Korean chips at 2.8x forward earnings which is the lowest in 20 years.
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The stock jumped nearly 8% after-hours The number we are watching: its $1 billion quarterly interest bill. The Q3 numbers show how fast demand for AI compute is growing: ▪️ Revenue hit $3.66B, up 168% YoY ▪️ Adjusted EBITDA reached $2.26B, up 169% ▪️ Revenue backlog surpassed $132B ▪️ Annualized revenue run-rate outlook rose to $20B–$21B Now look at what it costs to build the capacity to serve that demand. CoreWeave expects $35B–$39B in 2026 capex. It also expects $1.05B–$1.15B in interest expense in Q4 alone. That’s more than $4B annualized at the Q4 pace. And even with revenue more than doubling, CoreWeave posted a $529M adjusted net loss in Q3. There is still significant long-term potential. Customers are committing billions, and the backlog gives CoreWeave a substantial pipeline of future revenue. How much cash that revenue generates will depend on what it costs to build and finance the infrastructure behind it. How much of that $132B backlog will translate into free cash flow after capex and interest? That’s the number we want to see. Source: CNBC, Merlin Capital
That’s a nearly $23 billion swing. The figure I’m watching is the $10 billion SoftBank has borrowed against its OpenAI stake. First, a look at the quarter. ▪️ SoftBank recorded a $3.7 billion loss tied to changes in equipment plans for US AI data centers. ▪️ Its Vision Fund posted an ¥81.6 billion quarterly loss. ▪️ Financing costs more than doubled to $2.9 billion. ▪️ SoftBank shares are down more than 50% from their June peak. SoftBank signals it may slow its AI spending after a $7 billion loss (bearish for semis?). “It is only natural that there is some discussion now about waiting and seeing how things play out for a little while,” CFO Yoshimitsu Goto said. SoftBank also denied Elon Musk’s claim that it was defaulting on turbine orders. The broader financial question is how much room SoftBank has if the value of its collateral falls. SoftBank invested $64.6 billion in OpenAI for a roughly 13% stake, valued at nearly $100 billion at the end of September. Alongside the $10 billion borrowed against that stake, SoftBank has around $25 billion in loans backed by Arm shares. If OpenAI’s valuation falls materially, SoftBank could have to post more collateral or repay some debt, depending on the loan terms. If Arm and other tech holdings fall at the same time, raising cash could get more expensive and asset sales could add pressure to tech stocks. How much flexibility would SoftBank have if its biggest tech holdings fell together? Source. The Macro Paper