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Sunday, October 25, 2026

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@convequity

Convequity on X

Neoclouds Now Trade as a Hedge Against AI Demand Growth Convequity’s latest ABBX review shows $CRWV, $NBIS and $IREN are inversely correlated with AI demand growth. Stronger demand widens the working-capital hole and keeps investors risk-off, even as order books expand. Insatiable demand is usually the reason to own the supplier. Here it does the opposite. Jensen Huang told CNBC at GTC Berlin that neocloud demand is “off the charts” and that working capital is the missing piece. Working capital is current assets minus current liabilities. A cash-conversion mismatch squeezes it even when demand is huge. Liabilities hit first. A neocloud pays $NVDA and networking suppliers in roughly 30–60 days. Asset-backed hardware loans add heavy near-term debt service. Assets lag. A signed customer contract sits off the balance sheet as backlog. It only becomes receivables or cash once the cluster is deployed, energized and billed — months later. Cash leaves before revenue arrives. A faster pipeline simply widens the short-term deficit. Latest ABBX figures NBIS: $8.5B gross debt vs $8.0B cash; guidance for >$9B customer prepayments this year. IREN: $7.6B debt vs $5.9B cash; $13.8B hardware and site commitments; 20% prepay on the Microsoft contract. CRWV: $35.6B debt vs $5.5B cash, plus $16.3B operating leases and $35.5B rent not yet commenced. Build-out relies far more on debt than customer prepayments. Even with those prepayments, NBIS and IREN keep raising large extra funding. CRWV faces the same hole with a far larger debt stock. Handing contracts back to resell at higher spot prices would ease CRWV’s cash hole only if customers and lenders agreed. Customers pay even if they do not use the capacity, CRWV must deliver it, and we found no public right to change the price or exit early. Break a customer contract and the hardware lenders can lock up CRWV’s cash. If that lockup holds, they take the cash to repay the loan. Borrowing later would cost more, and the switch only pays while spot stays high. If spot fell, CRWV would lose both the committed revenue and the contract value backing those loans. For investors to turn risk-on again, AI demand growth needs to slow enough for infrastructure supply to catch up.
@BrokenMoats 1 click

Broken Moats on X

Gaslighting how $RNG talks about cash flow but ignore the 240m in SBC (roughly 40% of that number). Talking 22-23x cash flow at the implied open. 85x roughly gap eps numbers....for a business that has inflected from 5.5 to 6% growth this year.....They can talk AI and % of ARR abut at the end of it the total impact is having a marginal move on the business. They did some nice work to clean up some costs and get profitability to true gap levels. But that was from bloated application days and low hanging fruit. Thats the move from 14-40. Very difficult for this math of fundamentally make sense from hereat these levels.
@aleabitoreddit

Serenity on X

Pretty crazy Reuters piece on the global selloff. - October 22 marked the 1st time since the COVID crash that long/short, systematic, and multi-strategy hedge funds tracked by Goldman Sachs ALL lost more than 1% in a single day. - Tech-focused hedge funds: down ~10% in October - Asia-focused hedge funds: down ~9% in October There’s separate interviews where Citadel/JP Morgan have been saying retail has been the ones buying the dip in semiconductor, neocloud, and memory stocks. And the stocks bought by most retail were $NBIS, $SNDK, and $TSM. Reuters stated this downturn triggered institutional deleveraging events among hedge funds. Quite the divergence, I do think there’s been a ton of irrational selling now, hedge fund deleveraging seems to be a major contributor.
@calvinblissett 2 clicks

Calvin Blissett on X

Quoted that stuck out to me from $SLM earnings call Still in peak season, stronger than normal volume continue into 4Q We believe the customers charging off today have an enhanced ability to repay compared with customers in history Length of deposits up to 37 months from 24. What mean and why good Loan sales in this environment would be below minimum acceptable threshold Not executing planned October loan sale. Sacrificing the short term for the long term. (5% NIM on retaining loans)

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