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Moha 🃏 retweeted
🚨 NOMURA: THE MARKET MAY BE MISREADING THE ENTIRE AI DATA CENTER BOOM.
Big Tech is spending hundreds of billions on AI infrastructure. Free cash flow is under pressure. Investors are worried the AI boom isn't profitable.
But Nomura argues something very different:
AI infrastructure is already highly profitable. The cash flows simply haven't caught up with the investment cycle.
Here's the breakdown 🧵👇
1/ The profitability numbers tell a different story.
According to Nomura's November 2 report:
• AWS revenue: $46B, +39% YoY
• AWS operating margin: 38.7%
• Google Cloud revenue: $30.7B, +103% YoY
• Google Cloud operating margin: 36.2%
• Azure growth: +48%
These are not the numbers of an industry struggling to generate operating profits.
2/ The real issue is timing, not necessarily profitability.
Big Tech pays for data centers, GPUs, networking and memory upfront.
Revenue and cash generation arrive over subsequent years.
That creates a classic free-cash-flow J-curve:
CAPEX accelerates → FCF deteriorates → Infrastructure generates revenue → Investment growth moderates → FCF recovers.
3/ Nomura expects operating income to surge before free cash flow.
Its illustrative forecasts suggest operating-income growth could peak around 2029, while FCF growth accelerates later.
That distinction matters enormously for investors valuing AI infrastructure businesses.
4/ Why can't hyperscalers simply stop spending?
Because AI increasingly threatens their existing businesses.
Search, advertising, shopping, software and cloud services are being reshaped by AI agents.
Companies that underinvest today risk surrendering customers, data and market share tomorrow.
5/ Demand may not be the primary constraint. Capacity is.
Nomura cites enormous contracted cloud backlogs:
• Google Cloud: $560.8B
• AWS: ~$496B
• Microsoft commercial RPO: $677B
These figures have different reporting definitions, but collectively illustrate substantial contracted demand.
6/ Big Tech has financing alternatives to cutting CAPEX.
Nomura identifies four paths:
① Accelerate investment
② Freeze CAPEX
③ Use joint ventures and operating leases
④ Monetize contracted future cash flows
Its preferred expectation is continued investment supported by increasingly sophisticated financing structures.
7/ Oracle offers a real-world example.
Nomura highlights Oracle's combination of long-term leases, project financing, customer prepayments and customer-provided hardware.
The broader message: hyperscalers can restructure who finances infrastructure without necessarily reducing how much infrastructure gets built.
8/ This distinction is critical for semiconductors and memory.
Negative hyperscaler FCF does not automatically imply collapsing demand for GPUs, DRAM, HBM or other data-center components.
If spending continues through financing structures, semiconductor demand can remain resilient even while hyperscalers optimize their balance sheets.
9/ What could invalidate the thesis?
A genuine compute oversupply.
Watch:
• Cloud revenue growth
• GPU rental pricing
• Contracted backlog growth
• Data-center utilization
• Memory supply commitments
• Hyperscaler investment guidance
These are more useful indicators than negative FCF alone.
10/ The investment takeaway:
The key question is not simply:
"Why is Big Tech burning so much cash?"
It is:
"Will the infrastructure being built today generate enough durable cash flow to justify its cost of capital?"
Nomura is optimistic.
But the answer ultimately depends on pricing, utilization, investment discipline and the durability of AI demand.
The AI infrastructure cycle may be a cash-flow timing problem rather than a profitability crisis.
$NVDA $MU $GOOGL $MSFT $AMZN $META $ORCL
Moha 🃏 retweeted
JPMorgan's Midterm scenario cheat sheet
Wall Street's Midterm Cheat Sheet: The Likeliest Outcome Is The Worst For Stocks zerohedge.com/markets/wall-s…
Moha 🃏 retweeted
Global AI Infrastructure debt Monitor:
2025: $112,923 M
2026 (YTD): $313,823 M
I’m all in about competitiveness for allocation in order to get the best return with the risk that you are willing to take, nevertheless when there’s a specific sector charging supply that is highly correlated and sharing main assumptions regarding the fruits expected from capex, things can get messy.
Moha 🃏 retweeted
🇫🇷 #France | Prediction markets point to a changing presidential race ⚠️
1️⃣ David Lisnard is gaining momentum. He has caught up with Édouard Philippe on Kalshi and is narrowing the gap on Polymarket. His rising social-media following and the surge in reported Nouvelle Énergie membership reinforce the sense of growing momentum.
2️⃣ Marine Le Pen remains the frontrunner, but has lost some ground recently.
3️⃣ Jean-Luc Mélenchon remains in fourth place, trailing the three leading contenders on both platforms.
➡️ The key question: can Lisnard turn his online momentum and growing party membership into broader electoral support?
nitter.gq/LoupePolitique/status/…
Moha 🃏 retweeted
France's 10-year bond yields are surging to new post-2012 highs relative to German 10-year yields.
Moha 🃏 retweeted
For those of us who drive and eat, it’s pretty clear that #inflation remains a problem that the #Fed alone will have to deal with in the absence of #fiscal policy restraint.
Moha 🃏 retweeted
Ratio of CCC to B, sits at years high in € credit market >4X!
Bigger than during covid or 2022 meltdown...
18% YTW...
Seems overdone, even if lot of sh*tty names in it.
