Anthropic s1 filing truly initiated a bounce I was fed into too much “insider insights” which weren’t revealed in this S1 😂 Missed this bounce and congrats to you all who played the trade. I’m still patiently waiting for the longing opportunity. Still too much uncertainty to me.

Like I mentioned, Opus5.5 is growing fast since the end of Sep. However due to distillation and seasonality. My forecast for year end ARR is 80-85B. But if $ANT do a seasonality adjustment, it could be 90Bish. OAI’s ARR growth in Oct is stalled because of Opus 5.5🥹.

AI Semis Trade: From Arousal to Reality The past few weeks have been painful for AI semi investors. One of our mistakes early in the month was not realizing how much of an impact Anthropic’s ARR print would have on the AI trade, and not “sussing” out the set up heading in: lower distillation revs, OpenAI taking share in September, & META/MSFT off-ramps. These were all things that were reported on; if this was an earnings print, we wouldn’t have wanted to be long in the weeks heading into it. In hindsight — knowing what we know now, it was a perfect set up to reduce exposure into it. The upside of whiffing on that trade and the market’s renewed focus on Lab ARRs and financing? It has forced me (and other investors) to sharpen our pencils and better understand the different moving pieces of the trade, and how they play off each other. Let’s rewind a bit before diving into where we are now: For the first three years of the AI semi trade, and especially during the May/June go-go days, investors were in the throes of the honeymoon phase: maximum arousal, minimum scrutiny. Every piece of news was looked at with rose-colored-glasses. It’s just like the beginning of a new relationship when the infatuation is so strong that your partner can do no wrong. Even when she tells you she believes in an "open-source relationship," you somehow hand-wave it away and convince yourself it’s just going to soak up more of the frontier labs' excess demand. When your level-headed friends pull you aside to point out glaring red flags, like the fact that she’s running a shadowy circular-financing scheme with her roommates, you don’t listen; you just stop inviting them to parties. Before you know it, you’ve turned on Gavin Baker’s X notifications and forward SemiAnalysis to anyone who thinks you’re moving too fast, the ultimate wingmen who never stop hyping her up and telling you what you want to hear. “It’s way bigger than just coding, bro. She’s going to replace the entire global labor force.” Before long, the endorphins and dopamine completely take the wheel. Even if you carry the scars from past relationships — whether the early 2000s, GFC, 2019 SaaS, or the 2020–2022 Covid binge — the blinders go right back on. Those exes weren’t real supercycles and everyone knows there’s no dark fiber in GPUs, you tell yourself as you stare at GPU rental prices. You’ve even picked out baby names: Bel if it’s a girl; Claude if it’s a boy. But eventually the dopamine wears off, and you have to get to know the person you’ve been telling everyone is perfect. You begin to see the flaws and start asking practical questions about spending habits, expectations, whose money is actually paying the bills. Can we afford this lifestyle on those lab ARRs, or are we just annualizing the honeymoon and assuming the capital stays cheap forever? And is there enough power in ’28 to keep the spark alive? Things suddenly feel a lot more complicated, and we feel some investors longing for the simpler, more intoxicating days of May and June. But we see the end of the honeymoon as a chance for the relationship to mature. That means accepting where we are, adjusting expectations, and focusing our attention on where the strengths are rather than the flaws...

AI data center tenants are now demanding penalties of more than $5 million per day if developers fail to deliver power and facilities on time, up from around $1 million earlier this year, according to The Information.

This will be a sword of Damocles hanging above US stock market around midterm through year end until the real strike landed or a true peace deal signed, otherwise the market doesn’t know how to price in this uncertainty. Will buy oil and XLE for this if there is any pullback.

As someone with a portfolio of energized land assets here is what I am seeing: 1. Neoclouds are disorganized and poorly capitalized. Some are definitely better than others however. 2. Hyperscalers are intractable, bureaucratic organizations that take 3 months to do an NDA and want 18mo escrow periods. We built our portfolio by competing against these terms because of our speed and simplicity. The more future assets orgs like ours win, the bigger the problem for the hyperscalers downstream (see 3). 3. There are delays in the existing pipeline that will catch people off guard in 2027. Hyperacalers will (obviously) react by focusing on their own internal compute needs over any third party. If the third party is a model company, they will tell them to go through their model router where they will also take a non-trivial vig. Them telling Ant they have no compute for them (rumored in Ant’s S-1) if true is a huge tell that this is already happening. All of this is to say that it does look like there will be a lot of partially stranded compute and compute sitting in inventory in 2027 than is currently forecasted. This is bought and paid for but effectively underearning (below total cost of capital) or collecting dust. We see this as true for everyone - model companies, hyperscalers, neoclouds except ONE (you can guess which one). This dislocation will benefit two kinds of orgs: the non-bureaucratic big scalers who can build industrial scale quickly and the nimble, well capitalized players feeding them. 2027 will be a turbulent year because it will clear out a bunch of wrong/bad bets. It will also be a consolidation year for a few.

Here's my view here for next week and what I think we are setting up to do. I'm pretty confident in this, but as always i'll literally know if im wrong just via price. Price is king and price is the only thing that will pay you - not some narrative/thesis/hope Let's dive in bro:

My friend @QCrua23 just shared this with me from his own fund flow monitoring system: 1.The unwind of crowded AI longs deepened while the rest of the market held up, a rotation within equities rather than out of them 2.Hedge funds look to be cutting net exposure, not gross: they went from 3% net buyers to 9% net sellers while their short-sale share fell from 61% to 50%, so long sales rose and short sales held. Gross remains heavy, with short leverage near a five-year high, so forced de-grossing is the risk 3.The 10-year fell 12bp to just under 5% despite Brent +2.4%; the desk expects CTAs, very short bonds, to add buying near their short-term threshold, a flow no exhibit measures 4.Retail went into Thursday long the unwind's leaders