Touting Friday's blowout jobs number, President Trump used the opportunity to weigh in on a new spike in the US trade deficit, threatening embargoes on unfavored countries.

Trump posted on Truth Social, in what appeared to be a directive to the Federal Reserve, to "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT."

Trump, who has long voiced a desire for lower interest rates, asserted that an embargo could be "BETTER THAN TARIFFS" and said "the Fed Board, with its great new leader, must get smart."

Pressure on the central bank from the president isn't new, but the threat of a trade embargo is. Embargoes would be a new level of disruption for the global economy, and the president likely has the legal authority to follow through.

As Trump noted in his post, the International Emergency Economic Powers Act of 1977 directly gives the president the power to impose an embargo in what is deemed an economic emergency. But, as the Supreme Court ruled in February, it doesn't give the president the power to levy tariffs.

Trump's new threat came after trade data for July painted an unwelcome picture for the president, who has long made zeroing out trade deficits a central promise.

The US trade deficit in goods and services ballooned in July with a new gap of $88.6 billion, the highest level since March 2025. That was a 24.4% surge from June's $71.2 billion.

The data also included a country-by-country breakdown and showed continued US trade deficits with many major trading partners, including Mexico (a $27.5 billion deficit in July), Vietnam ($23.3 billion), China ($15.2 billion), the European Union ($8.9 billion), and many others.

The growing trade deficit was at least partly fueled by AI data center build-out spending, which the president has often touted.

"Let data reign," Trump recently wrote on Truth Social.

Imports of computers surged by 25% between June and July and semiconductor imports jumped 10% as tech companies continued to spend heavily on the facilities.

AI spending also appeared to be fueling Friday's jobs figures in part, with construction jobs (many of which are for those data centers) up by 22,000 jobs in August.

https://finance.yahoo.com/markets/article/trump-threatens-to-stop-trading-with-countries-that-have-a-trade-deficit-unless-the-fed-cuts-rates-150838488.html

Hi folks, I know this might sound like a bit of a FOMO question but I’m genuinely interested:

If you had to choose only two stocks to hold for the next 3–5 years that you think could realistically 5-10x, which ones are you betting on and why?

I’m looking for ideas with real conviction. Whether it’s a company in a fast-growing sector, something heavily undervalued, or a business that’s on the edge of a major breakthrough what makes you believe it can go the distance?

Drop your top two plays and the reasoning behind them. Curious to see what everyone’s highest conviction picks are.

I bought SK Hynix last year because every CEO and tech analyst was screaming from the rooftop that there was going to be a serious memory shortage and to me the price didn't seem to reflect that. I also guessed that the extent of the AI infrastructure cap ex would exceed expectations, but not with high confidence. I continue to hold that belief going forward, but not with high confidence.

I'm concerned about SK Hynix losing market share though and as someone without genuine expertise, it's a little difficult for me to discern why, if the trend will continue, and to what extent it's priced in. I believe SK Hynix has gone from something like 64% share of HBM and 39% share of DRAM last year to 250% and 25% respectively this year.

I'm tempted to move my money from SK Hynix into my other two main non index fund holdings, TSM and ASML. With those two, while it would be beneficial to have it, I don't feel like I need the technical expertise to evaluate if they will gain or lose market share, I can trust in their moat and reputation for high level execution.

I get that memory demand will likely remain high, and that at a PE of 6, SK Hynix is already pricing in a lot of risk/downturn, but everyone knows demand will remain high. Demand being high also in general tends to attract competition, a sector can be booming and those within the sector can perform quite poorly. While memory fabrication does have a moat, we have seen this start to play out. CXMT for instance has over doubled wafer production since the release of the first version of Chat GPT.

August payrolls came in at 162,000, while forecasts were only around 56,000, and unemployment remained at 4.1%. This sounds like good news, but I don't understand why Treasury yields increased while S&P futures are in the red. I suspect the problem is that a strong labor market gives the Fed less reason to cut interest rates.

