Good morning.
Verdict: risk-off in large-cap tech (GOOGL -6-7%, SpaceX -25% off peak), but semis and memory tear to fresh highs. MU HITTING ATH AFTER ANTHROPIC EQUITY DEAL — they’re weaponizing the HBM bottleneck to extract lab equity. The Philly Semi had its 9th +5% day in 60 sessions — historic volatility, totally bifurcated from software (CRM 15 straight red days, IGV back to $80s). Futures imply a soft open, but the tape is screaming "infrastructure only."
No major AH earnings prints, but the narrative is the print: Micron’s Series H stake in Anthropic and multi-year supply agreement is a structural shift. Memory suppliers just jumped the hyperscaler layer. On the physical track, MSFT-Chevron 2.67 GW behind-the-meter deal bypasses ERCOT entirely — that’s the new blueprint for gigawatt buildouts.
Asia: Korea and Taiwan ETF inflows hit records (Korea leveraged AUM $40BN). Chinese AI names like Zhipu up 2,000% YTD — speculative mania in full swing. Macro overlay gets hawkish: BofA pencils 3 hikes this year, Goldman cuts recession odds to 10%, and quarter-end rebalancing points to ~$165B out of equities.
Three themes framing today:
1. Memory moves up the value chain. MU taking equity in Anthropic proves HBM is the new rare earth. Legacy DDR2 tightness forces buyers to downgrade — every node is full. This is a structural repricing of allocation risk, not a cycle.
2. The grid is dead; long live E&P partnerships. MSFT-Chevron Kilby deal (2.67 GW, $7B capex, zero grid draw) validates behind-the-meter gas as the only viable path to scale. Watch for XOM, Coterra to follow with AWS/GCP.
3. Compute scarcity narrative is fraying. H100 spot rental index rolling over. CUDA optimization cut GB200 serving costs 2.5x in 70 days — software efficiency expands effective supply. If scarcity premiums compress, hardware multiples lose their moat.
We’ll hit up MU and MSFT first, then get to memory/semicap names…
JBL smashed Q3, guided Q4 above whisper, and dropped a $13.6B AI revenue number for FY26 that has the bull case basically writing itself. The stock is +83% in the past year, now sitting at ~$374 with a market cap pushing $40B — and the analyst community is scrambling to re-rate. BofA goes to $470 (Buy), Stifel to $460 (Buy), UBS to $430 (Neutral). The spread tells you everything: execution is undeniable, but at 51x trailing earnings, the valuation debate is real.
Revenue of $8.8B vs $8.55B consensus. Core EPS of $3.16 vs $3.08. Operating margin of 5.8% — both print and beat. Whisper number was healthy (this is a crowded name) and they delivered.
The headline: AI INFRASTRUCTURE REVENUE RAISED TO $13.6B FOR FY26, +51% Y/Y. Management threw out an early FY27 view of "similar percentage growth," which pencils to roughly $20B. That's a compound monster if they hold the line.
Three hyperscaler wins now. The third one — won this quarter — is expected to generate several hundred million in FY27, ramping to OVER $1B IN FY28. Also announced a multi-gigawatt alliance with Adani in India for high-density AI rack manufacturing. That's FY28+ but signals they're thinking about onshoring/geographic diversification ahead of tariff noise.
Revenue shift of $200-300M from Q3 into Q4 on delivery timing. Normalized Q4 growth is ~23-26% vs Q3's 28-31% — decelerating, but against a brutal comp. UBS is right to flag this, but the absolute dollar trajectory is still accelerating.
This is a repeatable machine. JBL is essentially the manufacturing arm for the AI infrastructure buildout — hyperscalers don't want to own the factories, they want partners with scale, and JBL is one of three that matter. 50% AI revenue growth in FY26, similar in FY27, margins moving from 5.8% to 6.0%+ on operating leverage. BofA expects 20-30bps of margin expansion per year for several years. Free cash flow of $1.4B+ guides, capital returns improving. Tariff risk is manageable because they have geographic flexibility (see: Adani deal). The PEG ratio of 0.62 suggests the growth is underpricing the multiple.
