Since last year, Chinese models usage are on an upward march. Peak week: 46%. A year ago their share was 4.5%. And is currently higher than American models. Let that Sink In!!

Not because American companies turned pro-Beijing. But because the tokens are frontier levels and 60–90% cheaper

China’s newest export isn’t EVs. It isn’t solar panels or batteries. It’s intelligence — that is priced to kill.

And tomorrow an important company CXMT, China’s DRAM champion, lists in Shanghai after raising ¥66.6B — about $9.8B, the biggest semiconductor IPO the mainland has ever done. Everyone will cover it as a chip story.

Wrong lens.

Cheap tokens and cheap memory come off the same machine — one that’s been running for five years. It eats Chinese household wealth on one end and exports deflation out the other.

Lets unpack.

· · ·

INSIGHT 1: The quietest mega-crash in financial history

China’s property market peaked in Q3 2021.

Since then: $18–20T of household wealth has been erased. That’s the BIS number, not a doomer blog. Real prices are down 25% from the peak — below where they stood in 2006.

Two decades of housing gains. Gone.

And it’s not finding a floor. New home prices have now fallen 17 quarters in a row.

Property was the Chinese savings account. So the Chinese consumers have pretty much shut down making expenses

INSIGHT 2: Beijing’s answer was factories, not welfare checks

America’s answer to its housing bust was to reflate the consumer.

Beijing looked at the $19T hole and chose a different religion: build more supply.

Except the printer wasn’t pointed at households. It was pointed at industrial capacity.

The output shows up exactly where you’d expect. China ran a record $1.19T trade surplus in 2025 — while producing 30% of everything manufactured on Earth.

INSIGHT 3: You’ve already watched this movie. It was called solar.

Solar modules cost over $4/W in 2008. Today: about $0.25. Down 94%.

Now put that curve next to what DeepSeek did to frontier token prices.

Yep!!

INSIGHT 4: The newest export is intelligence — and it’s tariff-proof

Going back to the number in the open. 4.5% to 46% in one year

The mechanism is brutally simple: GLM-5.2 and Kimi-K3 land within spitting distance of the US frontier while running 60–90% cheaper.

If you are a believer of 24X7, Always on AI, this is an important change to pay attention to.

Chinese labs have a bigger share than the American counter parts now.

INSIGHT 5: CXMT watch it for interesting clues

Back to tomorrow’s IPO.

CXMT priced at ¥8.66 — an $85B valuation, the largest mainland chip listing ever. Business Times reckons it could end day one as the biggest listed company in all of China.

Will memory get the solar treatment? Honest answer: I don’t know. AI demand is a different animal

INSIGHT 6: No Lehman. Something slower and meaner

China’s capital account is closed, and so the losses are domestic, held by state banks, socialized in slow motion. A $19T wipeout with no margin call. Nothing like the 2008 Great financial crisis.

The real casualties are industrials, not financial. “As China exports its surplus, Korea, Germany and Japan pay the industrial price” — that’s a January news headline, not my phrasing. By March, the EU Parliament had commissioned a formal overcapacity study. By June, the Atlantic Council was writing that Europe “has had enough.”

Disinflation for consumers. Deflation for competitors. Trade wars for everyone.

What am I doing with this?

1. Respect the machine. Anything where the Chinese marginal producer sets the price — commodity chemicals, mass-market EVs, legacy solar — is structurally short. The competitor’s margin IS the export

2. Own the cost-curve consumers. Cheap tokens subsidize the application layer the same way cheap panels subsidized solar developers. Falling input prices re-rate whoever BUYS intelligence at scale

3. Watch what CXMT does with the war chest, not the day-one pop. Capacity announcements over the next year tell you if memory gets the solar treatment

4. Watch out for the Open source beneficiaries

5. Staying away from ORCL since, they bet on Open AI and I see value that accrued on the frontier labs are starting to shift

6. America is trying to inflate away its debt by exporting inflation while China is exporting it’s deflation. Truly the war of the titans!
   
   

US labs have no choice but to cut prices! This is why Fable was pretending to leave the Stable (Subscription) , but it could never do so


P.S.

• This article is a premise to 3 insightful articles that I will publish in a flurry. So stay tuned

• I don’t intend to buy any positions in CXMT

Perplexity, Claude, Chatgpt all fail at this task because they got so much data that is high noise.

