Why the FED Just SAVED Us - And What Meta and Microsoft Earnings Could TRIGGER
Overall Thesis
The Fed's measured approach under new leadership provided market confidence, but semiconductor stocks like Micron are experiencing significant selling pressure despite positive earnings, creating mixed signals for near-term market direction.
Narratives
Jo argues Micron is irrationally oversold given its earnings trajectory, calling it a 'screaming buy' and 'generational buying opportunity' despite a brutal short-term selloff with no fundamental justification. He notes the stock trades at a very low forward P/E despite projected massive earnings growth through 2029.
Key Arguments
- Forward P/E under 7 despite ~300% earnings growth
- SK Hynix earnings the prior day were good for Micron, no oversupply signs
- Projected ~$600 billion in cumulative earnings by 2029, largely locked in
- Selloff is driven by irrational panic/margin liquidation, not fundamentals
Jo has a small Meta position and views its earnings/capex guidance as a key trigger for whether the broader AI-driven market selloff continues or reverses. He noted Meta's forward capex guidance (130-145B vs prior 125-145B) came in as a mild, digestible increase, which he viewed as a positive sign for market stabilization.
Key Arguments
- Capex guidance in line with a slight upward revision is the 'best case scenario' that gives the market least reason to panic
- Meta's earnings miss on EPS was minor and the selloff on it seemed overdone
- Meta is a weaker AI product but included in the trade due to compute buildout/leasing
Jo has no position in Microsoft but sees its earnings call commentary on Azure/AI growth and capex as pivotal for market direction. He noted Microsoft beat earnings and traded near decade-low valuations, framing it as part of the broader 'anti-bubble' big tech setup.
Key Arguments
- Microsoft valuations are at 10-year lows despite strong growth
- Microsoft double-beat on revenue and EPS in this report
- Only AAA bond rating left among mega-cap tech, seen as a sign of balance sheet strength
Jo remains a long-term bull on Tesla, arguing it is 'insanely cheap' but currently moving in lockstep with the broader tech/AI selloff rather than on its own fundamentals. He believes once the broader market panic subsides, Tesla will rally sharply alongside peers like Nvidia and Palantir.
Key Arguments
- Tesla's recent decline mirrors Nvidia, Palantir, Snap, and Micron, showing it's a market-wide issue not Tesla-specific
- Long-term thesis on Tesla and SpaceX remains intact despite short-term volatility
- Market is irrational and fundamentals currently 'play no role'
Predictions (1)
Hedges & Caveats
- Presenter acknowledges uncertainty about market direction: 'I don't want to jinx anything and this selloff can of course continue'
- Presenter notes current market conditions are characterized by 'absolute freefall' and 'overwhelming negativity'
- Presenter discusses personal trading positions with options strategies (short puts) that carry risk of losses
- Presenter states 'No risk, no fun' indicating speculative positioning rather than fundamental conviction