"Maintaining [the] Buy rating, citing large scale operations, manageable tariff risk, capital returns, improving margins and strong cash flow." – BofA
51x trailing P/E is pricing in a lot of perfection. Growth is decelerating — Intelligent Infrastructure revenue went from +52% to +21% y/y in the print (tougher comp, but still). The $200-300M shift masks the Q4 deceleration when normalized. UBS stays Neutral for a reason: the r/r gets worse from here. If AI demand normalizes (not collapses — just normalizes), the multiple contraction is painful. No one's arguing the business isn't good — they're arguing the entry point is poor.
Verdict: Monness called the bottom-ish. Upgraded CRM to Buy from Neutral overnight with a $200 PT, citing valuation that's become too cheap to ignore. Stock down 41% YTD, 58% from its late-2024 ATH, and trading just 1% above the 52-week low of $154.23. This is a deep-value trap or a re-rating opportunity — Monness is betting on the latter.
The thesis is simple: CRM’s margin profile (77.6% gross margin), cash generation (12% FCF yield), and aggressive buyback make the 18.1x P/E and 0.47x PEG compelling. The firm thinks the AI "threat" to software is overblown — they see CRM actually helping customers transition to "agentic enterprises." That’s the narrative pivot.
"The stock trades at a P/E ratio of 18.1 with a PEG ratio of just 0.47, suggesting attractive valuation relative to growth."
The recent Fin (Intercom) acquisition for ~$3.6B adds an AI-driven customer service layer — $400M+ ARR, 76% autonomous resolution rate. Street mostly cheered: Jefferies, Canaccord, Stifel, Wolfe all reiterated Buy with PTs in the $220-250 range. Only UBS held at Neutral/$185, cautious on near-term integration impact.
Bottom line: Monness is leaning into the value case. At $155, CRM is pricing in a lot of bad news. The question PMs should ask: is this a value trap (growth slowing + AI disruption) or a margin compounder with a catalyst (agentic AI adoption)? Monness says the latter. Given the r/r at 0.47x PEG, it’s worth a look if you can stomach 41% drawdowns.
WILLIAM BLAIR THROWS IN THE TOWEL. Downgraded ACN to Market Perform from Outperform, yanking it off the Conviction List. Reason: weakening forward demand and a softer implied exit rate into FY27. The stock is already down 41% from its 52-week high ($314 → $126) – but this analyst says the deterioration isn't fully priced in yet.
"Accenture’s fiscal third-quarter results, guidance, and commentary point to weakening forward demand and a softer implied exit rate into fiscal 2027."
Not a consensus view, but the bear case is mounting. UBS still at Buy with a $320 PT (pre-Q3 print), while Berenberg cut to $220 on sector de-rating. The delta between those two tells you how wide the dispersion is right now. ACN's been on an acquisition spree (Dragos for $4.2B, plus runZero, NetRise, etc.) – pro forma it's a bigger cybersecurity bet – but that doesn't change the underlying demand signal if clients are pulling back on consulting spend.
Bottom line: The rate of change on forward bookings matters more than any deal. If the exit rate into FY27 is truly "soft," the stock hasn't found a floor yet, even at $126. Watch the next print for guidance – that's the catalyst.
Oppenheimer stays on the sidelines (Perform) but just torched their capex estimates — 2026 CAPEX NOW $29.4B VS $23.5B CONSENSUS, a 25% premium. That’s not a rounding error, that’s a statement. They’re effectively arguing that if Tesla is going to dominate Physical AI, it has to spend like it. The $2.5B mark-to-market gain on SpaceX (IPO pop) provides some cushion, but the real narrative is about Terafab and Cortex capacity becoming the lead indicators of AI success.
