Market thoughts - 1 Jul 26 Headlines about "META is building a Cloud business to sell AI Computing" by Bloomberg sent semis into a tailspin. People picked up on the phrase "excess compute" and decided that META is cutting capex. Thankfully i have a BBG sub, i have posted screenshots of the actual article. The facts are as below 1. Meta is considering sell access computing infrastructure 2. Quoting Zuck " Almost every week there are different companies that come to us from the outside asking us to both stand up an API service or asking if we have compute that they could buy from us at some PREMIUM to what we bought it at" At this point, also remember that META is so compute constrained that 3 days ago GOOG was cappign META's use of Gemini. So why is META doing this? There are many possible reasons, but the easiest reason is that; Zuck sees XAI renting out compute and being able to rerate the stock. In order for Zuck to continue capex, he has to signal to investors that these CAPEX is ultimately going to bring back cash to investors. Ok, so who is paying? Anthropic that is renting from XAI; that is making 80% gross margin on selling inference. This is possibly the first time in the entire AI wave, that the "end state" buyers of compute are showing up revenue, at a MUCH faster pace than anticipated. I read this entire news as positive for AI capex. Also, the market has forgotten that META buys compute from NBIS and CRWV...quoting Serenity Basically pre-market right now with the Neoclouds like NBIS in simpler terms. Costco: sells $5 chickens. Walmart: mass buys those rotisserie chickens and sells excess as “Walmart Chickens”. Stock Market: sells off Costco. I think NBIS offers fantastic risk reward here, as with the entire neocloud sector that got dragged down - CRWV etc Moving away from this, SPX has held up strongly - reflective of the rotation regime that we are seeing today. As per my previous notes, instis sold down semis at one of the fastest pace last week. If we get a rebound in risk sentiment - this will spur on re risking. Good luck!(degentrading)