Pressure Points

The most underappreciated data point on MU’s earnings call was that the number of five-year SCAs increased from one last quarter to seven this quarter. That’s significant because it suggests customers expect this buildout to last for at least five years and want greater pricing visibility over that time frame.

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Apple showed plans for a new Siri AI that consumers will love. They failed to answer the key question: Do they have the AI chops to deliver? My guess is that we’ll see Siri AI in mid-CY27, versus previous expectations for the fall of this year.

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NVIDIA keeps crushing high expectations. It was a $27B business in CY22. This year it will be more than $400B. Investors are more worried that the growth will slow next year.

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The reason why shares of $AAPL are not up more is investors wonder if the new Siri can power an encore to iPhone super cycle that wraps up this quarter. I believe the answer is yes.

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The bottom line on the capex outlook, we’re early in the AI buildout. Three of the four hyperscalers hiked their AI spending outlook. I expect in CY26 will come in up closer to 80% vs. up Street expectations of up 64% going into tonight.

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Meta can’t shake the capex bears. Growth of 33% was better than the whisper of 32%. Guided June to 28% vs. Street at 25%. Investors opted instead to focus on capex growth this year going to 93% growth compared to previous expectations of 73%. I see the concern overblown. Meta has shown they can meaningfully accelerate revenue from capex. March of 25 it was up 16%. This June it will grow 28% plus.

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Investors shrugged off the higher capex guide for 2027 because Google Cloud is gaining meaningful marketshare, and Search is at an “expansionary moment” which means Search growth this year will be closer to 17% vs. the Street currently at 13%.

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Postive comments about Azure growing at 40% in June vs 39% in March was offset by them talking about the elephant in the room, the need for a new monetization model for software that is usage based.

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Sounds like they’re keeping capex outlook unchanged. Up 48% y/y in CY26 compared to up 59% in CY25. The kicker is outside of AWS, they still have not had their AI moment.

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Shares of TSLA sold off on the increased capex comments. It should have traded up because it supports the company’s long-term vision.

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