AMD says customers want more chips than it can make. At the same time, the U.S. 10-year Treasury yield rose above 5.35% for the first time in 24 years.
Chipmakers are aiming for much more AI revenue. Higher borrowing costs are testing the market around that growth story.
Chip Demand Is Strong. The Revenue Targets Are Bigger.
AMD CEO Lisa Su says demand exceeds supply. AMD plans to “substantially increase” supply in 2027, while memory remains broadly supply constrained.
A separate post describes Apple needing chips that Micron has, with Micron setting the price. In that account, Micron’s net income rose 42x in two years to $38 billion. That shows what a shortage can produce, at least in the account given.
Marvell raised its FY28 revenue outlook to about $20B from $18B. CEO Matt Murphy sees a roughly $400B AI market by 2030, compared with Marvell’s earlier $94B opportunity estimate for 2028. Marvell also sees total revenue reaching $70B-$90B by 2031.
Qualcomm’s Akos Pauliwala described its Amazon agreement as a “10-year $60 billion” transaction, with a portion committed. He set data center revenue targets of $5 billion next year and $15 billion in 2029.
There are more plans behind those targets. A post says Broadcom’s role arranging more than $50 billion for OpenAI’s new custom chip would be a major step if confirmed. Elon Musk separately said his companies would build and run Terafab. Taiwan Semiconductor may sublease part of the planned site.
The demand is visible now. The later revenue targets still have to be reached.
AI Products Are Arriving. Completed Work Is Another Question.
Meta has introduced a personal AI agent app powered by Muse Spark models. Meta says it can book appointments and fill out forms. Wang said it will have a free tier and monthly plans of $20 or $100, depending on usage.
Meta says the agent asks before sensitive actions and does not see users’ actual passwords or payment details. Users must opt out if they do not want their interactions used to train Meta’s models. Meta also faces lawsuits following a settlement of nearly $17 billion with state attorneys general.
Wells Fargo raised its Meta price target to $1,000 from $796 and kept an Overweight rating. The accompanying commentary described the call as a bet that AI spending turns into revenue. Pauliwala pointed to Meta glasses as an example of a personal AI device using Qualcomm chips. He expects more devices in 6 to 9 months, while calling robotics a “3 to 5 year story” for Qualcomm.
Ray Dalio called AI a “classic bubble” that may be close to bursting. His warning sits beside chip companies reporting demand they cannot fully meet.
There is also the question of what customers get from AI. In @wallstreetmillennial’s account of a Harvard study, engineers wrote about 4,000 more lines of code per month twelve months after companies adopted agentic AI. The increase in resolved Jira issues was not statistically significant. Code review demands rose, and the study found no statistically significant employment effect. More code had not established more completed work in that account.
A separate post attributed to Dimon a warning that AI has increased cyber risk tenfold.
Higher Yields Put Pressure on Borrowers
The Kobeissi Letter reported the U.S. 10-year yield above 5.35%, up +143 basis points from its pre-Iran War low. Watcher.Guru put the 30-year yield at 5.70%, its highest since 2002. France’s 10-year borrowing cost approached 5%, also its highest since 2002.
UBS points to a difference from 1999: the U.S. had a budget surplus then, while today’s deficit exceeds 6% of GDP. UBS says the amount of long-term debt markets must absorb could keep yields elevated even if the Fed pauses. A post on the Fed minutes says most participants saw another 2026 hike as likely appropriate. Later, Bull Theory reported yields falling across the curve and oil falling.
Credit looks more strained. A post put spreads on CCC-rated and lower U.S. corporate bonds at 12.0%, their widest since November 2022. A Financial Times account says the bond selloff is prompting companies to rethink borrowing and raises the prospect of defaults among the lowest-rated borrowers.
Dalio warned that China and Japan could buy fewer Treasuries. A separate post attributed to him a warning about a U.S. debt crisis in 36 months. @georgegammon argues that raising rates while the labor market weakens is a Fed mistake; he cited 29,000 non-farm payroll jobs against an expectation of 84,000. Michael Burry separately called a major crash “imminent,” according to a Kalshi Finance post. These are warnings, not outcomes.
Tom Lee says stocks can handle a 5% 10-year yield because growth is strong. He cited 29% third-quarter earnings growth and 2027 earnings estimates rising from 350 to close to 420. He also said markets would not like 6%.
Stocks have shown strength: Bull Theory reported the S&P 500 reaching $71 trillion in market value, while another post put Nvidia at 5.21% of the MSCI All Country World Index, above Japan’s 5.16%. The credit figures show why the cost of money still matters.
A Treasury Above 5% Changes the Choice
In a portfolio discussion, @value-investing set Lululemon aside after comparable sales fell 9 to 10% and the company expected third-quarter revenue to decline 10 to 11%. He also stayed away from Uber: his scenarios range from substantial upside at high growth to a value 50% below the current price at 10% growth. Competition and what he sees as a lack of a durable moat keep him from investing.
He moved Tencent Music into an investment category after reviewing its cash flows and buybacks, citing a P ratio of nine or 10. He pointed to Kuaishou’s 400 million daily users and profitable core business, while its Clink AI business is losing money.
Other decisions remain mixed. He cited PDD’s 107 billion market cap, 66 billion in cash and 100 billion renminbi investment in Temu. For Charter Communications, he cited declining revenue and 120 billion in debt, alongside an expected 2 billion reduction in capital spending in 2027. He described Adobe’s business as facing a slow decline, sold his remaining Alibaba shares at 175, and said his earlier fear about Google’s search moat has not happened yet. He sees opportunity in offshore drilling but is uncomfortable with the risk of declining contracts.
@geopoliticaleconomyreport argues that the U.S. lost its trade war with China. The speaker says U.S. manufacturers still depend on Chinese parts and materials, and separating the two economies would take years, if not decades.
For @value-investing, a 10-year Treasury above 5% offers income. He worries about inflation and an AI stock bubble, and also points to international value businesses at P ratios of 10.