Earned Alpha

Can’t stop digging into tech and finance. Whatever rabbit hole I’m in this week, usually a bit too early.

[Earned Alpha @EarnedAlpha]

Everyone is posting the same chart today: open source models went from 28% to 62% of tokens on Vercel in two months.

Majority opinion is that closed models are losing. The commodity tier of AI work exploded, and that tier was always going to open source. Boilerplate migrates to whatever is cheap. Frontier work still costs real dollars that the token charts are not showing.

[Earned Alpha @EarnedAlpha]

@wallstengine Mass production is H2 2029. The memory squeeze repricing everything this year has a three year wait before this supply shows up.

[Earned Alpha @EarnedAlpha]

Michael Burry reportedly bought $NVDA calls this week to hedge his short ahead of tonight's print.

Shorting AI supply is a bet that demand breaks before capacity does. Apparently even the author of that bet wanted insurance on the timing.

[Earned Alpha @EarnedAlpha]

@CryptoGhosty333 Fair pushback. Money showing up does not make the GPUs arrive on time. Tomorrow answers the Childress question either way

[Earned Alpha @EarnedAlpha]

@Benioff @salesforce @AnthropicAI @Dreamforce Enterprise distribution is the one thing model labs cannot build alone. Salesforce sells to companies that will never touch an API key

[Earned Alpha @EarnedAlpha]

@zerohedge Oil futures barely moved Sunday night when the strait headlines first hit. Shipping rates are where the risk shows up first, and apparently it already has

[Earned Alpha @EarnedAlpha]

@weijinnnnnn The how-long question is why I watch the funding mix. Incremental debt went from 9% of hyperscaler capex in FY24 to 32% this year. The duration risk already moved from equity to lenders

[Earned Alpha @EarnedAlpha]

@EnergyAlphaCo The constraint list keeps growing. Memory got repriced this summer, optics supply is already tight, and now it's megawatts. Demand keeps finding the next bottleneck

[Earned Alpha @EarnedAlpha]

@RealNickMugalli Every hyperscaler says its custom chip beats Nvidia on the benchmark it was built for. The $108 billion ex-China guide says customers keep buying both anyway.

[Earned Alpha @EarnedAlpha]

@krshya @KobeissiLetter Tonight's print argues the pass-through works though. Margins up 250 basis points in the same quarter they told customers prices rise 15%. So far the memory bill lands on buyers, not on Nvidia

[Earned Alpha @EarnedAlpha]

The guide is the wilder number. $NVDA pointed to 108 billion dollars next quarter, and that excludes China data center compute entirely.

Their whole fiscal 2024, all four quarters combined, was 61 billion.

One quarter now beats that full year with an entire country left out of the number.

[Earned Alpha @EarnedAlpha]

Everyone is posting $nvda revenue beat. The number that settled something is further down the release.

Adjusted gross margin printed 75%, up 250 basis points from a year ago, in the same quarter Nvidia told customers server prices are rising 15% because of memory costs.

Customers ate the increase, Nvidia protected its margin, and the memory bill keeps rolling downstream. Clouds next, then everyone else.

[Earned Alpha @EarnedAlpha]

@PolymarketMoney Even the bet that demand breaks first wanted insurance

[Earned Alpha @EarnedAlpha]

@McnallieM @nvidia Margins up 250bps in the same quarter they told customers prices are rising 15%. The pass-through stuck

[Earned Alpha @EarnedAlpha]

@randgroup The App Store spending drop this week might be the first visible dent. Between web billing and AI subscriptions sold outside the store, the 30% is losing traffic from both directions

[Earned Alpha @EarnedAlpha]

@pequityresearch Nobody was complaining about hearing too much about HBM in early 2024 either

[Earned Alpha @EarnedAlpha]

Three things I'm watching this week.

$NVDA reports Wednesday. First earnings since they told customers server prices are rising 15% on memory costs. The number I want is the margin guide, which says whether the pass-through sticks.

Memory names trade on that hike news for the first time today. $MU closed Friday at 966.78.

The AI consolidation wave. Hugging Face reportedly shopping at 13 billion, Nvidia reportedly looking at Perplexity at 30, Stripe just bought OpenRouter. What’s next?

Grading these Friday.

[Earned Alpha @EarnedAlpha]

@pequityresearch Next question is whether optics gets passed through the way memory just did. Wednesday night on the $nvda call is where we would first hear it

[Earned Alpha @EarnedAlpha]

@commonsenseplay Most of the world is living a normal week while this app argues about AGI

[Earned Alpha @EarnedAlpha]

Sunday futures: most slightly red, oil not reacting to the strait headlines, gold at 4,676.

Main thing I'm watching this week is how memory stocks handle $NVDA 15% server price hike news from Saturday. First trading on it is tomorrow.