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SUMMARY
Amit Kukreja provides a comprehensive analysis of the U.S. equity markets on May 18, focusing on semiconductor sector volatility, upcoming Nvidia earnings, and significant macroeconomic and geopolitical developments. The discussion covers 13F filings, AI and data center trends, the SpaceX IPO, bond yields, and the ongoing impact of U.S.-Iran negotiations on global markets.
MAIN POINTS
- Markets rebound in pre-market trading as macro concerns ease and semiconductors recover from overnight losses.
- Leopold's 13F filing reveals major new positions in Bitcoin miners and data center infrastructure, influencing pre-market moves.
- Leopold's portfolio shows heavy hedging with puts on core semiconductor and AI names, while maintaining bullish long positions.
- Reports emerge that the U.S. may lift some Iranian oil sanctions, causing oil prices to drop and markets to turn green.
- Warren Buffett's Berkshire Hathaway 13F shows new positions in Delta and Macy's, a significant increase in Google, and a full exit from Amazon.
- Iran agrees to a long-term nuclear freeze rather than full dismantlement, seeking sanctions relief and international mediation.
- Brad Gerstner's 13F reveals increased stakes in Nvidia, CoreWeave, Meta, Uber, and TSM, with notable sales of Snowflake and Bloom Energy.
- Howard Marks sells his Grab stake while Renaissance Technologies takes a large position, highlighting differing strategies among major investors.
- Stanley Druckenmiller exits Google and buys SanDisk, reflecting a shift toward memory and infrastructure plays in AI.
- Bill Gates Foundation sells all Microsoft shares, raising questions about tech sector sentiment and long-term positioning.
- ServiceNow rallies on positive analyst coverage, while space sector stocks surge on SpaceX IPO anticipation and satellite partnership news.
- SpaceX perpetual futures imply a $2.4 trillion valuation ahead of its anticipated IPO, fueling a rally in related space stocks.
- Evercore and RBC analysts debate S&P 500 targets, with bullish cases rooted in AI-driven productivity and earnings growth.
- Citadel's Ken Griffin expresses concern over AI's rapid displacement of high-skilled jobs, highlighting broader labor market implications.
- Discussion of automation's impact on blue-collar jobs, referencing Figure's warehouse robot outperforming human workers.
- Wall Street Journal contrasts CoreWeave and Nebius in the neocloud space, as major investors adjust positions in data center infrastructure.
- U.S.-China diplomatic talks focus on Taiwan, with limited progress on Iran; markets await confirmation of any Iran deal.
- Market opens with volatility: space stocks surge, semiconductors and software names diverge, and major indices fluctuate between gains and losses.
- Semiconductor stocks reverse pre-market gains, with selling pressure extending to memory and data center names.
- Investors debate entry points and conviction in AI and semiconductor stocks amid sharp pullbacks and sector rotation.
- Samsung executive warns of potential memory supply glut in 2025, raising concerns about future pricing power for memory producers.
- Market sell-off intensifies as bond yields rise and oil prices rebound, with software stocks showing relative strength.
- Debate over the resilience of legacy software companies versus the 'software is dead' narrative, as oversold names attract renewed interest.
- Warnings about euphoria and risk in robotics ETFs trading at extreme premiums to NAV, highlighting speculative excesses.
- Consumer mania over Swatch and Audemars Piguet watch collaboration prompts discussion on investor versus consumer psychology.
- Homebuilder sentiment improves slightly, but remains negative; global bond yields reach multi-year highs, pressuring equities.
- Trump posts on social media amid U.S.-Iran negotiations, but no official confirmation of a deal, keeping markets on edge.
- Options market activity surges ahead of Nvidia earnings, with traders positioning for significant post-earnings volatility.
- Seagate CEO signals reluctance to expand memory fab capacity, casting doubt on the sustainability of current memory demand narratives.
- Jensen Huang emphasizes the need for massive energy infrastructure upgrades to support AI growth, advocating for sustainable energy investment.
- FCC chairman discusses new spectrum deals enabling direct-to-cell satellite connectivity, with SpaceX, Amazon, and others competing for market share.
- Malta partners with OpenAI to provide ChatGPT Plus access to all citizens, reflecting AI's expanding global footprint.
- Nvidia earnings anticipated as the pivotal event for market direction, with analysts watching for guidance on AI capex and demand.
DETAILED ANALYSIS
The trading session on May 18 was marked by heightened volatility in semiconductor and technology stocks, driven by a combination of upcoming Nvidia earnings, shifting macroeconomic signals, and significant geopolitical developments. Pre-market trading saw a rebound in semiconductor names such as Nvidia, Micron, and Intel, as overnight macro concerns—primarily related to Middle East tensions and U.S. bond yields—appeared to ease. The S&P 500 flipped green, and Bitcoin stabilized above $77,000 after dipping below key levels the previous week.
A focal point of the morning was the release of several high-profile 13F filings, providing insight into the positioning of major institutional investors. Leopold’s 13F, highly anticipated due to his track record of outsized returns in data center and Bitcoin mining plays, revealed substantial new positions in CleanSpark, APLD, Hive, and T1 Energy, with a notable thematic tilt toward Bitcoin miners evolving into high-performance computing (HPC) infrastructure providers. Leopold also maintained significant holdings in CoreWeave, Bloom Energy, and traditional semiconductor names such as Intel, Micron, and TSMC, while employing extensive put options as hedges against his long positions.