I will be sending more industry analysis in the coming days using this agent. For our Enterprise clients, click through auditability on transcript quotes was important, so we built it.

We are rolling this out to our Enterprise customers, so if you would like a demo, please write/DM me

DISCLAIMER: Beyond this point, the email is completely agent generated. But is incredibly insightful on finding opportunities

QUERY: What do you think are the next emerging themes/niches and are guiding for massive growth but the stock’s still yet to see that in action. Focus on AI beneficiaries

Across a deep scan of small-to-mega-cap earnings transcripts, several distinct AI-beneficiary niches stand out where management teams are describing genuine demand, raising guidance, or building entirely new product categories — yet the stock hasn’t followed. Below, I group them by theme, cite exactly what executives said, and show the performance gap.

1. AI’s “Trust Layer” — Governance, Security & Recovery for Autonomous Agents

This is perhaps the cleanest new IT spending category that barely existed 12 months ago. As enterprises deploy AI agents, the conversation has pivoted from “what can AI do” to “can I trust, govern, and recover when it goes wrong.”

AvePoint (AVPT) — CEO Tianyi Jiang, FY2026 Q1 (May 8, 2026):

“The conversation has pivoted away from productivity and towards something far more important, enterprise trust in this new enormously powerful technology… as AI agents operate more autonomously across enterprise productivity apps, companies truly need a trust layer so that they can scale AI adoption without losing control of data security, privacy and compliance.” — Tianyi Jiang, CEO · AVPT FY2026 Q1

AvePoint posted its 12th straight quarter of double-digit organic net new ARR growth and was validated by Gartner as superior to Microsoft’s native Agent 365. The company launched specific products to monitor AI agent behavior (Agent Plus), define risk for agents, and auto-remediate issues.

N-able (NABL) — CEO John Pagliuca, FY2026 Q1 (May 8, 2026):

“As we look ahead to a world with agents owning more workloads for businesses, the possibility of agents making costly mistakes also rises. We see the need to effectively undo agent mistakes and restore operations through a clean prior state as a potential demand catalyst.” — John Pagliuca, CEO · NABL FY2026 Q1

N-able is positioning its security platform as the “control plane to govern and secure agents.” ARR hit $548M (11% growth), with 106% net revenue retention.

2. AI-Powered Agent Orchestration & Analytics Platforms

Beyond the trust layer, there’s an emerging category of platforms that coordinate AI agents, build AI apps from natural language, and run real production workloads — not just dashboards.

Domo (DOMO) — CEO Joshua James, FY2026 Q4 (March 10, 2026):

“The next wave of enterprise AI will be less about models and more about coordinating data decisions and workflows… our platform doesn’t stop at insight. It unifies data, provides AI-driven intelligence via our AI service layer and with Agent Catalyst enables agentic workflows in a single system.” — Joshua James, CEO · DOMO FY2026 Q4

Domo reported record quarterly billings ($111.2M, +8% YoY), highest gross retention in 3 years (88%), and described 15 production AI agent deployments across restaurant chains, home improvement retailers, pharma companies, financial services, industrial manufacturers, and compliance tech. AI now comes up on ~70% of customer calls. The stock? Dismal.

Unity (U) — CEO Matthew Bromberg, FY2026 Q1 (May 7, 2026):

“Unity is on an incredible trajectory… strategic revenue growth of 35% year-over-year… our Vector revenue in the first quarter of 2026 is 80% larger than 1 year ago, an astonishing result.” — Matthew Bromberg, CEO · U FY2026 Q1

Unity launched Unity AI (an integrated agent that writes code directly into Unity projects) and ingests image pixels, outputs production-ready game assets. 90% of game developers already use AI in workflows, new mobile apps are up 60% YoY, and Unity expects to become GAAP profitable by Q4 2026. Yet the stock has been hammered in the near term.

Amplitude (AMPL) — CEO Spenser Skates, FY2026 Q1 (May 7, 2026) confirmed “a significant increase” in AI agent adoption on the analytics platform, deployed “forward engineers” to help customers integrate AI.

⚠️ Micro-cap risk is significant — especially DOMO at $2.42. These declines may reflect solvency or business model concerns, not just mispricing.