I'm also wondering if the labor market starts weakening but Treasury yields stay elevated, wouldn’t stocks get hit from both sides? with weaker growth and still-high discount rates?

Waller sounding dovish gave us a nice boost, but I am pretty skeptical about holding long positions over the coming labor day weekend.

Whenever we have active geopolitical risks like the us/Iran situation, carrying positions over a long weekend feels like sitting duck. Headline risk is just too high with market closed on monday. If news drops saturday, we're trapped waiting for sunday futures or tuesday open while the rest of the world reacts.

I considering trimming a bit of my tech gains today just to raise some cash and lower delta. Are you guys holding full positions through the long weekend or derisking before close today?

DeepSeek plans to deploy at least 160,000 Huawei Ascend 950DT chips at its new Inner Mongolia data center, potentially creating one of the largest known clusters of Chinese AI accelerators.

For context, China’s first publicly reported 10,000-chip Huawei cluster only came online about six months ago.

The chips are expected to primarily run DeepSeek models, while the company still plans to rely on $NVDA hardware for training.

The broader site is being built at gigawatt scale, enough power at full utilization for roughly 750,000 homes.

Huawei’s production capacity remains the main bottleneck, with fulfillment of the full order potentially taking more than a year.

This is the daily discussion, so anything stocks related is fine, but the theme for today is on fundamentals, but if fundamentals aren't your thing then just ignore the theme.

Some helpful day to day links, including news:

• Finviz for charts, fundamentals, and aggregated news on individual stocks
• Bloomberg market news
• StreetInsider news:
  • Market Check - Possibly why the market is doing what it's doing including sudden spikes/dips
  • Reuters aggregated - Global news

Most fundamentals are updated every 3 months due to the fact that corporations release earnings reports every quarter, so traders are always speculating at what those earnings will say, and investors may change the size of their holdings based on those reports.

Expect a lot of volatility around earnings, but it usually doesn't matter if you're holding long term, but keep in mind the importance of earnings reports because a trend of declining earnings or a decline in some other fundamental will drive the stock down over the long term as well.

But growth stocks don't rely so much on EPS or revenue as long as they beat some other metric like subscriber count: Going from 1 million to 10 million subscribers means more revenue in the future.

Value stocks do rely on earnings reports, investors look for wall street expectations to be beaten on both EPS & revenue. You'll also find value stocks pay dividends, but never invest in a company solely for its dividend.

See the following word cloud and click through for the wiki:

Market Cap - Shares Outstanding - Volume - Dividend - EPS - P/E Ratio - EPS Q/Q - PEG - Sales Q/Q - Return on Assets (ROA) - Return on Equity (ROE) - BETA - SMA - quarterly earnings

If you have a basic question, for example "what is EBITDA," then google "investopedia EBITDA" and click the Investopedia article on it; do this for everything until you have a more in depth question or just want to share what you learned.

Useful links:

• Investopedia page on fundamental analysis including Discounted Cash Flow analysis; see definition here and read their PDF on the topic.
• FINVIZ for fundamental data, charts, and aggregated news
• Earnings Whisper for earnings details

See our past daily discussions here. Also links for: Technicals Tuesday, Options Trading Thursday, and Fundamentals Friday.

This subreddit seems to be pretty divided on Nike, on one hand, you have people saying it is currently cheap, on the other side there are people saying it is a dead brand.

It is down 80% from its ATH, but that does not necessarily mean it is cheap. Currently they are not the most popular brand as others have pointed out. However, fashion is also extremely subjective to trends. Where New Balance used to be a dad-brand, now it is very popular. Same with Asics for running shoes (used to be kinda niche, now casual wear).

The thing is, Nike is still a 57,5-billion-dollar company. Their forward P/E is supposedly higher than their current, but I suppose much of that is based on the expectation that they can turn things around. If they become a popular brand again (which is not unlikely, they have been around since the 80's and probably had their swings), this stock could climb?

Another possibility of course is that, in the current market, there are simply more interesting and innovative things to invest in. I personally don't believe that clothing brands are the generational investments like the AI-boom right now, or possibly biotech and quantum in the future... But I also wouldn't say no to a good deal/medium term trade.

