh stated that his view is that the weakness in the labour market is more th result of demographic shifts rather than economic weakness.

Perhaps that puts the bar of weakness higher, in order to force more dovish Fed policy, and leans the fed further towards hawkish policy.

Overall, though, I felt the speech was a mirror of his FOMC speech in July, and I think the reaction was also quite similar.

We had bond yields lower initially, before sharply higher as equities sold off and closed the day towards their lows.

The 2 year spiked strongly back into its channel:

https://preview.redd.it/vhoowe70fpmh1.png?width=876&format=png&auto=webp&s=24d6f4e309ecc154e5d9faca7095e3f83a6bc92c

And the 30Y moved higher also:

https://preview.redd.it/0toxngu0fpmh1.png?width=1058&format=png&auto=webp&s=1b88265e7926a7959166a26dc069a88085952eb1

However, just as the July FOMC saw sharp selling on similar bond movement and similar Fed rhetoric, before reversing higher into the following week, the data does continue to lean that way.

Overnight futures are negative, initially rather negative, before some sharp buying back on Nasdaq as it followed the recovery in KOSPI, which essentially gives us a failed breakdown, and that negative futures reaction was on the basis of the following news over the weekend:

US strikes Iran's Larak Island again, explosions reported.

Prior to that news, although obviously on unreliable volume, weekend futures were pretty much trending higher so that was definitely the main news of the weekend.

Crude is higher as a result:

Note texas crude is coming into a bit of a decision point.

Against a hawkish backdrop laid by Warsh on Friday, this oil spike is certainly not welcome, but there is what I think is an interesting reaction in the 2 year here, as it is currently lower, although you'd probably expect it to be higher on rising oil prices:

https://preview.redd.it/fc7fkrz3gpmh1.png?width=1102&format=png&auto=webp&s=70723792fc776138405d16ea9de7bc68f89be61c

Potentially some news failure type action there.

However, oil prices continue to get bid and will continue to get bid I think into the midterms. The main resolution to these elevated oil prices and bond yields is a meaningful Iran and US deal, but whilst a fake deal may be propagated for positive headline manipulation, there is certainly very little chance of a true deal really occurring here as the US and Iran remain at a stalemate.

Trump doesn't want meaningful escalation with the midterms still pending, and already pressure at the pumps for US citizens, whilst Iran knows that they are buying time for the US to drain the SPR , and for inflationary impacts to catch up on the US economy, and also is certainly in no hurry to help Trump at the polls by forging a deal.

Wheat prices cotninue to head higher as well, with positioning quite bullish as we see here:

https://preview.redd.it/clbcopm4gpmh1.png?width=1186&format=png&auto=webp&s=d0292fb6051fa130d3672a66e79437bd67fe264e

Inflationary pressures continue to build. The soft print over the past 2 months benefited from advantageous comparables, that I mentioned would evaporate over the next month or two, so we could see inflation tick higher.

This does put pressure on the Fed to hike rates, but whilst following Jackson Hole, the rate hike odds for September have risen to almost 60%, I do not see a Fed rate hike this month.

We know that historically, at least under Powell's Fed, if the market went into a Fed decision with one of the outcomes priced at a greater than 60% probability, the Fed always voted in that direction. AS such, 60% remains the key threshold. Currently, we are at 58% for a hike in September, which makes this week's jobs report that much more important.

However, my estimates currently have NFP coming soft this week.

We know that last month's negative print for the NFP cut rate hike odds almost immediately from above 50% to 30%. We could see a similar move this week if my expectations of a soft labour market print come to fruition.

I do not expect a negative print as my baseline, but a weak print, although a negative print is still on the table.

If it is a negative print, there is no modern era Fed precedent of hiking after 2 negative payroll prints. It has simply never happened, so I think that would certainly kill the possibility of a September rate hike and should give the market some room to stage a temporary rally at least.

BBG Economics is looking for a below-consensus read but says that the consequence of that may not be as much as normal after Warsh portrayed the labor market as in good health and pointed out that softer job gains are often a matter of demographics, not an economy in decline.

That comes back to the point I made earlier, and it's true, but we go back to that historical precedence. If we get a weka labour market print, I think the Fed won't hike in September.

