Advanced Micro Devices (AMD) has secured a massive, multi-billion dollar AI chip deal with Meta, guaranteeing a significant revenue stream for the next five years. NVIDIA's (NVDA) upcoming earnings report is a critical market event, with options markets pricing in a potential 10% move for the stock. The software-as-a-service (SaaS) sector is facing a major selloff due to fears that AI will disrupt established business models. Investors should monitor Bitcoin (BTC), as a sustained break below the critical $60,200 support level could signal a deeper correction for the crypto market. Finally, Hims & Hers Health (HIMS) stock dropped significantly after guiding for much slower growth and disclosing an SEC investigation.

Advanced Micro Devices (AMD)

• AMD stock was up 10% in the pre-market after announcing a five-year, multi-billion dollar deal with Meta (META).
• Meta will buy AMD chips and computers designed for AI models, starting in the second half of 2026. The deal is for six gigawatts of compute.
• As part of the deal, Meta will receive warrants to buy 160 million AMD shares, which could represent about 10% of the company. This is tied to AMD meeting specific milestones.
• This deal structure is almost identical to a previous deal AMD made with OpenAI, which also involved six gigawatts and warrants for 160 million shares.
• The speaker questions the deal's structure, suggesting it may not come from a "position of strength" since AMD is giving up significant equity (potentially 20% of the company between the Meta and OpenAI deals) to secure contracts.
  • The speaker speculates this could be a hedge against the OpenAI deal, as Meta is a more financially stable partner.
• CEO Lisa Su defended the deal, calling it a "win-win" and one of the most "transformational deals" for the company. She stated it's about creating a deep strategic partnership to innovate faster and that every gigawatt of compute is "double-digit billions of revenue" for AMD.
• The deal guarantees a significant revenue stream, estimated at $70 to $80 billion over five years, which helps justify AMD's valuation and supports Lisa Su's goal of 35% compound annual growth rate (CAGR).

Takeaways

• The deal with Meta provides a massive, guaranteed revenue stream for AMD for the next five years, significantly de-risking its future growth prospects.
• Investors should be aware of the potential shareholder dilution. The warrants given to Meta and OpenAI could eventually dilute existing shareholders by up to 20%. However, this is performance-based and tied to revenue generation.
• The market's positive initial reaction faded slightly, with the stock struggling to hold its full 10% gain. This suggests some investor skepticism about the equity giveaway, despite the large revenue guarantee.
• This reinforces the theme that major tech companies ("hyperscalers") are diversifying their AI chip suppliers beyond just NVIDIA.

NVIDIA (NVDA)

• NVIDIA earnings were scheduled for the next day and are seen as a major event that could "dictate the trajectory of the market."
• Historically, over the past 18 quarters, NVDA stock has moved an average of 3.9% to the upside after earnings. The last significant move was a 16% jump in February 2024.
• The implied volatility for the upcoming earnings was 10%, meaning the market was expecting a potential 10% move in either direction.
• The stock initially sold off slightly on the AMD/Meta deal news but recovered. The speaker believes this is an overreaction, similar to when AMD sold off on a previous NVIDIA/Meta deal.
• The overall sentiment is that the massive demand for AI compute is a positive for both NVIDIA and AMD. It's difficult to be bearish on either company if you are bullish on the long-term AI trend.
• The speaker notes that if NVIDIA can break above its previous high of $212, it would be a very bullish sign, refuting the idea that the stock has already topped out.

Takeaways

• NVIDIA's upcoming earnings are a critical catalyst for the entire market, not just the tech sector.
• While the stock is a clear leader in AI, investors should be prepared for significant volatility around the earnings report, with the market pricing in a potential 10% move.
• The growing AI "pie" is large enough to support multiple winners. A win for AMD is not necessarily a loss for NVIDIA, as hyperscalers like Meta need to source chips from multiple vendors.

SaaS (Software-as-a-Service) Sector & AI Disruption

• The SaaS sector experienced a major selloff, described as getting "absolutely took it on the chin," driven by a viral article from Citrini and advancements from AI company Anthropic.
• The core fear is that AI agents (like Anthropic's Claude) will "disintermediate" many software companies. The theory is that users will interact with an AI agent to perform tasks (e.g., "order food," "send a payment") rather than using individual apps like DoorDash (DASH) or PayPal (PYPL).
• This AI anxiety caused sharp drops in many well-known software and tech stocks, including Microsoft (-4%), AppLovin (-10%), CrowdStrike (-10%), Salesforce, and Twilio.
• IBM (IBM) had its worst drop since 2000, falling 14% after Anthropic announced its AI, Claude, could streamline COBOL, a legacy programming language heavily used in banking and tied to IBM's mainframe business.
• There is a counter-argument that this fear is overblown. A "big tech" employee commented that AI's current capabilities are "nowhere near the current hype" and that investors have "simplistic models" of how AI works.
• The podcast highlights a potential market bottom for SaaS, with names like Salesforce (CRM), ServiceNow (NOW), and Figma showing a strong rebound. However, the speaker is skeptical, questioning if the rebound is genuine or an "algo-driven head fake."

