Pete Hoffman retweeted
Musk’s interview went great: Reporter: What is your thought on the ban of foreign students, you were one of those kids, right? Musk: “I think we want to stick to talking about spaceships.” Reporter: I was told that any topic is good. Musk: “Well no.”
Pete Hoffman retweeted
We've never in almost 100 years seen breadth this bad.
The S&P $SPY is knocking on new highs but there are (many) more stocks at lows than highs.
The percentage of stocks in long-term uptrends is plunging.
The only remotely similar setups were January 1973 and November 1999.
Pete Hoffman retweeted
September Empire Manufacturing Index fell to 7.6 vs. 15.0 est. & 20.6 prior … new orders down to 2.0 vs. 17.3 prior; shipments down to -3.2 vs. 11.7 prior; prices paid up to 63.1 vs. 58.6 prior; employment up to 10.6 vs. 9.3 prior
Pete Hoffman retweeted
USS Abraham Lincoln’s resupply problems weren’t a mystery. Iran hit NSA Bahrain—the 5th Fleet’s main logistics hub—hard in February. The Navy had to shift to Diego Garcia, 2,200 miles away instead of ~800. Transit times roughly tripled, so replenishment dropped from every ~3 days to ~10. That’s the logistics reality behind the shortages and 200+ days at sea without a port call. The Pentagon fired the editor of Stars and Stripes for telling the truth.
Rick Santelli cnbc melting down on air. Your buddy’s have screwed up. Stop blaming what happened 20 years ago now that the walls are closing in.
Pete Hoffman retweeted
The reality is that Nvidia is speedrunning the Dot Com playbook to vendor-finance its way out of an impending demand slump as AI capital becomes increasingly scarce
All those GPUs $NVDA is helping finance through neocloud backstops is the play-by-play rerun of Lucent investing into telecom start ups as demand for networking equipment began waning in the late 1990s
When those same telecom startups began going bust, the end result was a decade-long fiber glut that caused bandwidth prices to collapse by 90%
The same fate awaits today's circular financing scheme when it predictably implodes on itself. The neoclouds go to zero and the hyperscalers will scoop up their GPUs for pennies on the dollar
It's not 4d chess, it's a last ditch desperate effort to keep the order books inflated for just a few more quarters while everyone from Jensen Huang to Michael Intrator dump billions of inflated stock onto bagholders
Don't be one of them
The reality is what we are seeing unfold is Nvidia speedrunning the creation of a synthetic hyperscaler.
Apologies in advance to all the investors who are stuck in their priors that this will trigger.
But what is a hyperscaler? Strip it down and it’s a scaled infrastructure collective of CPUs, networking, storage with a development platform on top. It fulfills two purposes. Financial: it pools and smooths the financial obligations of its users, renting infrastructure as opex instead of capex. And Operational: it builds software that makes consumption the underlying primitives simple by abstracting them away.
The hyperscaler makes a healthy 35-40% operating margin by buying hardware at bulk pricing, pooling scale to get a lower cost of capital, and driving utilization of that hardware with software that shares and shards workloads across many customers.
But in the age of AI, the atomic units of compute changed. Training (massive coherent clusters) and inference (agentic workloads) - require a fundamentally different configuration of resources. These new workloads require dramatically more accelerated compute, shifting the design target from multi-tenant utilization (the cloud era) to absolute workload performance (the AI era). The economics of the data center inverted. A giant, redundant fleet of Amazon Basics CPUs and storage doesn’t work when the job is synchronous training and one straggling node stalls the entire cluster. For inference, tokens per watt and time to first token dominate the economics, not how many VMs you can pack in a box. And none of it works in a world of limited power (at least in the West. Maybe in China).
As Nvidia built more compute and sold it to the hyperscalers, it faced a fundamental problem. The hyperscalers had classic innovator’s dilemma - expecting 35-40%+ op margin, along with an underlying desire to commoditize Nvidia's 75% GMs with their Amazon Basics equivalent. Pay an ASIC vendor a 25% margin instead of Jensen’s 75%, then stack your own 40% on top! They owned the customer relationships too, enterprises developed on AWS, Azure, GCP and their data was captive there too. But most important of all, these companies moved at their own pace. They were not scrappy or hungry to operate at the pace Nvidia or the AI labs felt was necessary to build out compute to fulfill the demand in front of them. They would never look at retrofitting a 35MW site outside of Ashburn, Virginia!