2021 refi hits hard
Few ways to play this though, with high bid-ask spreads on single names.
Moha 🃏 retweeted
Hybrid bond market is a relatively small market where investors love to buy "boring" business with higher spreads (against a "subordination")
Now, let's see what happens when '"boring" businesses are disrupted.
First to react? hybrid bonds of course!
VZ perp spreads skyrocketing
Moha 🃏 retweeted
TOTALENERGIES CEO SAYS I PREFER A WORLD OF DISRUPTION RATHER THAN A PEACEFUL WORLD BECAUSE IT CREATES MORE OPPORTUNITIES
Moha 🃏 retweeted
Eurozone bond spreads keep widening as Spain’s snap-election announcement adds to France’s debt and budget fears. France’s 10yr spread over Bunds widens 4.7bps today, Italy’s 4.6bps, Spain’s 4.3bps. Germany remains a safe haven: only Austria, Latvia and Lithuania outperform Bunds today.
Moha 🃏 retweeted
France 10 year yield is 140 bp above Germany this morning.
You liked "le spread" widening?
You will love the French banks’ CDS widening.
Below chart: 5Y CDS of SocGen, BNP & Credit Agricole.
Moha 🃏 retweeted
BREAKING: 🇪🇺 Euro crashes to a 17-month low against the dollar.
Euro is on track for its fifth straight weekly decline as political and fiscal risks rise across the region.
Moha 🃏 retweeted
JPMorgan lays out the investing playbook for 3 midterm-election scenarios
- Markets tend to hate the uncertainty that comes with a general #election.
- Partisan gridlock would likely be the best case scenario for Wall Street, JPMorgan says.
- The impact to the stock market will be "more nuanced" than in previous elections.
Scenario 1: Gridlock
A continuation of the status quo tends to be a benign outcome for #investors.
The possibility of a divided house or senate would make it extremely difficult for the White House to pass most legislation. That's good news for anyone worried about excessive government spending, stricter regulation, or sharp #tax increases
"Congressional gridlock has been associated with positive S&P 500 returns since 1950, whether on an election date basis (+21% gridlock vs. +18% Single Party Control over 2-year Congressional term) or start date of the new Congress (+25% Gridlock vs. +18% Single Party Control," Lakos-Bujas noted.
His team sees the most benefit for defense contractors, healthcare companies, and some tech stocks that aren't heavily exposed to the AI data center buildout, which may be stalled if Democrats take either branch.
Scenario 2: Blue Wave
Prediction markets are strongly favoring the possibility of a Democratic wave in November, with odds currently hovering at close to 88% on Polymarket, which defines a blue wave as #Democrats taking more than 218 seats in the House of Representatives and more than 49 seats in the Senate.
However, that doesn't necessarily mean a total policy reset, the bank said.
"Rather than enabling a broad Democratic agenda," Lakos-Bujas stated, "a Blue Wave would likely shift the policy landscape at the margin through funding negotiations, oversight and efforts to preserve or unwind existing policies."
That said, his team sees healthcare stocks benefitting, as a Democratic congress could reverse the Medicaid cuts contained in Trump's One Big Beautiful Bill Act (OBBBA). They also see a blue wave as a bullish indicator for the clean energy sector, specifically for renewable energy resources.
Scenario 3: Red Wall
Lakos-Bujas and his team see #Republicans holding on control of both chambers of #Congress as the most bullish scenario for tech stocks. The result would likely mean fewer obstacles for the data center buildout, a flashpoint of the election that many democratic candidates have campaigned against.
"If Republicans maintain control of Congress, that would likely provide the most supportive incremental federal policy backdrop for the AI/Infrastructure buildout through policy continuity, potential fiscal expansion, deregulation and faster federal permitting," he added.
However, they also see strong benefit for any companies that stand to gain from a looser regulatory environment. If Republicans maintain control, that should benefit sectors including traditional energy and nuclear power, financials, and defense, the analysts said.
Moha 🃏 retweeted
🚨 Japan Just Broke The French Bond Market
One Tokyo fund (Sumitomo Mitsui DS) didn’t trim exposure. It dumped every French government bond it held and rotated into German Bunds and short-term Japanese paper.
Not a reduction. Full exit. Something that even shocked the Financial Street.
The France-Germany 10-year spread blew past 140 basis points, the widest gap since the euro crisis.
France's 5-year CDS has spiked up to 81 basis points, the highest since 2013. The higher the number, the greater the risk of national bankruptcy.
French domestic holders are now facing a deeper mark-to-market loss and a less liquid exit to sell into the same one-way market.
Japanese investors still sit on roughly ¥25 trillion of French debt, second only to American holders and this was a single manager’s book.
Carry trades that funded higher-yielding global debt market with cheap yen just got a live demo of how fast the unwind can hit.
When the bid from Japan disappears, the largest European sovereign market has to find new buyers at the same time its own government is arguing over a deficit plan that markets already distrust.
If more Japanese money follows the same exit, the same flow that once compressed euro spreads can reprice them in the other direction.
We now understand what @yutokanzakireal meant by saying “Japan is bringing the entire house down” in response to Scott Bessent’s “I am the house now” statement:
Ending cheap-yen funding is forcing a margin call on the leveraged global debt system built on the carry trade and not just the U.S. leverage.
France just got the first real look at what Japan’s wealth returning to the homeland looks like.
