Some details from the $COHR call that stood out:
1) Almost every recently signed TLA includes some form of upfront customer funding, such as prepayments or development payments. As Jim Anderson put it, customers have “skin in the game” on the capacity being built for them.
2) Internal InP output doubled, but the internal versus external sourcing mix “hasn't changed much in a year.” Transceiver demand grew fast enough to absorb the additional supply.
3) Scale-across revenue exceeded $200M and nearly quadrupled YoY, “ahead of MultiRail.” That product’s revenue ramp is expected to begin in the March quarter.
Coherent is spending heavily to expand, but customers are helping fund capacity.
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Wild statements from $SPCX today
$SPCX: "I would be surprised if we're brought on less than 13 gigawatts of compute by the end of next year."
I know mostly post about AI stocks
But my portfolio has become quite broad
Some of my best performers today are $NKTR $ZURA and $UNH
Makes the volatility much easier to stomach and I can toggle different levers as I see fit
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I am now much more diversified than I have been in a while
My portfolio has exposure to:
> Networking (both optics + copper) + supply chain
> Neoclouds
> CPUs / Inference
> Hyperscalers (All of them)
> Powersemis
> Robotics (Perception, Control Systems, Sensing etc)
> Edge AI
> Software
> Healthcare
> Biotech & Pharma
> Bonds
Most are long term, but some are shorter term trying to capture rotations/momentum
I think that being concentrated has its moments. Both in the market and in real life
And right now it's time for me personally to have some diversity and protect the downside even if it means limiting the upside
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$VICR operating profit grew 107% QoQ on 38% revenue growth.
Wow. This is the earnings leverage you love to see
And the hardware business is doing its part.
• Product revenue +16% QoQ to ~$131M
• Product gross margin ~52%, up from ~47%, calculated from reported figures
• ~$100M of bookings in the first TWO WEEKS of Q4
That last number includes a large second-generation power-delivery order from its lead customer.
The new AI licensee has already placed another significant licensing purchase order.
Q3 royalties included initial payments. For Q4, management expects at least $43M without new license agreements. Existing agreements could generate more.
Alongside that, hardware revenue is expected to grow another ~10% QoQ.
I like what this says about the business. Hardware profitability is improving and the licensing customer is already coming back for more.
Lets see how Q4 turns out. Q3 was exceptional and shouldnt be annualized. Also, yes of course the market could just punish the multiple and the AI trade is heavy. But just focusing on the company, this was an exceptional quarter
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BofA reiterated its Buy on $NOK today with a ~$18 target (16€)
Lets look at how they get there.
Their model values Nokia’s businesses using 2028 EBIT multiples of
Optical + IP networking → 30×
Other businesses → 10×
They also expect more than $2.25B of Q3 AI-related orders ahead of Thursday’s earnings.
Last quarter, Nokia booked roughly $3.14B of AI & Cloud orders. Sales to those customers more than doubled YoY, and management expected around half of those orders to become revenue within the following 12 months.
They’ve said supply is the main industry constraint. Customers are ordering further ahead to secure it.
→ Pennsylvania expansion targets up to 10× the site’s optical chip test and packaging capacity, with new capacity originally expected by the end of Q3.
→ San Jose’s new optical semiconductor fab was scheduled to start ramping later in Q4.
Those investments are intended to support demand in 2027 and 2028. Thursday should give us a better read on their progress and how much additional product they can deliver.
More shipments would let a larger portion of that demand show up in sales. In BofA’s model, additional optical and IP profit also receives a much higher multiple than profit elsewhere in Nokia.
The risk is paying for the ramp before it delivers of course. Delays could push earnings further out, while a weaker market could compress those premium multiples.
Nokia had already guided to roughly flat comparable operating profit QoQ in Q3 because of software revenue timing, so the order growth won’t necessarily produce an immediate earnings surge.
Will be an exciting day!
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There’s a drone-navigation business inside $VIAV.
I usually talk about them through networking, but their Inertial Labs business gives them exposure to autonomous aircraft too. It's not big, but I thought this was interesting enough to talk about.
One problem they’re working on is how a drone stays on course when GPS gets jammed or becomes unreliable.
Their visual navigation system combines motion sensors with an onboard camera. It compares what the camera sees with 3D maps to help determine where the aircraft is, even without a reliable GPS signal.
That’s a useful capability as drones take on more work in environments where losing navigation could end the mission.
Inertial Labs contributed $86.1M of revenue in FY2026, roughly 5.7% of VIAVI’s total.
That includes its broader aerospace, defense and industrial business. VIAVI hasn’t broken out drone revenue separately.
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I finally have some exposure here through $MKSI
Starter for now. Want lower for more
NFA
UBS: WFE suppliers are preparing for 30%+ annual growth for the foreseeable future, with parts of the supply chain being asked to support a potential $500B/year WFE market.
$LRCX $AMAT $ONTO $KLAC $MKSI $NVMI
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Morgan Stanley now expects AWS to more than double its revenue between 2026 and 2028. $AMZN
That’s a pretty big expectation for a business this size.