3. AI Infrastructure With a $553 Billion Backlog — The Stock Doesn’t Reflect It

Oracle (ORCL) is the single largest gap between AI narrative and stock I found. On the FY2026 Q3 call (March 10, 2026), CEO Clay Magouyrk:

“Multicloud database revenue grew 531% year over year. AI infrastructure revenue grew 243% year over year. Both also have demand that exceeds supply… This is directly visible in our $553 billion RPO.” — Clay Magouyrk, CEO · ORCL FY2026 Q3

Oracle has secured 10+ gigawatts of power and data capacity over three years (>90% partner-funded), signed $29 billion in new contracts since the prior quarter alone using a bring-your-own-hardware model, and hit 32% AI infrastructure gross margins (above guidance). The company is “constantly raising our FY27 forecast.” The stock: down 6% YTD, down 11% over 1 year ($184.29).

Contrast with Cisco (CSCO) — AI infrastructure orders of $5.3B YTD (4.5x FY25), Acacia optics growing 200%+ YoY, campus refresh multiyear cycle underway. Stock: +57% YTD. The market is very discriminating here — Cisco’s AI story has been bought; Oracle’s hasn’t, despite arguably larger numbers.

4. AI-Driven Drug Discovery — Faster, Cheaper, Fewer Compounds

Recursion Pharmaceuticals (RXRX) is building an end-to-end AI-powered drug discovery engine. From the FY2026 Q1 call (May 6, 2026), R&D Chief Najat Khan:

“We are synthesizing 90% fewer compounds than the industry benchmark… about 330 compounds on average versus 2,500 to 5,000 compounds… while advancing development candidates roughly twice as fast.” — Najat Khan, R&D Chief · RXRX FY2026 Q1

Recursion has 50+ petabytes of proprietary multimodal data, over 10 high-dimensional disease biology maps (half in partnership with Roche/Genentech), and clinical enrollment running 30-60% faster with its AI ClinTech tools. Phase 1 assets are now dosing (REC-4539 in small cell lung cancer). Yet the stock is down 23% YTD, down 33% over 1 year ($3.23). This is a pre-revenue biotech carrying high binary risk, but the AI moat is real.

5. AI in Legal Tech / eDiscovery

CS Disco (LAW) applies AI to legal document review. CEO Eric Friedrichsen, FY2026 Q1 (May 6, 2026):

“Overall, I’m incredibly pleased about the revenue, 14% revenue growth for the business this quarter.” — Eric Friedrichsen, CEO · LAW FY2026 Q1

CFO Aaron Barfoot added that $100K+ customer adds grew 5% sequentially and described it as a “leading indicator” — matters come in, expand, and convert to platform revenue. The Auto Review AI product is bringing in new matters and converting some to managed services. Yet the stock is down 52% YTD ($3.47).

6. AI in Compliance-Heavy Payroll & HR Systems

Asure Software (ASUR) is a small-cap payroll and HR compliance platform where AI is a moat-widener, not a disruptor. CEO Patrick Goepel, FY2026 Q1 (April 30, 2026):

“We move approximately $20 billion annually on behalf of our clients… These are not functions that a generic AI layer can absorb. The regulatory complexity does not go away. In fact, it compounds.” — Patrick Goepel, CEO · ASUR FY2026 Q1

Revenue grew 23% YoY to $42.8M. Organic growth accelerated to 7% (from 3% in Q1 2025). Luna, the AI agent, saw interactions up ~50% QoQ, adopted by >15% of potential users with zero marketing. The AI layer is converting manual compliance workflows into proactive continuous systems, and the new AsureWorks managed service brings 2-3x the revenue of a payroll-only client. Stock: down 9% YTD ($8.27).

7. Edge AI Fiber & Distributed Compute Infrastructure (Early Stage)

Clearfield (CLFD) is a small-cap fiber company pivoting toward edge AI infrastructure. CEO Cheryl Beranek, FY2026 Q2 (May 6, 2026):

“Industry trends continue to support a shift toward compute closer to the end user, as low-latency AI applications require faster processing capabilities… This dynamic will drive the build-out of smaller distributed edge locations that function like compact data centers and require high-density fiber connectivity.” — Cheryl Beranek, CEO · CLFD FY2026 Q2

Backlog rose 39% sequentially (1.3 book-to-bill), the NOVA Platform for edge AI ships in H2, and BABA-compliant fiber extrusion is ready. The stock is up 37% YTD but only +5% over the past year — early recognition of the thesis.