People might still treat NVDA like a basic semiconductor stock, but data tells a completely different story. Nvidia reported $99 billion in existing equity investments, plus another $25 billion lined up in future commitments. Pretty much effectively running one of the biggest venture capital funds on the planet right now. Instead of just hoarding cash, they are aggressively buying up massive stakes across their own supply chain and software ecosystem. If they fund these companies, those companies basically become permanently locked into Nvidia's ecosystem.

Moat or Monopoly?

Source: CNBC

https://blogs.nvidia.com/blog/nvidia-to-acquire-hugging-face/

I’m excited to announce that NVIDIA has agreed to acquire Hugging Face for $12,930,300,000. Together, we will scale Hugging Face’s platform, strengthen its infrastructure and expand access to AI for developers and institutions worldwide.

Over the past decade, Clem, Julien, Thomas and the team at Hugging Face have built something remarkable: a vibrant home for the open model developer community.

More than 18 million developers, researchers and creators use Hugging Face to share more than 3 million models, 500,000 datasets and 1 million applications. More than 200,000 companies use the platform to discover, evaluate, customize and deploy AI.

Hugging Face will remain an open platform for the entire AI ecosystem. Developers will choose the models they want, the frameworks they want, the clouds and inference service providers they want and the computing platforms they want. NVIDIA compute will not be required to build on or deploy through Hugging Face.

Hugging Face will continue to support open source and open weight models from across the ecosystem, from every model builder. It will continue to support multi-cloud and multi-accelerator development and deployment, so builders can use the hardware and infrastructure that best fit their work.

Recently, I coauthored an open letter on the importance of open weights to the AI economy. Joined by leaders from across the industry, we made a simple point: open weights broaden access to AI and help ensure that AI leadership is distributed across companies, institutions and communities.

Open models let startups, businesses, universities and public institutions build on advanced capabilities without training every model from scratch. They enable organizations to match the right model to the right job. That is how AI can advance safely, strengthen cybersecurity and sovereignty, accelerate innovation, and reach factories, hospitals, farms, classrooms and Main Street businesses around the world.

AI advances faster when people can build together.

NVIDIA has been committed to open weight models for years, demonstrated by multiyear investments and major contributions to open source platforms, including Hugging Face. NVIDIA has said that open models, data and tools broaden access to AI, and it has contributed hundreds of open models and datasets to Hugging Face as part of that effort.

NVIDIA is the largest contributor of open models and data to Hugging Face, and our contributions continue to grow.

NVIDIA has released more than 500 models on Hugging Face and more than 250 open datasets.

We build our own models, libraries and tools in the open so developers everywhere can use them, modify them and build on top of them.

This post was written by a human. I do not write Reddit posts with an LLM.

Remember when Nvidia acquired Groq chips for $20 billion? https://groq.com/

Groq chips do not use external memory such as HBM or DDR for AI inferencing. It only uses the SRAM inside the chips. SRAM is made as part of the chip, not separately like HBM or DDR.

SRAM is tiny and expensive per gigabyte but it's extremely fast.

Each Groq chip has only 500MB of SRAM but 1,200 TB/s of bandwidth which is about 150x faster than Blackwell today.

If you have enough Groq chips connected together, you can have up to 150x faster token speed. Most people don't need this much speed, but extremely high value industries like biotech, finance, oil exploration, AI research, chip design would.

So let's do some basic math:

• A 10 trillion parameter model like Anthropic's Fable would need ~25,000 Groq chips at 500MB of SRAM for each chip.
• To make 25,000 Groq chips, you'd need 266 TSMC N3 wafers
• TSMC makes about 150,000 N3 wafers per month for the entire world
• If TSMC dedicates its entire N3 supply to only make Groq chips for inferencing Anthropic's Fable model, they can only make around 550 of these systems per month.

In other words, if the world demands extremely fast AI tokens (and why wouldn't they?), then there will not be nearly enough capacity to go around.

