Hi Multis
Congratulations to the USA for its 250th birthday. It’s incredible what happened in those 250 years and how the country became the leader of the free world.
This is just the first article this week. There are multiple reasons for that.
The first is my jet lag after my week in Vail. On Monday and Tuesday especially, I really felt it, but even now, my biological clock is not reset yet.
Usually, it takes me just two days to recover, but the altitude in Vail probably plays a role. The village lies at more than 2,500 m (more than 8,200 ft) and the mountain even more than 3,500m (11,500 ft) and you definitely feel that. My Garmin watch warned me that during my first night, my oxygen level was just 85% and that I was either sick or at high altitude.
The second reason is that we had a belated birthday celebration for our daughter. Her birthday was three weeks ago, the day before the exams started, so we only had a small family celebration then (I wrote about that in the OOTW as well). Now, she had time to celebrate with her friends. We went to a trampoline park (the girls called it a “trampo park”) and they went swimming in a subtropical swimming pool with multiple glides and a wild river ride. There was a sleepover as well.
The first two reasons why this is the first article this week are personal, in other words, but the third is not. I went into research mode this week, and maybe (!) there’s a new pick crystallizing. It’s not sure yet, and if I decide to release a new pick, it may not be in the upcoming week. We’ll see. But I learned a lot this week and I enjoyed it.
I’ve also been working on an earnings review, but it’s not fully finished yet. I might have pushed it out yesterday if I really wanted it, but it didn’t feel finished enough yet. It needs some sanding, so to speak. So, probably, that’s an article I will publish tomorrow. At the same time, the Muse doesn’t come on command, so maybe it could be later this week.
It’s something I don’t often talk about, but I really try to make my articles as good as possible. I used to play guitar and sing and I composed my own songs. Some came in 15 minutes, some took months before they were finished. With articles, it’s less extreme (I have never written an article in 15 minutes and never worked on one for months in a row) but it’s a bit the same process. It’s only finished when it feels finished, not before.
Sometimes, I almost don’t change anything from the first draft, sometimes the rewriting takes more time than the writing. The Chapters Group is in the second category. The reason I don’t often talk about this is because it doesn’t matter for you. The article should always be good, full stop, whether I struggled with it or not.
That’s also why I still write the old-fashioned way. AI can’t make articles that are anywhere near satisfactory for me. It’s way too middle-of-the-road, faceless, without character. I also see it immediately in other people’s articles or X posts.
Let’s dive into this handwritten Overview Of The Week!
Memes Of The Week
Just one meme this week, shared by our Meme King, Flo.
Interesting Podcasts Or Books
This week, I listened to Chris Mayer, the author of the great book 100 Baggers talk about his new book The Investor’s Odyssey in Investing By The Books. You can find the episode here.
Because of this, I saw that the previous episode of Investing By The Books had Tom Russo on Common Stocks and Uncommon Profits, a fantastic investing book by Phil Fisher and one of the books that inspired me the most for Potential Multibaggers. I have not listened to that one yet, but it’s on my list for the upcoming week. You can find it here.
The markets in the past week
So, what did the indexes do this week? Let’s check.
As you can see, the Russell 2000 was down 0.46%, but the S&P 500 was up 1.76% and the Nasdaq 2.12%.
The Greed & Fear Index is still in FEAR but it’s up from EXTREME FEAR last week.
Quick Facts
1. SK Hynix On The Nasdaq
On Friday, SK Hynix will start trading on the Nasdaq under the ticker SKHY.
There’s a huge memory boom going on, as many of you will know and that is visible in the numbers. Bernstein estimates that SK Hynix could post a 90.9% gross margin in its DRAM business for Q2. Others see around 80%, so this is a surprising call. In Q1, this was already at a record 72%.
HBM remains the main thing, but conventional DRAM and NAND prices are also shooting up. And SK Hynix is a great player. If it had been on the American markets years ago, I would have bought it. I didn’t want it when it traded on the Korean market because of the lack of top-notch info and the costs associated with buying there.
Now, we will get an easier way to buy the stock, as SK Hynix is scheduled to begin trading on Nasdaq this Friday, July 10.
The offering could raise as much as $29.4 billion. SK Hynix plans to invest in new fabs and manufacturing equipment to add capacity.
I don’t think I will buy shares soon, but I’m happy it comes to a big market. And if I buy, I will let you know, of course.
2. AI Capex Slowing? Nope
There have been some voices saying that the AI capex boom is slowing.
Last week, I shared this.
And the average token pricing is down as well, albeit moderately.
But using cheaper models and lower token pricing has not resulted in slowing the AI infrastructure spending. Usage is growing much faster than prices are declining, according to JP Morgan.
JPMorgan estimates that token usage on OpenRouter jumped a whopping 70% month over month (!) in June, up 20x from last year. The message is simple: cheaper AI makes users use it much more.
Chinese and other low-cost models are winning a larger share of token volume, as already mentioned last week. In particular, developers, startups and AI agents use them. U.S. models accounted for only 35% of usage in June, down from 56% in April.
But the money tells a different story. Models from OpenAI, Anthropic, Google and xAI still collected more than 85% of total spending. Customers appear willing to pay higher prices for the strongest models when performance matters.
The hardware market shows the same thing. Rental prices for Nvidia’s A100, H100 and B200 all increased in June. The A100 rose 6.3% from May, while the H100 posted its seventh consecutive monthly increase. Even older GPUs remain valuable as companies match each workload with the most economical chip. This is pretty crazy if you know that the A100 was launched in May 2020 and the H100 in March 2022. That also means that Michael Burry’s call that 5 years of depreciation time was egregious is simply ignorant.
Memory is even crazier. JPMorgan says the price for 16-gigabit DDR5 has shot up 740% over the past year. AI servers need more memory capacity and bandwidth, while HBM production consumes manufacturing resources that might otherwise serve conventional DRAM. That’s why there’s so much demand for Micron, SK Hynix and Samsung.
Storage suppliers like SanDisk, Western Digital and Seagate also benefit from prices far above last year’s levels, but NAND has started to soften a little bit.
So, up to now, the consistently higher infrastructure still demands bigger and bigger demand from customers.
Below:
Why I think the Mag7 is set for a comeback nobody's pricing in
The CCP AI propaganda that's fooling millions of people on X right now
The study of 21,559 companies that proves AI won't kill jobs (and what it means for your career or company)
The Multibagger pick President Trump just bought (and what happened right after),
And of course much more.
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