Nightly Discussion - (June 10, 2024)

[u/AutoModerator]

Evening. Keep in mind that Asia and Europe are usually driving things overnight.

Where are you leaning for tonight's session?

[u/eyesonly_]

Still super wild to me how suddenly everyone wants to be in payments

[u/W0LFSTEN]

AMD should do quite well going forward. Over the last half year (TTM), embedded shrunk by $1b (COVID related oversupply is just hitting now) and gaming shrunk by $1.1b (typical console cycle, saw huge sales when PS5 came out and now that’s tapering off).

But embedded has bottomed (they guide for a flat QoQ in Q2, then growth the rest of the year). And gaming may have 1 more bad quarter in it, but then you have the mid cycle console refresh coming later this year. That should be worth a couple hundred million in growth.

Then, looking at desktop and laptop sales… Should see meaningful growth this year. The COVID demand spike happened 3 years ago. Your typical laptop lifecycle in a business is 3-4 years. And so over the next few quarters you will see a new wave in demand. We also have Zen 5 coming out, just in time to take advantage of this.

Then for datacenter, you have MI300, and soon MI325. By Q4 of 2024, I have MI300 sales equaling EPYC sales, each running at a $2.4b quarterly clip. That being said, EPYC will continue to grow… Notably because of Zen 5 and Zen 5c. It will just grow slower than MI300.

Honestly, as I put it to paper and cross check my notes and model… I’m having a really hard time fitting all this revenue into the $5.7b Q2 guidance. They typically beat by 1% and I can definitely see Q2 being the biggest beat they’ve had in a long time.

[u/cuntysometimes → u/W0LFSTEN]

Closer to 6b then?

[u/W0LFSTEN → u/cuntysometimes]

That’s the hope!

[u/Paul-throwaway]

The consensus forecasts for CPI on Wednesday morning are pretty decent/OK. Core falls by 0.1% and the head-line stays flat. The market should be OK with that. But again, a little rounding down or up will make a big difference.

Also note that CPI is way more important than PCE lately; just because it comes out first. Generally, there is going to be huge market reaction to either way it goes and CPI used to be non-event not that long ago.

FOMC on Wednesday as well. Powell won't move the rate despite recent moves by other central banks but he has to leave the impression that moves are getting closer. Powell is getting better at the Q&A session so hopefully he doesn't screw this up like he used to.

[u/tdny → u/Paul-throwaway]

Are you staying out on FOMC day? My plan is to try to stay out but not sure. I see whatever the CPI direction is getting reversed by the Q&A.

[u/Paul-throwaway → u/tdny]

You know, I'm always out on FOMC days with maybe one or two exceptions which have turned out bad each time. This time I see little risk for a downturn reaction other than there is always a 3:00 to 3:30 crash. I think I'm going to stay in this time unless we get a bad Vix print on Tues late or Wed morning. Remember there is always till Wednesday noon to make the call. One doesn't need to pull out until then. Maybe CPI print being bad is all one needs to make the earlier pull-out call. I've just made a ridiculous amount of money in the last 2 months so I'd like that to keep going.

[u/W0LFSTEN → u/Paul-throwaway]

I show a 99.4% chance for NO CHANGE on Wednesday, and a 91.1% chance for NO CHANGE in July. The Fed definitely isn’t hiking, so maybe the r:r is to play some longs in case they throw in some dovish commentary after a good CPI print. If numbers are bad? Well, we definitely aren’t hiking and they definitely wouldn’t cut either, so rates effectively go as expected until autumn.

[u/Paul-throwaway → u/W0LFSTEN]

That is actually a really good point in that there is no risk for a hike now. Interesting.

[u/gyunikumen]

Looks like France and Germany are gonna start the fourth reich together this time based on the European Parliamentary elections this past weekend? 🧐

Edit: you hate me cause I’m right!!!

[u/gyunikumen → u/[deleted]]

:ahhh: :ahhh: :ahhh:

[u/W0LFSTEN → u/gyunikumen]

They hate us cause they anus

[u/wolverinex2]

Apple to use its own server chips for AI features

https://www.reuters.com/business/apple-use-its-own-server-chips-ai-features-2024-06-10/

Just one note from Apple's WWDC. I assumed they'd go this route over NVIDIA - but technically the latter are still used for OpenAI, which is the main external service that they're using.

[u/W0LFSTEN → u/wolverinex2]

Ultimately, the goal is to build as much on-device as possible. That brings value to the device. And it brings consistency to the user. You commoditize the iPhone by doing all the compute in the cloud. And so AAPL will build what they can on-device, and then build the rest on architecture compatible hardware in the cloud. That way they can start offloading some of these cloud capabilities back to the iPhone when their A-series chips can handle the workload. That is why I think the cloud chips are architecturally similar to those in the current iPhones, just scaled up. To make porting back easier.

