Last wk despite WTI +10% & ylds +2-7 bps across the curve, S&P/Nas/R2K +0.1%/+0.4%/+0.1%. $NVDA acquisition of Hugging Face & $Meta release of Muse Spark 1.3 last wk make both names more attractive into year-end. My view is that LLMs increasingly bifurcate into 90%+ usage of open-source/ open-weight models in the future as companies optimize the right models for the right task. Since the focus on controlling AI expenditures, the Silicon Data token cost has fallen over 50% since late May but the weekly usage of tokens in models across OpenRouter has increased by 3.6x over this same time. In addition, enterprises are increasingly focused on making sure their own proprietary data does not leak out when they use third party closed frontier LLMs. Hugging Face is the premier central collaborative platform, repository, and toolkit for open-source and open-weight AI with over 18 million developers. Nvidia has three customers that accounted for 44% of their revenues over the past six months and their largest customers are increasingly designing their own ASICs and in some cases selling them externally. A more diversified customer base that owns their own AI compute stack instead of renting from the big cloud service providers would help Nvidia with both of these issues. With this acquisition, Nvidia is in an even better position to sell enterprises a complete alternative AI stack (from the model to chips) where the customer will own their own data. Valuation is also compelling. Nvidia trades at a 15x CY27 PE versus their own guidance for 70% revenue growth and the Big 3 public cloud service providers at 21-23x for 15-26% total revenue growth. The S&P trades at 19x for 9% revenue growth for comparison. Nvidia is also up “just”24% versus the Semiconductor Index up 66% following underperformance last year at up 39% versus 42%. As for Meta, the stock is down 7% year-to-date after being up just 13% last year driven largely by concerns that 1) they can only monetize their near doubling in AI capex spend through efficiencies in their own business and 2) they were falling behind in the AI model race. The launch of the Muse Spark 1.3 API last week, catapulted Meta back to near frontier status (Top four in the Artificial Analysis Intelligence Index out of 10 models) but with aggressive token pricing (Bottom four in Cost per Task.) Open-weight versions of the Muse Spark lineup are coming soon. This will give the company another way to monetize their aggressive capex plans. This follows Meta's settlement in late August with state AGs on their youth addiction trial which was another overhang on the stock. Trading at 16x CY27 PE for 20% revenue growth is compelling with the settlement and Spark 1.3 launch as catalysts. From a broader market perspective, I recommend caution between now and the US mid-terms for reasons I have fleshed out in prior posts including: 1) Don’t Fight the Fed given I believe a 9/16 hike is likely 2) September -0.5% on avg & up only 48% of the time 3) S&P drawdowns of 10% in lead-up to mid-terms 4) Bipartisan pushback against datacenter expansion 5) Iran dragging out hostilities through US mid-terms