If there was to be a rate hike, it would be purely symbolic at this point in order to try to regain credibility in order to force bond yields down, but I do not see it as I believe that Warsh is still under strong political pressure to avoid rate hikes for as long as possible into the midterms.

The other breaking news over the weekend was the fact that Trump said that he was going to try too ill up the Strategic Oil reserve with Venezuelan oil in what would be the biggest oil deal of all time.

Trump said that the topping out process will begin shortly and that this is a gift from Venezuela to the US.

Note that this is pretty much just headlines manipulation rather than anything more meaningful.

Trump knows the SPR is draining heavily, and that this is a concern propping up bond yields as the US have been using their SPR to offset losses of oil from Iran to keep oil prices relatively in check. Once that SPR is drained the implication then is that oil prices can rise from there.

This is a headline manipulation attempt to reassure investors that the SPR is far from being drained and is being refilled at record rates.

Not strictly true, even if there is a deal.

We know that Venezuelan crude is extremely heavy.

The US SPR stores only medium-gravity crudes (typically 30-40° API, per DOE specs) and does not store heavy crude due to operational issues; most Venezuelan oil is heavy sour (often 10-16° API), so doesn't really get stored in the US strategic reserve.

These comments from Exxon Mobil CEO highlight the fact that Venezuelan Oil pretty much sucks for the US here:

Crumbling infrastructure and high costs: Venezuelan crude is heavy, sour, and difficult to refine. Rebuilding the infrastructure requires massive investments with uncertain economic returns.

If there is a winner out of this news, it's refiners, as cheaper, heavy sour addition, if it does happen, likely widens crack spreads further, so more upside for refiners.

Now, coming onto September Seasonality and what the data suggests, September seasonalityis typically negative, and I think a lot has been made of that expectation on social media. But firstly, we saw a similar expectation around July seasonality, but the AIon data went a different way, suggesting negative price action. The Aion data was proved correct there, and here again, we have the Aion data going against seasonality as it suggests a strong start at least to September, so let's see there.

Interestingly, and whilst a very limited data point, but if we do take all the best September returns ever (i.e. those returns that massively bucked seasonality), we see that the majority of them came in midterm years:

https://preview.redd.it/56j864q7gpmh1.png?width=1400&format=png&auto=webp&s=64f2e0f26c5a1fd5a83990a90ab25f4420aeb690

So if we were going to get a really strong September performance, it would likely come in a midterm year, is the takeaway.

Now looking at the dealer positioning data:

760 is a bit of a floor here, but most of the positioning is still higher.

https://preview.redd.it/wg052d88gpmh1.png?width=1400&format=png&auto=webp&s=679eba427f8aa1b09af49e53afeefcd855c62635

We see 790-800 lighting up strongly into September.

And if we look at the dex chart:

https://preview.redd.it/9l2x6me9gpmh1.png?width=1400&format=png&auto=webp&s=70791c0865c490763e32b0839f8b87cf2e8e90f3

The put floor is at 760 and there's extremely strong support at 750, but again, most of the positioning is higher, certainly so in terms of gamma. We still have calls being built at 790 there.

Regarding QQQ, whilst QQQ has massively lagged the other major indices, positioning is still mostly supportive.

Strong support at 700. Call delta building on 730. Breakout node is 720, which is the call wall. Above it, we can see a strong move higher.

https://preview.redd.it/bwsfx45agpmh1.png?width=1400&format=png&auto=webp&s=87e9b0abced31c87e7ade334e5aa97e875ccc4a6

This is broadly corroborated in Aion, which has the breakout node at 717.5.

https://preview.redd.it/ckj0bjuagpmh1.png?width=1400&format=png&auto=webp&s=767bb1874075a65689f0f8af6e0d08b434ae2988

QQQ closed Friday with an elevated P/C ratio of 1.4.

Whilst if we look at the technicals, I still think I can see a potential inverse head and shoulders developing there for a move back to ATHS:

https://preview.redd.it/9vtmp9hbgpmh1.png?width=1054&format=png&auto=webp&s=bfb7c6b3a065bfef2d9cfead62da566c165cb55e

The Aion forecast is something like so:

https://preview.redd.it/ue1w8w2cgpmh1.png?width=1400&format=png&auto=webp&s=3a3ff8f245eb1554beace501d10878f759cd1df3

Let's see how that works out.

