Spoke to a few large semiconductor and infrastructure CEOs and consensus is if the build slows in the U.S. the demand outside the U.S. is more than sufficient. Forecasts remain in tact. Location is now fungible. 👀

It is an interesting time to be an AI optimist and even more perplexing to be an AI bull. We are witnessing the diffusion and democratization of intelligence at an unprecedented rate. It will all but certainly transform the world and power economies for decades. If you have spent any time using the technology it is instantly evident how powerful and game changing it is. However, markets can be humbling. Right now we are in a tug-of-war between exponential growth and capital intensity. The Mag 7 is spending at a breakneck pace to position for long term viability and reduce existential risk to their business. And even with record revenue growth and great guidance, the market is calling its bluff. So what to believe when sentiment turns like it has in recent weeks? I believe we may see more downward pressure, but this is dislocation between the strength of the AI wave and the realities of the free cash flow crunch. The comparisons with the internet boom are largely a false flag. The adoption curve and demand for intelligence is nearly infinite and the growth of companies like Anthropic prove the demand continues to gain strength. This will continue to accelerate. The big question to ask is whether the thesis has changed and whether fundamentals have changed. In this case it is clearly a change in capital market structure and the impact is in the near term risk capital is nervous. I also think this market has presented more opportunity for long term investors and growth. Many great companies have lost a ton of near term value while fundamentals have improved. Hard to think that long-term minded investors won't do well buying strong performing names that are benefitting from the AI revolution. Next few months will be very interesting. I remain optimistic and bullish over the long term, but definitely believe sentiment has shifted bearish for now. Happy Sunday, Y'all.

One important caveat around AI ROI is being realistic about when AI became useful. I would argue the ChatGPT moment in late 22/23 was followed by about 3 years of model advances that really didn’t translate to utility for most business use cases. Potential was evident, but this was the era of AI slop. We would pinpoint February 2026 with the release of Opus 4.6 as the real inflection. TLDR we’ve really had useful models for about 8 months. And I would say the advancements since 4.6 have been incredible. More impact on ROI to follow. 👀

FUTURUM JUST MAPPED EVERY LAYER OF THE CPU SUPPLY CHAIN CPU Architecture & IP • Arm: $ARM • Proprietary: $IBM • x86: $AMD $INTC Chip Design Software • EDA: $CDNS $SNPS Manufacturing • Memory: $MU $SKHY • Foundries: $TSM $INTC $GFS • Advanced Packaging: $TSM $INTC $AMKR • Wafer Fab Equipment: $ASML $AMAT $LRCX $KLAC CPU End Markets • Enterprise: $AMD $INTC $IBM • Mobile: $AAPL $QCOM $GOOGL • Consumer: $AMD $INTC $AAPL $QCOM • Agentic AI: $ARM $NVDA $QCOM $AMD $INTC • Cloud: $AMD $INTC $NVDA $AMZN $GOOGL $MSFT $META $BABA

The AI doom is non sequitur to what the customers of the hyperscalers are proving with their rapid growth. Enterprises are spending big to implement AI into their businesses. The growth across all the major clouds is exhibit 1A. 💪🏻

This is an odd one. There is no softness in demand for components any where in the silicon supply chain. The softness is clearly capital markets/debt and that is evident in the rising credit spreads and concerns around free cash flow. Either this CIO has no idea what they are talking about or they are spreading FUD. 🤔

Enterprises are handing coding agents real engineering work and choosing the model on benchmarks that basically just count passing unit tests. Those benchmarks do not see the failure every engineering team has met, code that runs and misses the point, and they say nothing about what a passed job costs. Signal65 PINNACLE now has a Coding Agent test, published today beside the PINNACLE Model Score. ➡️ A model is dropped into a codebase it has never seen, with a business brief, 74K tokens of documentation and 7,200 seconds, and asked to build the software ➡️ Grading is all code. The program it builds is run on 200 unseen samples, every answer is recomputed, and the design is checked across samples, so a generator that never varies fails the job ➡️ Two classes of work, open-ended Frontier Class jobs and fully scoped Local Class jobs, weighted equally into one PINNACLE Coding Agent Score ➡️ The best enterprise model is not necessarily the best coding model, and the rankings part ways at the top of the field ➡️ One passed open-ended job costs from $1.35 to $73.76 across the hosted frontier, failed tries included, with open-weights models priced on a rented @NVIDIA B300 node 63 configurations, 3,690 Frontier Class and 3,660 Local Class attempts, developed in close partnership with @Kamiwaza. Read the article and the results:

$INTC saw its share prices rise 7x at its peak largely off a bearish to bullish posture that came with U.S. investment and $NVDA partnership. The narrative of its return is still in tact but was always a longer term work in progress. The massive 7x run was never based on fundamentals or earnings. It was the belief/thesis that its design business had a massive tailwind from AI and that a U.S. Foundry was absolutely necessary to meet demand and protect national interests. The risk was always timeline and execution. This quarter we saw execution risk play out in real time. Longer term the right question is whether that thesis is still intact? I would say yes. But execution remains the real question mark. I still think the narrative that supported its parabolic holds true. But now investors want receipts.

Hyperscaler earnings confirmed that AI is full steam ahead. Growth, capex, and demand all remain elevated. But, cracks forming around AI, both macro and micro has investors spooked. Breaking down a really tough week for markets 👀

What better time to do a live podcast than in the middle of this AI selloff? Daniel and I are going live on the Futurum Equities channel at 3 PM ET to break down biggest takeaways from $GOOGL, $MSFT, $AMZN, $NOW and $INTC earnings and what's driving this drawdown across AI stocks. Most of the episode will be live Q&A so come ready with your questions!