BreakPoint Options @BreakpntOptions

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.

Elon Musk @elonmusk

a day ago

@Yuchenj_UW I think we’re going to see a lot of stranded compute in partially complete data centers

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Pretty much. As of the past few weeks, debt markets have almost entirely shut off access to money for any company that doesn’t have substantial revenue independent of AI data centers. SpaceX closed $40B of debt for GPUs, but we’re investment grade and have Starlink & launch revenue. That means the 200+ neoclouds are going to see guppy-level death and consolidation. Some will make it through, but not many.

@Gdtrfb1974 @MattFinkes Gas prices skyrocketed in 2022 while Democrats controlled the White House, due to the war in Ukraine. But now we’re blaming Ohio Republicans for gas prices? State governments don’t control global oil prices lol

Been obsessed with the stock market since I was a teenager. Have traded through the dotcom bubble, the financial crisis and just about every market mania since. But I’ve never seen anything like the skepticism surrounding AI. Not even close. Every time one bubble narrative falls apart a new one takes its place. Rumors become headlines. Misleading data goes viral. Claims that could be debunked with 5 minutes of research get repeated by major media outlets, influential investors and Wall Street analysts. It’s relentless and honestly pretty fascinating to watch. Of course there will be spectacular failures and massive wealth destruction along the way. That’s what happens during technological revolutions. But I’ve never witnessed this much effort to convince the world that something so transformative is actually one giant speculative bubble destined to take the entire economy down with it. I understand why AI scares people. What I find harder to understand is why so many investors seem to be rooting for it to fail.

@ChrisCamillo you long going into these $META earnings?

Someone just bought $435,000 of CoreWeave, $CRWV, puts betting the stock keeps falling. Contract: $50 puts expiring Feb. 19, 2027 Size: 649 contracts at about $6.70 each Swept across exchanges and bought mostly at the ask, a sign of urgency Breakeven: about $43.30 by expiration The trade also triggered repeated alerts today.

False breaks can lead to big drops. ⚠️ $QQQ

Our most common question right now: "How is the S&P 500 hitting record highs with $100 oil and rate hikes?" Most people are surprised to hear that 59% of S&P 500 stocks are down at least -20% from their highs, 41% are down more than -30%, and 17% are down more than -50%. We are in a "Bull-Bear Market," and we believe it's a highly compelling opportunity. Read more on our latest analysis below.

The Kobeissi Letter @KobeissiLetter

a week ago

x.com/i/article/2110…

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Why is the overall market so fixated on $CRWV's imminent demise? At the peak of the Dot Com bubble, $CSCO - the largest company in the world, and the $NVDA equivalent of the era - generated about 10% of its revenue from circular deals through vendor-financed startups. When those startups lost access to capital, $CSCO's revenue growth went from +66% to -30% within a few quarters, and the stock lost 80% of its value. The same story played out across the dot com supply chain, sending the Nasdaq down 80%. Today, $CRWV alone makes up roughly 8% of $NVDA GPU sales. Losing that demand is enough to nuke $NVDA's growth story all by itself. Oh, and $CRWV isn't an isolated example - every major neocloud is hemmoraghing cash and borrowing costs are going UP across the board. If you lose the neoclouds, you lose the incremental growth driver for marginal data center capacity, and the AI capex trade goes up in smoke. That's why we're seeing carnage across the entire AI supply chain, from $CAT and $GEV to $MU, $AVGO and more recently $NVDA. This is what the beginning of the end of a debt-fueled, circular-financed capex bubble looks like.

🚨CoreWeave is now in serious trouble. $CRWV is down more than 16% today and has crashed more than 50% in the last 5 months. The reason is its debt. CoreWeave owes about $35B and paid $640M in interest last quarter alone. Investors are now dumping that debt. Its 2032 bonds have crashed more than 23% since June. Bonds trading this low are treated as distressed. Because the price fell, anyone buying these bonds now earns over 15% a year. So 15% is now what CoreWeave has to pay to borrow. That is a big problem, because it plans to spend $35B to $39B this year and has only $5.5B in cash. It has to keep borrowing to keep building. Credit default swaps, which investors use to insure against default, now price a 58% chance that CoreWeave defaults within 5 years. Lenders are starting to question how the AI buildout is being paid for.