Even with semiconductors which has obviously been the lagging sector, and has struggled to get off the ground with even NVDa earnings giving a lacklustre reaction on the week (Albeit due to Jackson Hole), I think that is an inverse head and shoulders developing on XSD and SMH

https://preview.redd.it/vukw05jdgpmh1.png?width=1400&format=png&auto=webp&s=fbee25ebc77ecc0f55d56a97992e1418ad12fbba

If we do get a move higher as the positioning data suggest on NDX, I would expect SMH will participate. Software was the main funding trade which has now gone into reverse as software has been short squeezed and semis have been offloaded to fund that squeeze.

Fundamentals continue to be strong in the sector, NVDA earnings were essentially immense, ad the next major data point for the AI trade will be Anthropic's public release of the S1, which should give us some indication as to how much hey sandbagged their guidance last month.

Whilst Nasdaq continues to print reasonably strong or at least neutral market internals (market breadth):

https://preview.redd.it/9jicku9egpmh1.png?width=758&format=png&auto=webp&s=ddab6c0ed070859873481de47cb8e12618b3fa0f

Semis certainly are in the gutter in terms of breadth:

https://preview.redd.it/v6hmjwqegpmh1.png?width=764&format=png&auto=webp&s=30e5483698d99ebbf9ecef6999892db4628c86e5

But that to me is a contrarian indicator and can lead to some snap back if the market pushes higher.

The Aion data basically paints a picture of strength through early to mid September , some chop, but then weakness into October.

Note that we do see that picture starting to develop somewhat if we look at the blended VIX dealer positioning:

VIX is low, very low vs seasonal normals.

But if w look at the blended nodes that are lighting up, we see that into early September it is still pretty low. 15, 18 etc.

Into late September, we start seeing 20 lighting up, then we have that 35 node into October 21st. Now that's not a bet that VIX goes to 35, but is a clear anomaly in the data there, which reinforces that October might be a somewhat ugly period.

If you found this piece useful, I post free daily commentary on my sub r/tradingedge. Feel free to check it out.

We are still broadly tracking the Aion forecast line here:

https://preview.redd.it/dckfgcvgs3mh1.png?width=1400&format=png&auto=webp&s=5710966ec87e9bd077d10796b808e147f1605e4e

Liquidity is still supportive.

https://preview.redd.it/3v8zecahs3mh1.png?width=632&format=png&auto=webp&s=4680e885a1796b60c6e370aacdd913c0882b8242

That 800 node has started to build strongly into End of September.

https://preview.redd.it/k1ywtdzks3mh1.png?width=1400&format=png&auto=webp&s=0d84070377d9def90d993cda412db0d065fbcf57

Similar here on QQQ for 740:

https://preview.redd.it/8mrmadils3mh1.png?width=1400&format=png&auto=webp&s=c48f2e2fd26b477d545ee52d115d24e8596172cc

Strong positioning on QQQ:

https://preview.redd.it/frmwu4ams3mh1.png?width=1400&format=png&auto=webp&s=1458f7e768d4110dd51576f1f2e5840aae371bd0

Call surge also.

https://preview.redd.it/wfeb3wmms3mh1.png?width=988&format=png&auto=webp&s=ddc1b70d14fed5fdc505e9bc3e4a41b08e9a1d46

And on SPY also.

https://preview.redd.it/xo01ms2ns3mh1.png?width=1400&format=png&auto=webp&s=8ecd654e1f65357521dfead0444a71db2e6fa763

The key now is today's Jackson Hole. If bond yields respond positively to the event, the market rally should broaden into the more AI sector which is currently being perceived as more speculative. 

if it doesn't, then we could see leadership cotninue to hide out in software, although the data does suggest currently that any major dip will get absorbed as the Aion data shows long dealer book, dampening dynamics and positive gamma.

https://preview.redd.it/wcgn6knns3mh1.png?width=1168&format=png&auto=webp&s=a42ac936323f014b8ec26b28c17f2dcfa2e2058a

This on top of the increasing liquidity, so a dip should be absorbed by the market, but bond yields need to participate lower for the rally to broaden back into the sectors that it was in.

