Market is overreacting to hyperscale credit spreads widening from my perspective. TL;DR Spot pricing for renting GPU compute materially above contracted rates implies hyperscalers are underearning while operating cash flow acceleration is an underestimated source of funds for AI capex. The fact that spot prices for GPU rentals are at least 2x higher than contracted rates is the missing piece from the discussion about hyperscaler credit, which is the only fundamental factor behind this selloff. Multiple private companies are planning on spending at least 2x more per GPU for compute as contracts roll-off and some have spoken about this publicly.   As contracts roll-off, hyperscale growth rates are going to continue to accelerate as their installed bases of compute reprice higher. Hyperscale operating cash flow growth using a mix of estimates and actuals is modeled to accelerate from 31% in the first quarter of 2026 to 50% in the second quarter. This acceleration should continue for the rest of the year and this is not in estimates which incorrectly model a deceleration in the third quarter from my perspective.   Some math. Consensus estimates are probably for 25-35 gigawatts added by hyperscale and neoclouds in CY28 (using a range as standing up datacenters is hard and a lot of the neos plus labs are still private).  At 60b per gigawatt, that is 1.5 to 2.2 trillion in capex. Consensus estimates for hyperscale/neo operating cash flow is 1.3 to 1.4 trillion. I think this gets revised up materially as contracts reprice and growth accelerates so the 100b to 700b that would hypothetically need to be plugged by debt goes away. And their credit profiles materially improve. Not to mention the said 100b to 700b would be less than 1 turn of incremental leverage on consensus EBITDA estimates. And obviously the Nvidia and Broadcom “credit wrappers” help improve creditworthiness as well given their FCF profiles.   OpenAI, Cursor/Grok and the various Open Source inference clouds have accelerated materially over the last two months per public data and Anthropic continues to grow insanely fast while likely generating FCF. This - along with the fact that spot prices for GPU rentals are so far ahead of contract - are the missing pieces from the BofA chart on hyperscale FCF vs. semiconductor FCF.   Hyperscalers are underearning and anyone who signed a contract for GPU compute in 2024 and 2025 is overearning. Operating cash flow will be enough to fund capex but as contracts reprice and cloud growth continues to accelerate then spreads likely come in as well.  
Would also note that CDS markets are easy to manipulate - was a huge feature of the GFC - short the stock and then buy the CDS. So I would not put attach much signal to CDS. 
Net, net I’m not that concerned about the widening spreads in hyperscale credit. The real risk is that bringing power online and energizing all these GPUs is really hard but we are getting better at this every day.

$BE CEO says recent customer conversations point to accelerating AI infrastructure investment Bloom signed its first hyperscaler deal less than a year ago and now works with every major U.S. hyperscaler positioning the company as the emerging standard for behind-the-meter power

SK hynix (Market Cap: KRW 1,132.2632 trillion) 2Q26 Earnings Results ▶️ Results: Revenue: KRW 79 trillion (+257% YoY) (Consensus: KRW 84 trillion; 5.5% below consensus) Operating profit: KRW 61 trillion (+557% YoY) (Consensus OP: KRW 64 trillion; 5.4% below consensus) Operating margin: 76.3% (Consensus OPM: 76.2%; 0.1%p above consensus)

For my first post, I’m sharing a letter @NVIDIA signed on why open models matter. AI will transform every industry, power every company, and be built by every country. Open models strengthen safety and cybersecurity, accelerate innovation and diffusion, and enable sovereignty. The world needs both frontier closed models and frontier open models.

Jukan is right. Korea has seen some weakness recently. A certain Korean equity analyst has also expressed a cautious view, drawing much of his research from information in the Chinese market. This pattern has persisted for several quarters now — this quarter is certainly not the first time. This is largely because China’s inference demand has yet to take off, while the smartphone market there remains concentrated in lower-end models. However, you can also see that his US-based colleagues, the reports we have published, the detailed notes in our latest interview database, as well as surveys such as the most recent Cleveland Research survey, all indicate that the US has broadly accepted a new round of price increases, with the scope of the increases already negotiated and agreed upon. This has also made China's influence on pricing increasingly limited, and in reality it is not nearly as significant as this Korean equity analyst believes. The analyst says Americans are too bullish, but that's simply because the reality is exactly that. If China's inference market were to improve substantially, Chinese buyers would change their stance as well.

