Here’s a preview of what we’ll cover this week: 

Macro: Core Inflation Has Become a Habit; How is the Consumer Doing?

Markets: The Most Hated Trade on the Street; AI Demand Hasn’t Blinked; The Rotation Has Started; What is Renaissance buying?

Lumida Curations: Jordi Hays On Nvidia Trading at a Jensen Discount; Jason Calacanis on AI and Art

This week, I joined Pascal Hügli on Less Noise, More Signal to talk about whether the AI trade is broken or just bruised.

I also shared a live demo of Iris, our agentic advisor. She ran a discovery call faster than this CFA charterholder would have, and I’ve made my peace with it.

This is a prototype of the future, and you’ll see Iris in the Lumida Invest app in the coming weeks.

Here’s what we covered:

Watch the full conversation here.

For more conversations like this one, subscribe to our YouTube channel.

We are hosting a private fireside chat in New York on November 19th with Kartik Chopra, former CIA officer. The topic is “What did the intelligence community know about Nvidia?”

In my pre-call Kartik said “The intelligence community already knew these issues.” More to come, and be sure to join live and in-person in NYC.

Seats are limited. Request an invite here. 

We’ll also ask Kartik about his experience at the CIA.

Jensen Huang is out. The board accepted his resignation as CEO and director on November 11.

We’d love to have Jensen back in office. (We are also part of the petition urging the board to reinstate Jensen as the CEO.)

Jensen is a founder-CEO. That's irreplaceable.

No one will care about these affairs 3 months from now any more than anyone cares about Elon's 8 kids with as many women. 

Jensen wasn’t just Nvidia’s CEO. He was its chief salesman.

Nvidia has 8 large customers: hyperscalers plus frontier labs. Those are CEO text messaging and in-person relationships.

Here’s what Elon Musk said post his departure: “Jensen drove supply chain brilliantly at Nvidia, but many of those deals were a handshake with Jensen, not a written contract. Without Jensen, at least some of those critical deals will be lost.”

He was also the central bank of the AI trade.

Nvidia spent $42.2 billion buying equity stakes in the first half of its fiscal year, against $1.2 billion a year earlier. 

Nvidia backstopped neoclouds and funded open-weight labs.

A new CEO won’t walk in and write $25 billion checks. They’ll be cautious, consensus-driven, and focused on surviving the board’s gauntlet.

Rubio is the First Mover

Marco Rubio set in motion a chain of events that led to Jensen’s termination.

Rubio received a CIA report concerning Alice Huang (Megaspeed, VP and alleged China spy).

The CIA report showed she had established an extra-marital relationship with Jensen.

The CIA report questioned whether Megaspeed was funneling chips to China.

Rubio re-wrote the CIA report assertively in his own voice and shared that with Trump admin officials.

Recall that Rubio is a China hawk.

Rubio doesn’t want China to have GPUs. Jensen wants China to build on American Tech.

Anthropic, which is more Dem aligned, also doesn’t want China to have GPUs.

Open Weight models from DeepSeek and Kimi were allegedly trained on Nvidia’s chips.

Our view is that there is no better leader for Nvidia than Jensen Huang. At the same time, an export controls violation is a serious issue.

We’ll need to see how it plays out.

The Wrong Interim CEO

CFO Colette Kress is now the interim CEO.

We think putting the CFO in charge is a mistake.

A CEO is a general manager. They lead, they talk to customers, they make trade-offs, they recruit and hire top talent. They intervene. They problem solve. They own goals and deliver.

A CFO counts the money and prepares the earnings release. They run cross-firm budgeting processes.

The CFO is not doing sales or customer or product development.

Jensen micromanaged execution. He ran a flat organization with dozens of direct reports, and the decisions ran through him.

The board decision is highly questionable.

The obvious choice was Ian Buck, who runs the datacenter business, Nvidia’s largest and fastest-growing unit.

It’s the same path that worked elsewhere.

Satya Nadella ran Azure - the cloud business - before leading Microsoft as CEO.

Andy Jassy ran AWS before Amazon.

General managers are natural CEOs.

There’s only one good reason to pass over the person running the datacenter business: the board worried that Ian might be caught up in the export-control questions around the company.

So either the board is making a stupid decision in elevating the CFO, or the board believes these export control violations may implicate Ian too.

The General Manager of the business would be even more knowledgeable about the customer contracts than Jensen.

So, there’s more to the story than is currently revealed to the public and something needs to give way — board competency or there are serious export control violations.

President Trump made a remark on 60 Minutes about warning an American CEO about potentially wearing an orange jumpsuit.

Our view is the export control violations story has some legs to it.

Nvidia Capitulation?

At the same time, Nvidia’s stock is showing signs of capitulation.

Here you see all the hallmarks:

(1) Extremely high volume

(2) No less than 6 front page WSJ articles on the same day (my barber is going to tell me about Nvidia at this rate)

(3) Large red bar indicating panic selling

Nvidia’s chip sales are intact for the next 12 months and beyond on existing pipeline.

So, they will continue to hit their numbers. We’ll need to see what they say in guidance when ‘ex-China’ is stripped out.

