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Tower Semiconductor Deep Dive

Tower Semiconductor’s low-loss photonics chips halve lasers in 1.6T optical modules, supporting a $680 million annualized photonics run rate and customer wafer prepayments through 2027.

TSEM $19B
CV's Substack 8 clicks

From X

@ACapitalLP 2 clicks

A Capital on X

Still working through them, but I think you have to underwrite each one separately. Counterparty credit, remaining financing needs, construction execution, power certainty (especially Texas/ERCOT), and how much pipeline value is already priced in. $CORZ and $CIFR screen as the most dislocated on my framework, but the discounts aren’t necessarily irrational. The exercise is figuring out which risks are already more than priced in…
@ACapitalLP 2 clicks

A Capital on X

𝙋𝙤𝙬𝙚𝙧𝙚𝙙 𝙎𝙝𝙚𝙡𝙡 𝙋𝙧𝙤𝙫𝙞𝙙𝙚𝙧𝙨 (𝙋𝙎𝙋) 𝙑𝙖𝙡𝙪𝙖𝙩𝙞𝙤𝙣 𝙁𝙧𝙖𝙢𝙚𝙬𝙤𝙧𝙠 $APLD $CIFR $WULF $CORZ $HUT I think people forget that these are real estate companies. That’s why I like “Powered Shell Providers” vs. “AI/HPC” as a descriptor (h/t Morgan Stanley). They secure land and power, develop data centers and lease the infrastructure under long-term contracts. At the end of the day, they have two things of value: (1) an existing portfolio of contracted assets and (2) a pipeline of future developments. That’s it… The valuation exercise is pretty straightforward. Take the stabilized NOI from contracted leases, apply an appropriate cap rate, subtract remaining construction costs and debt, and add back cash and other assets. That’s your theoretical “equity floor.” Then take the uncontracted pipeline, separate it into ~three? buckets based on development readiness, assign each bucket an equity value per MW and a probability of commercialization, and add the risk-adjusted value to the contracted business. Note: You can also reverse-engineer the current share price to see how much the market is implicitly paying for the pipeline. So what’s the worst-case scenario? Why should $CRWV neocloud debt blowing out matter to a landlord with a 15-year lease? There are legitimate risks. Some projects aren’t fully financed, some tenants are more creditworthy than others, and higher financing costs can impact both the ability to complete existing developments and the value of contracted cash flows. Given the leverage involved, even a modest increase in cap rates can have an enormous impact on residual equity value. That’s why the contracted floor isn’t necessarily a hard floor… (but this is true for every stabilized real estate company) But I think the market is conflating two very different things: the value of infrastructure already contracted to a creditworthy tenant and the value of speculative capacity that still needs to be financed, built and leased. Neoclouds own GPUs, rent out compute and face enormous hardware depreciation and recurring capital requirements. PSPs are fundamentally landlords. A deterioration in neocloud financing conditions absolutely matters for tenant credit and future development, but it doesn’t automatically mean that every existing lease is worth less...
@ACapitalLP

A Capital on X

𝙋𝙤𝙬𝙚𝙧𝙚𝙙 𝙎𝙝𝙚𝙡𝙡 𝙋𝙧𝙤𝙫𝙞𝙙𝙚𝙧𝙨 (𝙋𝙎𝙋) 𝙑𝙖𝙡𝙪𝙖𝙩𝙞𝙤𝙣 𝙁𝙧𝙖𝙢𝙚𝙬𝙤𝙧𝙠 I think people forget that these are real estate companies. That’s why I like “Powered Shell Providers” vs. “AI/HPC” as a descriptor (h/t Morgan Stanley). They secure land and power, develop data centers and lease the infrastructure under long-term contracts. At the end of the day, they have two things of value: (1) an existing portfolio of contracted assets and (2) a pipeline of future developments. That’s it… The valuation exercise is pretty straightforward. Take the stabilized NOI from contracted leases, apply an appropriate cap rate, subtract remaining construction costs and debt, and add back cash and other assets. That’s your theoretical “equity floor.” Then take the uncontracted pipeline, separate it into ~three? buckets based on development readiness, assign each bucket an equity value per MW and a probability of commercialization, and add the risk-adjusted value to the contracted business. Note: You can also reverse-engineer the current share price to see how much the market is implicitly paying for the pipeline. So what’s the worst-case scenario? Why should $CRWV neocloud debt blowing out matter to a landlord with a 15-year lease? There are legitimate risks. Some projects aren’t fully financed, some tenants are more creditworthy than others, and higher financing costs can impact both the ability to complete existing developments and the value of contracted cash flows. Given the leverage involved, even a modest increase in cap rates can have an enormous impact on residual equity value. That’s why the contracted floor isn’t necessarily a hard floor… (but this is true for every stabilized real estate company) But I think the market is conflating two very different things: the value of infrastructure already contracted to a creditworthy tenant and the value of speculative capacity that still needs to be financed, built and leased. Neoclouds own GPUs, rent out compute and face enormous hardware depreciation and recurring capital requirements. PSPs are fundamentally landlords. A deterioration in neocloud financing conditions absolutely matters for tenant credit and future development, but it doesn’t automatically mean that every existing lease is worth less...

Investor Letters

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Deep Dive: $ASML

ASML’s €230 million EUV machines underpin advanced AI chip production, with demand booked through 2028 after nearly $9 billion and two…

ASML $616B
Rebound Capital 8 clicks

Margin Call

Petrobras’s Morpho-1 well revived hopes that Brazil’s Equatorial Margin can become a major new oil frontier after hydrocarbons were…

PBR $96B
Doomberg 8 clicks

Our Views on CoreWeave

CoreWeave's financial statements point to a business model familiar to the authors after a closer review of the AI infrastructure company.

CRWV $34B
WHAT ARE WE DOING? “Contrarians At The Gate” 12 clicks
PTRN · short

Pattern Group INC

Pattern Group is a fragile consumer business targeted on the short side.

PTRN $3.2B
Value Investors Club 3 clicks

New Position (ONON): Game is On

On Holding (ONON) is gaining sportswear share, expanding store space and launching soccer with Kylian Mbappé as investors debate U.S.

ONON $12B
Aurelion Research 4 clicks

When the Ads Come to the Data

Meta’s Muse could place ads inside its AI agent by letting a private VM select offers from advertisers without sharing user data with…

META $1.8T
MBI Deep Dives 7 clicks

Deep Dive: Intuit ($INTU)

Intuit’s $21.4 billion software franchise faces AI-driven pricing pressure in tax and accounting, even as QuickBooks and TurboTax retain…

INTU $90B
Rebound Capital 4 clicks

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