Pressure Points

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I expect shares of Meta to be flat to down on the Meta Connect keynote, given we didn’t get much on Muse adoption. What we got that was important is Zuck’s vision that all that matters to the company long term is Muse. Bad news for Google.

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I went into today's Apple event thinking the foldable iPhone was going to be a rounding error for growth. After seeing the iPhone Duo, I’ve changed my mind.

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Get ready for an AI tsunami. Nvidia’s CY27 revenue guide means the AI brain next year will be about 40% bigger than I thought 24 hours ago, which means the distribution will be greater than I previously expected.

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This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit deepwatermgmt.substack.com

So what did we learn about the AI trade from Google and Tesla earnings? The infrastructure trade is intact based on higher capex outlooks and margins have been under pressure. Overall, I still believe we’re in the 3rd inning.

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The massive Cloud beat got buried by higher capex guidance and expectations for lower Cloud margins going forward. As for Search, AI Mode monetization is beginning, which should be a long term growth driver.

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While TSLA shares will likely be down tomorrow, the long term story continues to improve. Elon is all in on capex, FSD adoption is accelerating, Robotaxi is rolling out slowly to prioritize safety before scaling, and the odds of a SpaceX-Tesla merger just inched higher.

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Tesla June Quarter Preview: More moving parts this time around including capex, sustainability of delivery growth, ramp of cybercab production and our old friend, auto margins ex credits. Overall, I expect good news, just down know how investors will take greater capex for CY27.

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Tesla shares down on the huge delivery beat for three reasons. The biggest was buy on the rumor. The second is a question of how much did high gas prices help the number and third, the ending of the DOGE headwind (Elon left in May 25).Bottom line: The EV winter that started in March of 2024 is ending. Even backing out those one time benefits, it still was a monster delivery number, likely up 20% plus vs. up 6% in March.

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