〽️alum #goblue, tech investor, 🤖🚗📈 Tesla 🤓
Joined June 2011
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Kristin Hendricks retweeted
Technology is the greatest equalizer. Net worth no longer decides which phone you carry. Everyone uses the same iPhone.
You no longer need a fortune for a chauffeur. Tesla Full Self-Driving does that.
Need a personal assistant? Spin up as many Grok bots as you like. Each is as dedicated as the last.
Not far in the future, Optimus will push this further: the same quality of care for everyone, better with every software update.
Kristin Hendricks retweeted
Just listened to the KeyBanc interview with $MU Chief Business Officer, Sumit Sadana.
The highlights were absolutely INCREDIBLE and VERY bullish. They include:
- “Business continues to be exceptional”
- “Since earnings [on June 24th], demand from our customers has increased even further”
- “Conditions will continue beyond calendar year 2027 and 2027 calendar year will be tighter than 2026 because demand growth is faster than supply”
$250 Billion of investments in coming years
- “We are at such early stages”
- The growth in HBM memory means for every 100 bits, you need 3-400 bits of DDR memory, so it reduces DDR supply even more
- Building a manufacturing fab and ramping it is *significantly harder* than building a data center and takes years
- Every customer is saying #1 constraint they have is DRAM (not power, or other things)
- We expect to have a prolonged excellent financial performance “for a very long time”
- “The nature of our engagement with customers is at levels I have not seen in my entire career.”
- Working on engineering designs with our customers that are planned for beyond 2030
- New Strategic Customer Agreements (SCAs) are far better than previous LTA (Long Term Agreements) because: they cover longer time horizon of 3-5 years, they are binding commitments by year with “Take or PAY” with very stringent and binding terms, backed up by “tremendous amount of up-front cash that we hold on our balance sheet.” The SCAs have pricing that are either “floating” (market price) or a price band that have both a ceiling & floors. Floor pricing provides better gross margins than historical peaks on margins.
Physical AI such as humanoid robots might drive future demand even greater than what we’ve seen. May be astronomical!
Kristin Hendricks retweeted
Elon just said something extremely bullish for memory:
“One must always consider the limiting factor here. The limiting factor currently is memory.
Memory output is increasing by around 20% per year. Normally, that would be fantastically fast and amazing for any large, mature industry.
But ask yourself: Is demand increasing by 20% a year? No. Demand is increasing by 200% a year, maybe higher.
So, if demand is increasing much faster than supply, Economics 101 would suggest that prices increase. They do not decrease.”
Kristin Hendricks retweeted
Game theory suggests memory LTAs are likely to be durable.
And yes, Nvidia may have a significant cloud business via revenue shares.
GAVIN BAKER: NVIDIA IS NO LONGER JUST A CHIP COMPANY.
Gavin Baker recently laid out one of the sharpest observations about the current AI hardware cycle, and it explains why Nvidia's multiple looks strange relative to the strategic position the company actually occupies.
The starting point is a shift in how semiconductor supply is being allocated. Historically, buyers with enormous volume like Apple could break long-term agreements with suppliers whenever they wanted. There was no meaningful consequence, because the supplier had nowhere else to go.
That world is over. In the current cycle, there are at least four major memory buyers with genuine scale, plus a wave of AI startups adding to demand. The dynamic has flipped. If a hyperscaler breaks an LTA on price, the supplier can now retaliate by reallocating volume to a competitor. In a cyclical industry where oversupply is always followed by undersupply, breaking an LTA today can cost you your entire allocation the next time capacity gets tight.
That leverage is one reason Nvidia's position is so unusual. Every constraint in the AI buildout tilts in its favor. Nothing on earth is more financeable than an Nvidia GPU. And on land and power, Nvidia is playing the matchmaking chess game between customers, energy suppliers, and infrastructure partners.
The most interesting development Baker highlighted is Nvidia's new business model. He described it as a credit wrapper with a revenue share above a certain GPU price floor. Nvidia is financing customer deployments while retaining upside if GPU prices stay elevated. This converts Nvidia from a pure hardware vendor into something structurally closer to a cloud franchise via royalties on the compute being deployed on its chips.
Nvidia could end up with an effectively massive cloud business very quickly, not through building data centers but through collecting royalties on the compute those data centers produce.
The market is still pricing $NVDA as a semiconductor company. The company itself has already moved beyond that model. The gap between the two will eventually close.
@InvestLikeBest @patrick_oshag @GavinSBaker
Kristin Hendricks retweeted
Market is overreacting to hyperscale credit spreads widening from my perspective. TL;DR Spot pricing for renting GPU compute materially above contracted rates implies hyperscalers are underearning while operating cash flow acceleration is an underestimated source of funds for AI capex.
The fact that spot prices for GPU rentals are at least 2x higher than contracted rates is the missing piece from the discussion about hyperscaler credit, which is the only fundamental factor behind this selloff. Multiple private companies are planning on spending at least 2x more per GPU for compute as contracts roll-off and some have spoken about this publicly.