“Oppenheimer anticipates investors will begin looking at capital investments as a leading indicator of Physical AI success, suggesting an upward trading bias into Q2 2026 earnings.”
The analyst target range is absurdly wide ($62–$401), reflecting the binary bet: either Tesla is a car company with temporary AI hype, or it’s the next AWS-for-robots. Oppenheimer’s capex hike leans toward the latter, but a Perform rating says they’re not ready to pay up yet. The stock at $192 on a $2.53T market cap — the AI premium is priced, the execution is not. Watch for Q2 ’26 capex commentary as the next catalyst.
ATEN is on fire — up 87% YTD and trading just off 52-week highs (current: $33.26 vs high $33.63). BTIG just raised PT to $37 from $30, maintaining Buy, and the thesis is simple: AI is a structural tailwind for their next-gen network and security products. The TrojAI acquisition gives them a credible AI firewall story, and the numbers back it up — 12% revenue growth, 79% gross margins, Q1 revenue of $75M beating consensus by ~$2.4M.
(One caveat: largest customer is 31% of trailing revenue. BTIG says dynamics are healthy after talking to IR. I’ll take that at face value for now.)
"BTIG said it views the recent TrojAI acquisition favorably, noting it broadens A10 Networks’ security roadmap and improves the AI firewall story."
BWS Financial is even more aggressive at $45. The collective analyst view is that ATEN can compound at double-digits if they hit the three-year target of 12%+ annual revenue growth. The 52-week high is basically in play — next resistance is the PT cluster. Risk/reward still skewed to the upside.
MU — Memory players are now weaponizing the bottleneck. MU took equity in Anthropic’s Series H to lock supply priority ahead of hyperscalers. First time a component supplier has done this. HBM tightness + legacy DDR2/DDR3 shortages create a triple layer of demand confirmation. Jefferies expert call flags Q3 memory pricing +40-50% QoQ vs Street 15-20%. If that lands, Q3-Q4 estimates need material revision. P/E single digit vs triple-digit growth is classic value setup — but the CXMT (China) expansion and Google sourcing from them introduces race-to-bottom risk. Timing unknown.
MSFT — The Chevon Project Kilby deal is the biggest move of the day. 2.67 GW behind-the-meter, zero grid draw, $7B capex, 20-year PPA. This bypasses ERCOT entirely and sets a new blueprint for hyperscaler power. MSFT is actively commoditizing the model layer to monopolize the infrastructure layer. Stock in 20%+ drawdown since June 1, 20x forward earnings — cheapest since 2016. That is either a value trap or the best risk/reward in tech. The depreciation time bomb narrative persists but no data yet.
GOOGL — Two top AI researchers left in one week (Shazeer to OpenAI, Jumper to Anthropic). -6.2% intraday, $269B market cap wiped. That's positioning-driven selling amplified by talent narrative. But Google's institutional depth is real — Triggerfish TPU v9 variant reveals 2-3x SRAM, HBM4E, new simulation die for agentic workloads. MediaTek gets incremental 1-2M unit order. That reframes ASIC competition from compute density toward effective compute for agents. Real risk is not talent — it's losing the physical infrastructure race to MSFT.
NVDA — H100 spot rental index rolling over. Goldman Delta 1 flags that if rental prices drift lower, the shortage narrative is challenged. But SpaceX still paying >$10/hr for Blackwells with 90-day outs — suggests continued tightness at frontier. Meanwhile, GB200 NVL72 serving costs dropped 2.5x in <70 days via software optimization. CUDA efficiency loop is real and expanding effective compute supply. That's a two-sided coin: allows more inference workload, but compresses hardware scarcity premiums. The key question: does compute scarcity persist or does efficiency destroy pricing?
AMZN — Down 4.5% today. No specific company news — part of broad hyperscaler selloff. The 'air pocket' risk flagged by Maverick Capital applies here. AWS cloud revenue growth vs capex is the key debate. Expect AMZN to follow MSFT's lead on behind-the-meter power deals — likely to sign direct E&P PPAs with Exxon, Coterra. The grid bottleneck is being bypassed; AMZN's scale gives it leverage. No direct signal yet but the trend favors them.