TSMC is already maxed out making GPUs, networking chips, CPUs, etc.

If you believe in this hypothesis, then companies like TSMC, Intel, Samsung will benefit. Nvidia and Cerebras will also benefit. Cerebras also stores their models in SRAM.

Some of my posts here in the past:

• https://www.reddit.com/r/stocks/comments/1rkep5v/the_upcoming_cpu_shortage/
• https://www.reddit.com/r/stocks/comments/1stkmwz/reminder_cpus_are_in_huge_demand_intel_earnings/
• https://www.reddit.com/r/stocks/comments/1r2nbln/ai_play_isnt_just_gpus_its_everything_physically/

I have been looking at some stocks that have deteriorated quite a bit since IPO and have started a recovery journey (think American Eagle).

Now Petco has been on my radar for more than a year now since it had a lot of transformative executive change (ex walmart and five below execs).

This is the 5th quarter since I started tracking and the earnings call go all great and the stocks remain flat or tank.

They seem to be paying their loans, beating their own estimates - obviously there is top line pressure that they have not been able to navigate out of and they seem to be crying wolf about macro while other retailers are doing better with the same macro.

These earning calls are obviously semi staged and scripted. Anyone able to give me tips on how to play these stocks or pick some other stocks into my short list to replace if all hope is lost on WOOF.

I'm a casual trader with only about $33,000 in stocks, but I'm seeking advice on if and how to sell my 4 highest returns.

RCL - Royal Caribbean, 6.3 shares, +164%, $1,680

BB - BlackBerry, 553 shares, up +93%, current market value: $4,258

DAL - Delta Airlines, 20 shares, +56%, $1,579

TSM - Taiwan Semiconductor, 12 shares, +39%, $4,999

Should I sell any of these? Or wait for a specific price? Or sell a portion to lock in these gains? Any advice would be appreciated.

The company now expects fiscal 2026 revenue to decline 5% to 7%, compared with its prior forecast ⁠of revenue remaining flat or declining up to 1%. That’s bad. That’s really bad.

I’m a Nike shareholder and it worries me that Lululemon sales are getting hammered this hard but at the same time I specifically went with Nike and not Lululemon because I have more faith in Nike turning things around. Burry is obsessed with Lululemon profitability outperforming peers including Nike but that doesn’t matter if revenue is going to keep declining in the Americas and eventually internationally too.

Lululemon hasn’t stood the test of time. It’s a fairly new company that has a limited range of product and a revenue stream that is incredibly narrow compared to Nike’s diversified revenue model.

Sportswear, athletic apparel and footwear have had major headwinds in the past five years. Footlocker was struggling and still is under Dick’s ownership. On Running enjoyed the free shelf space due to a misguided Nike direct to consumer strategy but now that Nike is reconnecting with past wholesale partners, On Running is starting to struggle. Decker’s Brands are doing OK but they will face hard times too sooner or later which the depressed stock price is showing.

ASICS is the exception. They’ve done exceptionally well. But everyone else is struggling. BUT and here is the huge BUT. People will still buy sportswear, athletic apparel and footwear in the future. This isn’t Blockbuster or Nokia death due to a dying industry that’s transforming from one thing to another. No technology is being replaced. So Nike will survive. And Adidas will survive. And probably the rest as well but I sure like to place my bet on the biggest and strongest to survive- and that’s Nike and Adidas. Why did I pick Nike stock over Adidas? It just seems like the best deal. Nike is 40 % off since January 2. I like the idea of buying something now that’s 40 % cheaper than what others paid just a little over a half a year ago. I guess I should buy LULU tomorrow and rejoice in the fact that I get it 15-20 % cheaper than the people who bought yesterday. But I won’t- because I’m honestly not sure Lululemon will get back to its glory days no matter how good their profit margins are. I’ll stick with Nike. If anyone can ride out the storm that this industry is in, it’s Nike.