Their updated forecasts, reported today
2027 growth → 47%, previously 41%
2028 growth → 42%, previously 37%
Together, that would mean roughly 109% revenue growth over two years. They also raised their $AMZN target from $335 to $350.
AWS already generated $16.6B of Amazon’s $27.5B in operating income in Q2. So faster cloud growth can have a much larger effect on earnings than looking at Amazon’s overall revenue growth would suggest.
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Some of my long term $AMZN thesis
Businesses are going to spend more on AI, and they already have the customer relationships to capture that spending through AWS. Training models and deploying agents create more demand for compute. AWS grew 37% YoY in Q2, with operating profit growing 63%.
Their own chips give them more control over the cost of serving that demand. That business is already above a $25B annualized run rate. Better economics can help them attract customers and earn more from their usage.
They also get paid when people shop and when sellers advertise to reach them. Advertising grew 26% YoY. More automation in fulfillment gives them another way to improve how much profit they keep from each order.
The big financial opportunity is what happens as the new data centers fill up. They’re spending more than their operating cash flow today. Jassy expects much of the 2026 AWS investment to monetize in 2027–2028, with substantial customer commitments already in place.
NFA
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$VICR can get paid on power modules somebody else manufactures.
A licensed customer can source covered technology from outside suppliers.
Vicor earns from its patents while those suppliers handle the manufacturing.
September’s first non-exclusive Vertical Power Delivery license already had a substantial impact. Vicor raised Q3 revenue growth guidance to more than 30% QoQ, citing increased royalties.
On Q2 revenue of $143.4M, that implies more than roughly $186.4M in Q3.
Now think about additional licensees, broader use of the technology and renewals over time.
Vicor could participate in a much larger manufacturing network than it operates itself.
Earnings are tomorrow morning! Shall be exciting either way.
I would really like to hear more about the repeatable royalty contribution.
A growing stream of licensing income could let profits scale with far less factory investment than an equivalent increase in product sales.
@joedab12 is the man to follow if you are interested in this company.
Let's see what tomorrow brings and how much of the recent positive news the market is pricing in
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Here is why $NXPI interests me as a Physical AI investment.
The existing business is recovering
1 - Automotive revenue grew 12% YoY in Q2. Industrial & IoT grew 38%.
2 - Profitability is improving with it. Adjusted operating margin reached 35.1%, up 310 bps YoY.
3 - It can fund the next opportunity Q2 free cash flow was $791M, or 22.6% of revenue.
Physical AI gives those industrial relationships somewhere else to go. Customers adding vision and local decision-making also need reliable control and secure communication. NXP already supplies those functions.
I see a way to participate in more intelligent machines through a business that is generating substantial earnings and cash today.
More customer volume supports the recovery. Winning a larger role in each machine would add another source of growth.
One concern is how durable the recovery is. Automotive still accounts for roughly 55% of sales. Weaker vehicle demand or another round of customer inventory cuts could slow orders, while pricing pressure eats into profitability.
Those are real risks to earnings and the stock, even with the longer-term Physical AI opportunity.
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$FN is down 18.59% YTD. Look at this chart.
Latest quarter
→ Revenue up 45% YoY
→ Data-center revenue up 68% YoY
→ Adjusted EPS up 55% YoY
Data centers now account for 51% of sales.
Communications infrastructure grew 40% too, so the growth is coming from more than one part of the business.
At $370, they’re trading at ~26.3x the $14.09 of adjusted EPS they earned in FY2026.
Management’s next-quarter outlook was for another sequential revenue record.
The selling has come alongside a sharp reset in optical valuations.
B. Riley (tends to lean quite bearish on optical) cut its target from $598 to $431 citing that multiple compression. And FN’s expansion is consuming cash. After funding inventory and capacity, FY2026 free cash flow was only about $4M.
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Another one, $NXPI
Actually finished the week slightly green
(And I know there are plenty of stocks outside of semis that are green on the week. I'm just highlighting some semis that I own that have had RS)
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$QCOM also had really great relative strength this week
Just flat
$QCOM also had really great relative strength this week
Just flat
$GFS basically did nothing this week
Noteable…
Does anybody know why $GFS held up so well today?
I haven't really been online but I was happy to see this
Let me know if you heard/saw anything please
Mic drop
No, we haven’t liquidated and no, we have no plans to do so.
Selling at important seasonality lows…just as hedge funds have exited…is not how we’ve outperformed the market in 19/22 years.
This decline is about one thing IMO; a resumption of kinetic action with Iran, because it looks likely.
And that means this selling pressure is taking place in advance of it. To that I say “when missiles fly, stocks are a buy”.
We’re primary trend followers and we use drawdowns to add to core positions. We’ll soon be doing that again.
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I saw this too.
Thoughts?
Japan is funding up to $21B of new fabs that $GFS will operate.