META — -2.9% today, -14% YTD. No specific catalyst. Market questioning ROI of massive AI capex. Meta's open-source model strategy (Llama) puts it in a different position — they benefit from commoditization of models. Also investing ~$900M-$1B in CRED and hiring Kunal Shah to lead WhatsApp. That's a deployment of free cash flow outside AI — could be positive or dilutive.
ORCL — Cut workforce by 21,000 (13%) in 12 months, explicitly citing AI as a cause. First major enterprise software company to do so. This is structural signal for the entire sector — AI is replacing roles, not just augmenting. Margin expansion potential is real. OCI not a hyperscaler leader but niche enterprise AI workloads could see validation if FY27 margins beat.
SMCI — Upgraded to buy on Colossus 2 server orders (3,100 racks). Potential SpaceX shift to ODM direct model from 2027. Largest gainer in S&P 500 today. But beta to NVDA supply cycle is extreme — any NVDA miss hits SMCI disproportionately. The 90-day out clauses in SpaceX compute deals suggest uncertainty in long-term demand.
QCOM — Acquiring Modular Inc. at ~$4B valuation — an AI chip software stack startup. Fills Qualcomm's edge AI software weakness. Consolidation phase for AI chip startups has begun. Also AI200 data center inference accelerator entering production. Samsung Electro-Mechanics mass-producing FC BGA substrates. New competitor for NVDA inference share and custom ASIC programs.
AVGO — Lost Google TPU v9 order to MediaTek on 448G SerDes vs 336G. Signals ASIC competition shifting from compute to interconnect. Broadcom's moat in custom ASIC may be narrower than thought. But AMD employee interview suggests hyperscalers will come back to AVGO and MRVL for photonics and next-gen chip complexity. Long-term relationship intact but near-term loss to MTK hurts.
CRDO — No new signals. Still riding the interconnect theme. Watch for any follow-on from Broadcom losing TPU order — could shift share to Credo if Google diversifies SerDes suppliers. But no data yet.
ONTO — No direct signals. As a semicap metrology player, benefits from advanced packaging complexity. TSMC CoPoS pilot line installing — positive for inspection tool demand. But not a clear catalyst today.
FPS — No new signals. Downstream beneficiary of memory/GPU buildout. Colossus 2 orders could drive server chassis demand. Nothing actionable.
TWLO — No signals. Still a long-shot AI play with Twilio's CustomerAI. Not in the current crosshairs.
INTC — No signals. Foundry remains a zombie narrative. Samsung confirmed foundry inquiries from Nvidia, but Intel not mentioned. Status quo.
SNOW — No signals. AI/ML consumption story still intact but no catalyst. Market focus on infrastructure, not workloads.
VICR — No signals. Power delivery for DCs. Benefits from liquid cooling mandate (NVDA Rubin will be 100% liquid cooled). But no near-term volume.
BE — No signals. Fuel cell play for backup power. MSFT's behind-the-meter gas deal could be negative for fuel cell hype. No catalyst.
VC — No signals. Auto supplier, not AI.
MOD — No signals. Modular data center builder. Could benefit from BTM power deals if they integrate with E&P. But no company-specific news.
PLXS — No signals. EMS provider for DCs. Beta to SMCI and server buildout. No new orders flagged.
MDA — No signals. Space robotics, no direct AI infra linkage today.
GLW — No signals. Glass substrate for advanced packaging. TSMC's CoPoS pilot line could be positive, but not confirmed.
ALGM — No signals. Auto and industrial, not in AI trade.
TEL — No signals. Connectors for DCs. Passive beneficiary of volume.
MP — No signals. Rare earths for magnets, not directly AI.
FROG — No signals.
TYL — No signals.