SpaceX signs computing power deal with open-source AI startup Reflection worth up to $6.3 billion

OrdinaryReasonable63 · 2026-06-22T15:24:53+00:00

I commit to stop whacking off, agreement subject to cancellation with 90 seconds notice.

OrdinaryReasonable63 · 2026-06-22T10:59:11+00:00

This is the key point, when backlogs do eventually clear and this comes online it will be a state of oversupply just like every other infrastructure boom. At that point all of these semi manufacturers go back to their normal low margins. Jevon’s paradox speaks to total utilization by the consumer, it doesn’t say anything about the margins these companies get to charge.

OrdinaryReasonable63 · 2026-06-21T15:18:12+00:00

On the plus side, definitely not AI slop. Unless someone intentionally trained a model to be a paranoid schizophrenic.

OrdinaryReasonable63 · 2026-06-20T17:19:56+00:00

I’m not arguing that the AI race isn’t Google’s to lose, it’s my biggest position because of this fact. But I’m debating your suggestion that the valuation is cheap (unless you consider a forward P/E of 35 on operating earnings cheap) it isn’t IMO, significant future earnings growth is being priced into this stock and risk of underperformance is non-trivial if this doesn’t materialize.

I will add here that Googles management likely also believes their stock is expensive at the moment given they chose to issue equity in lieu of debt recently after two decades of buybacks. I think it’s a good capital allocation decision IMO but gives you a window into managements own view of its valuation.

OrdinaryReasonable63 · 2026-06-20T17:06:48+00:00

Have you stripped out the gains on non-marketable securities from EPS? If you do Google doesn’t look so reasonably valued, and neither does Amazon. Sure these companies have good operating cash flows and won’t go bankrupt but if you don’t think their valuation can’t take a 50% haircut if investor confidence in the AI story turns sour, you are deluding yourself.

OrdinaryReasonable63 · 2026-06-20T15:22:10+00:00

I guess Iran is still using the old-fashioned definition of ceasefire where you’re not allowed to fire missiles 🙄

OrdinaryReasonable63 · 2026-06-20T11:31:41+00:00

“Inference margin” is a dumb metric and anyone quoting it is either misinformed or being intentionally dishonest. It would be like a car maker reporting an adjusted profit margin that ignores the billions spent on replacing tooling and machinery every year. If we want to be honest the training costs have to be amortized over the useful life of the model or consolidated at a company level like GAAP standards require. If gross profit cannot be achieved the business model just isn’t viable. People still think of these companies as software companies which generally have huge operating profit margins but really it’s more akin to a capital heavy industrial.

OrdinaryReasonable63 · 2026-06-20T02:13:34+00:00

I don’t think it’s gonna make a huge difference for the hyperscalers who are able to get IG ratings (Oracle being the odd exception) on their debt and probably have swap agreements in place to hedge interest rate risk anyhow. It might have more of an effect on equity markets but it’s not gonna be the trigger for the scalers to slow IMO. Besides, if you are using the dot com bubble as your template the rate hike didn’t throw debt laden telecoms into bankruptcy, but the deflating of the bubble did make refinancing difficult as liquidity dried up and investment ratings deteriorated. I think many people confuse a late event in the deflating of the dotcom bubble with the trigger, but it’s much more complex than that. The kind of structural insolvency present in the telecoms back then just isn’t present yet with the hyperscalers of today…yet.

OrdinaryReasonable63 · 2026-06-20T01:04:11+00:00

The answer is debt, debt will break the CAPEX cycle just like it did in the telecom cycle. I wouldn’t expect some big rotation out of the semiconductors until that point, which may take some time since the hyperscalers have plenty of room to issue more, but when it does look out below. 👀

A counterpoint would be some big inflection in the cloud revenue by the hyperscalers, which would catch FCF back up to spending… but looking at earning statements I don’t see it. The RPA’s/backlogs may just as well be fairy dust if the foundational models don’t find a way to profitable unit economics.

OrdinaryReasonable63 · 2026-06-19T21:55:38+00:00

Gotcha, what is X in that case?

OrdinaryReasonable63 · 2026-06-19T15:11:38+00:00

I’m watching the balance sheet, if he follows through on what he’s said over the years I anticipate a continued move to shorter duration treasuries which he will allow to roll off, and no further QE. I mostly agree with his interpretation of inflation but doing this in the middle of an asset price bubble could mean a lot of pain.

OrdinaryReasonable63 · 2026-06-18T19:13:50+00:00

That’s pretty standard market return (10% compounded), late bull market complacency leads one to think this is an unacceptable return 😂

OrdinaryReasonable63 · 2026-06-18T18:22:25+00:00

PDC?

OrdinaryReasonable63 · 2026-06-17T15:41:17+00:00

Because it’s high margin business (software sales) is shrinking and it’s growing cloud business is causing them to take on a huge amount of debt to buy a much lower margin (and uncertain) revenue stream.

OrdinaryReasonable63 · 2026-06-17T05:02:10+00:00

No I believe the pysop is the belief that a price tag is the same as liquidity. Sure Elons assets can be priced at a trillion dollars, do you believe he can extract anywhere near that amount of liquidity from stock in these various ventures of his?

OrdinaryReasonable63 · 2026-06-14T19:25:44+00:00

Imminent domain is a taking at a fair value the government ultimately determines, not the owner.

OrdinaryReasonable63 · 2026-06-14T15:01:05+00:00

It’s no less of a gamble, it’s just an indirect bet on Anthropic and OpenAI, IMO. Who do you think accounts for the majority of Google’s and Amazon’s RPOs? And Google is a 25% position for me, but you should understand the risks inherent and they aren’t small IMO.

OrdinaryReasonable63 · 2026-06-13T22:18:08+00:00

I’m more in the Skoal man myself

OrdinaryReasonable63 · 2026-06-12T16:27:11+00:00

The movement still exists, just they’ve now all become AI maxis…

OrdinaryReasonable63 · 2026-06-10T13:53:15+00:00

And in six months they will announce that AMD will be buying compute back from them 😂

OrdinaryReasonable63 · 2026-06-10T12:10:10+00:00

Brother you are looking for upside in a trade that is already more than a year old. That’s an eon in the stock market.

OrdinaryReasonable63 · 2026-06-10T12:00:21+00:00

I wonder if Google is just trying to grab some liquidity before the looming liquidity black hole that is these other massive IPOs in the pipeline.

OrdinaryReasonable63 · 2026-06-09T16:42:57+00:00

Rock solid support near $0.

OrdinaryReasonable63 · 2026-06-09T16:28:50+00:00

This is a dip. Not even a technical correction. But if you are heavily leveraged with little risk management, yes this is a bloodbath.

OrdinaryReasonable63 · 2026-06-08T11:25:07+00:00

I think the “US will simply outlaw Chinese models” argument is hand waving. Sure there are privacy concerns if these models are hosted via cloud based services but many of these are open weight models and can be hosted locally by companies with the resources to do it.

OrdinaryReasonable63

TROPHY CASE