As someone who has personally spent $500k / mo+ on Google Ads for years, I can tell you with certainty: This revenue growth in Search is artificial & extremely unhealthy for Google’s business long term Search volumes are declining as legacy search is being increasingly cannibalized by non-monetized LLM queries Google’s response? Manufacture revenue growth via short-sighted, highly extractive, customer-hostile tactics. I.e. charge advertisers more for lower quality clicks, including clicks they do not want and explicitly did not approve Google to charge them for A few examples to illustrate: For all of its history until recently, Google operated on a 2nd price auction model I.e. if you bid $5 CPC and the next highest bidder bids $1 CPC, Google charged you $1.01 for the click (one penny more than the 2nd highest bidder) rather than the $5 you bid This was a genius move by Google early on as it incentivizes advertisers to input their true maximum willingness to pay rather than trying to play the game of bidding low and constantly adjusting to try to stay just ahead of the next highest bidder while still not paying too much However recently, Google silently deprecated the 2nd price auction and began charging advertisers as much as their bid and budget caps allow, regardless of what anyone else is bidding It’s a short-sighted cash grab at the expense of the long term health of the advertiser ecosystem Making thing worse, Google also recently nerfed keyword targeting precision Google previously had precise keyword targeting settings that allowed advertisers pick individual search phrases to bid on, defined down to the character w/ exact match or phrase match targeting This was one of the core features that made search advertising magic, enabling advertisers to run extremely precise campaigns based on exactly what their target customer typed But now, even if you bid on a specific term or phrase using the strictest exact -match targeting settings, Google will show your ad across 1000’s of unrelated keywords, labeling them as as “exact match (close variant)” The definition of “close variant” means whatever they want it to and changes constantly. The result is advertisers get billed for clicks that are totally irrelevant to their business and that their targeting settings explicitly forbid Google from targeting. Google does it anyway and there’s no ability to turn this off So now exact match is broad match, and broad match is just meaningless spam This is all very bad for advertisers, but for Google, it allows them to show your ad and bill you for clicks across 1000x more searches that were previously going unmonetized (mainly because they’re garbage queries no one wants) This is how you grow revenue atop declining search volumes Lastly, and perhaps most egregiously, Google quietly stopped respecting budget caps by a factor of 2x. For example campaigns we’ve been running for years with $1000 daily budget caps suddenly began spending $2000+ per day And the extra spend is entirely on the garbage keywords Google arbitrarily throws in as “exact match (close variants)” which have no value to our business, but can’t be turned off Google offers no refunds nor any recourse for overspend or spend on keywords you explicitly did not target These are not the actions of a healthy business. These are the actions of company whose core business is in decline but desperately needs to pump quarterly earnings so Wall Street will continue to fund insane capex while hopefully looking through their rapidly deteriorating negative free cash flow Google operated a benevolent monopoly for the better part of 25 yrs Meaning the value Google captured from Search was but a small fraction of the value it created, and that spread produced a potential energy that justified expectations of high earnings growth far, far into the future This is now no longer the case At the alter of AI capex, Google is sacrificing the golden goose

$TSEM is planning a $3B Japan expansion to boost 300mm silicon photonics, silicon germanium, and advanced packaging capacity. Japan will provide $1B in grants to support the project. First phase: repurpose the Arai facility and expand Fab 7 output, with production readiness expected in Q4 2027. Tower also updated its 2028 model to target $3.6B revenue and $1.2B net profit.

$IBM released preliminary Q2 results BELOW internal expectations as mainframe and software sales disappointed, with large deals failing to close on expected timelines. CEO: “This quarter we faltered.” Revenue: $17.2B vs $17.86B est. 🔴, up 1% YoY Software: +5% Consulting: flat, +1% cc Infrastructure: -7% Non-GAAP EPS: $2.93, up 5% YTD free cash flow: $4.8B CEO Arvind Krishna said: “In the last few weeks of June, we saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases.” He also said clients were distracted by “rapidly-evolving, industry-wide cybersecurity concerns,” and that IBM “did not anticipate the magnitude of the capex reprioritization.” Full Q2 results are scheduled for July 22.

Earnings Season begins the week of July 13, 2026 $NFLX $UNH $C $GS $ASML $TSM $JPM $PGR $BAC $WFC $AEHR $CAG $BLK $RF $USB $GE $FAST $ABT $AA $UAL $TFC $MS $ISRG $JNJ $ERIC $AERO $ELV $FITB $ALV $PNC $STT $MTB $CTAS $ANGO $FBK $FHN $CFG $CNS $EQBK $FNB $HOVR $BNY $JBHT $HOMB $IIIN $SDVKY $TRV $SPFI $VLVLY $WIT

BREAKING: President Trump has formally notified US Congress that the US is at war with Iran, per Politico. Details include: 1. The move gives Trump another 60 days to use the military in the region without congressional approval 2. Trump said strikes that began on July 7th represent "military action consistent with my responsibility to protect Americans and US interests both at home and abroad" 3. Trump also just said that he will "hit Iran hard" tonight amid mounting tensions The Iran War appears to be back again.

