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Sunday, October 18, 2026

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@convequity 4 clicks

Convequity on X

I feel like $SSNLF's record quarter is closer to a peak than a new base. Samsung guided to about 107.4 trillion won (roughly $80bn) of Q3 operating profit. The shares fell 2.4% on the day. Here is why I read it as a peak: 1. The record came from price, not volume. Samsung's own guidance has conventional DRAM shipments flat year on year. HBM grew, but most of the jump is higher prices per bit. 2. Samsung's own phone unit is now a priced-out customer. Samsung is cutting Q4 phone output by 20–30% because memory is too expensive, and it has reportedly looked at buying DRAM from China's CXMT for Galaxy phones. When your own phone division shops around, the price is too high. 3. Buyers are working to use less HBM. AI chip designers are cutting HBM specs and finding ways to need less of it per accelerator. That attacks the mix gain directly. 4. Revenue missed even as profit beat. 195 trillion won against about 207 trillion expected. Margin did the work, and margin built on price is the first thing to reverse. My view: a commodity product earning these margins is unhealthy for everyone downstream, from phones and PCs to data centers. Buyers respond by cutting units, despeccing and adding suppliers. That is how ASP-driven cycles turn. The divisional split comes on October 29. I will be watching whether memory profit grew much faster than group profit, which would show the phone unit paying for it.
@convequity 1 click

Convequity on X

The $70bn revenue figure reported for OpenAI in late September was a gross-basis comparison number, not OpenAI's own. OpenAI's own run rate, the one it told investors, was approaching $50bn at the end of September. The number that now needs the same scrutiny is Anthropic's, before its IPO. The two labs count partner sales differently. When a customer pays $AMZN or $GOOGL for Claude, Anthropic records the full price as revenue and books the cloud's cut as a cost. OpenAI records only its own share of such sales. The $70bn was OpenAI's number grossed up to Anthropic's method so the two could be compared. Three things follow. 1. OpenAI's revenue did not fall. Its net run rate was approaching $50bn at the end of September. Yet the stocks that fell on Thursday were its suppliers: $ORCL, $CRWV and $NVDA. 2. Anthropic's $65bn run rate at the end of July is a gross figure. On OpenAI's basis it is smaller by whatever the cloud partners keep, and that share has not been disclosed. The claim that Anthropic has overtaken OpenAI rests on two numbers measured differently. 3. Which method applies is an accounting judgement about which company controls the sale to the customer, so Anthropic's prospectus for its planned November IPO may keep the gross figure, with the partners' share inside cost of revenue. That filing will show the cost line. OpenAI, still private, does not have to. In our view Thursday's selling hit the suppliers to the lab whose number did not change. The comparison investors should redo before November is Anthropic's $65bn against OpenAI's $50bn after the cloud partners' share is taken out of both.
@convequity 1 click

Convequity on X

Software multiples have fallen further since our January report. As of 7 Oct 2026, 238 companies in our all-software watchlist have EV/Sales (NTM) data on Koyfin. The median is 3.1x, down from 3.7x in January. The average is 5.4x, down from 6.2x. The 25th percentile is 1.8x, down from 1.9x. The 75th percentile is 5.5x, down from 6.1x. 191 of the 238 (80%) trade below our 6.7x private equity floor. 113 trade below 3x. The Bessemer Cloud Index shows the same pattern. Its median is 4.7x, down from 5.1x in January. 46 of its 68 companies (68%) trade below 6.7x. The cheapest are $CXM at 0.9x, $SPT at 1.1x, $MNDY at 1.7x and $WIX at 1.8x. In our watchlist, only 21 companies trade above 10x. The most expensive are $PLTR at 44.5x, $CRWD at 42.4x, $NET at 38.6x, $PANW at 24.2x, $DDOG at 19.5x and $SNOW at 16.3x. Growth still earns a higher multiple. The 44 names expected to grow revenue 20%+ a year over 3 years have a median of 5.2x. The 85 names expected to grow under 10% have a median of 2.6x. Even for the faster growers, the 5.2x median is below the floor. The market is paying up for very few names. We think that is right. Many software companies have slowing growth, high costs and no clear AI strategy. We would not buy the sector, or a cloud index, on valuation alone. In software, we focus on the few companies rebuilding their products around AI, and our SaaS Survival Scorecard tests key SaaS names against the pressure from AI agents.
@aleabitoreddit

Serenity on X

Markets often miss second order implications until it shows up in direct statements. - If $LITE is completely sold out... (largely due to $NVDA bottlenecking everyone else, eg. securing Greensboro capacity), where else do your other companies like $AMD / hyperscalers / etc. get their supply procurement? - $SIVE is coming online with like 1/6th of the world's current laser capacity by themselves. (100M+ cw dfb lasers vs. 608M EML/CW globally per Trendforce). Not even including their partner foundries that they're targeting 2:1 for. - $AAOI is coming online with a ton of capacity too next year enough to produce 400k ELSFP + $471m/month of transceivers. Then combine that with other supply chain statements like "Having 2-3 suppliers used to be the norm, now it is 5-7" from Lightcounting. So as long as your products actually work + can scale, it's hard to see anyone else with capacity not get qualified into your supply chains. Since optical component shortages are a massive bottleneck now.
@aleabitoreddit

Serenity on X

Woooow... $LITE CEO went out on Bloomberg today and stated: Lumentum is "effectively sold out through nearly 2029". From our perspective, "Completely Sold Out, there's no end in sight". With demand visibility from hyperscalers that carries them out into 2030, 2031. The implications of these statements are enormous for photonics and remaining laser suppliers with capacity coming online like $SIVE, Sumitomo Electric, to $AAOI. What a crazy bottleneck that's unfolding.

Investor Letters

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2026.42: Home At Last

Stratechery’s weekly bundle covers Apple HomeView and SpaceX’s cellular ambitions.

AAPL $5T
Stratechery by Ben Thompson – On the business, strategy, and impact of technology. 6 clicks

TSOH Weekly Roundup (10/16/2026)

Bumble agreed to a $1.3 billion take-private deal, while Netflix cut about 1,000 jobs and Meta discussed its Muse superintelligence models.

NFLX $511B
TSOH Investment Research 11 clicks

Is The Market Turning The Page?

CoreWeave’s debt and equity price action is framed as a wake-up call for investors amid a broader market discussion.

CRWV $34B
WHAT ARE WE DOING? “Contrarians At The Gate” 53 clicks
LLY · long

LILLY (ELI) & CO

Eli Lilly trades at 33 times this year’s earnings and 26 times next year’s, versus roughly 12 times for big pharma peers.

LLY $1.2T
Value Investors Club 2 clicks

AppLovin Deep Dive

AppLovin rebuilt its ad model with AXON 2.0, lifting LTM revenue to about $7 billion and margins to 77% as Unity competition threatens…

APP $88B
Speedwell Research 27 clicks

Constellation: Stars Aligning?

Constellation Brands trades near $127 at roughly 11x next-twelve-month EV/EBIT, with recent business results offsetting concerns over…

STZ $22B
TSOH Investment Research 28 clicks

TSMC Q3 FY12/26 Earnings Review

TSMC reported excellent Q3 results, guided Q4 revenue growth higher and saw its shares slip despite strong AI-driven earnings momentum.

TSM $2.2T
Cestrian Capital Research 10 clicks

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