$CRWV isn’t paying 15% interest. Only 4% of their debt costs that. I went through the Q2 10-Q line by line. Out of ~$35B in debt, exactly one loan sits at 15%. It’s $1.3B, due March 2028, and already being paid down. The 15% chart going around is the market yield on their 2032 bond. A higher yield doesn’t change what CoreWeave pays. It works like a mortgage. If you locked in at 3% and rates go to 7%, you’re still paying 3%. CoreWeave locked that bond at 9.625% and still pays 9.625%. What they actually pay > $6.6B of convertibles at ~2% > ~$10B of bonds at 9-10% > Most secured loans around 9% > ~8.4% blended across everything They have roughly $20B of 2026 capex left to fund, and 2027 will need more. Their main funding tool has been loans backed by customer contracts. The investment grade one backed by Meta priced around 5.9% in March. If they keep borrowing that way, I think the math holds. Zooming out, the AI trade still looks intact to me. $ASML reported record Q3 profit this morning and said lithography demand will outrun their supply in 2027 and 2028, even after adding ~30% capacity each year. Customers are already asking about 2029 and 2030 slots. Demand is still outpacing supply everywhere I look. $CRWV $ASML

Chamath Palihapitiya @chamath

2 weeks ago

👀

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might have to run a 1v1 with @tailopez who doesn’t believe in stockx after this

Tai Lopez @tailopez

2 weeks ago

Stock market is a middle class trap.

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This is crazy. In my entire career with markets i've never seen such a low volume day on the $SPY. The last time we saw a number like this, 2005. The crazy thing is the last few days have all been very very low!

@AlgorithmDeep @power_white My point is you shouldn’t want any money. .

@Browns @FBI @FBIDirectorKash

The Difference between the dot com bubble and the AI bubble is actually every simple yet no one seems to be talking about it surprisingly... The dotcom bubble was pumped up by mal investment in unprofitable equities that got pumped to moon by expectations of future profitability from the revolutionary technology called "The Internet". Investors paid for companies that either made no money or bought companies at valuations that made no sense based on their future growth rate. The AI Bubble is a concentration bubble. Alot of capital is being pumped into VERY profitable companies but those companies are cyclical in nature. The expectation for most investors is that the AI CAPEX cycle will never and we're never going back to a time when semiconductors end up at negative growth and thus multiples should reflect that durability. You also have an entire generation that is hyper focused on equities and have never done any work on understand how debt impacts enterprise value and the multiples the market will pay on that debt overhang risk as well as cashflow that has to be diverted to debt servicing instead of buybacks. The worst case scenario is that we get a simultaneous bust of capital allocators waking up and realizing... holy crap the moats we thought we had dont actually exist. The lynchpin to EVERYTHING is OpenAI and Anthropic. If at any point, if the market believes that OpenAI and Anthropic cannot meet its obligations, the entire AI economy collapses. All that capital will rush out of the AI trade and into safe haven assets like Treasuries.

Dividendology @dividendology

2 weeks ago

If we are in a bubble- Then the bubble is not in the price… it’s in the earnings.

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Wife asking for new furniture in the house

$MU watch the breakout over 1100 burrowscapitalresearch.com/research/micro…

Today is October 5th. It is officially the bottom of the Bitcoin cycle according to the famous 4chan prophecy. The day has finally come. Will the prophecy hold? Is it just schizo nonsense? Time will tell.

You’re comparing a cumulative 10-year currency loss to an annual Treasury yield. A 50% loss in purchasing power over 10 years requires roughly 7.2% annual inflation, and a 75% loss requires roughly 14.9% annual inflation for a decade. Those aren’t small assumptions. If the dollar instead loses ~27% of its purchasing power over the decade, that’s only ~3.2% annual inflation, meaning a 5.27% Treasury still produces a positive real return.