Mostly equity markets, real estate, and venture capital commentary. Not investment advice.
Nice France, Tucson & DC
Joined December 2023
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👉 When everyone else is pessimistic, be greedy.
My greatest success in life is that I’ve always been driven by an optimism that was downright oblivious to everyone’s opinion. I built and sold three tech startups in the wake of the dot-com collapse, and I built my real estate empire in the wake of the 2008 crash. No one ever thought the ideas were great or the timing was right, but I did not care.
People who show up to sign a lease agreement without the security deposit or first month’s rent. Is this some form of window shopping?
You fill out an application, get approved, confirm you have the money when we specifically ask, schedule the lease signing, and then go, “Oh damn, sorry, we actually don’t have the money.” 😆
AI operating fundamentals remain strong, but the financial and regulatory environment has deteriorated sharply. Are we still going to need more semiconductors and compute over the coming decades? Emphatically, yes.
Landlords, remember you are a lender of last resort, making junk loans to people banks won’t touch.
If you wouldn’t lease them a car, why would you lease them a house?
Don't get confused because they call you a landlord, you are a junk debt lender. Act like one.
Wrapped up another loan today. Rate went from 6.9% on the last deal to 7.04% today, despite the 10-year Treasury dropping about 5 basis points. You’d expect rates to follow. Apparently, lenders saw an opportunity to pad their spreads instead.
Think I’ll giddyup on some portfolio refis while rates are still hanging around in the 6s. If inflation falls hard enough and rates drop, the economy could pull a 1979-style full send and send inflation roaring.
No matter how you read this election, there’s one thing no political party can survive, and that’s rising gas prices and inflation. Americans hate, and I mean HATE, inflation.
Right now, there’s a lot of fear in people’s posts as this regime change takes place, and you can see that same uncertainty in the markets as they whipsaw around as it finds its new bearing.
Remember smooth seas never made a skilled sailor. Calm your soul, and focus on the fundamentals of being a good investor.
As the direction becomes clearer, price action should begin to settle down. Look past the political fearmongering and focus on the earnings and growth, it will lead you in the right direction.
The labor market is showing signs of life, and the gains aren’t random.
By industry
Professional & business services +106K
State/local government +104K
Manufacturing +54K
Construction +36K
By region
West +244K
Midwest +90K
Northeast +49K
South −49K
Quits also climbed to 3.37 million, suggesting workers are gaining confidence.
This is still a low-fire, slow-hire labor market, but hiring is improving in key sectors. The recovery isn’t evenly distributed, yet the underlying mechanics are moving in the right direction.
The 300%+ year-over-year revenue growth in memory is extraordinary, but investors need to understand what they’re actually looking at.
SK hynix is reporting roughly 328% YoY growth, while Micron is approaching 379%. These numbers reflect a massive shift toward high-bandwidth memory (HBM), rising DRAM prices, and constrained supply.
But 300% growth isn’t the new normal. It’s the mathematical result of a dramatic pricing and product-mix inflection against a much smaller revenue base.
Sequential growth tells a more useful story. Revenue is climbing roughly 30% quarter over quarter, while actual bit growth is substantially lower. Much of the expansion is coming from pricing and higher-value products rather than proportional increases in physical output.
Meanwhile, cloud demand remains exceptionally strong. Google Cloud growth has accelerated across five consecutive quarters, reaching 103% YoY. AWS and Google Cloud are already generating operating margins in the mid-to-high 30s.
The free cash flow pressure we’re seeing is largely the result of enormous upfront infrastructure investments, not an absence of operating profitability.
Memory manufacturers also have substantial forward visibility. Customer requests exceed available HBM supply, and long-term agreements are increasingly covering 2027 and 2028 production.
Here’s what I’m watching going forward.
Cloud revenue growth, GPU utilization and rental pricing, memory contract prices, sequential bit growth, hyperscaler capital spending, and the conversion of contracted backlogs into actual revenue.
My expectation is that growth percentages will normalize considerably as the comparison base rises, even if absolute demand and revenue continue expanding.
That’s not necessarily a slowdown in the underlying AI business. It’s simply how exponential-looking growth transitions into a much larger, more mature industry.
Don’t confuse a declining growth rate with declining demand.
