Bullpen.News From Edwin Dorsey
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Sunday, October 25, 2026

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@convequity 15 clicks

Convequity on X

We think the gross margin gap between Cerebras ($CBRS) and NVIDIA ($NVDA) says little about which company delivers compute more cheaply. Cerebras reported a 14% gross margin in Q2 2026, against roughly 75% for NVIDIA. That is not a clean comparison, because Cerebras's commercial agreements include customer warrants. A customer warrant gives a buyer of Cerebras compute the right to buy Cerebras shares at an agreed price, adding potential equity upside to the compute it purchases. Cerebras records the value of these incentives over time as a reduction in revenue. Its cost of delivering the compute stays the same, so the full amount comes out of gross profit and its reported gross margin falls too. Add the warrants and a few other items back and Cerebras's Q2 margin was 41%, so the reported gap tells us little about what each company spends to deliver equivalent compute. Cerebras could challenge NVIDIA with attractive economics on selected workloads without matching every capability of NVIDIA's platform. In our view NVIDIA's stronger answer is Feynman reaching customers on schedule with the 3D-stacked SRAM we expect. Stacking more fast memory close to the compute would reduce the need to fetch data from slower external memory, helping NVIDIA narrow the architectural advantage behind Cerebras's fast inference. NVIDIA's adoption of Groq technology could ease some of this pressure, but we believe Groq's current architecture remains weaker than Cerebras's for low-latency inference. The longer Feynman takes to arrive at scale, the more time Cerebras has to win customers.
@convequity 8 clicks

Convequity on X

We see Nova ($NVMI) as a potential next-generation KLA ($KLAC), and we are backing it to take a larger share of semiconductor process-control spending. Its wins with leading chipmakers are strengthening that case. A leading global foundry has selected Nova’s materials-measurement tools for production of its next generation of transistors. Another chipmaker has adopted a different Nova platform for the same transition. These wins show Nova securing a place in the manufacturing processes behind more advanced chips. KLA’s broader process-control business has a strong emphasis on finding and analysing manufacturing defects. Nova is more concentrated on measuring chip dimensions, material composition and the chemistry used in production. KLA also competes in these areas, but they are more central to Nova’s business. These measurements help manufacturers understand whether each production step is delivering the intended result and where adjustments are needed. As logic chips and memory stacks become more complex, manufacturers need tighter control over the structures they build and the materials they use. Small variations can hurt performance or reduce the number of usable chips. We expect this to increase demand for Nova’s measurements and create more opportunities for its tools to become essential to production. In our view, the Western semiconductor supply chain badly needs new entrants. Equipment leaders $AMAT, $KLAC, $LRCX and Tokyo Electron, design-software vendors $SNPS, $CDNS and Siemens, and $TSM in manufacturing are too cautious and slow to match the pace of startups and highly driven Chinese challengers. Protecting existing products and the returns on past investments can make these incumbents reluctant to pursue technologies that threaten their established businesses.

Investor Letters

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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…

TSEM $19B
CV's Substack 9 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 $83B
Doomberg 9 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 $30B
WHAT ARE WE DOING? “Contrarians At The Gate” 12 clicks
DLTR · long

Dollar Tree INC

Dollar Tree is long after divesting Family Dollar, separating its stronger banner from its weaker business.

DLTR $25B
Value Investors Club

Capital Wars

CoreWeave’s $35 billion to $39 billion 2026 spending plan relies on debt as unsecured yields reach 15%, making its GPU cloud expansion a…

CRWV $30B
Net Interest 11 clicks

Putting bear cases to rest

Medpace authorized $1 billion of buybacks through 2028 after Q3 revenue rose 8.5% to $716 million; service revenue grew roughly 12% as…

MEDP $18B
Best Anchor Stocks 14 clicks

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