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Friday, October 30, 2026

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@convequity 2 clicks

Convequity on X

$META's Muse progress confirms our view that Meta owns the essential assets for frontier AI, and it is progressing better than most people believe. Zuckerberg called Muse Wonder Meta's first frontier model on the 21 October Q3 2026 call. More than 10 million people set up Muse in about six weeks, and shopping is the largest use case. We expected Meta to come back, and we are delighted to see it back among the frontier labs. Two things concern us. 1. Meta appears to have recognized it will not catch up on frontier enterprise use cases, coding above all. So it is differentiating on consumer. In our view that is a double-edged sword. Consumer is where Meta's assets are strongest. But we think the next big shift is silicon-based consumption squeezing out carbon-based consumption: spending by AI agents replacing spending by humans. Humans have finite attention and a limited addressable market, so human demand grows roughly linearly. AI agents have a near-unlimited spending demand, and we think it is about to go exponential. A consumer-first AI is built for the side that grows linearly. That is a longer-term concern for Meta. 2. We are disappointed that Muse is only available in the US, not in the rest of the world. That is cautious big-company behavior, closer to Google than to SpaceX. Our guess is that the legal warnings and threats Meta keeps receiving have made it extra careful on the legal side. That caution has a cost: it handicaps Muse against the other leading frontier apps.
@convequity 12 clicks

Convequity on X

$ORCL Spends More of Its Cash Flow on Capex Than $AMZN or $MSFT — Does the Backlog Justify the Stretch? We hold Oracle, so we pulled the numbers from our ABBX dashboard to check whether the contracted backlog supports the heavier spending. Capex intensity (last four quarters) Oracle spent about 161% of operating cash flow on capex (to 31 Aug 2026). Amazon was about 107% and Microsoft about 63% (both to 30 Jun 2026). Oracle put USD 75.7B into capex against USD 46.9B of operating cash flow. Debt and lease load Add borrowings, lease liabilities, and the undiscounted value of leases signed but not yet started. Purchase obligations are excluded for all three. - Oracle: about USD 457B, or 3.6x its USD 125B of borrowings. - Amazon: about 2.9x. - Microsoft: about 11x (its borrowings are small relative to lease commitments). Oracle stands out on size versus cash flow: roughly 9.7x trailing operating cash flow, versus 2.5x at Microsoft and 2.3x at Amazon. The backlog counterweight Oracle’s RPO (remaining performance obligations) is USD 664B — close to Microsoft’s USD 678B commercial RPO, while generating only about a quarter of Microsoft’s operating cash flow. RPO covers about 1.45x Oracle’s debt-plus-leases figure, versus 1.48x at Microsoft. Those contracts provide revenue visibility, though delivery still depends on margins and timing. Amazon’s USD 496B backlog is AWS-only, so it is not a clean comparison. ABBX capacity estimates show Oracle rising from about 4 GW to about 12.8 GW by 2029, Microsoft from 8.5 to 17 GW by 2030, and Amazon from 10.6 to 16 GW by 2028. That implies roughly USD 52B of RPO per planned GW for Oracle versus about USD 40B for Microsoft (rough scale comparison given different RPO scopes and time horizons). Our take The bigger risks at Oracle are timing, execution, and funding rather than a lack of demand. Oracle expects about 13% of its RPO to convert to revenue in the next 12 months while capex is being spent now. Its 12.8 GW figure is an ABBX estimate, not company guidance; it carries ABBX’s lowest confidence of the three, and grid approval is still pending at one or more sites. Oracle also sold USD 20B of stock in FQ1 FY27. We think the backlog justifies holding the position, but sized for funding risk. What we watch: RPO converting to revenue on schedule, new capacity coming online, and whether more equity is needed.
@StableBread 4 clicks

Fajasy on X

Here’s where BWX Technologies’ $BWXT stock could be by the end of 2027, 15 months from now, in my bear, base, and bull cases. I value each case on 2028 adjusted EBITDA, since the market will be pricing 2028 numbers by then. For net debt, I use today’s $1.65B minus the $750M from its medical isotope sale, or $0.9B. To stay conservative, I don’t credit the FCF $BWXT earns between now and the end of 2027. Management plans to spend the cash, including on acquisitions, but hasn’t said how much or on what, so I leave out both the cash and any EBITDA acquisitions could potentially add. Therefore, each case’s value is 2028 adjusted EBITDA times the multiple, minus the $0.9B of net debt, over 92.0M diluted shares (its convertible notes only dilute above $262.51). Bear case ($118, -19%) The bear case assumes budgets slip (the government is running on a continuing resolution through December 11), the terms of its Janus contract (the Army’s microreactor program for military bases) disappoint, and new-build orders arrive later than John MacQuarrie, president of Commercial Operations, expects. That implies only 5%/year adjusted EBITDA growth to $735M in 2028, and a multiple of 16x, slightly below $BWXT’s 16.6x at the end of 2023, for a value of $118/share. Base case ($162, +11%, most likely) The base case assumes $BWXT delivers its 2027 framework (high-single-digit growth to $720M of adjusted EBITDA) and grows 10% in 2028 to $790M as new-build revenue starts. That implies the multiple holds at 20x, near today’s, for a value of $162/share. $BWXT’s own 2030 plan goes further. Today’s $15.0B EV is 13.0x the $1.15B midpoint of its 2030 adjusted EBITDA target. If $BWXT hits that midpoint, trades at 18x instead of the base case’s 20x, and runs at 2.5x net leverage (~$2.9B of net debt) after deploying its capital, the stock would be worth $194/share at the end of 2029. With ~$4/share of total dividends through 2029, that’s a 9.9%/year return from $145.70. But getting from the base case’s $790M in 2028 to $1.15B in 2030 takes ~21%/year growth, more than double the 2028 pace, so the new orders and acquisitions outside $BWXT’s predictable core (the programs backed by backlog and long-term contracts) have to show up. Bull case ($204, +40%) The bull case assumes a new-build order lands by early 2027, $BWXT signs a Janus contract on par with microreactor startup Radiant’s (up to $750M), and margins rise toward 20%. That implies adjusted EBITDA of $820M in 2028 and a re-rating to 24x, just under the 24.8x of Curtiss-Wright $CW today, for a value of $204/share. Notably, none of the three cases considers a commercial BANR (microreactor) sale, a Wyoming TRISO fuel plant, a battleship reactor, or a data center customer, so at $145.70/share, you’re getting commercial microreactors and data centers as a free option.

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SNY Earnings Review

Sanofi raised FY26 guidance after Q3 sales grew 14.3% at constant currency, led by 34.8% Dupixent growth; vaccines declined 6.6%.

SNY $108B
Cestrian Capital Research 1 click

AMZN Q3 FY12/26 Earnings Review

Amazon reported $201.9 billion Q3 revenue and 39% AWS growth, while $220 billion in 2026 capex drove trailing free cash flow to a $42.4…

AMZN $2.6T
Cestrian Capital Research 3 clicks
SAP · long

Sap Se

SAP shares are down 45% since February 2025 as AI disruption fears create a long thesis on its risk-reward.

SAP $271B
Value Investors Club 2 clicks

Another Haircut with Avy the Barber

SoFi’s stock case hinges on interest rates, tangible book value and private-credit loan sales after its $1.5 billion equity offering.

SOFI $22B
WHAT ARE WE DOING? “Contrarians At The Gate” 3 clicks

Intel Q3 2026: Dead Inside

Intel’s Q3 2026 datacenter CPU shortage reflects wafer-start planning failures, not substrate constraints, after demand shifted from client…

INTC $348B
Irrational Analysis 2 clicks

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