🚨 NOMURA: THE MARKET MAY BE MISREADING THE ENTIRE AI DATA CENTER BOOM.
Big Tech is spending hundreds of billions on AI infrastructure. Free cash flow is under pressure. Investors are worried the AI boom isn't profitable.
But Nomura argues something very different:
AI infrastructure is already highly profitable. The cash flows simply haven't caught up with the investment cycle.
Here's the breakdown 🧵👇
1/ The profitability numbers tell a different story.
According to Nomura's November 2 report:
• AWS revenue: $46B, +39% YoY
• AWS operating margin: 38.7%
• Google Cloud revenue: $30.7B, +103% YoY
• Google Cloud operating margin: 36.2%
• Azure growth: +48%
These are not the numbers of an industry struggling to generate operating profits.
2/ The real issue is timing, not necessarily profitability.
Big Tech pays for data centers, GPUs, networking and memory upfront.
Revenue and cash generation arrive over subsequent years.
That creates a classic free-cash-flow J-curve:
CAPEX accelerates → FCF deteriorates → Infrastructure generates revenue → Investment growth moderates → FCF recovers.
3/ Nomura expects operating income to surge before free cash flow.
Its illustrative forecasts suggest operating-income growth could peak around 2029, while FCF growth accelerates later.
That distinction matters enormously for investors valuing AI infrastructure businesses.
4/ Why can't hyperscalers simply stop spending?
Because AI increasingly threatens their existing businesses.
Search, advertising, shopping, software and cloud services are being reshaped by AI agents.
Companies that underinvest today risk surrendering customers, data and market share tomorrow.
5/ Demand may not be the primary constraint. Capacity is.
Nomura cites enormous contracted cloud backlogs:
• Google Cloud: $560.8B
• AWS: ~$496B
• Microsoft commercial RPO: $677B
These figures have different reporting definitions, but collectively illustrate substantial contracted demand.
6/ Big Tech has financing alternatives to cutting CAPEX.
Nomura identifies four paths:
① Accelerate investment
② Freeze CAPEX
③ Use joint ventures and operating leases
④ Monetize contracted future cash flows
Its preferred expectation is continued investment supported by increasingly sophisticated financing structures.
7/ Oracle offers a real-world example.
Nomura highlights Oracle's combination of long-term leases, project financing, customer prepayments and customer-provided hardware.
The broader message: hyperscalers can restructure who finances infrastructure without necessarily reducing how much infrastructure gets built.
8/ This distinction is critical for semiconductors and memory.
Negative hyperscaler FCF does not automatically imply collapsing demand for GPUs, DRAM, HBM or other data-center components.
If spending continues through financing structures, semiconductor demand can remain resilient even while hyperscalers optimize their balance sheets.
9/ What could invalidate the thesis?
A genuine compute oversupply.
Watch:
• Cloud revenue growth
• GPU rental pricing
• Contracted backlog growth
• Data-center utilization
• Memory supply commitments
• Hyperscaler investment guidance
These are more useful indicators than negative FCF alone.
10/ The investment takeaway:
The key question is not simply:
"Why is Big Tech burning so much cash?"
It is:
"Will the infrastructure being built today generate enough durable cash flow to justify its cost of capital?"
Nomura is optimistic.
But the answer ultimately depends on pricing, utilization, investment discipline and the durability of AI demand.
The AI infrastructure cycle may be a cash-flow timing problem rather than a profitability crisis.
$NVDA $MU $GOOGL $MSFT $AMZN $META $ORCL
After nearly three years of declining rents, the U.S. rental market may finally be finding its bottom.
Several important indicators are beginning to turn:
Apartment List reports annual rent growth has turned positive at +0.1% for the first time in over three years.
Multifamily vacancy has declined from approximately 7.3% to 7.0%, suggesting excess inventory is finally being absorbed.
Single-family rents are outperforming multifamily, with Cotality reporting 1.5% annual growth and six consecutive months of acceleration.
What we’re seeing is potentially the beginning of a new rental cycle. The enormous wave of multifamily construction that pressured rents over the past several years is gradually being absorbed.
If vacancy continues declining and new construction slows, landlords could regain pricing power heading into 2027 and 2028.
