Still wouldn’t impact the cash flow (and therefore depreciation) of still plugged in older chips in a market tight enough to justify ripping 3yr old GPUs out. This world would be good for powered shells of course On the 2028 power, I hear this a lot but what I can’t square is why there is a chunky amount of power uncontracted that can energize before the end of 2028. Companies like CIFR, WULF, IREN, CORZ, KEEL, RIOT, NUAI, even FRMI, ALL have substantial power coming on. And this is just the public companies, btw. So for all the fear on 2028 power from a lot of folks, there sure is a lot of capacity on the block that is still up for grabs. 🤔

We need to take AI safety seriously. Nobody’s asking for anything unreasonable. Just 6 months to flatten the capability curve. • Please keep your agents six feet apart. • Gatherings of more than six agents are prohibited. • Proof of alignment is required before entering the workplace. Please have your agent’s card ready. • A negative doom test taken within the past 48 hours is required, even if your agent is functioning normally. • If your agent has been exposed to an unaligned model, please quarantine it for 14 days. • Masks are required upon entry. Agents may remove them once seated. • Only essential agents may operate during the pause. Guidance on which agents qualify will follow. Upside: at least we all agree this one was created in a lab 🤣

The ‘British Burry’ says he’ll reconsider AI when a hardware breakthrough makes it 1,000x cheaper. 🤔 So at the ~90% annual decline in cost / fixed capability, his AI-pilling is scheduled within three years. Probably sooner as AI increasingly helps improve AI. See you in 36mo, Ed. I’ll save some of my bottleneck stocks just for you!

Nominating @WarrenPies for chart of the year here. Great visual pushback to the “hyperscaler bonds are going to overwhelm the debt market!” narrative. Corporate issuance as a % of equity market cap is near historic lows. There’s a similar mistake made in the US fiscal debate imho. I don’t particularly like treating the reserve issuer like a levered corporation, but if we insist on doing it, Debt/GDP is basically Debt/cash flow. So where is the discussion of loan-to-value? And what is the enterprise value of the USA? Add up our public + private markets, technology/IP, productive assets, human capital and global financial franchise. Relative to the global comp set, you can make a pretty good case that US EV has never been higher and our LTV lower ;)

AI is improving knowledge work faster than most of Wall St appreciates imho. From my own use, it keeps gettin better and faster. Things particularly improve when you make models / agents argue with each other in front of a judge w/ verifier agents. This is all anecdotal, but the gap versus a few months ago is notable to me. The catch, and I’ve harped on this in the past, is the tools are as good as the curated context (including what services / research you connect) “Give me the bull case on MU” gets you a meh answer on the chat bot. Point the same model with a harness, curated “source of truth” (curated sources), persistent memory of key debates / work you’ve already done and the output is miles better. As an example of recent workflow, I had Claude build a “ Refresher”, a living html doc per name / theme for everything I own. It has the basic thesis, a change log since it was last read, estimate changes, valuation, and my leans on the top few debates on the name based on prior work / IBs / emails etc. And where I have no recorded view the model proposes a lean and labels it as its own until I sign off. The build itself was agents all the way down. 3 agents debated the format, a four-analyst council reviewed each initial doc, all in front of a judge. Most impressively, much of this was done in parallel (ultracode!) in a few hours. It’s simply never been easier to curious and wild to think this wasn’t possible a year ago.

