Yesterday was one of those sessions that gives me hope the craziness may have peaked with the post-election gyrations. I know there will be a lot of noise down the road, especially from Congress, and more than likely newly elected Democratic governors will take some action against data centers, but they are not crazy, and the crazy members of Congress don’t have the numbers for their most harebrained schemes.

Plus, Trump is still around for two more years.

This market could have been down a lot more, given the Nvidia (NVDA) woes, December rate hikes cemented in, and the overall malaise that has cast a dark shadow since early October. Yesterday, the NASDAQ erased big losses on a positive headline about Anthropic. There is some eagerness to be ‘long,’ and stocks are oversold. But bias is squarely to the downside – for now.

Panic Breadth

The Volatility Index (VIX) slipped under 20, which is usually a great sign after a prior spike above 28. But I’d also like to see the VIXEQ get back to 32 or lower.

Breadth was terrible, especially on the NASDAQ, where decliners doubled up advancers, and down volume doubled up volume.

Hyperscalers or Semiconductors?

I’ve talked and written a lot about “irrational pessimism” this year, and it's gone into overdrive.  Positioning in Technology (XLK) has plunged to the lowest level since late 2022, when the ChatGPT rally began. It's in line with negative earnings growth rather than growth of 53%.

But Wait…There’s More

The so-called hyperscalers remain relentless in their ambition and continue to plow money into their buildouts. According to J.P. Morgan (JPM), including SpaceX (SPCX), capital expenditures (capex) are projected to reach $2.0 trillion in 2028.

At the start of the year, these stocks paid a heavy price for turning mountains of cash into negative free cash flow (FCF) and borrowing billions of dollars. More recently, they’ve gotten bids on the assumption that these investments will return untold profits and free cash flow.  I think that’s true. They are reinventing themselves to avoid being victims of creative destruction.

A camp says hyperscalers will never get back their investment, but demand isn't the problem. After the close, CoreWeave, Inc. (CRWV) posted results that beat the Street by miles across several metrics.

 Two numbers stand out:

• $132.5 billion backlog
• Over $1.0 billion quarterly interest expense

Their rival, Nebius Group NV (NBIS), reports tomorrow before the open, but I wouldn’t write off neocloud businesses just yet.

This is Madness

While the hyperscalers are getting bids, investors have been dumping semiconductor (SOX) stocks recklessly. First it was memory, but lately everything has been caught in the snare of panic selling.

I understand these are cyclical businesses, but the cycle still has a couple of years of data center demand, humanoid robot demand, and good old-fashioned AI chip demand (I heard Apple (AAPL) is looking for chips).

Jensen Watch

The Jensen Huang story will continue to dominate. It’s not looking good for him, but the company will continue with or without him. An argument can be made that the stock is oversold now, but it's too dicey in the near term to take the bait.

Today’s Session

That CoreWeave call was fantastic. The company cleared up a lot of things, but one of the biggest takeaways is that pricing for its older GPUs (Hopper and Ampere) increased 30 to 50% from last quarter, to above their original contract prices.  This means that when current contracts run out, the company thinks renewals at current pricing could add nearly $10.0 billion in annualized revenue without any additional capex spend.

This is great news for NVDA and hyperscalers.

In addition to the CRWV news, FT is reporting that demand for Anthropic's IPO is so strong that the valuation may be lifted to $1.5 trillion from $1.0 trillion.

This is huge; yesterday, the financial media spent half the day dunking on a potential $1.0 trillion valuation.

Thank you to all our vets.

Comments

thanks for your service as well Charles Neil on 11/11/2026 10:40:23 AM

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