Daily Alpha · X
· Midday Alpha · by Buzzberg Research
X weighed Alphabet's negative $9.1 billion free cash flow against 103% Cloud growth, while @oguzerkan read Microsoft's bond deal as a higher cost of capital for neoclouds.
Themes on this desk
Alphabet dip
@ren_stocks notes Alphabet is back to its March low while quarterly revenue rose to $128B from $110B and Cloud growth reached 103%; @tengyanAI focuses on free cash flow of negative $9.1B.
Memory supply
A post quoting Citi argues the market underestimates how constrained DRAM and HBM supply will remain, with supply possibly tight through 2027 and 2028 and DRAM bit growth only in the low 20s.
Ticker heat
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Top voices by smart followers and alpha score
Market Radar →@goodalexander says Fortinet, ServiceNow and Google's ad business are decelerating into the fourth quarter
@goodalexander lists Fortinet and ServiceNow down 25% and Google down 13% on decelerating fourth quarters, while Cheesecake Factory posted a 15% comp, Chili's 10% and Norwegian Cruise lifted its full-year guide.
you're seeing a consistent pattern: - Fortinet: people bought bc of AI cybersecurity 'emergency'.
@goodalexander questions why AI-themed holdings are underperforming consumer names.
Watch Robinhood monthly active users, which @goodalexander says are decelerating sequentially.
Source →ASE's Q3 revenue rose 44.8% and it raised its 2026 advanced packaging outlook to $4.0 billion
ASE reported revenue of NT$244.16 billion, up 44.8% year on year, with packaging and testing gross margin rising to 30.6% from 27.3%. Management targets a doubling of LEAP revenue in 2027 and expects CPO-related revenue above $500 million in 2027.
$ASX Q3 2026: Packaging and testing margins expand sharply ▪️ ASE reported revenue of NT$244.16 billion, up 44.8% YoY and
Computing rose to 34% of the segment from 30%, shifting ASE's mix toward computing.
Watch Full-process advanced packaging revenue, expected to grow from $300 million this year to over $1 billion next year.
Source →Alphabet's free cash flow was negative $9.1 billion despite 103% Cloud growth, per @tengyanAI
Q3 capex was $51.4 billion, and Google started using third-party compute at the end of Q3 and expects to ramp it in Q4, warning of near-term Cloud margin pressure.
Would you buy the dip... or not? Alphabet reported 103% Google Cloud revenue growth.
Capacity scarcity can lift revenue growth while hurting the economics of serving it; Cloud operating margin reached 36.2% in Q3.
Watch Cloud margins in Q4 as third-party compute ramps.
Source →@oguzerkan says Microsoft's bond deal raises neocloud capital costs
Microsoft was the only hyperscaler that had not raised debt for the AI buildout; with all of them now in debt markets as aggregate free cash flow is expected to turn negative next year, neocloud cost of capital rises.
This is bad news for neoclouds... $MSFT was the only hyperscaler that hadn't raised debt to finance the AI buildout.
If hyperscaler cash flows do not turn positive again in 2028, neoclouds could struggle to raise capital at attractive rates.
Watch Hyperscaler free cash flow in 2028.
Source →Jonah Lupton started a Marvell position after its 12% drop on Lumentum deal rumors
Lupton says Marvell is down 35% from its highs and trades below 30x CY2027 EPS, and thinks it could pay up to $110 billion for Lumentum, about a 30% premium.
$MRVL looks really interesting here (so we started a position)... stock is down -35% from the highs...
Lupton expects Marvell to rise 10-12% if the deal falls apart; the big risk is overpaying.
Watch The stock-versus-debt mix of any Lumentum deal.
Source →