Founder of Laveer Capital Management. Active #investor. Author.

Valparaiso, IN
Joined June 2015
The biggest lesson of any capex cycle is to not take equity risk for a fixed rate of return. That's what the neocloud problem is. Lending to SpaceX with Starlink-type revenues or strong offtakes and you get a bond, but lending to a borrower whose only asset is GPUs and only customer is another AI company is just equity with a coupon cap. Credit is pricing that split. Apollo is telling you that good GPU financing can get done at +200/+250 over, and when Volta tried to raise $5 billion for a Norway data center earlier this month, investors balked and pushed the rate to 11%+. Slok's point on if compute costs more to produce than users get out of it, the collateral is worth less every quarter tells you everything you need to know and that's all before we talk about the equity of the business. Elon is right that the debt markets haven't been receptive. It is pretty clear that the market is starting to price in that equity risk to the space.
Replying to @chamath
Pretty much. As of the past few weeks, debt markets have almost entirely shut off access to money for any company that doesn’t have substantial revenue independent of AI data centers. SpaceX closed $40B of debt for GPUs, but we’re investment grade and have Starlink & launch revenue. That means the 200+ neoclouds are going to see guppy-level death and consolidation. Some will make it through, but not many.
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AI bubble just popped.
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As someone with a portfolio of energized land assets here is what I am seeing: 1. Neoclouds are disorganized and poorly capitalized. Some are definitely better than others however. 2. Hyperscalers are intractable, bureaucratic organizations that take 3 months to do an NDA and want 18mo escrow periods. We built our portfolio by competing against these terms because of our speed and simplicity. The more future assets orgs like ours win, the bigger the problem for the hyperscalers downstream (see 3). 3. There are delays in the existing pipeline that will catch people off guard in 2027. Hyperacalers will (obviously) react by focusing on their own internal compute needs over any third party. If the third party is a model company, they will tell them to go through their model router where they will also take a non-trivial vig. Them telling Ant they have no compute for them (rumored in Ant’s S-1) if true is a huge tell that this is already happening. All of this is to say that it does look like there will be a lot of partially stranded compute and compute sitting in inventory in 2027 than is currently forecasted. This is bought and paid for but effectively underearning (below total cost of capital) or collecting dust. We see this as true for everyone - model companies, hyperscalers, neoclouds except ONE (you can guess which one). This dislocation will benefit two kinds of orgs: the non-bureaucratic big scalers who can build industrial scale quickly and the nimble, well capitalized players feeding them. 2027 will be a turbulent year because it will clear out a bunch of wrong/bad bets. It will also be a consolidation year for a few.
Replying to @Yuchenj_UW
I think we’re going to see a lot of stranded compute in partially complete data centers
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I think we do understand
French protestors want higher public spending, wages, subsidies and pensions. Meanwhile France has gov’t spending of 57% of GDP (among highest of Western countries), deficits of 5% of GDP, 10 year bond rate >5%, and a currency they don’t control. I don’t understand how this ends.
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Instead of increasing shareholder value today I decided to enjoy a little fall golf
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Illegal? Dear Lord
GM just announced the biggest stock buyback in automotive industry history. Instead of investing in their workers or new product lines, GM executives are robbing from the future to pay themselves and their shareholders today. Stock buybacks should be illegal.
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Great advice
The first version of anything you build will be a little embarrassing. Ship it anyway. You learn more from one real person using it than from ten more weeks of polishing in private.
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The first version of anything you build will be a little embarrassing. Ship it anyway. You learn more from one real person using it than from ten more weeks of polishing in private.
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Doing everything I can to lock in a lower rate
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An LA hospitality group runs 25 bars, many of them right by Dodger Stadium. Every extra playoff game means packed bars. An early exit means lost revenue they were counting on. So they hedged it. They put $60,000 on Kalshi on the Dodgers *not* making the World Series. The Dodgers lost the NLCS to the Brewers. The position returned nearly 2x, helping cover the playoff business that *never* came. A Columbia law professor told Fortune it works like “a form of bespoke insurance.” Read the full story here: fortune.com/2026/10/19/predi…
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Absolutely
Underappreciated how much the shale revolution unlocked the AI revolution.
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Damn they move quick
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Life should be lived like EBITDA adjustments It should always be positive, and sometimes, completely delusional
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Lol
Elon Musk giving $10bn directly to American children is outrageous. We need a donation tax. You can’t just invest in their future without paying a commission to the people who’ve already mortgaged it.
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Next year, I will give one of my SpaceX shares to every kid in America. This will be the first of many.
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Data center junk bond update
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We literally have flying cars but the 401(k) rollover process still uses paper checks.
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Invesco’s Global Head of Real Estate Credit is avoiding data centers. He cites single tenant risk, no alternative use, and functional obsolescence.
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CoreWeave’s unsecured notes are officially 1,000bps STW, now yielding ~15%. Either this is terribly mispriced and a buy or the HY market is telling you something about the AI build-out Which one is it? robinhood:0x5f10a1c971b69e47e059e1dc91901b59b3fb49c3
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I'm increasingly partial to the argument that increases in the fed funds rate will do little to lower inflation, and may be counterproductive. - AI investment is unlikely to slow because interest rates are slightly higher - Energy is highly inelastic and rate changes can't alleviate the current supply shock - Higher rates hurt supply-side solutions in housing, energy, autos, and other capital intensive industries - Higher borrowing costs raise business operating expenses, some of which is passed along to consumers - A large percentage of debt is fixed-rate, dampening the feedback loop but hurting new homeowners, small businesses, and investment - An economy increasingly dominated by services is less sensitive to rate changes - This century has repeatedly demonstrated how blunt interest rate policy can be, both in stimulating inflation when it's low and suppressing it when it's high
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