Overall, there is significant value and dislocation here. For a moment, Nvidia traded at < 10x Year 2 PE. That seems excessive.

Who Can’t Believe Their Luck: Hock Tan and Lisa Su – AMD and Broadcom (AVGO) were both up ~14% in the last week. 

Bespoke looked at every large-cap CEO removal since 2016.

On average, stocks sell off both before and after the board shows the CEO the door.

There is a silver lining for Nvidia’s stock though. 

The best outcome comes when a CEO goes for personal conduct rather than business performance. 

Those stocks tend to be dead money for a year, and not a disaster like in other cases. The ones that really hurt are CEOs fired for running the business badly. (See chart below)

The business Jensen leaves behind runs on autopilot for a while. 

Nvidia has 12 to 24 months of backlog already booked, and a product roadmap set for the next two to three years. 

Goldman expects only a measured hit to earnings over the next year to 18 months.

So earnings should keep coming in for the next year and change. 

However, we expect the hit lands on the multiple, because uncertainty is the one thing the market charges extra for.

That’s how you end up with the most important company in AI trading at about 14x forward earnings. Nvidia is now a growth at a reasonable price value stock.

What We’re Watching

Nvidia reports this week.

We expect a beat and raise, because the 2026 and 2027 buildout is intact.

What matters more is what management says on three things:

(1) Guidance

The question that matters for shareholders is whether chips reached China through Singapore customers like Megaspeed, and whether the company knew.

Does the company pull guidance entirely? Do they lower guidance?

This is the single most important question.

(2) The financing book.

Does Kress keep Nvidia as the Central Banker of semis? We doubt it.

That would lower capex and datacenter build out, and funding for neo-clouds.

We noted a few weeks ago, there are too many neo-clouds. They exist at the will of Nvidia.

Q3 13F filings are due Monday.

That’s when we find out how various funds were positioned going into the October selloff.

We’d be interested to see how Whalerock, Altimeter, and Atreides are positioning around the AI theme.

You can set up your Lumida Invest app to track the latest hedge fund filings as they hit on Monday.

The app lets you see what each fund is buying, selling and holding, and which stocks have the highest hedge fund exposure across all 13F filers. 

You can also set trackers on the funds you care about and follow them, so you’re notified when they file.

Renaissance Technologies has already filed, so let’s analyze what their black box bought.

Notably, Renaissance has bought SpaceX. Don’t forget they previously owned Robinhood and Reddit and Palantir.

In August, Renaissance dumped Micron right before July’s semis crash. Very well timed.

In Q3, after the crash, they bought it back. Renaissance increased its Micron position about sevenfold, its largest addition of the quarter.

We also own Micron and SK Hynix. These have compelling valuations. 

Micron trades at under 7x forward earnings, most of next year’s output is already committed, and management can’t see when supply and demand will balance.

But, Renaissance’s MU buy in 3Q26 wasn’t the best timing. It has fallen another 20% since Sept 30th.

You can buy Micron cheaper today than the quants did.

The rest of the buy list reads like a list of the market’s most hated stocks.

Consumer: Nike and Airbnb.

Financials: Charles Schwab and JPMorgan. We like the financials.

What were they selling? 

They sold what ran.

Renaissance cut Palantir by about 70%, sitting on a gain of roughly 500%. 

They also trimmed Tesla, Chevron, the gold names (Kinross and Franco-Nevada) and Sterling Infrastructure, another huge winner.

The positioning was clear: sell what ran, buy what fell but also had real earnings growth.

We are eager to see how other fundamental hedge funds are positioning. I’ll do a video once the filings are out to walk you through the best insights. 

Follow our YouTube Channel for the video.

Inflation isn’t going away.

October’s core CPI rose 0.3% m/m. That’s the third straight month at that pace, and was above forecasts.

The bigger problem is inflation is now widespread — the pressure is coming from many places. 

Tariffs are pushing up goods prices. The Iran war pushed up energy, and that’s now feeding into services like transportation and insurance.

And the AI buildout is bidding up power, labor and materials all at once.

Any one of those could fade. All three together make inflation sticky.

With sticky inflation, you’ve got the Fed under pressure to do something, and markets are now pricing in a 100% certainty on what it’d do. 

Waller was one of the Fed’s doves. Last year, he was making the case for cuts. 

But, on this Tuesday, just before CPI, he said he was leaning toward a quarter-point hike in December even if October’s numbers improved. 

If core came in around 0.3% or higher, he said a half-point hike should be on the table, because stopping at a quarter point would put the Fed’s credibility at risk. 

Core came in at 0.3% – right at Waller’s mark.

This gave markets the signal. 

Markets now price a 100% chance of a hike on December 9. A week ago, roughly one in four traders still expected the Fed to hold. 

Now the only question is the size, with about 11.5% odds on a half point.

We expect inflation to stay higher for longer. It has run above target for five years, and nothing in Washington suggests discipline is coming. 

Deficits are running near 7% of GDP.

The new Congress won’t fix it: populism, from either party, almost always means spending more.

The consumer just went through a crazy rough patch: an oil shock from the Iran war, tariffs on everyday goods, and rates heading the wrong way.

