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Monday, October 19, 2026

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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.

Investor Letters

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LXS.DE: a 2028 sale it can force

Lanxess can force Advent to buy at least half its Envalior stake in April 2028, potentially raising about €745 million to reduce net debt.

LPTH $525M
Trade Ideas Flow 20 clicks

Build-A-Bear: A Narrower Path

Build-A-Bear's push into prestuffed toys and broader retail distribution tests brand stretchability, but recent results warrant caution.

BBW $303M
TSOH Investment Research 17 clicks
SKIN · long

Skinhealth Systems INC

SkinHealth Systems owns a dominant professional skincare consumables franchise but trades at roughly $115 million market cap and $255…

SKIN $73M
Value Investors Club 2 clicks

Do You Trust Apple?

Apple’s HomeView strategy ties Siri, privacy and smart-home control to consumer trust in its vision for the home.

AAPL $5T
Stratechery by Ben Thompson – On the business, strategy, and impact of technology. 3 clicks

Semtech Analyst Day Review

Semtech raised Q3 guidance and targets $3.2 billion of fiscal 2030 revenue, excluding upside from its AI data-center optical and copper…

SMTC $13B
CV's Substack 13 clicks

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