86x sales, agreed hours after the seller said demand was not the problem
Ahoy there, Trader! ⚓️
It’s Phil…
On Wednesday evening Nvidia told the market its constraint is supply. Demand, said Jensen Huang, runs well beyond the 70% growth guided for fiscal 2028. The company simply cannot build the things fast enough, and the queue is the problem.
On Wednesday night, per The Information, it agreed to pay $12.9bn for Hugging Face, a repository whose annualised revenue Reuters puts near $150m.
That is roughly eighty-six times sales, for a firm that turned down $500m from the same buyer last year at a $7bn valuation. Whoever made that decision should be given something with a ribbon on it.
Thursday’s tape approved. Nvidia added 7.4%. Marvell 5.8%. Micron 4.5%. Salesforce closed 23% higher on a revenue outlook and a deepened Anthropic partnership, which is tidy, because Salesforce Ventures led the 2023 round that valued Hugging Face at $4.5bn.
Ten of the eleven sectors fell. The equal-weight version of the identical five hundred companies fell 0.3%. The S&P rose 0.72%. Both of those are true, and only one of them made anybody money.
Meanwhile the instrument paid to have views on the cost of all this money moved one basis point, to 4.211%, and volatility fell 4.73% to 14.50.
Warsh speaks at ten o’clock this morning.
The One That Mattered
Twelve point nine billion. The agreed price for roughly $150m of annual revenue, or about eighty-six years of sales if nothing grows, which is not the pitch. It was agreed by the company that had just finished explaining that its difficulty is manufacturing rather than finding customers. The customers, increasingly, are firms it has invested in, sold to, or now owns. Anthropic has committed about $45bn over six years to compute running on Nvidia’s next-generation systems. Nvidia’s finance chief told the call that its investments reflect independent commercial judgement and carry no tie-in.
So: if an industry is financing its own demand, what is the interest rate actually for? Today’s Macro Edge goes down that hole. [Read it here →]
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Stock Market Edge
The Index Rose. Its Average Member Went Backwards. One sector carried the session and the other ten filed a complaint
Cash close:
S&P 500 7,730.99, up 55.29 points or 0.72% against Wednesday’s 7,675.70. The equal-weight version of the identical 500 companies fell 0.3%. Russell 2000 3,014.34, up 0.28%. Read at 16:53 ET, S&P futures sat 7,732.50 and Nasdaq futures 29,629.00.
Sector rotation:
Technology was the only sector of eleven to advance. Nvidia 7.4%, Marvell 5.8%, Micron 4.5%, the VanEck Semiconductor ETF 3.5%, the iShares Semiconductor ETF 3%. Everything else went the other way, which is a strange shape for a day that everybody has agreed to call good news.
Earnings and guidance:
Salesforce 23%, the index’s best, on outlook plus an Anthropic partnership. CrowdStrike 9%. Nvidia guided fiscal 2028 growth to 70% and said actual demand exceeds it. Marvell reported after the bell, consensus near $2.71bn against company guidance of $2.70bn plus or minus 5%.
Cross-asset nuance:
The 10-year traded 4.645% early Thursday, two basis points lower. The 30-year 5.161%, the 2-year 4.211%, all of them wire quotes because the official series has not published Thursday yet. VIX 14.50, down 4.73%, in the session before a Federal Reserve Chair’s first Jackson Hole keynote. Crude closed up 1.52% at $83.48. The dollar added 0.23%.
📊 There’s a level on SPX I’m watching closely this morning. My full analysis briefing has it – plus what happens if we hold it, and what happens if we don’t. [Read it here →]
Crypto Market Edge
Eight Record Days, One Still-Negative Year The best month of 2026 has recovered slightly more than half of one quarter
Price snapshot:
Bitcoin read 79,985 at 16:53 ET Thursday, up 1.21%, having taken $80,000 back during the session for the second time this week. It went up alongside equities rather than against them, which is not how the rest of August has gone. Solana touched roughly $109 in early afternoon, up 13.5% in a day and about 44% since the rally began early last week.
Flows and positioning:
An eighth consecutive day of inflows into US spot bitcoin funds. August has cleared $3bn, the strongest month of the year and roughly double April. Net assets closed Tuesday just above $99bn against about $77bn in mid-August, though most of that $22bn came from price rather than from fresh money actually arriving, which is a distinction the headlines keep declining to make.
Leadership and rotation:
BlackRock’s IBIT took around 62% of Monday’s total and roughly $1.3bn last week. Ether products have matched bitcoin day for day. The large alternatives are running hardest, which is what the late innings of a catch-up trade tend to look like.
Catalysts and roadmap:
Three sessions left for August to beat October 2025. The funds are still net negative for 2026 by roughly $2.5bn, so the best month of the year has recovered rather less than one bad quarter. Warsh speaks at 10:00 ET.
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TL;DR – The Bottom Line
- Nvidia agreed $12.9bn for a business billing about $150m a year, roughly eighty-six times revenue, hours after saying its constraint was supply rather than demand.
- The S&P closed up 0.72% at 7,730.99 whilst the equal-weight version of the same 500 companies fell 0.3%. Technology was the only advancing sector.
- Salesforce added 23% on an Anthropic partnership, and Salesforce Ventures led the 2023 round that valued Hugging Face at $4.5bn. Small world, getting smaller.
- The 2-year moved one basis point to 4.211% and volatility fell 4.73% to 14.50, on the eve of the month’s largest scheduled policy event.
- Warsh takes the Jackson Hole podium at 10:00 ET with a September rate rise priced near 36% and Hammack already on air urging him to act.
📌 Fun Fact
The $500 Million Nvidia Offer That Got Turned Down Saying no once appears to have been worth several billion dollars
The Financial Times reported in January that Hugging Face had rejected a $500m investment from Nvidia last year, at a valuation of roughly $7bn. On Wednesday night The Information reported Nvidia has agreed to buy the entire company for $12.9bn. On those two numbers, the refusal aged rather well.
Meme of the Day:
Happy trading,
Phil
Less Brain, More Gain
…and may your trades be smoother than a cashmere codpiece
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