Dycom (DY) — EVP Dan Peyovich on the FY2026 Q4 call (March 4, 2026) described a $20B+ TAM for AI-driven long-haul and middle-mile fiber construction:

“Is it more than $20 billion? We strongly believe that… today, we are getting more phone calls and seeing more opportunities than we saw even a quarter ago or, frankly, even a week ago.” — Dan Peyovich, EVP · DY FY2026 Q4

Dycom’s fiber-for-AI story is back-half weighted, ramping through 2027-2028. Stock is up 31% YTD (+97% 1-year) — partially discovered.

8. Inference Economics & The Token Multiplier

Multiple CEOs flagged the same inflection: agentic AI drives 5x-30x more tokens per task vs. simple chat. This means the inference economy is radically underbuilt.

Digital Realty (DLR) CTO Chris Sharp, FY2026 Q1 (April 23, 2026):

“As agents come to market, it’s a demand multiplier… 5x to 30x more tokens per task… that’s going to really drive another inflection point.” — Chris Sharp, CTO · DLR FY2026 Q1

MARA Holdings (MARA) CEO Frederick Thiel, FY2026 Q1 (May 11, 2026):

“We’re seeing thousand-fold increases in agentic token consumption when somebody moves from chat to using Cowork or Claude Code… Just talk to any CIO and ask what their token bills are lately.” — Frederick Thiel, CEO · MARA FY2026 Q1

DLR is up 21% YTD; MARA is up 43% YTD. The inference hosting/token factory thesis has partial recognition but is still early.

✅ Already Priced In: Themes Where Stocks Have Moved

For clear contrast, these AI beneficiaries have seen massive price action — the narrative is well-understood by the market:

Key Takeaways

• AI Trust & Governance is the freshest unmet theme. No company I found has a clearer story than AVPT and NABL — both explicitly building the security and control infrastructure for autonomous agents, both growing ARR double-digits, both down 20-60% YTD. The risk is that platform giants build native governance, but these companies are pre-integrated and validated.

• Oracle has the biggest narrative-to-price gap of any mega-cap. A $553B RPO, 531% database cloud growth, and $29B signed in three months at improving margins — yet the stock is down YoY. This is a puzzle the earnings calls repeatedly flag: “the market has yet to recognize” is a recurring management theme.

• The AI agent orchestration plays (DOMO, AMPL, U) are heavily beaten down but pivoting hard. Unity’s 35% strategic revenue growth and Vector AI scaling, Domo’s 15 production agent deployments, and Amplitude’s agent adoption surge are real. These names carry execution risk and micro/small-cap survivability concerns.

• AI Drug Discovery (RXRX) and AI Legal (LAW) are longer-duration bets. Both have real AI differentiation (50PB data, 90% fewer compounds; 14% revenue growth, expanding $100K+ customers) but the stocks need catalysts — clinical data readouts for RXRX, sustained revenue reacceleration for LAW.

• The inference token multiplier is a theme everyone is talking about but few are positioned for. DLR’s CTO on 5-30x tokens, MARA’s CEO on thousand-fold increases — the buildout of inference infrastructure (token factories, private AI clouds, edge compute) is a multi-year wave where the capital hasn’t fully deployed yet.

• The market is discriminating sharply. Memory (MU +260%), custom silicon (MRVL +247%), and copper/fiber/cooling (BE, DOCN, VRT) are well-recognized. The next wave of recognition seems most likely in AI governance/trust and in the companies building the software orchestration layer for agentic AI — but those are smaller, riskier names.

Disclosure: I have used excessive AI generated memeS for this article.

• • •

Everyone thinks the battery business is about batteries.

Cells. Chemistry. Gigawatt-hours. Who makes the cheapest box.

They’re looking at the wrong thing.

The actual money is NOT in making the battery. It’s in running it.

Charging when power is cheap, discharging when it’s expensive, and getting paid a third time just for being on standby. Same physical asset, many revenue streams

A well-run battery is a quant trading desk wearing a steel enclosure.

This is the model that quietly produced the best numbers in the entire energy sector last year. Not the panel makers. Not the cell makers. The owner-operators!!

INSIGHT 1: THE BOX IS THE COMMODITY. THE TRADING IS THE BUSINESS.