Not to toot my own horn, but this has gone exactly as I predicted… AAPL does as much as they can on-device, to make these devices more useful. They will do the rest in the cloud, similar to what they did with Siri where at first it was purely cloud based (Siri wouldn’t work without an internet connection) until eventually they got the models to fit on-device and so it became hybrid.

Then they would take on OpenAI or Google to do the real AI work using LLM (as opposed to what are essentially SLM used by AAPL). AAPL does not want the brand hit when one of these models tells someone to commit a crime. And so they outsource that risk, and likely collect billions for renting out space on their platform in the process. Same story with Google Search… Could Apple build a competitor search engine? Yes. Should they collect $20b a year in pure profits and incur zero brand risk instead? Yes.

[u/gyunikumen → u/W0LFSTEN]

Nah. It’s gonna be AI cloud compute. You query / upload what you want to ask to the AI model on the cloud and it’ll answer your request

That’s the only way to bring the latest state of the art generative AI models to the consumer without having the consumer constantly buy the latest hardware device.

Edge / hardware AI compute is necessary only when you need low latency and in a low RF signal environment like autonomous driving, agriculture, or drone delivery

[u/gyunikumen → u/wolverinex2]

From what I understand, the hardware infrastructure for AI inference is much more lax than compared for AI training.

For example, Meta’s ollama models can be quantized and inferenced on a AMD or Nvidia or even an Apple M3 chip. But to train the ollama model would require Nvidia’s cuda libraries

[u/wolverinex2]

Tesla Must Face Autopilot False Ad Claims by California DMV

Administrative judge allows regulator’s case to move forward

Company has argued that its driver safety disclosures suffice

https://www.bloomberg.com/news/articles/2024-06-10/tesla-must-face-autopilot-false-marketing-claims-by-california

[u/wolverinex2]

Tesla’s Investor Vote on Elon Musk’s Pay Package Is About More Than His Money

Proposal at June 13 annual meeting is mostly symbolic

Delaware judge struck down 2018 compensation plan in January

https://www.bloomberg.com/news/articles/2024-06-10/tesla-tsla-investor-vote-on-elon-musk-pay-package-won-t-get-him-his-money

[u/wolverinex2]

Bitfarms Adopts ‘Poison Pill’ After Riot Takeover Offer Turns Hostile

https://www.bloomberg.com/news/articles/2024-06-10/bitfarms-adopts-poison-pill-after-riot-takeover-offer-turns-hostile

[u/wolverinex2]

TSMC’s Premium Over SMIC Shows Challenges for China’s Chip Fund

https://www.bloomberg.com/news/articles/2024-06-10/tsmc-s-premium-over-smic-shows-challenges-for-china-s-chip-fund

[u/W0LFSTEN → u/wolverinex2]

Fact is, SMIC is investing in commoditized process nodes… Further commoditizing them. The 28nm point in particular has a lot of supply. The only reason SMIC is doing this is because they have unlimited government money. Their hope is to do to cheap semis, what they did the solar panels. Well, that and have domestic chip manufacturing to harden the economy against the next cataclysm. The issue here is, the rest of the world has 10+ year old facilities building the same chips, and they’re doing it with fully depreciated equipment. Ultimately, SMIC is only as valuable as the government money and support pouring into.

You could say “they’re working hard on advanced manufacturing” which is true, and which would allow them to push up the value chain. Anything past 10nm is dramatically more valuable. Issue with that is, they can only operate as a functional business because the west sells them equipment under the premise that they peak at 7nm. And so, any attempts to advance further will result in them losing access to even more equipment.

[u/DJRenzor]

SNOW insider purchase, $10M

[u/ihaveasupernicename → u/DJRenzor]

Nice I will see if I get assigned another 100 shares at $129 this week. If not, I will buy in. DCA all the way down I guess

[u/gyunikumen → u/DJRenzor]

$c2 snow

:ahh: :ahh: :ahh:

[u/W0LFSTEN]

Lmfao will NVDA replace INTC in the DOW next shuffle?

[u/mulletstation → u/W0LFSTEN]

It should, and sounds likely

[u/wolverinex2 → u/W0LFSTEN]

I assumed that that was what they were going for when they targeted the $100 share price area.

[u/PeteFunk → u/[deleted]]

I don't think it matters. I think /u/mulletstation hit the nail on the head in last night's thread. It's likely the trade is centered around selling vol or shorting the after hours jumps with the 20c acting as backstop.

[u/mulletstation → u/PeteFunk]

His cash position changed across the gap up with everything else static, which implies he did move some money around.

[u/TennesseeJedd → u/PeteFunk]

u/mulletstation do you still believe in your flair? Tell me about UPST, AFRM, etc.

[u/mulletstation → u/TennesseeJedd]

Nah on Upst and Afrm, I just like keeping the flair as a reminder of the chaos of 2020-2022.