Luke

Founder in Silicon Valley. Building to help Gen Z understand the markets and the economy.

[Luke @Lukbut]

CHINA IS PREPARING FOR A MASSIVE SUPPLY SHOCK

Oil in China just hit $100 per barrel and they ordered its largest refiners to stop exporting diesel and gasoline

China is the largest crude oil importer in the world, and 50% of that oil flows through the Strait of Hormuz

They are preparing for a scenario where global energy supply becomes very unstable

When countries start fearing shortages, they stop exporting fuel and start keeping it at home

It also means that they expect a prolonged disruption, not just a short term spike

We saw similar behavior during past energy shocks, when countries moved to protect domestic supply first.

That can tighten global markets even further and the supply shock people fear can become self reinforcing

[Luke @Lukbut]

So what exactly are photonics and why did $NVDA invest $4 billion in them?

If you actually want to understand then read this 👇👇

Electronics move information with electricity

Photonics moves information with light

AI data centers are beginning to hit a bottleneck... They have powerful GPUs, but they also need to talk to each other constantly.

Copper wires are reaching their limits as they use more power, create more heat, and struggle over longer distances

However with photonics, optical links can move more data with far less energy loss. This is why silicon photonics and co-packaged optics are becoming a major AI infrastructure theme

Photonics can move the same amount of data as copper using about 3x to 20x less power

So why exactly are these photonics stocks up so much lately?

The market is buying the bottleneck narrative here

AI companies are spending HUGE money on GPUs. And if the data cannot move fast enough, the GPUs will sit idle. That means the expensive part of the AI factory is not actually being fully used

So photonics is being valued as the next layer of the AI buildout

The biggest catalyst is NVIDIA... In March 2026, NVIDIA announced a partnership with Coherent (photonics company) and said they would invest $2 billion to expand supply, deepen R&D, and also advance U.S.-based manufacturing for advanced optics

That is why stocks like Coherent, Lumentum, Marvell, Ciena, Corning, GlobalFoundries, Applied Optoelectronics, and other optics/data-center names have gotten attention

So are you investing in photonics?

[Jason Luongo @JasonL_Capital]

$NVDA just told you exactly where to invest your money.

They just poured $4 billion dollars into photonics.

Here are 10 of the most important photonics companies you need to be aware of:

1. $LITE - Lumentum (Lasers)

The laser source that powers photonics interconnects. NVIDIA just invested $2B with a multibillion-dollar purchase commitment for advanced laser components. Building a new 240,000 sq ft InP laser fab in North Carolina. Added to the S&P 500. When NVIDIA writes a $2B check to secure your supply, the market is telling you something.

[Luke @Lukbut]

This only happens when three things line up:

1. Too many people betting against it (shorts)
2. Too few shares available to trade (low float/concentrated ownership)
3. Sudden forced buying (margin calls + hedging)

[Luke @Lukbut]

They crash when the illusion of safety returns

During the embargo:

- Everyone knew things were bad
- Expectations were already low
- Risk was obvious

After it was lifted:
- People thought the worst was over
- Markets stabilized
- Positioning got complacent

But then the damage was already done

[Luke @Lukbut]

SpaceX, OpenAI, and Anthropic are projected to IPO in the next 12 months

But think about how fast this is happening...

It took decades to build companies to 1T valuations:

- Apple (42 years)
- Microsoft (44 years)
- Amazon (24 years)

Now we’re creating trillion-dollar companies in under a decade

- SpaceX controls access to space + satellites (20 years)
- OpenAI controls intelligence layers (11 years)
- Anthropic controls intelligence layers (6 years)

That’s very different from past cycles

Before:

Companies sold products

BUT NOW:

Companies control entire systems

[shirish @shiri_shh]

The biggest IPO run in the history of the market

three $1T+ companies. possibly all going public in the next 12 months.

SpaceX IPO: $1.75T.
OpenAI IPO: $1T
Anthropic IPO: $1T

we're living through the greatest technological wealth creation in history.

[Luke @Lukbut]

EXPLAINED:

OPEC is a group of oil-producing countries that work together to:

- Control supply
- Influence oil prices

Think of it like a "team" that limits how much oil gets sold to keep prices stable (or higher)

So what does it mean if the UAE leaves?

It means one of the biggest oil producers is no longer following the team rules

If the UAE leaves, it can:

- Produce more oil whenever it wants
- Ignore production cuts
- Compete directly with other OPEC countries

[Luke @Lukbut]

For 20+ years the model was simple:

- Build property
- Sell land
- Use debt to fund more growth

That cycle is now broken

China has to rebuild its economy without real estate

BUT

Consumers aren’t stepping in

Because when 70% of your wealth is tied to housing…

And then housing falls…

People won't spend

And that results in a LOOP where:

1. Property falls
2. Consumers pull back
3. Growth slows
4. Property falls even more

[Luke @Lukbut]

Its not just OpenAI It’s an AI business model problem

AI has a hidden issue:

Costs scale with usage

More users doesn’t always mean more profit

It can actually mean:

- Higher compute costs
- More infrastructure spend
- Thinner margins

And with competition:

- Anthropic
- Google
- Open source models

Their pricing power disappears fast

[Luke @Lukbut]