Battery costs are massively down and there is currently an oversupply in batteries due to China subsidizing this industry for a few years now.

Lets unpack what a merchant battery actually does in a day.

Midday, solar floods the grid. Power prices crater — sometimes negative. (Hello Germany!!) The battery buys. (Yes, sometimes it gets paid to charge.)

Evening, the sun sets, everyone turns on the AC and the EV charger, prices spikes multiple x’es. The battery sells.

That spread — buy at $10, sell at $40-$80 — is the entire game. The battery is long volatility. It doesn’t care if power is cheap or expensive. It cares that the price moves.

I have written about this insight extensively last year here.

And it stacks with other use cases. A battery earns from:

1. Energy arbitrage — buy low, sell high, every single day.

2. Ancillary services — frequency regulation and reserves, where you get paid just to be available to respond in milliseconds. Pure standby income.

3. Capacity payments — utilities pay you to exist so they don’t have to build a peaker plant.

The grid pays for all of it because it physically cannot keep the lights on without something that absorbs solar’s midday glut and releases it at 7pm.

Punchline: you’re not selling electricity. You’re selling optionality

Here is a great illustration

Read more

Demnang2 released a thoughtful piece, breaking down what will drive Edge AI’s success. It contains a key insight to build conviction in our pick.

Now I don’t want to share his work here for free, so please go check out the article here

Damnang’s Substack

Edge AI Investing Guide: Where Capital Goes After Cloud AI

For the past two years, almost all of the capital flowing into AI has gone to the data center. NVIDIA’s quarterly revenue exploded, and HBM and CoWoS owned the headlines every day…

Read more

2 months ago · 6 likes · 3 comments · Damnang

A lot of people will feed this article to their AI and reach similar conclusions.

I am gate keeping the insight/name for subs but will release the articles for everyone soon. Last time WOLF, IPWR, and MX and they ran so fast quickly that we all barely time to digest and position into them

Read more

For today, there is a stock that is completely misunderstood and hasn’t run much yet. You know how tightly I control the quality

Read more

When I picked up the phone and spoke to the IR team of TOYO, I realized something profound. Also realized why Leopold might have bought into TE.

Hours of researching the solar supply chain helped me connect the dots and I now know what the US govt. is incentivized to do.

This article will help you build conviction

So China has complete chokehold on Polysilcon.

You could try to produce Polysilicon elsewhere, but it is 3 times more expensive. Just look at Hemlock/GLW (US), Wacker(Germany) and OCI (Korea) the biggest non Chinese Polysilicon producers.

Like literal 3X

I pointed out in the previous article that Polysilicon (the raw material for Solar) is used and required for Semi conductor chips. 2% of the highest grade is used in semi conductors and 98% in Solar.

That’s the part that finally clicked for me

Solar and Semi are married at the hip

The economics of producing Polysilicon at home, doesn’t work, if you don’t have Solar buying up the 98% of the remaining produce . So in order to have American suppply chain for semi conductors, YOU have to have a business case for the 98% of its product which is solar.

TLDR:

Meaning, If you want to be long SEMI, You have to be long Solar.

I can already see what Trump administration will have to do. They got no choice but to pump American solar industry and continue incentivizing the build out, because they love their chips and want to bring it onshore

With this thesis, CSIQ, ARRY, NXT all warrant more closer look

I have written extensive deep dives on TE, if you haven’t read those yet. Here they are. As always DO NOT CHASE, when it is ignored again, swoop in.

P.S. This is why I wouldnt touch FSLR as they are the biggest US solar manufacturer but uses CdTe thin-film, not silicon. So if the policy goal is propping up the polysilicon→semi corridor, FSLR is outside the thesis

I was writing an in depth article on a Robotics bottleneck play.

Serenity unfortunately just now mentioned it and I am forced to release my half baked article.

If you have money in your IBKR account, you could get in on Sunday late night (Japan’s stock market open) and play along.

I started mentioning this name to my inner circle in March. I will start publishing my early ideas more often. I want you to consume them before the swarms of bees arrive. Maybe in a chat community.

I have a bigger article coming up on how inflation is here to stay and is going to be structural. OPEC talked about loosing 30% of their production capacity. And Cathie is delusional (Again) when she says tech is going to cause disinflation.

