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@carlquintanillaRoss Hendricks questions why the market is fixated on $CRWV's imminent demise, comparing to $CSCO at Dot Com peak which had 10% revenue from circular vendor-financed deals, leading to growth from +66% to -30% and 80% stock drop, dragging Nasdaq down 80%. $CRWV makes up roughly 8% of $NVDA GPU sales; losing neoclouds would nuke $NVDA growth and AI capex trade, explaining carnage in $CAT $GEV $MU $AVGO $NVDA as start of debt-fueled circular capex bubble end.
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Why is the overall market so fixated on $CRWV's imminent demise? At the peak of the Dot Com bubble, $CSCO - the largest company in the world, and the $NVDA equivalent of the era - generated about 10% of its revenue from circular deals through vendor-financed startups. When those startups lost access to capital, $CSCO's revenue growth went from +66% to -30% within a few quarters, and the stock lost 80% of its value. The same story played out across the dot com supply chain, sending the Nasdaq down 80%. Today, $CRWV alone makes up roughly 8% of $NVDA GPU sales. Losing that demand is enough to nuke $NVDA's growth story all by itself. Oh, and $CRWV isn't an isolated example - every major neocloud is hemmoraghing cash and borrowing costs are going UP across the board. If you lose the neoclouds, you lose the incremental growth driver for marginal data center capacity, and the AI capex trade goes up in smoke. That's why we're seeing carnage across the entire AI supply chain, from $CAT and $GEV to $MU, $AVGO and more recently $NVDA. This is what the beginning of the end of a debt-fueled, circular-financed capex bubble looks like.
Reasoning: Fundamentals · Medium term