To The Moon

$Dow Jones(.DJI)$ fell 419 points on Tuesday, or 0.79 per cent, to 52,766.88; $S&P 500(.SPX)$ lost 0.71 per cent to 7,631.47; $Invesco QQQ(QQQ)$ fell 1.27 per cent. The selling started in the Middle East: US forces struck Iranian targets near the Strait of Hormuz, and Brent crude jumped about 5 per cent on the day to around US$95, a level reports call its highest since late July.

When oil goes up, the inflation maths has to be redone. The ten-year Treasury yield closed at 4.78 per cent, which reports put as the highest since January 2025; the thirty-year reached 5.27 per cent. Futures at the CME now put the odds of a rate rise this month at 68 per cent.

A yield is the discount rate you use to turn money you get later into money you have today. $Microsoft(MSFT)$ closed 1.24 per cent lower at US$501.02, and the explanation given that day was blunt: US$41 billion of capital expenditure running into a 4.8 per cent yield. A data centre costs money now and earns it later, so when the discount rate rises, that later money is worth less once it is brought back to today.

The same day, BofA lifted its Microsoft target from US$500 to US$600, citing that same US$41 billion — not what it costs, but what it turns into as cloud revenue later.

$NVIDIA(NVDA)$ fell 1.51 per cent to US$217.44. Its customers had news of their own that day: Texas froze new grid connections for data centres to audit a 700-gigawatt queue, and reports say a good many of those applications overstate how much power they would draw.

Elsewhere, Anthropic signed a US$35 billion cloud contract with Lambda, a company Nvidia has invested in. Barron's put the question straight in its headline: is this money going round among friends?

$Dell Technologies Inc.(DELL)$ closed the regular session down 6.80 per cent at US$425.00, then rose 8.01 per cent to US$459.03 after hours once the results landed. Earnings came in at US$7.04 a share, more than forty per cent above expectations, on revenue of about US$47 billion, some 4.6 per cent above. The company raised its full-year revenue guidance by US$25 billion, pointing to AI server revenue doubling and record orders.

Options going into the results were priced for a move of about ten per cent; the stock moved 8 per cent. Deutsche Bank started coverage the same day at Hold, with a US$480 target.

Almost the only large-cap technology name in the green was $Apple(AAPL)$, up 2.61 per cent at US$325.13. The same day, John Ternus formally became chief executive, with Tim Cook moving to executive chair. In his first memo to staff, Ternus described the 9 September event as "phenomenal".

That event falls on next Wednesday, his ninth day in the job. Apple has not said what is coming. The supply chain has it launching three high-end models and nothing else: the two iPhone 18 Pro models, plus the first foldable iPhone — 7.8 inches open, 5.5 inches closed, and a body too thin to hold the Face ID module, so face unlock goes and the fingerprint reader moves back to the side. The standard model waits until next spring. The analyst Ming-Chi Kuo puts the price at US$2,299 to US$2,499.

J.P. Morgan has done the sums on that machine: five million units a year at an average of US$2,200 is about US$11 billion, three to five per cent of annual iPhone revenue. Apple has worked on this for years and the return is a rounding error. What it really moves is the other end: it would carry the average iPhone above US$1,000 for the first time.

Going on stage is not the same as going on sale. Reports say Foxconn is still working on the hinge and the durability of the screen, and the phone may go on stage in September but only ship at the end of the year.

The company Ternus takes over is worth US$4.75 trillion on 37 times earnings. Rosenblatt kept its Neutral rating that day and raised its target from US$300 to US$303, still below the price. One analyst said his first job is winning back the people who have left, not this event.

Two more tests remain this week. ADP lands on Wednesday and payrolls on Friday, against 23,000 jobs lost in July and a market expectation of 55,000 added in August.

The whole semiconductor sector is waiting on Broadcom's results after Wednesday's close. $Marvell Technology(MRVL)$ closed 0.60 per cent lower on Tuesday, and $Broadcom(AVGO)$ itself barely moved, down 0.18 per cent at US$369.68 and still 25 per cent below its 52-week high. The consensus is US$3.22 a share.

Its AI chip sales are up 143 per cent from a year earlier, but the next step in that business is not only selling chips. Reports in late August said Broadcom plans to borrow up to US$80 billion through newly created special purpose vehicles, build the compute centres itself, and then lease that capacity to customers such as Anthropic — rent on top of the chip revenue.

None of that debt sits on Broadcom's own books. But the senior tranche gets an investment-grade rating, and a cheaper coupon along with it, because Broadcom stands behind that tranche: if a customer cannot pay the rent later, the bill comes back to Broadcom. Bloomberg noted a jump in its credit risk measures at the time.

$Dell Technologies Inc.(DELL)$'s US$47 billion is money already collected this quarter, so it does not get discounted. For the machine Apple puts on stage next Wednesday, the price, the orders and the shipping are all still a quarter away. And what waits in that Texas queue of 700 gigawatts, or inside a US$35 billion contract, or behind US$80 billion of debt that can only be raised because Broadcom guarantees it, is a set of data centres nobody has built yet — all of it is money for later, and it has to be brought back to today at 4.78 per cent. That is the answer semiconductors are waiting on, and Broadcom gives the first half of it.

The above is personal analysis, not investment advice.

💬 【Talking Point】

Broadcom reports after Wednesday's close. AI chip sales are up 143 per cent from a year earlier, but the plan reported in late August goes further: borrow off its own books, build the compute centres itself and collect rent, with Broadcom on the hook if a customer stops paying. What would you need to hear about that rental business before you counted it as a second source of revenue rather than a second place to lose money?

💰 【Bounty】

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