Lets begin

HARMONIC DRIVE (6324)

Here is the short thesis

- Every humanoid uses 10–40 strain-wave actuators per unit at $2k–$5k each → arguably the single highest-margin BOM line in the robot. There is literally no other western provider for this except Harmonic drive

A strain wave gear (aka harmonic drive) is the precision reducer that turns a fast, weak motor into the slow, high-torque, zero-backlash motion a robot joint needs.

Three parts: an elliptical wave generator spins inside a flexible steel cup (flexspline) whose teeth mesh, at two points, with a slightly-larger-toothed outer circular spline. Each motor revolution advances the output by only a few teeth → 50–160× reduction in one stage, sub arcminute backlash, very high torque density.

- Micron-level grinding and flexspline metallurgy are the moat.

Only real challenger: Leaderdrive / Green Harmonic (688017.SH), which already supplies Tesla Optimus and owns >60% of China domestic share. Nidec, Sumitomo (cycloidal alt.), and a handful of Korean startups (e.g. SBB Tech) chase.

- Closest analog: ASML in lithography — one Japanese firm holds the precision-machining know-how the rest of the industry needs to scale.

1. Why HDS holds the chokepoint

The thing isn’t really “harmonic drive” the product — it’s strain wave gearing, a category invented by C. Walton

Musser in 1955. That original patent is long expired; HDS’s moat today rests on three layered things:

- Tooth-profile IP. HDS owns the modern profiles that actually work — the “S-tooth” and “IH-tooth” geometries that get ~30% of teeth in continuous engagement (vs. far fewer in involute gears). That is what gives the unit zero backlash, sub-arcsecond repeatability, and high torsional stiffness in a pancake form factor. Patents extend to lubrication sealing, dual-stress separation (US 10,788,114 — Ishikawa 2020), and powder lubricant delivery.

- Process know-how. Flexsplines are thin-wall hardened steel that has to fatigue-cycle hundreds of millions of revolutions. Heat treat, grinding, and surface finish tolerances are deeply tacit — patents don’t tell you how to actually make them survive. This is the harder-to-copy layer.

- Reference designation. In semiconductor lithography, surgical robots, satellites, and high-end SCARA/six-axis arms, HDS is the de-facto spec. Once you’re in a customer’s CAD and qualification dossier, you’re in for a decade.

2. Can they be innovated out?

Partially yes, already happening — but only at the low/mid end:

- Chinese challengers (Suzhou Green Harmonic, Leader Drive) sell harmonic reducers at 40–60% of HDS price and have ~25% global share. Green Harmonic is bringing a 500k-unit/yr Suzhou plant online in 2026 specifically for humanoid demand.

- For commodity humanoid joints, “good enough” precision + cost will erode HDS’s unit share. Tesla’s strategy of dual-sourcing HDS + Green Harmonic is exactly this — qualify the Japanese gear for early bring-up, ramp on Chinese gear when volumes arrive.

- For sub-arcsec / aerospace / semicap / surgical, the manufacturing moat still holds. No credible substitute has emerged — RV/cycloidal (Nabtesco) is heavier and used at the base joints, planetary roller screws are linear-only,and magnetic gears haven’t matured.

So: HDS can be innovated around at low precision but probably not replaced at the high end inside a 5-year horizon.

The real risk is mix shift — they own a smaller piece of a much larger pie.

3. Does Tesla buy from them?

Yes, but not exclusively, and there is no publicly disclosed direct purchase agreement. Industry supply-chain teardowns (China Merchants, 36Kr, futunn) consistently list HDS alongside Suzhou Green Harmonic as Optimus harmonic-reducer suppliers. Tesla Optimus uses 14 rotary actuators, each = frameless torque motor + harmonic drive + sensors. Tesla’s known posture is dual-source; the $685M Sanhua order was for thermal/linear actuators, not harmonic gears.

HDS itself has not disclosed Tesla as a named customer in any IR document I can find — they discuss “robot manufacturers in Japan/China/Europe” generically. So treat the Tesla angle as strongly inferred from supply-chain reporting, not company-confirmed.

RISKS:

No insider buys in the last year. I am scratching my head on this one. Stockdrifts has Japanese and Korean stock insider graph.

—————————————————————————————————————————————————————

A few months ago, I talked about Status quo and the fundamental shift that is required to realize 30-50X increase in Power density within AI data centres.