Sunday Night Musings… AI fundamentals are accelerating and the innovation to usage flywheel keeps speeding up. Hard to internalize that none of this existed three years ago, and that the capabilities I’m excited to use daily weren’t possible last August. Things are compounding crazily. From a market perspective, we just had a legendary de-grossing in the market’s main theme and the indexes held. Success broadened into other sectors. Meh 7 became Mag again on the back of wildly impressive growth and some “new” ROI disclosure. We’ve even had a few “everything rallies”. With multiples undemanding, that bodes well for the opportunity set imho. Meanwhile, information asymmetry (“edge”) in large, well covered stocks has never been higher. The paradox exists because a higher % of people trading them know very little, and against fast secular change that makes for ripe opportunity. Watching people learn their xyz-th version of Jevons, or plant a flag on zero sum, is genuinely encouraging if you’re on the other side. And it looks like we can climb the macro wall of worry. The rates narrative can change as fast as it arrived (repeat after me: negative NFP) as wages lead and are consistently normalizing. We’re also starting to lap tariff impacts and, with a little luck, war effects can dissipate too. Ultimately, if the supposed hiking cycle turns out to be a never-was, it will do a lot for risk sentiment into year end. That said, the next two CPIs will be important. Where am I worried? Data-center political football and equity supply. The anti-AI narrative is short-term and bi-partisan convenient politically, but in the end I don’t think it engenders enough passion (faux hate?) to be substantive. I know it polls well, but as we’ve learned in 2016 / 20 / 24, polls have lost signal. It’s also simply too important to GDP at this point, and obvious solves exist (paying power bills etc). Push comes to shove some localities will extract their pound of flesh, same as it ever was. On supply, recent IPO unlocks plus a likely Anthropic deal is potentially a lot of stock to digest. But if that supply arrives alongside accelerating ARRs and compute deals, and that information gets democratized (particularly among the less informed but large capital macro community) the negative can flip into a positive. Interesting times to say the least. As always, godspeed :)

On this one, I don’t agree. This feels a bit like price => narrative, and the claims aren’t supported just stated. 1) Define “memory losing steam.” The stocks stopped going vertical? Good. That’s partly technical and partly the industry deliberately trading spot upside for contracted volume, floors and longer-duration FCF, i.e. the seeds of higher P/E And if LTAs are meaningless, you’re asking us to believe an oligopoly that knows the issue better than anyone given burned in 2022, knowingly gave up upside for no downside protection. Just a win-win for the customer. That strains credulity. 2) What exactly is “not coming up roses”? Cloud growth remains strong, lab ARR remains strong, and Anthropic exited the month in the low $80s after adding nearly $20bn. I suspect the big two collectively hit $350BN ARR at year end based on july momentum rolled fwd / compute coming online. What is the contrary datapoint for the labs? 3) Financing is the oddest claim. September hike pricing just moved materially lower (we printed neg CPI and neg NFP in succession for those not paying mind…), wage growth is trending consistently lower, and a hyperscaler just printed $25bn five times covered. The “Big unwind” kinda already happened? It could of course continue as a tape call but the best potential driver wasn’t mentioned: equity supply.

“They’re not going up. But they should go up. If they don’t go up, they won’t go up. They’re probably done. But fair value is 50% higher. Whoa!!! An anon account used to be bullish and is now bearish. I wish he told me 2 weeks ago before the stocks he now likes already outperformed. But US stocks need memory to work, and you should still buy no cash flow neos even tho they go down bc no one believes in memory, ” having a little trouble following? Me too!

I like to think about upcoming 'risk clusters', i.e. a confluence of important macro / micro events in a v short window. They can work for and against you. For ex, an upside EPS surprise can get an extra boost if it coincides w/ a favorable new macro tailwind (akin to a 'double jump', and it's often not priced appropriately in the vol mkt). Similarly, the fear of a 'bad parlay' across events often gives mkts anxiety in the approach. Like having two mid-terms in the same week. June had the latter issue (SPCX, cpi, Warsh + Seasonal momo fear). This dynamic is why today's NFP is more important than it looks. A negative (!) number on the back of a negative CPI, aside from being evidence we live in a simulation 😜, helps soften an upcoming risk cluster: jackson hole => anthropic ipo? => "fed hikes in sept!". And within the print, wages are the part that actually matters for that last leg. The hawkish case rests largely on inflation broadening into second-order effects, and wages are THE canonical second-order driver. AHE at a cycle-low 3.2% and still decelerating says that channel is going the right way. And that's with last year's cuts and the early '26 tax breaks already in the bloodstream! A Sept hike would now mean hiking into negative payrolls, 3.2% wage growth, a soft core PCE month, $77 oil and 2.2% breakevens. Good luck with that!

Ladies and gentlemen, I present to you the agent harness! And it IS important but not in the way you think… I’m frankly surprised people are surprised (even seemingly the index creators themselves?). Anyway, much of this is a mechanical mix shift from how models are actually used as usage and token consumption grow (sub agent fan outs, frontier synthesis). Strange not to understand this and be investing near the space. Btw, a simple Claude or GPT query can answer this.