Why has today been so bad?You had multiple sell side analysts on Wall Street come out this morning and basically say the…

Why has today been so bad?

You had multiple sell side analysts on Wall Street come out this morning and basically say the same thing, which is that they are starting to believe capex growth will now peak in 2027. This doesn’t mean capex will stop, but the rate of growth for it will peak in 2027.

This means the rate of growth for semi earnings could be perceived as topping as well.

At the same time, the market doesn’t know if the Fed will continue to be aggressive with their tightening.

Neocloud debt continues to yield higher, with CoreWeave now having yields at 17%.

The result is a market sell off across the board. Nvidia is down 9%.

No one believes in the future earnings or low P/Es because if datacenters can’t come online, the revenue itself won’t be there to justify the capex.

The bright side is that mean hyperscalers pull back capex and FCF goes positive sooner than expected along with yields eventually coming down due to lack of new AI debt, but that means semis continue to sell off in that scenario.

Worst day all year for the Nasdaq.

Source: amit