CPI READ LIVE, NBIS EARNINGS, OIL UP | MARKET OPEN

SUMMARY

Amit Kukreja provides a comprehensive analysis of the August 12th market open, focusing on the latest CPI data, robust AI infrastructure earnings, and the impact of rising oil prices. The session highlights renewed momentum in semiconductor and AI-related stocks, macroeconomic developments, and evolving investment strategies amid shifting market sentiment.

MAIN POINTS

• Pre-market momentum builds around AI infrastructure stocks ahead of CPI release. [1:00]
• Consensus for CPI is 3.4%, with market hopes for a lower print to spur a rally. [3:01]
• CPI comes in at 3.4%, exactly matching expectations, leading to a flat market reaction. [8:01]
• AI infrastructure stocks like Nebius and Coreweave surge in pre-market trading after strong earnings. [11:00]
• Nebius reports 454% year-over-year revenue growth and raises contracted power guidance. [14:01]
• Coreweave posts 112% revenue growth and highlights expanding operating leverage and backlog. [18:00]
• Coreweave signs a three-year contract for older Nvidia A100 GPUs, reflecting intense compute demand. [20:03]
• AI infrastructure stocks rebound but remain below all-time highs, with renewed optimism post-earnings. [23:01]
• Macro headlines include stalled Iran negotiations and rising oil prices, influencing market sentiment. [25:01]
• Momentum and SMCI deliver strong earnings, with SMCI doubling gross margins and raising revenue guidance. [28:00]
• Short interest remains high in AI infrastructure stocks, with ongoing debate over capital expenditure and profitability. [31:00]
• Three new swing trades are initiated: Intel at $99.60, Bloom Energy at $217.78, and DRAM at $53.28. [33:01]
• South Korean memory stocks and the broader AI infrastructure trade are seen as attractive after significant pullbacks. [36:01]
• Citadel's report suggests systematic buyers are returning to AI names after a July liquidation event. [38:01]
• Position sizing strategy allows for doubling down on trades if a 10-15% drawdown occurs. [40:01]
• The $500 billion AI infrastructure financing led by Nvidia's Jensen Huang is seen as a major catalyst for sector growth. [42:02]
• Momentum is expected to return to AI infrastructure, with trades positioned for a September-October window. [44:00]
• Software stocks show weakness as semiconductors rally, suggesting a rotation in market leadership. [46:00]
• AI infrastructure names like Nebius and Coreweave are favored over software and hyperscalers for near-term momentum. [48:01]
• The AI buildout is compared to an industrial revolution, with massive capital flows and sector-wide upgrades. [51:00]
• Coreweave CEO highlights extended GPU lifespans and surging demand for compute in a CNBC interview. [53:02]
• Fed rate hike probabilities drop following the CPI report, reducing macroeconomic headwinds for high-beta stocks. [56:00]
• Bank of America announces a $250 billion infrastructure initiative, and Norway's sovereign wealth fund invests in SpaceX. [59:01]
• Discussion of Nvidia's vendor financing strategy and the concentration of AI demand among leading labs. [1:02:00]
• Despite concerns about demand concentration, broad-based growth in AI and cloud services is observed. [1:06:00]
• Market opens with semiconductors and AI infrastructure stocks leading gains, while software lags. [1:08:02]
• Insider selling in Coreweave and Nebius is noted, but strong fundamentals continue to attract buyers. [1:16:00]
• Nebius breaks through $230, intensifying the short squeeze and highlighting institutional interest. [1:27:00]
• Reports emerge of a potential capital gains tax cut proposal by President Trump, with possible bullish implications for equities. [1:29:02]
• AI adoption is illustrated through personal anecdotes, reflecting rapid consumer uptake of generative AI tools. [1:40:00]
• Leopold invests in a Japanese MLCC manufacturer, signaling interest in niche AI hardware supply chains. [1:51:06]
• Options flow surges in high-beta names like Nvidia and Oracle, indicating renewed risk appetite. [1:54:02]
• Analysts debate the sustainability of AI infrastructure returns and Nvidia's $500 billion financing pool. [2:05:00]
• Momentum CEO reports unprecedented demand for optical components, driven by hyperscaler investments. [2:08:00]
• SoftBank and OpenAI discuss the lag between AI investment and productivity gains, with near-term inflationary effects. [2:37:02]
• Michael Burry's persistent short positions are analyzed in the context of his past successes and market psychology. [2:45:05]
• Bitwise CEO discusses the evolving landscape of Bitcoin storage and the potential for institutional adoption. [2:55:01]
• The session closes with a discussion of market volatility, new product launches, and upcoming events. [3:06:05]

DETAILED ANALYSIS

The August 12th market session opened with heightened anticipation around the Consumer Price Index (CPI) release, which was expected to set the tone for both equity and macro sentiment. The CPI for July came in exactly at consensus—3.4% year-over-year and 0.1% month-over-month—matching expectations across all key components, including core inflation at 2.5%. This in-line result led to a muted market reaction, with neither a strong rally nor a significant selloff, but it did provide a stable backdrop for risk assets, especially those in the technology and AI infrastructure sectors.

The session was marked by a pronounced rebound in AI infrastructure stocks, particularly Nebius, Coreweave, and SMCI, all of which reported robust earnings. Nebius posted a staggering 454% year-over-year revenue increase, with annual recurring revenue (ARR) guidance raised to $3 billion and contracted power guidance increased to 5 gigawatts by the end of 2026. This expansion in contracted power, up 5x since August 2025, was interpreted as a sign of sustained demand, with management emphasizing supply constraints rather than demand limitations.