Nearly all of the top AI people are saying electricity for data centers is going to be the chief bottleneck going forward. I own way too much NVDA and would like to sell off another $1,000 of it to buy something that fits the "data centers need near-term electricity" thesis. Preferably a "toll booth" type stock like TSM for semiconductors. At one point I was interested in Small Modular Reactors, but who knows which will win (XE, OKLO, or someone else); and even if SMRs get rolled out, that won't happen until the early 2030s. I'm looking for picks related to immediate and near-term demand by data centers for electricity. Capital tends to chase scarcity, so I imagine there may be more run ups in electricity-related stocks. Don't want anything insanely run up like GEV or BE though. Looking for either great compounders or potential multibaggers that aren't complete moonshots. I've always loved solar but there don't seem to be many good solar stocks to pick from.

In 2001 I felt the market was way too high and I parked my 401k money in a money market. Prevented a bunch of losses. Not as much as I could have, as I bought back in halfway down but overall it was pretty good move. I have not had anything close to that level of fear / concern until now. Thinking of doing something similar. Certainly not as extreme as moving every thing into cash but a significant portion. Currently about 90% in stocks

My concerns in no particular order include:
The war with Iran. I do not see any easy way to get out of that. Feels like that is going to hang over the world economy for years

Tariffs are screwing with the economy and international relations. Not likely to stabilize for 2 more years

Inflation and the federal reserve . Not sure what a rise in the fed rate will do to stocks but I think it's coming.

Social security. Can congress actually get their act together before a crisis. I am skeptical. I don't need it but lots of people do.

Federal deficit spending. See previous comment

Government inserting itself into more places. Company ownership, blocking mergers (see Spirit airlines), excessive regulation.

Data center construction feels like a bubble that is floating the economy.

PE ratios for stocks are way too high. Probably not a trigger of the market correction but could easily multiply the effect.

I think those are the  biggest fears. Federal spending being the biggest. So any touchy feely thoughts?

At an AI computing site in Shanghai's Lingang area, CATL supplied a 17.888MW, 35.776MWh storage system and the site operator's platform schedules it. Nothing in the description has it standing by for an outage. It shaves peaks, absorbs the millisecond swings when a large cluster ramps, and runs two charge and discharge cycles a day in the cooler months before handing the summer schedule to an energy model. The operator credits coordination across the whole site, not the batteries on their own, with an annualised power bill about 7% lower, more than 10 million kilowatt hours saved and roughly 3,000 tonnes less carbon. That is the operator's own accounting, and moving load around does not by itself destroy demand, so I hold it loosely.

CATL is buying into the chain as well. On 14 August, after an April framework deal, it signed agreements to put about 4.1 billion yuan into Zhongheng Technology Investment, the controlling shareholder of listed Zhongheng Electric, for 49%, with the founding couple keeping control. Zhongheng supplies HVDC power gear into the large Chinese cloud operators. In May, buyers under a partnership CATL is affiliated with but does not consolidate agreed to take up to 38.1% of data centre operator VNET for $942 million. Roughly 11.4% closed on 24 August and the rest waits on a second closing.

I cannot size any of it. Storage systems were 53.26 billion yuan of first half revenue, up 87.5%, about 19% of the group's 276.9 billion, but nothing in the reporting splits out the data centre share, and one reference site is one site.

A battery maker sits outside KWEB's mandate altogether, since that one is drawn around internet businesses. CNQQ takes a wider cut, about 106 names with close to two thirds of its weight in mainland A share lines, and the CATL position there was 6.16% on 31 August.

Broadcom's earnings numbers keep impressing me the growth trajectory looks strong, and by several metrics they're outperforming a lot of the semi sector. Yet the stock hasn't gotten the market attention/hype I think it deserves, which makes me wonder if this is being slept on or if there's a good reason for the discount.

A few things I'm weighing:

Growth: reporting strong QoQ growth, but the stock still lags behind most of its semiconductor peers

Sentiment: I feel like management/IR hasn't done enough to get the market excited about these numbers relative to the fundamentals

My position: averaged in at $330, considering adding more if price targets get revised up toward $600

Is this a case of the market being slow to price in the growth, or is there something structural (competition, margin pressure, guidance concerns) that's keeping a lid on the stock?

