A week dominated by tons of earnings reports and a relentless rally in AI semis, especially memory and CPU stocks.
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Weekly | Why Memory / CPU Rally Accelerated and Outperformed Optics, SMTC & AMD Deep Dive, DDOG, APP, LITE, COHR, PLTR, NET, RKLB, RDW
May 11
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A week dominated by tons of earnings reports and a relentless rally in AI semis, especially memory and CPU stocks. As our long-term readers would recall, we have consistently highlighted the “mis-positioning” by many US funds, which significantly underweight semi/hardware while overweighting software/internet, and, more importantly, they are starting to adjust. This was confirmed by Coatue’s latest presentation, in which they disclosed that Semis + Infra’s long exposure % jumped to 58% as of late, up from 35% at the beginning of the year. This is at the expense of Software, Internet + Other exposure decreased materially.
Source: Coatue
Meanwhile, Altimeter’s Brad Gerstner openly justified the valuation of memory stocks and said he will be on a podcast with the Micron CEO in a few weeks to discuss how the shortage could last until 2028/29 or even longer, suggesting a material shift in his fund’s positioning, too. We sense that the attitude change by these two reputable US TMT funds has ignited FOMO among other investors, including both HFs and LOs, thereby accelerating stock moves lately.
Under this assumption, we think the performance gap between memory/CPU and optics is explanatory. For these funds that missed out on the AI semi rally largely since 2023, MU/SNDK and INTC/AMD are at least names they have known for years, compared to LITE/COHR, which were smaller in market cap and more difficult to understand from a technology perspective. Moreover, MU/SNDK ’s lower valuation multiples on paper are a big help. We believe the LTA announcement during SNDK earnings gave the funds we mentioned above a major reason to chase the names here. The market is starting to discuss that once LTAs exceed 50% of the mix, the stock can no longer be viewed as cyclical. We are increasingly hearing investors benchmarking NAND valuation to HDD at 8-10x FCF. You’ll probably recall the LTA Report we published—the first in-depth LTA Report in the market —which laid out the case for why this LTA cycle is different from previous ones.
Deep|Memory: Sustaining the Supercycle – AI-Driven Necessity and Formidable LTAs
FundaAI| | ·
Apr 1
TLDR: Historically, Long-Term Agreements (LTAs) were tools for memory vendors to protect themselves; currently, LTAs are being utilized by customers to ensure their own protection.
Read full story
In general we have been long in all three AI beneficiary segments and would suggest investors exercise caution in names that are going vertical in the near term, while paying closer attention to other areas that are being neglected.On the Premium Research side, we published an SMTC initiation and an AMD deep dive, among others, validating our conviction in all these segments. Please contact sales@funda.ai for more information.
This Week ’s Reports
Review|DDOG 1Q26: Big Guidance Upside Surprise, No Growth Cliff Concern Anymore. We were bullish into the event but earnings were even stronger than our higher-than-consensus estimates. 1Q26 met expectations but the real story was the guide — 2Q26 +30% YoY (implying ~35% with the typical 5pt beat) and FY26 raised to 26-27% (low-to-mid 30s on actuals), effectively retiring the 2H OpenAI cliff narrative. Two new hyperscaler AI training wins reinforce DDOG’s tech moat over in-house and OTel alternatives.
Review|DDOG 1Q26: Big Guidance Upside Surprise, No Growth Cliff Concern anymore
May 7
DDOG’s 1Q26 results met expectations, but 2Q26 and FY26 guidance were even stronger than our higher-than-consensus estimates, signaling sustained revenue growth in the mid-30s YoY for 2Q and low-to-mid 30s for FY26. This mitigates prior concerns about a growth cliff in 2H26 tied to OpenAI’s migration. Both non-AI and AI-native cohort momentum drove strength, with two hyperscalers adopting DDOG for their AI training, highlighting DDOG’s technological edge. These results reinforce its premium valuation among SaaS peers, supporting our preference for infrastructure SaaS.
Preview|DDOG 1Q26: Stable Core, OpenAI Migration Pushed Out, Bits AI Contribution Still Early
May 5
We spoke with three former / current Datadog (DDOG) sales and channel experts this quarter, and additionally collected first-hand usage feedback from a large North American enterprise customer. Overall, DDOG’s core business held up well in 1Q26, but with clear bifurcation: the AI-native cohort (including AI startups within the AWS ecosystem) grew above expectations as cloud consumption accelerated, while traditional and mid-market enterprises turned more cautious on observability spending as more of their budget was reallocated toward AI projects. Customer feedback on Bits AI was muted; enterprise customers concluded that the cost / benefit tradeoff did not yet pencil after testing, and only the AI-native cohort showed relatively positive uptake. OpenAI’s migration off DDOG is progressing somewhat more slowly than we previously assumed, with full migration now expected around 4Q26, while Anthropic’s usage continues to grow rapidly off a low base.
Review|APP 1Q26: Management Guides E-commerce to ~20% of U.S. Revenue, +25% QoQ
May 6
Quick Take
Preview|APP 1Q26: No META Impact Observed; E-Commerce Reaccelerating After 1Q26 QoQ Decline; Gaming Growth Robust
May 4
We recently spoke with seven AppLovin and Unity industry experts and gathered updates on several key topics
Review|RDW 1Q26: Headline Miss, Clean Margins, Prime Optionality. Revenue grew 58% YoY but missed by 7%, with after-hours weakness driven by the $350M ATM rather than the print itself; underneath, GM expanded to 26.6%, backlog hit a record $498M, and book-to-bill was 1.92x. Andromeda (~$6B opportunity), Golden Dome (VLEO/GEO prime), and Lunar Power Grid reframe RDW from components supplier toward space infrastructure prime — the dilution is buying optionality, not survival.
Review|RDW 1Q26: Headline Miss, Clean Margins, Prime Optionality
May 8
Core Conclusion
Selected Premium Report Snapshot
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