The company highlighted that it could sell its entire 2027 capacity at current terms but is strategically retaining some to capture higher value from immediate customer needs. This approach aligns with the broader narrative of compute scarcity driving the AI infrastructure trade.

Coreweave also delivered impressive results, with revenue up 112% year-over-year and adjusted EBITDA margins expanding from 55% to 59%. The company reported a revenue backlog of $104 billion, with an additional $25 billion in new customer commitments signed in early Q3, effectively raising the backlog to $130 billion. Coreweave's active power reached 1.5 gigawatts, with contracted power at 3.7 gigawatts.

Notably, the company signed a three-year contract for Nvidia A100 GPUs—hardware introduced in 2020—extending their useful life through 2029. This deal underscores the acute demand for compute resources, even for older-generation GPUs, and challenges bearish arguments centered on rapid depreciation and obsolescence.

The renewed momentum in AI infrastructure was further fueled by Nvidia CEO Jensen Huang's recent announcement of a $500 billion financing initiative to support the buildout of AI data centers and related infrastructure. This massive capital commitment, backed by major financial institutions, is designed to address supply bottlenecks and facilitate the deployment of GPUs, land, power, and energy resources necessary for the next phase of AI adoption. The financing is structured to ensure that capital flows directly into Nvidia's ecosystem, reinforcing its dominant position in the market while providing a lifeline to companies like Nebius and Coreweave that face high borrowing costs.

The broader semiconductor sector also benefited from these developments. SMCI reported a doubling of gross margins to 17% and raised its revenue guidance by $18 billion, signaling strong demand for server racks and related hardware. The positive earnings from AI infrastructure and semiconductor companies triggered a sector-wide rally, with memory names like Micron, SK Hynix, and Samsung also participating.

The memory trade, particularly in DRAM, was highlighted as a key area of opportunity, given ongoing supply constraints and the cyclical nature of the industry.

Amit Kukreja disclosed three new swing trades initiated in the overnight markets: Intel at $99.60, Bloom Energy at $217.78, and DRAM at $53.28. The rationale for these trades included significant pullbacks from recent highs (30-50%), attractive entry points following technical recoveries, and the expectation of renewed systematic buying as indicated by a Citadel report. The strategy allows for doubling down on positions in the event of a 10-15% drawdown, reflecting a disciplined approach to risk management.

These trades are framed as tactical rather than long-term investments, with a holding window targeting the end of September to early October, contingent on macro conditions and market sentiment.

Macro headlines during the session included ongoing geopolitical tensions with Iran, which contributed to elevated oil prices. Senior Iranian sources indicated no progress in negotiations, while U.S. political figures offered conflicting assessments of the likelihood of a deal. Oil remained above $83 per barrel, with the potential for further declines if a diplomatic resolution is reached.

The interplay between energy prices and inflation was a recurring theme, as lower oil prices would provide additional relief to headline CPI and support further equity gains.

The session also addressed the rotation from software and hyperscaler stocks into semiconductors and AI infrastructure. Software names, which had rallied strongly in previous weeks, showed weakness as capital flowed back into hardware and infrastructure plays. This rotation was seen as a healthy correction, providing opportunities for investors to accumulate software positions at more attractive valuations if the trend persists.

Institutional flows and options activity were notable, with significant call buying observed in high-beta names such as Nvidia, Oracle, and Intel. The options market reflected renewed risk appetite and the expectation of continued momentum in the semiconductor sector. The discussion also touched on insider selling in Coreweave and Nebius, with the view that strong fundamentals and institutional demand would absorb supply and support higher prices.

The broader context for AI infrastructure was framed as an industrial revolution, with massive capital inflows, technological innovation, and a growing ecosystem of suppliers and service providers. The session referenced Bank of America's $250 billion infrastructure initiative and Norway's sovereign wealth fund's $1.2 billion investment in SpaceX as evidence of institutional conviction in the sector's long-term potential.

On the macroeconomic front, the drop in Fed rate hike probabilities following the CPI report reduced headwinds for high-beta stocks, particularly those in the technology and AI sectors. The discussion also covered the potential for a capital gains tax cut proposed by President Trump, which, if enacted, would be bullish for equities by increasing after-tax returns and incentivizing further investment.

Personal anecdotes illustrated the rapid adoption of generative AI tools like ChatGPT and Gemini, highlighting the technology's penetration into everyday life and its potential to drive future productivity gains. The lag between AI investment and realized productivity improvements was acknowledged, with the current phase characterized by inflationary pressures due to surging demand for compute and related infrastructure.

The session concluded with a review of market volatility, new product launches (including foldable phones from Google and Apple), and upcoming events such as earnings releases and podcasts. The overall tone was cautiously optimistic, with an emphasis on disciplined trading, sector rotation, and the need to monitor macro and micro developments for sustained momentum.

In summary, the August 12th market open was defined by a confluence of factors: stable inflation data, strong AI infrastructure earnings, robust institutional flows, and evolving macroeconomic and geopolitical dynamics. The renewed strength in semiconductors and AI-related stocks signaled a potential inflection point, with investors positioning for further gains amid ongoing sector rotation and capital deployment.

LINKS

• Amit Kukreja's Twitter/X profile for market commentary and updates.
• Amit's Deep Dives Substack for in-depth stock and market analysis.
• Free news terminal and market data platform referenced during the session.

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