Takeaways

• The market is currently grappling with a major narrative shift: AI as a disruptor that could commoditize existing software business models. This is a significant risk factor for the entire SaaS sector.
• Investors in SaaS companies should evaluate each company's "moat." Does the company have proprietary data, a strong network effect, or a service that is difficult for a generalized AI agent to replicate?
• Some software companies are partnering with AI leaders (e.g., Intuit with Anthropic) to integrate AI rather than be replaced by it. This could be a key survival strategy.
• The SaaS sector is experiencing extreme volatility. While a bottom may be forming after the steep selloff, investors should be cautious of "bull traps" and false recoveries.

Bitcoin (BTC) & Cryptocurrencies

• Bitcoin was trading around $62,912, showing significant weakness and approaching key support levels.
• The critical low to watch is $60,200. A break below this level would confirm a "legit, legit bear market" for crypto.
• For Ethereum (ETH), the key support level to watch is $17.50.
• Institutional flows into Bitcoin ETFs have reversed, with "hundreds of millions of dollars per day" in outflows, creating heavy selling pressure.
• Crypto-related stocks like MicroStrategy (MSTR), Coinbase (COIN), and Robinhood (HOOD) have been "wrecked" as a result of the downturn in BTC and ETH.
• Meta is reportedly partnering with Coinbase to launch a stablecoin for payments across its platforms (Facebook, Instagram, WhatsApp), which could bring crypto back into the Meta ecosystem.

Takeaways

• The short-term outlook for Bitcoin and the broader crypto market is bearish. The price is testing critical support levels, and institutional demand has dried up.
• Investors should monitor the $60,200 level for BTC. A sustained break below this could lead to a much deeper correction, with the speaker mentioning a potential move into the $50,000s.
• The performance of crypto proxy stocks like COIN and MSTR will remain tightly correlated to the price of Bitcoin.

Palantir (PLTR)

• The speaker addressed fears about Palantir's moat in the face of AI disruption.
• The sentiment is that Palantir is not in the same vulnerable bucket as a simple CRM. Its business is about the complex implementation and orchestration of data and AI within large enterprises.
• The speaker argues that Palantir is actually "setting the standard" for how to implement AI in the enterprise, and that competitors like OpenAI are trying to copy its model (e.g., using "forward deployed engineers").
• Despite this fundamental strength, PLTR is still being treated as a SaaS stock and is being sold off by algorithms along with the rest of the sector. It is the second-largest holding in the IGV software ETF.

Takeaways

• Palantir may be more resilient to the AI disruption narrative than other software companies because its core business is about managing the complexity of AI implementation, not just providing a simple software tool.
• However, in the short term, its stock performance is likely to remain correlated with the broader SaaS sector (IGV ETF), making it vulnerable to macro-driven selloffs regardless of its specific fundamentals.

Other Investment Mentions

• Intuit (INTU): Announced a multi-year partnership with Anthropic to build custom AI agents for finance and tax. The stock initially popped 5% but faded. This partnership is a key example of a software company trying to leverage AI as a tailwind rather than be disrupted by it.
• Sandisk (SNDK): Prominent short-seller Citron Research announced a short position. Their thesis is that Sandisk sells a commodity (memory) and does not have a defensible moat like NVIDIA. They argue the memory cycle is peaking and competition from Samsung will hurt margins. The stock fell 3% on the news.
• Amazon (AMZN): Announced a new $12 billion investment in three data center campuses in Louisiana, reinforcing the theme of massive capital expenditure by hyperscalers to build out AI infrastructure.
• Hims & Hers Health (HIMS): The stock dropped over 10% due to a significant growth slowdown (from 60% to a guided 22%) and very low subscriber growth. The company also disclosed an SEC investigation into its compounded drugs, adding to the negative sentiment.
• Apple (AAPL): Positioned as a "safety" stock during the market turmoil. A significant rumor surfaced that the CIA briefed CEO Tim Cook that China could attack Taiwan by 2027, a major geopolitical risk for the company and the global economy.