Let's check out the structure:
→ Japan provides the investment capital
→ GFS gets paid for construction, operations and licensing its technology
→ Apple and Renesas are identified as initial customers
The first ~$10B fab is targeted to come online in 2029. A second would follow with additional investment.
We’ve been talking about GFS getting more out of its existing fabs through optical growth and better utilization.
Now they could earn additional income from a much larger manufacturing footprint financed by outside capital.
The fee terms and retained obligations will determine how attractive that income is. Management’s webcast is today at 10 AM Pacific.
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Is there anything concrete behind all the demand we’re hearing about in these optical businesses?
Are there actual contractual obligations, or is it all just vibes?
Well, let's look at some of what’s been signed.
$NVDA announced multibillion-dollar purchase commitments with BOTH $LITE and $COHR, plus access to future capacity.
$TSEM disclosed $1.3B of silicon photonics contracts for 2027 and $290M in customer prepayments ALREADY RECEIVED. Contractual wafer commitments for 2028 were even larger.
$META signed a multiyear optical supply agreement worth up to $6B with $GLW. $AMZN signed its own multiyear, multibillion-dollar agreement with them. Both support manufacturing expansion.
$COHR agreed to a $22.3M prepayment to $AXTI for six-inch InP substrate capacity. $LITE signed a six-year capacity reservation agreement with AXT, including an initial $43.5M deposit.
$MRVL expanded its multiyear agreement with $GFS to add optical manufacturing capacity, including for NPO and CPO.
On October 13, $SMTC agreed to invest in dedicated capacity at $TSEM across the US, Israel and Japan.
So yes, there is real money and contractual backing behind parts of this buildout.
Customers are helping fund capacity and reserving production years ahead.
But the amount of protection varies.
Some businesses have much more of their expected demand covered by contracts.
Others are leaning more on customer forecasts, discussions and indications of interest.
Even within a signed agreement, minimum purchases, cancellation rights and refundable deposits can make a big difference.
An “up to” dollar amount also deserves a closer look.
I think that distinction is worth spending time on when comparing these stocks.
How much future business is actually committed, and how much is management expecting to convert?
And the stocks can absolutely still get hit.
Earnings can grow while valuation multiples fall.
Contracted demand gives us more evidence about the business, but the price we pay still determines how much of that growth we get to benefit from.
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What a valuable read
1) Trying again.
TLDR: Everyone can win. Open-source, frontier labs, infrastructure, applications and most importantly the American people.
I understand all of the jitters about Anthropic losing share, real rates, spreads and second derivatives. Still think the most likely future outcome is a hybrid, multi-model future where almost everyone wins, open-weight tokens are likely the overwhelming majority of tokens, the dominant frontier model companies still do well albeit perhaps not the outcome that seemed possible in May and AI infrastructure/applications benefit immensely from the increased fragmentation, competition and lower margins at the model layer.
Lower margins at the model layer mechanically drive higher compute demand as long as someone is willing to pay for the training. And Jensen is obviously willing to be the “trainer of last resort.” As below-market compute contracts signed in 24/25 roll-off and reprice higher, cloud and neocloud revenue should continue to accelerate which will help address financing fears; I think we may be near peak external financing for this buildout. Noteworthy that using data from 3Fourteen Research, B200 clusters will generate a 37% IRR *if* their rental price declines 40% per year. Prices are still going up, but that IRR math is too ridiculous to print. 37% IRRs available at scale should get funded.
Re: this weekends controversy about MOUs, Anthropic’s $413 billion of real contractual commitments sounds scary. Reality is that it works out to roughly $31 billion of annual cloud spend, which is easily internally financed given their reported ARR, and $161 billion of spend at Broadcom which will be financed by Broadcom and private credit.
Continue to believe fragmentation at the model layer is the best outcome for ordinary Americans and humans everywhere. As I have said before, do not trust any 5-20 individuals to make the best possible decisions about the direction of this technology. I want as many AIs as possible to maximize the odds that they encompass the diversity of human values across the world and richness of human variation. And I want an AI that shares my own personal values. Safety, freedom and the maximization of human agency through democratization, distribution and diffusion vs. centralization. History has spoken on the dangers of the latter path.
Finally, from my perspective anything that slows this buildout down is net positive over the long-term as the biggest risk and worst outcome is an *actual* overbuild. We are structurally short watts, wafers and increasingly capital. That is all good. God forbid we were still in ZIRP, TSM ramped capex to 3x their current plan and we weren’t short turbine blades: there would almost certainly be an overbuild and a bubble. That would be terrible. Slower and smoother for longer is better both for investors and for the world. A terrible cyber event is the most plausible near term bear case IMHO, but AI cyberdefense ramping quickly and I was happy to hear Sholto say that cyber probably becomes defense dominant in the near future.
Longer, threaded version follows:
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$SMTC Analyst Day on Thursday 👀
Sometimes the market gives us gifts $smtc
After an awesome print & call, SMTC dipped in the 125 area
Which is where it was right before the print
But everything pointed in the other direction
New ATH just hit
Hopefully it breaks out, but regardless, very excited for the next few Q's
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