Before:

Microsoft had a special deal with OpenAI

- Exclusive access to the tech
- Deep integration into products (Copilot, Azure, etc.)
- Revenue sharing = Microsoft pays OpenAI when it makes money from it

That exclusivity = competitive advantage

Now:

Microsoft is saying:

- The license is non-exclusive
- It may stop sharing revenue

Why the stock dropped:

1. Losing exclusivity = losing an edge

If others can access similar tech, Microsoft is no longer "special"

2. More competition is coming

Think Google, Amazon, others building or partnering with AI models

3. Uncertainty

Investors don’t like when a winning formula changes

[Luke @Lukbut]

9. Weekly US Jobless Claims – Thursday

(Key real-time signal of whether the labor market is starting to crack)

10. US Treasury auctions (2Y, 5Y, 7Y) - This week

(Demand for US debt = direct signal of global confidence + impacts rates)

11. Oil inventory data (EIA) - Wednesday

(Critical right now with supply disruptions and volatility in energy markets)

12. US Dollar volatility/positioning shifts - Ongoing

(Hedge funds recently flipped heavily long USD - any unwind could move everything)

13. Airline/travel guidance updates - Ongoing

(Flight cuts, fuel cost pressures, and geopolitical rerouting are starting to show up)

14. Semiconductor supply chain/AI capex commentary during earnings - Wednesday/Thursday

(This is the real driver behind the market right now, not just headline earnings)

[Luke @Lukbut]

Warren Buffett is sitting on $382 BILLION in cash

BUT why now?

Let’s start with history:

The last times Buffett held unusually high cash levels:

1999 - right before the dot-com crash

2007 - right before the financial crisis

Both times, markets were expensive
Both times, he waited
Both times, he deployed cash AFTER things broke apart

But here’s the part most people miss:

Buffett doesn’t hold cash because he’s trying to time the market

He holds cash because he can’t find enough good deals...

So what’s happening today?

Valuations are stretched

Stocks are near highs, especially in AI and tech

Interest rates are high
He can earn ~5%+ risk-free in Treasuries
That’s a HUGE change from the last decade

Deal flow is weak
Private equity + companies aren’t desperate yet
Meaning fewer bargain opportunities

Buffett is waiting for stress

[Luke @Lukbut]

EXPLAINED:

Egg prices exploded over the last couple years mainly because of avian flu (bird flu)

- populations declined
- fewer chickens = fewer eggs

Farmers responded the only way they can:

- Rebuilt flocks
- Increased production
- Expanded supply

Now we have the opposite problem:

Too many eggs relative to the demand

This is a classic cycle:

Shortage = prices spike
Producers overreact = oversupply

Therefore prices crash

[Luke @Lukbut]

BUT prices can stay high even while money flows out

Why?

Because flows and prices aren’t the same thing

Flows = who is entering or exiting positions

Price = where supply and demand are right now

So you can have:

Outflows (people taking profits)

At the same time as:

High prices (because supply is still tight)

[Luke @Lukbut]

@NoLimitGains Even if the Strait reopens tomorrow

It doesn’t fix instantly

Because now you have a backlog of ships waiting

So supply comes back slowly

[Luke @Lukbut]

EXPLAINED:

Their currency keeps losing value very fast

So if you hold cash, you get poorer every day

So what do people do?

They buy anything that might hold value

- Stocks
- Real estate
- Even basic goods

That pushes stock prices up

It's not like these companies are doing great

Its only because money is trying to escape the currency

[Luke @Lukbut]

@NoLimitGains So basically shorts were buying because they had to

That’s forced demand

And then retail shows up

They sees the price going up

Adds then they optional demand on top of forced demand

and the stock skyrockets even more

[Luke @Lukbut]

Think about what’s happening globally:

War = supply chains matter again
Energy shocks = infrastructure matters
AI race = compute matters

Semiconductors sit in the middle of all three...

[Luke @Lukbut]

If the US can decide who moves through the Strait

It can influence:

- Who gets oil
- When they get it
- How much they pay for it

Countries like China, India, and Europe rely heavily on that flow

So this becomes global leverage overnight

Before = oil price was set by supply and demand
Now = oil price is also set by politics and access

[Luke @Lukbut]

A big part of this surge is AI… but not in the way people think

AI didn’t only create new companies

It also inflated these companies valuations faster than fundamentals

Why?

Because capital is chasing a single theme

These funds NEED exposure to AI so they compete to get in early

That drives valuations up quickly

And that’s how you get more $1B companies

Even if the business itself isn’t proven yet

[Luke @Lukbut]

So why were ships still near or trying to move?

1. Positioning

A lot of vessels were already inside the Gulf before things escalated

They now have to get out eventually

So they sit near the exit waiting for any possible window

2. Conflicting signals

They've had mixed messages:

- Ceasefire headlines
- Talks restarting
- Claims it’s “open”
- Then military saying it’s still controlled

That creates confusion

Some operators test the route

[Luke @Lukbut]

This is turning into an infrastructure race, and not really a technology race

The winners will be the ones that can secure the most electricity first not the ones with the best models

Data centers = massive power demand

Transformers = what actually delivers that power

No transformers = no data center = no AI