Let me do a quick recap

Problem:

• A single NVIDIA B200 or AMD MI300X consumes 0.9kW – 1.4 kW. Dont even ask me about Ruben.
• A “pod” of 8 such accelerators + CPUs approaches 12–15 kW
• An AI training cluster is hundreds of pods – multi-megawatt

At 12 V distribution you would need kilo-ampere bus-bars thicker than a wrist; power loss alone would exceed the chips’ TDP

• On top, Every 1 cm² of copper busbar you delete saves you north of $20/kg and a small argument with the procurement team.

Hear about it directly from the Horse’s mouth

NVIDIA’s own whitepaper claims ~45% less copper in an 800 V plant.

So First principles first, whats actually happening?

Here is a nice infographics to follow along the transition. Power distribution is changing from AC into DC microgrids.

Optics is forcing this transition quickly. And now that the retail knows what happened to Optics stocks, they are coming swinging for this sector too.

Here is what you need to understand about the Power Semis

Voltage is the cheat code. Crank it up early and keep it up for as long as possible. Then step it down ONLY inches from silicon, and you can unlock power dense, greener, cheaper AI factories.

If you need a refresher, go read this 6 months old post first.
On this post, VICR did 5X since this post.

If you are confused about SiC, vs GaN etc. Here is a great infographics that shows where does each of them thrive in the Data center value chain

Now that the market is interested in this deeply, lets go through the 3 small cap names that might do a few multi baggers for us. I will assess them and rank them.

IPWR: ($45M MC. Riskiest with the highest upside )

The 800V DC data center transition is creating structural NEW demand for solid-state circuit breakers. B-TRAN is uniquely positioned to serve this. CEO bought $250K personally at $2.75 (the 52-week low).

- Lead customer qualification Q4 2026, revenue ramp 2027. Markets might sniff it out if it works. They are eyeing the $200M sales pipeline
- They raised recently and will enough cash until the end of year atleast.

All excellent points from their deck

Under‑Appreciated Technical & Strategic Angles

IPWR’s B‑TRAN architecture targets a part of power semis that many investors (and some comps like NVTS) barely touch.

• B‑TRAN is a fundamentally different device: a true bidirectional bipolar transistor vs. unidirectional FETs and IGBTs.

• B‑TRAN: one double‑sided device replaces four devices (two switches + two diodes) in a conventional bidirectional leg.

  

• Economic value is in bidirectional, high‑current protection and switching, not just generic conversion (where NVTS focuses).

• Design‑win path and Stellantis work suggest “system‑level” attach, with long product lives once designed in.

• Capital‑light model with foundry partners lets them scale on mainstream silicon, not exotic substrates.

• Patents: 52 U.S. + 47 foreign issued, 76 pending (as of 12/31/2025) on B‑TRAN.

  

NVTS’s GaN is optimized for high‑frequency switching DC‑DC and AC‑DC; in protector/contactor/SSCB roles its conduction losses and need for extra devices are typically worse. Module‑level density and thermals

Fewer die + much lower conduction loss ⇒: Smaller heat sinks and bus bars.

Implication vs NVTS:

Navitas competes mainly in conversion (chargers, inverters, some motor drives) with unidirectional FETs; IPWR is attacking bidirectional protection and switching functions where a true bidirectional bipolar device has a structural advantage and can displace multi‑device SiC / IGBT stacks.

NVTS has a strong GaN IP portfolio, but it’s all FET‑based. To attack IPWR head‑on in these exact bidirectional switch topologies, they’d likely need new IP and process development.

Key Disconnect and Summary

1. Binary pre-revenue bet, but the risk/reward is massively asymmetric. Lead customer qualification Q4 2026, revenue ramp 2027. Markets might sniff it out

2. Risk: Pre-revenue. Illiquid. Technology adoption could slip. If B-TRAN doesn’t get qualified by year-end, cash runway becomes a concern.

WOLF: ($1.26B)

SiC is becoming the bottleneck material for the AI power stack. Structural capacity constraint on Silicon Carbide wafers. Wolfspeed owns the only 200mm wafer fab on the planet. They are lining up for 300mm wafers and do it in Ameria. Supply chain risk might make this a strategic priority

The Alpha: Market cap (~$1.25B) roughly equals cash ($1.3B). You’re getting the world’s only 200mm SiC fab, 2,300+ patents, and 300mm SiC technology leadership essentially for free. Renesas’s $2B+ investment implies $55-65/share — nearly 2x current price. AI data center revenue is growing +50% QoQ.