Meanwhile, a group of hungry entrepreneurs noticed the fat margins the hyperscalers earned renting what was basically stock Nvidia hardware with limited software on top, and started building businesses around it. Nvidia - skeptically at first - recognized that working with these partners would lead to faster development cycles and competitive fires and pressures for the ecosystem. Thus the neoclouds were born.
The software these neoclouds co-developed with Nvidia were purpose built for the new workloads. They solved the new problems and requirements operating the new infrastructure needed. They were ready with hotswaps, they did predictive maintenance, they built new storage software that was built for training with cheaper ingress and egress fees, because their competitive drive was to win workloads, not to lock in enterprise data on their platform. And it was working - AI labs started preferring to work with them over the hyperscalers. Common complaints on the incumbents: too slow, too particular with how their clusters were built, virtualization and networking overlays that made GPU clusters underperform stock Nvidia reference designs. Neocloud bare metal was cheaper too as their teams built AI software, not a cloud data warehouse business. And they were happy to run at half the margin (~20%) that the big guys would never accept.
But the hyperscalers still had one structural advantage: their balance sheets. Investment grade. Able to fund speculative capacity ahead of demand and rent it out at much higher spot rates. The neoclouds couldn’t play that game as lenders would only finance hardware that was already contracted with offtake. And more expensive if that offtake were the labs which at an earlier point were much more speculative. If only they could build ahead of demand, they could maybe earn the kind of returns Elon is achieving on Colossus.
But the twist is that balance sheet edge is eroding in real time. Google just printed its first negative-FCF quarter and raised $50B equity. Microsoft is carrying $329B of leases signed but not yet commenced. Even the IG balance sheets hit the wall - more capital had to come from somewhere else.
And that's how we got to where we are today. Look at what Nvidia has actually built. The operational half of a hyperscaler: DSX OS and Mission Control to run and operate GPU fleets, DSX reference designs and Omniverse digital twins as hardened playbooks for building a data center itself. Dynamo for inference serving. All the old secret sauces of the hyperscalers built specifically for new age data centers that they have led the way in architecting. Offered to any hungry, technically competent team with a serviceable site.
And then the financing half: the revenue share and credit support model that smooths utilization across a distributed fleet the way multi-tenancy used to. Support the operator, release capacity to demand, share in upside, and now bring $500B of third-party capital to the table. Nvidia standardized the asset with reference designs, proved the compute was “fungible and transferable across customers and operators” and showed infrastructure investors DD unlevered yields across 7-8% hurdles. Those investors wet their beaks on early special situation financings, saw the paybacks, and understood the demand was global. That’s why Jensen spent 2025 flying around Europe, the Middle East, and Southeast Asia - these are the ground zero for new compute sites. The reality is that this didn’t happen just over the last 3 months. CoreWeave master agreement in 2023, the $6B spot reserve backstop in 2025 (to sponsor capacity for the inference clouds), the Blackrock AI Infrastructure Partnership in 2024, Brookfield’s $100B fund with Nvidia in 2025, KKR Helix with Nvidia in 2026. And now six independent financing platforms. Chess!
So now the three fears by name. Circularity? Monday was the opposite with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR bringing third party capital, independently underwritten apart from one another, replacing Nvidia’s balance sheet rather than just extending it. Useful lives / underwritability of these assets? CoreWeave just disclussed A100s, 6 year old silicon contracted through 2029 and pushed 25% price increase on its fleet in July. The collateral is aging more like an aircraft than a smartphone as feared. Market share? If you don’t see that the platform of Nvidia and the fungibility of this compute is the reason why this is even possible - the skeptics themselves are making the bull argument. The complaint that these platforms keep capital tethered to Nvidia and away from other ASICs / accelerators… $500B that can only buy Nvidia reference architecture is a moat dressed up as a risk.
So what were you doing when the first synthetic hyperscaler was built under your nose? :)
All views expressed are my personal views. Does not reflect the views of Altimeter or Nvidia or anyone else. Full disclosure I/we may hold positions in companies mentioned. Purely for discourse and thinking - no financial advice.
Pete Hoffman retweeted
A good week for the Islamic Revolutionary Guard Corps and the Reflecting Pool Green Algae.
Pete Hoffman retweeted
Every year, I share this video of French caretakers who take sand from Omaha Beach in Normandy, and scrub them into the letters to give them the gold coloring.
They do this for all 9,386 US soldiers who died.
France also gave us this land as American soil. #MemorialDayWeekend
Pete Hoffman retweeted
I voted for Donald Trump because, at the time, he felt like the lesser of two options I didn’t trust.
