🚨Brutal rotation session on Wall Street

The Nasdaq has swung nearly 5% in twelve hours, and under the hood, it’s even more violent

Some explanations:

1. The market is pricing in a world where fewer data centers are built

A/ Democrats take Congress, and in Texas Hinojosa defeats Abbott with a clear platform: stop new data centers. Texas accounts for 27% of planned U.S. gigawatts, according to Wells Fargo, and Goldman estimates that moratoriums could affect around 45% of planned expansion

B/ Therefore, already connected capacity becomes the scarce resource, and belongs to the hyperscalers

>$AMZN +7.2%, $MSFT +6.6%, $GOOGL +4.1%

Around $750 billion in added market capitalization for Big Tech

2. Semiconductors are pricing in the end of the build cycle

The SOX falls more than 3%, SMH breaks 500 intraday

$CRDO -9.9%, $CRWV -9.5%, $COHR -7.4%, $MU -5.6%

$NVDA limits the drop to -1.3%, $AMD erases the +9% it gained on earnings

The street's reasoning is simple: if projects slow down, capex slows down, hyperscalers' free cash flow rises, and those who sell them the shovels receive fewer orders. Hyperscalers are spending more than $740 billion this year versus about $400 billion last year, and the market is beginning to price in that it won't rise any further

Part of the AI infra is already trading below 10x 2027 earnings

3. Meanwhile, deals continue

Google backs about $19 billion in leases between TeraWulf and Anthropic, for 401 MW delivered between late 2027 and Q2 2028

These contracts are signed and financed, with deliveries in 2027. The demand is still there; what is becoming scarce is the capacity to build, NOT demand, which remains my key signal

4. War and oil

JD Vance writes it in black and white, "The reason we lost is the war", and Trump acknowledges it. The market infers that Trump has every reason to seek an agreement with Iran

>Brent -8.6% to 94.70 at 12h

>U.S. 10-year at 4.89%, -6 bp

>VIX -19%

Less oil, less expected inflation, fewer bets on a Fed hike, and that is what is pushing the indexes higher, with the Dow at +3% and the S&P at +1.8%.

No agreement is announced for the moment and it seems that Tehran is holding a hard line

Add a momentum factor liquidation and short covering in heavily shorted stocks, and long/short funds have a very bad day; in fact, they had taken long positions in AI "Winners" to short the "Losers", except that today the situation has strongly reversed

In short, for me the market is selling 2028 projects when those for 2027 are already launched and financed.

The discount in semiconductors becomes extreme, and the selection will be between those that depend on new projects and those that have customers committed for several years