Hedge funds are piling into US semiconductor stocks: Last week, hedge funds purchased the most US semiconductor stocks in at least 3.5 years. This follows the 2 largest consecutive weekly sales since June 2024. As a result, semiconductor stocks now account for 10% of total hedge fund exposure. This percentage is twice as high as during the same period last year. However, this remains below the peak of 14% recorded in May. Hedge funds are betting the semiconductor selloff is already over.

Shocking stat of the day: Nvidia, $NVDA, Micron, $MU, Broadcom, $AVGO, and Applied Materials, $AMAT, are now expected to generate a record $430 billion in combined free cash flow (FCF) over the next 12 months. That would be more than TRIPLE the FCF they generated just 2 years ago. At the same time, the combined FCF of Amazon, $AMZN, Alphabet, $GOOGL, Meta, $META, Microsoft, $MSFT, and Oracle, $ORCL, is projected to turn negative for the first time on record. That would mark a massive reversal from the +$260 billion peak reported by these companies in 2024. This comes as AI-related CapEx by these 5 companies is estimated to surge to ~$1.8 trillion in 2026 and 2027 combined. Chipmakers are becoming cash machines, while AI giants are burning record amounts of capital.

on CXL: CXL could ease the capacity/utilization problem, increasingly in GPUs not just CPUs DRAM is bolted to each individual server. If one box has spare memory and the one next to it is starved, there's no way to share that idle capacity is "stranded" (Microsoft has said ~25% of the DRAM in its Azure fleet just sits there doing nothing). Since memory is roughly half the cost of a server, that's a lot of money idling. CXL unlocks three things: expansion (add capacity beyond the physical DIMM slots), pooling (a shared pool multiple servers draw from on demand), and sharing (multiple hosts hitting the same memory). The payoff is utilization. you stop provisioning every box for its worst case, so you buy less total memory for the same work. The catch is latency: CXL-attached memory sits ~200-500ns away vs ~100ns for local DRAM, so it's a tier below your main memory. good for colder data, KV-cache offload, big in-memory databases. I think of CXL as the shared storage closet down the hall cheaper per GB, much bigger, but you have to walk there It's not a DDR5 replacement, and importantly it does nothing for HBM bandwidth, which is a separate tier entirely.

功率半导体相关股票： Si MOSFET Infineon $IFX.DE, $ON, $MPS, Renesas $6723.T Si IGBT $IFX.DE, STMicroelectronics $STM, Mitsubishi Electric $6503.T SiC MOSFET $IFX.DE, $STM, $ON, $WOLF, $6963.T GaN HEMT $IFX.D, $NVTS, $ON, Innoscience $2577.HK Gate Driver $IFX.DE, Texas Instruments $TXN, $STM, $ON, Analog Devices $ADI, Renesas $6723.T 我的关注列表： $IFX.DE ，Renesas $6723.T $NVTS, $WOLF , Innoscience $2577.HK

Health Care has a 100% win rate in the back half of midterm election years. Not 80%. Not 90%. ONE HUNDRED PERCENT. I looked at every midterm year since 2006. Here's how each sector performed from July to December: 1. Health Care $XLV: +8.46% avg, 100% win rate 2. Industrials $XLI: +7.18%, 80% 3. Materials $XLB: +6.71%, 60% 4. Financials $XLF: +6.68%, 80% 5. Cons. Discretionary $XLY: +6.35%, 60% 6. Cons. Staples $XLP: +6.29%, 80% 7. Utilities $XLU: +6.18%, 80% 8. Technology $XLK: +6.08%, 60% 9. Energy $XLE: +3.26%, 60% 10. Real Estate $XLRE: -7.94%, 0% The S&P 500 $SPY averaged: +5.95%. Three things nobody is talking about: 1. Health Care outperforms EVERY sector in midterm H2. Not tech. Not discretionary. Health Care. Five for five. 2. Tech drops to #8#. The darling of every other year becomes middle of the pack when midterm volatility kicks in (60% win rate). 3. Real Estate has NEVER been positive Jul-Dec in a midterm year. 0 for 2. Negative every single time. 2026 is a midterm year. The rotation is underway. It always does.