But, the credit data says they came through it in good shape.

Credit card utilization has dropped to 22.6%, its lowest level since Q2 2023. 

Consumers aren’t maxing out their cards to get by.

Delinquencies are improving too. 

The rate of credit card balances turning newly delinquent improved quarter-over-quarter.

Only 5% of total consumer credit balances are late by 30 days or more, and just 2% are severely derogatory.

Foreclosures, collections and bankruptcies have picked up from the Covid-era lows, but they remain historically low.

Lending standards haven’t gone loose to make this happen. The median credit score on new mortgages is 768, and borrowers below 660 make up less than 10% of originations.

This matches what we heard from the banks in October earnings: consumers are spending, borrowing and paying back.

The Worst Is Behind Consumers.

The squeeze is easing.

Oil is coming off its highs, and that flows straight into gas prices, grocery bills and airfares.

We think it keeps easing, and politics is the reason.

The Republicans just took a beating at the midterms. Cost of living was ranked at the top of the issues list.

You can’t fix it with another escalation.

JD Vance is already positioning for 2028. He said the day after the election that the Iran war was a mistake.

To win in 2028, the administration needs a happy consumer. That means de-escalation abroad, cheaper energy and a serious effort to keep a lid on prices.

Democrats have the same incentive. They won on kitchen-table issues, and their most centrist candidates won by the widest margins. 

DSA aligned socialists won by the lowest margins.

Gridlock means neither side can push through anything crazy.

Ten weeks ago, AI momentum was the most crowded trade on Wall Street. Today, it’s the most hated.

The momentum long/short factor is now down about 38% from its peak. 

That’s the deepest drawdown since ChatGPT launched. October brought the most violent down days the factor has seen in that entire run.

The panic showed up everywhere. 

Hedge fund exposure dropped to the zeroth percentile of its history last week. You can’t go lower than zero.

Everyone who wanted to sell has sold.

Individual investors are just as gloomy. The Investors Intelligence bull/bear ratio dropped to 1.54, well below its long-run average.

Fear is a buy signal.

Valuations have gone from attractive to compelling.

One example: TSMC is priced at about 15x. 

The last time we saw those multiples was 2023, when the market still doubted AI was real.

Memory is even cheaper. 

SK Hynix plans to buy back as much as half its stock over the next couple of years.

The market sold AI on fears about politics, permits and a CEO. None of those touched compute demand.

Start with the price of compute. 

Ornn’s index of GPU rental prices is up another 23% in the past month, to $9.72 per GPU-hour. 

It’s now up 65% since August’s low of $5.89.

This is why Elon refuses to lock in forward contracts on SpaceX’s compute and sells it at spot instead. 

He’s betting prices keep rising, and so far he’s been right.

The companies selling compute are seeing the same thing.

CoreWeave reported this week, and its revenue grew 168% y/y last quarter, and its backlog reached $132.5 billion. 

More telling, it expects about $9 billion in customer prepayments and deposits.

Customers are pre-paying because compute is scarce and they can’t afford to wait in line.

The frontier labs also tell the same story. 

OpenAI’s 3Q26 revenue grew 160% y/y to $10 billion though still behind Anthropic’s $17B.

Cisco beat and raised, too.

The AI story is real, and the earnings keep coming.

And we’re still early. 

Goldman expects agentic AI to drive close to a 25x increase in token consumption over the next five years. 

An agent doesn’t ask one question and log off.

Companies are now increasingly mentioning AI applications, which shows it has entered Enterprise.

Then there’s the Anthropic IPO. 

History shows markets rally into and out of IPOs. 

See the following chart. The S&P 500 has tended to rally both into and out of the largest IPOs in US history.

I did a video with Michael Parekh, breaking down the Anthropic S-1. Watch here.

This week, we saw the first signs of rotation back into the AI theme. 

We pointed out last Sunday on X that positioning was at an extreme, and it should correct. That played out this week.

The stocks that fell hardest from October 6 through November 5 rose about 14% on average in a single day on Wednesday. 

Interestingly, many of these beaten down stocks were actually the best performers between June and July, when we saw the semis rally. 

They went up, peaked, declined, bottomed, and are now bouncing back.

In contrast, the stocks that held up best during the Aug-Sep selloff, the hiding places, slipped.

That’s money coming out of the bunker and back into AI.

We’d use the rotation to upgrade into quality semis: the capex receivers with real earnings and free cash flow, bought at prices the market hasn’t offered since 2023.

You can now view Lumida Curations at the Lumida Invest App.

Curated insights delivered on time. Download the app here.

Jordi Hays argues that Jensen Huang is irreplaceable and that Nvidia will now carry a lasting “Jensen discount,” while John Coogan counters that the right successor could unlock significant upside for the business.

View Curation 

Jason argues that AI tools won’t threaten major game studios anytime soon, but could transform indie gaming the way cheap digital cameras transformed independent film, noting that AI can build an explorable map of Manhattan in seven days against eight years of development on GTA VI.

View Curation 

I stand with the shareholders! Surely, the meme is mightier than the sword…

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