Daily Alpha · X
· Post-Market Alpha · by Buzzberg Research
Serenity (@aleabitoreddit) dissected AOI's five-year InP substrate deal, Gavin Baker called a narrow Democratic House win the market's worst case, and a BofA-cited consensus of $335B in 2027 hyperscaler FCF burn circulated.
Themes on this desk
AMD print
AMD reported Q3 revenue of $13.38B against $13.08B expected and guided Q4 to about $17B; the stock rose over 6% after hours.
AAOI substrate math
@zephyr_z9 puts the AAOI deal at about $1,077 per InP wafer, and Rosenblatt says the 2027 contract could underpin about $5.8B of annual transceiver revenue.
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Market Radar →Gavin Baker: a narrow Democratic House win is the worst market outcome
Gavin Baker says a narrow Democratic House victory is the worst scenario for the market because it empowers the DSA, quoting Bianco Research's view that the margin of victory matters more than the JP Morgan consensus assumes.
Super interesting and intuitively obvious once you think about it:
It makes the House margin, not just control, the variable for the market's reaction.
Watch The final House seat count.
Source →Serenity: AAOI's $194.4M InP contract hints at bigger laser capacity
AAOI signed a $194.4M-a-year contract with Yunnan Germanium for 2027 within a five-year deal, implying about $970M of InP substrates over five years. Serenity (@aleabitoreddit) says 180K wafers looks extreme for AOI's own transceiver lasers, suggesting capacity expansion bigger than disclosed.
$AAOI signs $194.4M/year contract with Yuunan Germanium. This is for 2027 alone, with a 5 year contract.
Serenity (@aleabitoreddit) sees a positive read-through for AXTI and says AOI secured capacity during the bottleneck.
Watch Possible new UHP laser contracts at AOI's earnings.
Source →BofA: hyperscaler and neocloud FCF burn seen at $335B in 2027
Per BofA, consensus for eight US hyperscalers and neoclouds has FCF burn worsening to $335B, or 13% of sales, in CY27 from $128B, or 6%, in CY26.
BofA: consensus for eight US hyperscalers/neoclouds has FCF burn worsening to $335 billion, or 13% of sales, in CY27E from
The burn more than doubles as a share of sales in one year.
Watch Hyperscaler capex and debt issuance into 2027.
Source →Texas governor race is the key election for the AI trade, says Michael Sikand
Michael Sikand says Texas has 26 GW of data-center capacity built or under construction, double Virginia's, with over 474 GW of grid requests waiting. Abbott, at 60%+ odds, is hawkish on the buildout, while his opponent is running on a full moratorium.
AI stocks are flying today and this chart might be why.
He links Abbott's odds to the day's rally in neocloud and AI landlord stocks such as HUT, IREN and RIOT.
Watch The Texas governor result.
Source →AMD trades at 27x 2027 earnings versus Nvidia at 13x after a strong guide
@thematictrader calls AMD's report incredibly strong, with a 2027 guide implying $95B-$105B of revenue and $19-$22 of non-GAAP EPS, but asks why AMD should trade at 27x 2027 earnings when Nvidia, guiding roughly the same growth, trades at 13x.
The $AMD report is incredibly strong, let's start there.
Mature networking and data-center infrastructure names also trade at 12x-20x forward earnings.
Watch AMD's multiple relative to Nvidia after the guide.
Source →