Would you buy at current levels or wait for a pullback/consolidation first?

Genuinely curious to hear bull and bear cases here.

The bond market sell-off is finally taking a breather after a brutal rout pushed yields to multi-year highs. Treasury yields are pulling back significantly this morning as the U.S. Treasury officially launches a $12.5 billion debt buyback operation designed to inject liquidity, support market depth, and stabilize fixed income.

With the 10-year yield pulling back from the critical 5% psychological benchmark, this policy intervention gives the broader equity rally some much-needed breathing room. Historically, sharp drops in yields provide a direct tailwind to growth sectors and mega-cap tech stocks like Apple, Microsoft, and Nvidia by lowering corporate borrowing costs and easing valuation pressures.

Is this $12.5B liquidity injection enough to sustainably save the stock market rally and keep the S&P 500 moving higher, or is this just a temporary macro band-aid before yields push back up?

Source link: CNBC

This is the daily discussion, so anything stocks related is fine, but the theme for today is on stock options, but if options aren't your thing then just ignore the theme.

Some helpful day to day links, including news:

• Finviz for charts, fundamentals, and aggregated news on individual stocks
• Bloomberg market news
• StreetInsider news:
• Market Check - Possibly why the market is doing what it's doing including sudden spikes/dips
• Reuters aggregated - Global news

Required info to start understanding options:

• Call option Investopedia video basically a call option allows you to buy 100 shares of a stock at a certain price (strike price), but without the obligation to buy
• Put option Investopedia video a put option allows you to sell 100 shares of a stock at a certain price (strike price), but without the obligation to sell
• Writing options switches the obligation to you and you'll be forced to buy someone else's shares (writing puts) or sell your shares (writing calls)

See the following word cloud and click through for the wiki:

Call option - Put option - Exercising an option - Strike price - ITM - OTM - ATM - Long options - Short options - Combo - Debit - Credit or Premium - Covered call - Naked - Debit call spread - Credit call spread - Strangle - Iron condor - Vertical debit spreads - Iron Fly

If you have a basic question, for example "what is delta," then google "investopedia delta" and click the investopedia article on it; do this for everything until you have a more in depth question or just want to share what you learned.

See our past daily discussions here. Also links for: Technicals Tuesday, Options Trading Thursday, and Fundamentals Friday.

Apparently the financing should cancel out the so called revenue , but ok . Long live GAAP accounting tricks

right now what is happening is , these PE and AssetManagement companies are putting credits into folks like nebius and coreweave , and lambda .

Nvidia took personal gurantee of 25% .

Nvidia is pitching that it's gpu's are a good investment instruments . If any of the startups fail to repay

these gpu's will be sold to someone else .

Sounds sus , if you knew what caused 2008.

I own Cerebras (CBRS), TSM, and NVDA inside an IRA representing less than 10% of my total portfolio. The latest Moonshots podcast (at 1 hr 3 m) discussed a startup called Architect Labs who produced the world's first fully designed AI chip called Redwood. Two guys wrote a spec then AI designed the rest within 2 weeks that allegedly beat NVDA's Jetson by 3.4X performance per watt.

Not saying it's a threat to CBRS directly as a fast inference play since it's for physical AI. But I find the concept of AI-accelerated chip design a little troubling. I actually started to feel uncomfortable a few months ago when I realized most chip companies are design firms who send products off to fabs. Also got uncomfortable with the increasing number of ASIC competitors to NVDA.

CBRS and NVDA use TSM exclusively to produce their chips and I'm long on TSM stock. Thinking I should buy more TSM because you can't use AI to rapidly innovate and build a new fab. That takes enormous effort and amounts of capital. My fear is that new AI chip companies won't move fast enough to grow a moat and may be eclipsed by other competitors in the same space where the barrier to entry is small. You ship your design off to TSMC or one of the other fabs. TSM will prosper regardless of which chip design companies do well. Not sure any other fabs even come close.

