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Feb 14
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SHORT
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chumba
Substack author, The Cookie Chumbles
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"Hyperscaler buybacks are trending to zero as these businesses *must* reinvest their free cashflow into growth capex to maintain competitiveness." This makes them capital-intensive, not "the greatest businesses in the entire world." The core investment thesis for these companies (capital-light, high FCF, massive buybacks) is eroding, leading to lower FCF and potentially lower multiples as they become more like traditional capital-intensive businesses. Take short positions or underweight large-cap technology companies heavily reliant on AI capex to defend their competitive position, as their FCF generation and buyback capacity diminish. AI capex leads to unforeseen productivity gains and new revenue streams; open-source/Chinese models fail to catch up; market continues to value growth over FCF. |
The Cookie Chumbles
Doomer or Boomer
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Feb 13
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LONG
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Jim Cantrell
CEO, Phantom Space (Co-Founder SpaceX)
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"The real restriction bottleneck is launch... Launch is a very, very high moat... Investors as they're looking at the future of space and where to invest, you look at those who control launch." In a gold rush (Space Data/AI), the bottleneck is the most valuable position. Launch providers are the "bridge" across the river. Furthermore, Hyperscalers are the primary customers with the capital to pay for this access to secure unique data for AI models. Long the owners of launch infrastructure (SpaceX, Phantom Space) and the capitalized clients driving demand (Hyperscalers). High capital intensity, regulatory delays (FAA/Federal ranges), and technical failure risks inherent to rocketry. |
Bloomberg Markets
Building Data Centers in Space
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Feb 13
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LONG
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Max Kettner
Chief Multi-Asset Strategist, HSBC
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Mag-7 stocks are trading at ~26.5x forward earnings, comparable to the Russell 2000 at ~24x. Valuation compression has occurred because prices stayed flat while earnings grew. The "fear trade" provides a buying opportunity in high-quality growth at reasonable valuations compared to historical premiums. Buy the dip in Big Tech; valuations are no longer stretched relative to the broader market. Regulatory headwinds or a hotter-than-expected CPI print. |
Bloomberg Markets
Trump Team Plans Metals Tariff Rollback; NASA...
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Feb 12
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WATCH
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Josh Shapiro
Governor of Pennsylvania
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Shapiro outlines a principle where "If you're a big hyperscaler... you've got to be able to bring and pay for your own energy" via a "secondary auction." This shifts the cost burden of new generation explicitly onto Data Centers rather than spreading it across all ratepayers. While it ensures they get power (positive for growth), it likely increases their specific operating costs (negative for margins) compared to a subsidized model. Watch for the implementation of "secondary auctions" which could formalize higher energy costs for tech giants. If the secondary market fails to develop, data centers may face power shortages in the PJM region. |
CNBC
Gov. Josh Shapiro: PJM model of raising price...
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Feb 11
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LONG
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Bill Ford
Chairman, Ford Motor Company
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"There's almost infinite demand... for the next four or five years... [Tech giants] are moving from an asset light cash flowing business model to really put all our chips on the table." The market fears "AI Capex bubbles," but Ford argues the demand side ("intelligence on demand") is so strong that this spending is rational and necessary. The "Super Cycle" view implies the infrastructure build-out is just beginning. Long the AI Infrastructure spenders. ROI on AI Capex takes longer to materialize than the market expects. |
Bloomberg Markets
.General Atlantic CEO Ford on Current Investi...
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Feb 09
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NEUTRAL
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Mohamed El-Erian
Chief Economic Adviser at Allianz / Warden Professor
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The market is moving away from the 2023/2024 dynamic where investors "fell in love with anything that had an AI label." We are entering a "differentiation phase." Investors can no longer buy the whole sector blindly. They must scrutinize individual business models (e.g., comparing Google to OpenAI) because FOMO is leading to potential over-investment. Bond market spreads have widened slightly for "hyperscalers" (large cloud/AI companies), signaling that credit markets are becoming cautious about spending levels. Missing out on the broader sector momentum if the "productivity boom" accelerates faster than cost concerns. |
CNBC
Volatility, dispersion and fragmentation are ...
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