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Sunday, October 25, 2026

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Convequity on X

We think the market is pricing in too steep a growth slowdown for $AVGO. In Q3 FY26, Broadcom's AI semiconductor revenue reached $16.7 billion, roughly 56% of its $29.6 billion total revenue. In the same quarter, AI revenue grew 221% year over year, compared with 86% for total revenue. As AI accounts for more of the business, it has a greater influence on consolidated growth, so models that assume Broadcom's growth must slow each year risk missing this change. Our valuation work suggests that the market is pricing in revenue growth of approximately 66% in FY26 and 62% in FY27, followed by a 20% compound annual growth rate in years three to seven. Our view is that this assumes growth slows too quickly. Our base case gives more weight to the customer pipeline and management's outlook for the AI business. On that basis, we estimate Broadcom's total revenue could grow by 100% in FY27, compared with the 62% the market implied, with growth remaining well above the market's assumptions as we approach 2030. We increased Broadcom's portfolio weight from approximately 2.2% to 3.4% because we think the market underestimates both how fast Broadcom can grow and how long that growth can last.
@convequity 4 clicks

Convequity on X

We think hardware manufacturing and chip costs, more than launch, will decide how much $SPCX earns from orbital compute. Our SPCX model estimates how much orbital compute can be made and launched, what it costs and what it earns as it ages, then adds that revenue to our forecasts for SpaceX's launch, Starlink and Cursor businesses in our SPCX DCF. Each year, deployment equals the gigawatts of solar and AI computing hardware the supply chain can make for orbital data centers, capped by what Starship can carry. In our base case, launch is the tighter limit only in the first four years of the forecast, and manufacturing is the limit after that. Our base case puts chips and racks at about 80% of the cost to build each gigawatt and launch at about 11%. Solar arrays, satellite structure and laser communications make up the rest. Because chips make up most of the cost and launch only a small part, whether SpaceX uses merchant GPUs, custom chips or makes its own chips at Terrafab will matter more to returns than how cheap launch gets. Revenue per gigawatt depends on the business model, and we assume it is higher for selling AI services through an API than for renting out compute. Revenue falls as the hardware ages, and we assume each satellite is replaced after a 7-year life. The model's price-cut settings let us test price competition. We think Chinese companies could use their own launch and computing infrastructure to offer cheaper AI services internationally, pressuring the prices U.S. AI companies charge and what they can pay for capacity. The U.S. and China could also tie access to their AI services to defense and trade relationships. Countries with ties to both, including India and some Middle Eastern states, could keep access to U.S. and Chinese providers and negotiate lower prices.

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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 10 clicks

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 $631B
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 $83B
Doomberg 11 clicks
JBFCY · long

Jollibee Foods CORP

Jollibee Foods trades at PHP 144, about 56% below its January 2019 high, framing a long thesis on the Philippine restaurant operator.

JBFCY $2.5B
Value Investors Club 1 click

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

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 12 clicks

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