As contracts roll-off, hyperscale growth rates are going to continue to accelerate as their installed bases of compute reprice higher. Hyperscale operating cash flow growth using a mix of estimates and actuals is modeled to accelerate from 31% in the first quarter of 2026 to 50% in the second quarter. This acceleration should continue for the rest of the year and this is not in estimates which incorrectly model a deceleration in the third quarter from my perspective.
Some math. Consensus estimates are probably for 25-35 gigawatts added by hyperscale and neoclouds in CY28 (using a range as standing up datacenters is hard and a lot of the neos plus labs are still private). At 60b per gigawatt, that is 1.5 to 2.2 trillion in capex. Consensus estimates for hyperscale/neo operating cash flow is 1.3 to 1.4 trillion. I think this gets revised up materially as contracts reprice and growth accelerates so the 100b to 700b that would hypothetically need to be plugged by debt goes away. And their credit profiles materially improve. Not to mention the said 100b to 700b would be less than 1 turn of incremental leverage on consensus EBITDA estimates. And obviously the Nvidia and Broadcom “credit wrappers” help improve creditworthiness as well given their FCF profiles.
OpenAI, Cursor/Grok and the various Open Source inference clouds have accelerated materially over the last two months per public data and Anthropic continues to grow insanely fast while likely generating FCF. This - along with the fact that spot prices for GPU rentals are so far ahead of contract - are the missing pieces from the BofA chart on hyperscale FCF vs. semiconductor FCF.
Hyperscalers are underearning and anyone who signed a contract for GPU compute in 2024 and 2025 is overearning. Operating cash flow will be enough to fund capex but as contracts reprice and cloud growth continues to accelerate then spreads likely come in as well.
Would also note that CDS markets are easy to manipulate - was a huge feature of the GFC - short the stock and then buy the CDS. So I would not put attach much signal to CDS.
Net, net I’m not that concerned about the widening spreads in hyperscale credit. The real risk is that bringing power online and energizing all these GPUs is really hard but we are getting better at this every day.
🤖 Made with AI
Kristin Hendricks retweeted
The single most underrated exercise to improve your health is to get 7000-10,000 steps a day.
Kristin Hendricks retweeted
Tesla FSD % adoption has been historically touted at single digits to low teens.
Now in North America (largest FSD capable area), 55% of car sales are shipping with the FSD subscription selected by the buyer.
FSD is selling cars. Likely a point of meaningful inflection 👍🏼
Kristin Hendricks retweeted
Incredible. All Tesla needs is just a few more cars. They even picked me up right outside baggage claim, no more hike to the uber lot
Kristin Hendricks retweeted
Many scientific and engineering breakthroughs are just one prompt away. Very exciting time to be alive.
Kristin Hendricks retweeted
"Project Bueller" in Chicago for a @Tesla commercial this Sunday and Monday.
Lots of to unpack here
@tesla is commercially filming in Wrigleyville, Chicago next Monday 7/13 2pm-11pm. Production will take over the entire 3700 block of Clark from 8pm-9pm.
“West side of Clark st at 3720 North Clark St” is music venue Metro. There is no scheduled concert that day. The rest of the two blocks of permitted city blocks aren’t very notable.
Two Cybercabs did just get delivered to Chicago last week at a site 2 miles away from this production.
Speculation: maybe there’s a lobbying event at Metro to support the Autonomous Vehicle Pilot Project bills. Per @the_illinoize’s quote from @HastingsforIL, will be revisited during the Fall Veto Session in November/December. The pair of senate and house bills are needed to pass to legalize @robotaxi/@waymo/@zoox in Illinois.
Shoutout @chi_urbanist for first spotting the posted permit
@filming_chicago
Kristin Hendricks retweeted
Gavin Baker bought the Tesla story at a $1.5 billion market cap.
Fifteen years later, his first-principles read hasn't changed. Gavin Baker @GavinSBaker heard Elon walk through it on a bus tour: battery on the floor for a low center of gravity, millisecond motor control, no engine block to enter the cabin in a crash, and a deflationary cost curve ICE can't match.
Lars Moravy @larsmoravy, Tesla VP, has made the same cost-structure case from inside the company.
The EV physics case is the priced leg of $TSLA. The talent flywheel across Tesla, SpaceX, and xAI is the part still in play.
The full "age of Elon" thesis: podcastalpha.substack.com/p/…
Source: Generating Alpha Podcast - youtube.com/watch?v=FmLGYLQ6…
Kristin Hendricks retweeted
Tesla on Cybercab in new report:
"Our new reaction injection molding (RIM) process, engineered for Cybercab production, reduces manufacturing cycle times from hours in a traditional paint shop to just minutes with paint being injected during the molding process.
For the parts put through the RIM process, supply chain and manufacturing GHG emissions are cut by 35% - and unlike traditional paint processes, this change has also eliminated volatile organic compound (VOC) emissions. This substantial leap in efficiency and sustainability underscores our commitment to scalable, low-impact innovation."