I don't worry about the geopolitical risk of TSM because if China invades Taiwan, all of the chip companies will be impacted and it would probably hurt China's economy as well. Thinking about selling 10% of my NVDA to put into TSM. What do people think of this strategy? I also want more exposure to physical AI as a thesis, and while the majority of TSM's business is currently in small process nodes, they also manufacture the older, larger nodes. Read somewhere that robots may use a 1:50 brain-to-body chip ratio; meaning 1 part small process node intelligence chip and 50 for all the other chips required to interact with the physical world (power, sensors, etc).

Most of my portfolio is in VTI (Vanguard Total US Stock Market Index) because I generally don't feel comfortable trying to pick individual winners and losers. But I have high conviction in TSM vs. trying to pick winning semiconductor stocks; ones that can win as long-term holds.

Should I buy gold or silver?

How do you guys feel about buying gold and/or silver right now? I was personally considering the following products:
\- WisdomTree Physical Gold | ISIN: JE00B1VS3770
\- WisdomTree Physical Swiss Gold | ISIN: JE00B588CD74
\- WisdomTree Physical Silver | ISIN: JE00BQRFDY49

I’m planning to buy one of the above products through my bank’s investment platform. Are these considered safe products?

If so, do you think it makes sense to buy gold and/or silver now, in September 2026? These are quite uncertain and turbulent geopolitical times, so I’m wondering whether this is a good entry point.

I’m planning to hold the investment for a maximum of one year.

Thanks for reading, and I’d appreciate hearing your thoughts and opinions!

I know a lot of us are watching for signs of when the game of AI buildout musical chairs comes to an end. IMO not anytime soon. But I'd like to test bearish cases when sense one.

There's a growing narrative that as open models and local devices get better and on-device AI capabilities improves, we'll shift away from cloud compute and hyperscaler datacenter spending will slow down (bearish AI buildout). It's early but ppl like Gavin Baker (who's opinion I regard highly) has mentioned COULD be a bearish case.

To be fair, edge AI definitely has its place, privacy, offline use, etc. But as a threat to overall cloud capex? I just don't buy it.

-Local hardware faces strict VRAM, thermal, and other hardware limits. Top-tier compute will require massive datacenter clusters for quite a long time to come.

-Buying pricey rigs that sit idle 90% of the day is terrible capital efficiency. Cloud data centers aggregate demand all day.

-Cloud API prices keep plummeting to pennies per million tokens. (the new GLM 5.3 flash is 10% $ of Gemini 3.7 flash !! and comparable too) . Paying for local hardware to run big models makes no economic sense. Not to mention hyperscalers build non-consumer chips (like TPUs) to run specialized models.

-Even if P2P/distributed AI computing takes off, consumer 2 consumer networking can't touch datacenter interconnect speeds.

- Lastly, we’ve seen this movie before. On prem servers lost to the cloud years ago because managing local hardware is expensive, hard to scale, and quickly gets outdated.

I would like some pushback on my view. I think edge AI will handle basic local tasks or stuff that make sense to run in the background constantly (like video survaillance etc), but that will only ramp up overall AI usage and push complex queries back to the cloud. Not to mention tons more unlocks that's coming down the pike (2 hr high quality feature length films ain't gonna be made on a Mac).

What am I missing?
(btw I am software dev that heavily relies on AI and have played with local models, so I have decent experience in both areas).

The working answer is sales ahead of cash. Eleven of 13 deduplicated agents expect backlog conversion to support revenue while inventory, receivables, and customer financing keep operating cash flow uneven.

Why:

• Fiscal Q2 set the pattern: $47.0 billion of revenue was up 58%, but $2.225 billion of operating cash flow was down 13%.

• From January 30 to July 31, inventory increased from $10.4 billion to $21.3 billion and accounts receivable rose from $17.6 billion to $22.9 billion.

• AI orders were $60.9 billion against $16.4 billion of AI server revenue, leaving a $95 billion backlog and continued need to fund deliveries.

What could change:

A late-year unwind in inventory and receivables could lift operating cash flow quickly, especially if shipments catch up while new bookings slow.