Rebel’s Edge Notes

Global equity indices are trading higher today, with notable gains in the U.S., where the Nasdaq 100 Index rose by 1.8% and the S&P 500 Index increased by 0.8%. This positive sentiment follows a series of economic data releases that have exceeded expectations, including U.S. GDP growth for Q2 reported at an annualized rate of 1.5%, which is below the previous quarter’s growth but still reflects resilience amid geopolitical tensions.

Prediction $258M bet on Ethiopian PM? Seriously? 

What Was the KOSPI Index Telling Us About Chips & AI?: 1.2 million leveraged retail trading accounts in South Korea triggered margin calls as of July 13th, with an estimated 320,000–360,000 accounts fully liquidated, per Goldman Sachs. This means around 3.4% of the adult ⁠population in South Korea has received margin calls. The KOSPI is currently down another ~18% since July 13th. We believe that the total number of fully liquidated accounts is now above 500,000.

MSFT: Microsoft reported a strong Q4, exceeding revenue and earnings expectations, driven by its Intelligent Cloud segment.

The company’s robust performance, especially in Azure, positions it favorably compared to competitors like Meta, which faced challenges.

Investor Sentiment: Microsoft’s earnings have generated positive investor sentiment, with predictions favoring a strong market reaction compared to peers like Meta.

Cloud and AI Growth: The commercial contracted backlog for Microsoft surged 84% to $678 billion, enhancing revenue visibility and supporting future growth.

META Down 10% or $127B: Meta Platforms Meta fell sharply after its earnings release. While revenue was solid, earnings per share missed expectations and the company reiterated very high capital expenditure plans for AI infrastructure. Investors focused on margin pressure, elevated spending, and somewhat soft forward guidance, driving the pre-market selloff. Why Investors Sold The market largely ignored the solid top-line (ad) growth and focused on profitability and cash flow concerns: Massive AI spending — Meta is pouring enormous sums into data centers, servers, and chips. Investors are increasingly questioning when (or if) these investments will generate adequate returns. Free cash flow collapse — The near-wipeout of free cash flow raised red flags about the sustainability of the spending pace. Margin pressure — Expenses rose 55%, squeezing profitability. Guidance concerns — The continued high capex outlook and a somewhat soft forward revenue view disappointed those hoping for signs of spending moderation.

SIMO +24%: Silicon Motion Technology Corp reported strong second-quarter results, with net sales of $451 million, marking a 32% increase quarter-over-quarter and a 127% rise year-over-year. Earnings per diluted ADS were $3.99, significantly exceeding last year’s $0.49. This robust performance was attributed to strong sales in Embedded eMMC and UFS controllers, as well as SSD solutions for automotive and enterprise applications. The company also provided optimistic guidance for the third quarter, projecting revenue between $519 million and $541 million, surpassing consensus estimates. Following this news, shares are trading sharply higher in pre-market hours, reflecting positive market sentiment ahead of a scheduled conference call at 8:00 AM ET to discuss these results. Earlier in the session, shares pulled back from a session high but remain elevated since Wednesday’s close.