The market is ready for it with positioning improving on SMH at 600, but it's now up to Jackson Hole.

https://preview.redd.it/b5jy15axs3mh1.png?width=1400&format=png&auto=webp&s=1b33726ae52e0d8757c5b05477476b79470fbe9a

https://preview.redd.it/hsyqrz3os3mh1.png?width=1400&format=png&auto=webp&s=01956bd960e77b135701109fa699b7e6fc4e92f0

For more of my data driven daily analysis, please feel free to check out my sub r/tradingedge

So first of all, it was really an amazing quarter, one of the best we have seen from NVDA in recent memory to be honest.

Most did NOT have them doing 70% next FY. And on top of that 70%, they said they would do 100% if not for supply constraints. 

I think they will land above 70%. Note that this level of growth has them above 2029 estimates at the end of next year. So pretty much insane.

We have a reacceleration in revenue. Last quarter was +85% YoY, this quarter +102% YoY. Next quarter they are guiding $108 billion which would be 89% YoY. With a beat of ~4% again, you'd see revenue grow ~96% YoY. 

The data says that 8 of the last 8 NVDA prints, it has faded intraday from where it opened, whether that be a red open or a green open.

If there was an earnings report that was going to buck that trend, this would frankly be it.

Key things I took away from the earnings, separated into topic. Some of these you may have caught, some of these you may have misse.d

Nvidia with one customer representing 16% of total revenue in Q2'27.

https://preview.redd.it/qwjs3qyaiwlh1.png?width=1400&format=png&auto=webp&s=98a2e78e842065abf3e14ed4461a62fff8dd5bf5

Note that their overall revenue concentration seems to be going DOWN from years ago which is a good sign.

Likely:

Customer 1 = msft

Customer 2 = googl

Revenue visibility throguh 2029+

https://preview.redd.it/3zl6fzebiwlh1.png?width=1400&format=png&auto=webp&s=e48a186b341c848fe950972f61c8d7b9f01992c8

Jensen Huang: "We just have a lot greater visibility now upstream and downstream. It is the case that we never forecasted or never guided to a year in advance. Even though our demand is much greater than 70%, our supply allows us to confidently deliver 70%."

NVDA on gross margins:

"This quarter we decided we would rip the bandaid off, reset expectations about our gross margins. We have now absorbed the cost increases. We have also repriced our products in the marketplace. Based on that, our margins are going to come down from 75%, but it will be between 72% and 73% next year." 

Memory their major expense: bullish for the memory ecosystem.

https://preview.redd.it/j4u55ddciwlh1.png?width=1400&format=png&auto=webp&s=405ab7301a6b8b6253a65d9c71c639d4879ccd85

"we are experiencing extreme pricing conditions in memory. The magnitude of the price increase has exceeded our prior expectations and are headed even higher into next year."

On the scope for growth in compute:

Jensen Huang: "The amount of compute necessary for an agent versus a human using it is probably 15 to 100 times, depending on the type of problem you're trying to solve. And so the amount of compute necessary is just extraordinary."

CPU revenue to more than double in FY28

Bullsih commentary around data centers:

Jensen Huang: "I heard the other day that return on investment capital is now less than a year. We're talking about $50 billion data centers."

Jensen Huang: "Everybody will have to be part of this computing shift, and everybody has to build infrastructure."

Demand outstrips supply:

Jensen Huang: "We have more supply than 70%, but about 70%. Our demand is much higher than that."

"we are seeing demand acceleration even at our scale. Customers forecasts point to our growth doubling next year. 

Demand has upside optionality through AGI:

Jensen Huang on demand if AI reaches AGI: "it is going to inflict further."

Open models are not a threat to NVDA:

Jensen Huang: "I would say nearly all open models run on Nvidia."

On circular financing:

"We recognize the scale of this support, and we know some will call this circular financing. We see it differently. We are going through a major computing platform shift. The creation of one of the most important technologies in human history. These are once in a generation companies, the technology leadership is proven and their customer traction and usage are skyrocketing."

Bullish commentary for the bottleneck trade:

"We will be shipping both Blackwell and Rubin systems in the future and are currently experiencing certain supply constraints." 

NVDA  has been in serious talks to acquire Hugging Face in a deal that could value the open-source AI platform at more than $13B.

No agreement has been reached and talks could still fall apart.

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