Equity Long-Short, Semiconductors, Fabricated Knowledge

Douglas O'Laughlin

Equity Long-Short, Semiconductors

Fabricated Knowledge

Learn more about the world's most important manufactured product. Meaningful insight, timely analysis, and an occasional investment idea.

Equity Bottom-Up

<ul><li>KLA had a rare miss. The guidance was a bit light for the inspection execution machine.</li><li>KLA rarely misses and is by far the best financially managed of the large-cap semicap companies.</li><li>KLA reports Q2 EPS $6.16 ex-items vs FactSet $5.91</li></ul>

KLA had a rare miss. The guidance was a bit light for the inspection execution machine.KLA rarely misses and is by far the best financially managed of the large-cap semicap companies.KLA reports Q2 EPS $6.16 ex-items vs FactSet $5.91

KLA & LaserTec, AMD, Hyperscaler Capex, SK Hynix, SWKS and QRVO, WOLF, MCHP

Technology / Semiconductor / Internet Research

Nicolas Baratte

<ul>
<li>I’ve compiled a large set of financial data to measure the impact of the AI Capex boom on the financial health of the 4 hyperscalers.</li>
<li>We can't measure the ROI of AI, but very clear that 1) operating margins and operating cash flow are increasing 2) higher Capex puts mild pressure on Free Cash Flow.</li>
<li>The major negative is that asset turns keep declining. This isn’t AI-specific, it started 10 years ago. Hyperscalers have become asset-heavy, high fixed costs companies. </li>
</ul>


I’ve compiled a large set of financial data to measure the impact of the AI Capex boom on the financial health of the 4 hyperscalers.
We can't measure the ROI of AI, but very clear that 1) operating margins and operating cash flow are increasing 2) higher Capex puts mild pressure on Free Cash Flow.
The major negative is that asset turns keep declining. This isn’t AI-specific, it started 10 years ago. Hyperscalers have become asset-heavy, high fixed costs companies. 


Hyperscalers: Is AI Capex Too High? What’s AI Return on Investment?

Hedge Fund News, Information and Data, Hedge Fund Alpha

Hedge Fund Alpha

Hedge Fund News, Information and Data

We focus on hedge funds with a bias towards emerging managers, specifically fundamental long-short managers. We are known for a lot of insights and exclusives on hedge fund letters, coverage of industry conferences, and interviews with investors and interesting service providers.

Thematic (Sector/Industry)

<ul><li>Ken Griffin’s Citadel reported $875.01 billion in U.S. securities on its latest 13F, a figure that makes the hedge fund’s portfolio appear far larger than its actual equity holdings.</li><li>Roughly four-fifths of the filing consists of options, leaving $171.76 billion in disclosed equity positions.</li><li>The distinction matters because several different figures are used to describe Citadel’s size. </li></ul>

Ken Griffin’s Citadel reported $875.01 billion in U.S. securities on its latest 13F, a figure that makes the hedge fund’s portfolio appear far larger than its actual equity holdings.Roughly four-fifths of the filing consists of options, leaving $171.76 billion in disclosed equity positions.The distinction matters because several different figures are used to describe Citadel’s size. 

Ken Griffin Portfolio: Citadel Top Holdings (Q2 2026)

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>Chips &amp; Memory is now the largest theme in active Global funds, at 9.70% of the average portfolio versus 8.96% for Hyperscalers.</li>
<li>AI Build-out accounts for 24.4% of the average fund, well ahead of AI Adoption at 14.7%.</li>
<li>Ownership is spreading into memory stocks, but both leading themes remain underweight the benchmark. Rising exposure does not represent a uniform buying wave</li>
</ul>


Chips &amp; Memory is now the largest theme in active Global funds, at 9.70% of the average portfolio versus 8.96% for Hyperscalers.
AI Build-out accounts for 24.4% of the average fund, well ahead of AI Adoption at 14.7%.
Ownership is spreading into memory stocks, but both leading themes remain underweight the benchmark. Rising exposure does not represent a uniform buying wave


<ul>
<li>AI investments are bearing fruits. Revenue growth is accelerating, margins moving up.  </li>
<li>As usual, no guidance. Capex will double in 2026 to $180bn. That’s a record high ~37% of revenues, hence a very major bet on accelerating growth / margins.</li>
<li>Consensus is reasonable-to-low with 14% revenue growth and 21% Operating Profit growth in 2026, 13% and 16% in 2027. I expect upward revisions. Valuations are high but growth is accelerating.</li>
</ul>


AI investments are bearing fruits. Revenue growth is accelerating, margins moving up.  
As usual, no guidance. Capex will double in 2026 to $180bn. That’s a record high ~37% of revenues, hence a very major bet on accelerating growth / margins.
Consensus is reasonable-to-low with 14% revenue growth and 21% Operating Profit growth in 2026, 13% and 16% in 2027. I expect upward revisions. Valuations are high but growth is accelerating.


Google: Very Impressive. Higher Capex, Higher Growth & Margins

United States

Alphabet, Inc. operates as a holding company. The Company, through its subsidiaries, provides web-based search, advertisements, maps, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Alphabet (GOOG US)

KLA & LaserTec, AMD, Hyperscaler Capex, SK Hynix, SWKS and QRVO, WOLF, MCHP

Another week of earnings, with KLA having a rare miss and the guidance being a bit light for the inspection execution machine.

Fabricated Knowledge

Hyperscalers: Is AI Capex Too High? What’s AI Return on Investment?

financial data shows the AI Capex boom is boosting operating margins and cash flow for hyperscalers, but increasing Capex is putting mild pressure...

Nicolas Baratte

Ken Griffin Portfolio: Citadel Top Holdings (Q2 2026)

Citadel reports $76 billion in investment capital, while its regulatory filing lists $570.62 billion in assets under management. Neither figure...

Hedge Fund Alpha

The AI Build-Out Reshapes Global Funds

Chips & Memory has overtaken Hyperscalers as the largest theme in active Global funds. We examine the shift towards AI Build-out, growing memory...

Steven Holden

Google: Very Impressive. Higher Capex, Higher Growth & Margins

AI investments paying off with accelerating revenue growth and increasing margins. Capex doubling in 2026 to $180bn, a major bet on future growth....

Nicolas Baratte

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

KLA & LaserTec, AMD, Hyperscaler Capex, SK Hynix, SWKS and QRVO, WOLF, MCHP

Another week of earnings, with KLA having a rare miss and the guidance being a bit light for the inspection execution machine.

Fabricated Knowledge

Hyperscalers: Is AI Capex Too High? What’s AI Return on Investment?

​financial data shows the AI Capex boom is boosting operating margins and cash flow for hyperscalers, but increasing Capex is putting mild pressure...

Nicolas Baratte

Ken Griffin Portfolio: Citadel Top Holdings (Q2 2026)

Citadel reports $76 billion in investment capital, while its regulatory filing lists $570.62 billion in assets under management. Neither figure...

Hedge Fund Alpha

The AI Build-Out Reshapes Global Funds

Chips & Memory has overtaken Hyperscalers as the largest theme in active Global funds. We examine the shift towards AI Build-out, growing memory...

Steven Holden

Google: Very Impressive. Higher Capex, Higher Growth & Margins

​AI investments paying off with accelerating revenue growth and increasing margins. Capex doubling in 2026 to $180bn, a major bet on future growth....

Nicolas Baratte

financial data shows the AI Capex boom is boosting operating margins and cash flow for hyperscalers, but increasing Capex is putting mild pressure...

AI investments paying off with accelerating revenue growth and increasing margins. Capex doubling in 2026 to $180bn, a major bet on future growth....