The disclosure of these positions catalyzed sharp pre-market moves in several of the named stocks, particularly T1 Energy, which surged on the news.
Other major 13F filings provided additional context on institutional sentiment. Warren Buffett’s Berkshire Hathaway made rare moves into Delta Airlines and Macy’s, while significantly increasing its Google stake and fully exiting Amazon. Bill Ackman’s Pershing Square shifted from Google to Microsoft, citing relative valuation and growth prospects, while Brad Gerstner’s Altimeter Capital increased exposure to Nvidia, CoreWeave, Meta, Uber, and TSMC, but notably did not add to Micron despite public commentary on its prospects.
Stanley Druckenmiller exited Google in favor of SanDisk, reinforcing the trend of top investors seeking exposure to memory and infrastructure components of the AI value chain. Meanwhile, the Bill and Melinda Gates Foundation’s complete exit from Microsoft raised eyebrows, given the foundation’s long-standing position in the company and the timing near recent lows.
The morning’s macro narrative was dominated by reports that the U.S. might lift some Iranian oil sanctions as part of ongoing nuclear negotiations. Iranian state media suggested that the U.S. had accepted sanctions relief in exchange for a long-term freeze on Iran’s nuclear program, with mediation from Pakistan and Oman. These headlines drove oil prices down from $108 to $103 and contributed to the early rally in equities.
However, skepticism remained high, as neither the U.S. nor Iran provided official confirmation, and subsequent reports indicated that only partial asset unfreezing was under discussion. The lack of clarity and the potential for renewed military escalation kept markets on edge, with oil and bond yields rebounding later in the session.
The session also featured a notable divergence between semiconductor and software stocks. While semiconductors initially rallied, a sharp reversal occurred after the open, with heavy selling in memory and data center names such as Micron, SanDisk, and CoreWeave. This selloff was attributed to a combination of profit-taking after parabolic moves, concerns about the sustainability of memory pricing, and rising bond yields.
A key catalyst was commentary from a Samsung executive warning of potential memory oversupply and price declines in 2025, as well as Seagate’s CEO expressing reluctance to expand manufacturing capacity due to fears of excess supply. These statements cast doubt on the prevailing narrative of insatiable memory demand and raised questions about the long-term earnings power of memory producers.
In contrast, software stocks experienced a rotation into strength, with ServiceNow, Salesforce, Zeta, and MongoDB posting significant gains. This shift was supported by analyst upgrades, renewed confidence in the resilience of legacy software business models, and a reassessment of the “software is dead” narrative. Investors debated the merits of holding oversold software names versus chasing momentum in semiconductors, with some advocating for patience and conviction in fundamentally strong but temporarily out-of-favor companies.
The space sector attracted attention as perpetual futures trading for SpaceX implied a $2.4 trillion valuation ahead of its anticipated June 12 IPO. This event, combined with news of satellite partnerships involving AT&T, Verizon, T-Mobile, and AST SpaceMobile, fueled rallies in related stocks such as Rocket Lab, Redwire, and Lunar. The FCC chairman highlighted the transformative potential of direct-to-cell satellite connectivity, with SpaceX, Amazon (via Globalstar), and AST competing for leadership in the emerging market.
AI and automation remained central themes throughout the session. Citadel’s Ken Griffin voiced concern over AI’s rapid displacement of highly skilled finance professionals, while the deployment of Figure’s warehouse robot “Gary” underscored the accelerating impact of automation on both white- and blue-collar labor markets. The discussion touched on the ethical implications of human-like robots and the potential for widespread job displacement, reinforcing the bullish case for AI infrastructure but also highlighting societal challenges.
Jensen Huang, CEO of Nvidia, emphasized the urgent need for massive upgrades to global energy infrastructure to support the exponential growth in AI compute demand. He advocated for increased investment in sustainable energy, arguing that market forces now provide sufficient incentive without the need for government subsidies. This perspective aligned with the broader narrative that AI-driven productivity gains are underpinning equity market resilience despite rising bond yields and persistent inflation concerns.
Options market activity surged ahead of Nvidia’s earnings, with traders positioning for a significant post-earnings move. The options market priced in a 7% move, though historical reactions have been closer to 3%. Large volumes of deep-in-the-money call buying and active trading in zero-day contracts reflected heightened anticipation and risk appetite.
Geopolitical uncertainty remained a persistent overhang. Reports late in the session indicated that the U.S. had rejected Iran’s latest peace proposal, raising the risk of renewed military escalation and driving oil prices higher. Social media posts from former President Trump added to the uncertainty, as markets awaited official confirmation of any breakthrough in negotiations.
Consumer behavior and speculative excesses were also discussed, with the mania over the Swatch and Audemars Piguet watch collaboration serving as an example of investor versus consumer psychology. Warnings were issued about robotics ETFs trading at extreme premiums to net asset value, highlighting the risks of chasing thematic euphoria.
In summary, the session encapsulated the complex interplay of earnings-driven momentum, macroeconomic headwinds, sector rotation, and geopolitical risk. The upcoming Nvidia earnings report was widely viewed as the pivotal event that would determine the near-term trajectory of the semiconductor rally and broader market sentiment. Investors were urged to assess conviction, manage risk, and remain vigilant amid rapidly shifting narratives and market conditions.
LINKS
- Amit Kukreja's Twitter/X profile for market commentary and updates.
- Amit's Deep Dives Substack for in-depth stock and sector analysis.
- Link to sign up for the Singapore meetup event.