I didn’t want to see Joe Biden or Kamala Harris continue what I believed was a system full of corruption, mismanagement, and constant tension.
Trump’s message was simple:
No new wars.
End existing conflicts.
Put America first.
That was the foundation of my support.
But looking at things now, I’m struggling to square those promises with what’s actually happening.
We’re seeing conflicts intensify instead of cool down.
Billions continue to flow overseas in aid and military support to places like Ukraine and Israel.
And at home?
People are still dealing with rising grocery bills.
Veterans are still without stable housing.
Families are still buried in debt and uncertainty.
So I keep asking the same question:
Where does America First fit into all of this?
I didn’t vote for deeper global involvement.
I voted for stability at home.
I voted for relief, not expansion.
And honestly, that’s where my frustration comes from.
Not anger for the sake of it—but disappointment in what’s changed, and the gap between what was promised and what feels real on the ground today.
I’m not sure how many others feel the same, but it’s getting harder to ignore that gap.
Pete Hoffman retweeted
“The Trump administration has abruptly canceled an $11 million contract with Catholic Charities to shelter and care for migrant children who enter the U.S. alone…” miamiherald.com/news/local/i…
Pete Hoffman retweeted
THE STRAIT OF HORMUZ JUST HANDED YOU THE TRADE OF THE DECADE
And most investors are looking in completely the wrong direction.
Brent crude closed above $103 on Friday. Up nearly 40% since the strikes began on February 28.
The Strait of Hormuz is effectively shut down. Insurance companies have canceled war risk coverage. Over 150 ships are stranded. Tanker traffic has collapsed to near zero.
The IEA just called it the largest supply disruption in the history of the global oil market. Nearly 20 million barrels per day of crude and product flows have been choked off.
The US is scrambling. The IEA coordinated the release of 400 million barrels from strategic reserves, the largest such action ever. Trump ordered emergency insurance for tankers. The Navy was told to begin escort operations.
But behind closed doors, Navy officials told tanker executives there's currently NO availability for escorts. And no guarantees there will be.
Iran holds the upper hand. And the market knows it.
But here's why this matters far beyond the oil price:
What we're witnessing is the EMification of America in real time.
The US launched strikes in the middle of nuclear negotiations. The executive branch has been attacking central bank independence. Budget deficits are running at levels historically associated with emerging market economies.
Erratic policymaking. Massive fiscal deficits. Judicial interference with monetary policy.
These are EMERGING MARKET characteristics, and yet the US equity market still carries a premium developed market valuation.
That premium is evaporating.
Emerging markets returned 33% in 2025. The S&P 500 returned 17%. Almost DOUBLE the outperformance. And 2026 is accelerating the trend.
Here's what the consensus is missing: EM macro is BETTER than developed market macro right now.
Budget deficits as a percent of GDP? Lower in EM. Debt levels? Lower. Inflation? Lower. Forecasted earnings growth? HIGHER.
EM earnings are expected to grow 21% to 29% this year versus 13% to 14% for the U.S.
Brazilian equities are trading at roughly 9 times CAPE earnings. About HALF where they traded during the last EM rally in 2018.
And the positioning is absurd:
US institutional investors have essentially not owned China since Trump 1.0. Most portfolio managers working today weren't even in the business the last time EM led, which was 2001 to 2008.
Everyone is out of position.
Now layer in commodities:
The digital eats the physical. Without copper, silicon, aluminum, and power, there IS no AI. Full stop.
And fossil fuels and renewables are rallying AT THE SAME TIME. That tells you the world has a massive power demand problem that isn't going away.
Oil above $100. Gold above $4,600. Silver above $85. Copper near all-time highs.
The commodity super-cycle is confirming itself in real time. The Iran conflict just poured gasoline on it.
Now here's the setup:
Emerging market equities, China and Latin America in particular.
Commodities across the board.
Energy, industrial metals, precious metals.
And what to avoid? Long-duration developed market sovereign debt. Overweight positions in the Mag 7, priced for a world where everything goes right and nothing disrupts the AI spending fantasy.
Leadership batons in global markets shift in multi-year cycles.
The US led from 2009 through 2024. 15 years.
Now we're in the early innings of a multi-year rotation into emerging markets and commodities.
The flows follow the performance. The performance follows the earnings. And the earnings are now better in EM than in the US.
At a fraction of the valuation. With better macro fundamentals. And almost nobody owns it.
This is the trade.