Analysts still have a consensus “Reduce” at $14.33 target — 48% below current price. They are stale and will be forced to upgrade.

Emerged from bankruptcy with debt at $2B vs. 6B. Big progress

Key Disconnect: The market is stuck in “bankruptcy hangover” mode while the business is pivoting to AI at breakneck speed. SiC is the ONLY material that works for 800V HVDC (physics moat). Mohawk Valley at ~30-35% utilization means massive operating leverage ahead — every 10% utilization gain drops straight to the bottom line.

Also, their fabs are American.

Risk: Competition on 6-inch substrates (though not on 200mm/300mm).

Watch: May 5 Q3 FY26 earnings (AI revenue trajectory + utilization update). Design win announcements for 10kV SiC MOSFET. 300mm customer qualification milestones.

MX Magnachip: ($155M)

• Cash ($103.8M) = 66% of market cap

• 55 new products launched in 2025 vs 4 in 2024 — a 14x acceleration

• They are actually buying back instead of diluting which most small caps do

• Byreforge LLC filed a 13D (activist intent) for 8.5%

The Alpha: Market prices MX at 0.4x book as a dying display company. Reality: it’s a focused pure-play power semi company with an activist-loaded shareholder base and insider buying at every level. CEO bought 30K shares at $2.84. CFO bought 10K at $2.87. A director bought 60K shares in March

If you simply glance at the fundamentals, they don’t exactly inspire confidence. But, what’s unknown is that they decided to do a full pivot into Power semis. Sold their display business to concentrate fully.

Their outstanding shares are reducing. This is a business in a turnaround stage.

Key Disconnect: The new product pipeline (40V/60V MV MOSFETs for AI servers, IGBTs for solar/ESS, Hyundai Mobis automotive JV) is invisible to the market because headline revenue is still declining from the display exit. Q1 2026 guidance shows gross margins improving from 9.3% to 14-16% sequentially — the inflection is starting NOW.

Risk: Execution risk is real. Legacy pricing pressure. Power semi revenue must ramp fast enough to offset display runoff. Competition from much larger players (Infineon, ON Semi).

Watch: Q1 earnings April 28 — this is 5 days away and the volume surge today (+22.7% on 10-15x normal volume) suggests someone knows something.

These KPI metrics do not show any improvements and hence, Analysts are clearly not pricing in the chance of growth in their business

MOSFET line (0.7mΩ Rdson, 397A, 25% faster switching, PDFN56 package) for sync rectification in the final power stage. That’s where they compete and compete reasonably well against the likes of Infineon and Alpha & Omega at that voltage class

Closing Thoughts:

I Asked Claude Code to determine the Upside Case. Do what you will with it. They are all in different Risk categories to be honest

In my last message on 16 Mar , I talked about how I am raising cash in my folio since a few weeks and that bounces were to be sold. This bounce seems no other, especially because Trump yesterday said nothing new in his speech.

Trump TACO’d 3 times and markets simply ignored until 2 trading days ago. And now this reaction is getting awashed too. Remember that bullish news + bearish action = bearish

This rally has been so good so far, but On a dead cat or oversold bounce, the QQQ is going to rebound aggressively to overbought conditions, stop there, and then crash back down to earth.

So we gotta stay vigilant and watch the reaction today and tomorrow, SPY at 610-615 is gonna be very juicy if there is a last leg downwards.


My entire strategy is to find misunderstood names that are overly negative and get a good entry point. Timing the macro markets perfectly is not where the real money is made, but rather buying when everybody is scared in strategic SPY and QQQ levels like 610-620. Thats when I get in heavy with the cash I raised.

This has allowed me to do well as well as stay calm in these moments of volatility. My opinion is that the markets don’t bottom when Oil is still making all time Highs. Lets see

That being said, here are some of my favorite names to play right now. I usually talk about small caps, however, in downturns, you wanna get into famous big names so you can hold with conviction and for the strong bounce.

RDDT

It is getting lumped into a software basket. Too much negativity for a product that has real network effects and real moats. Yes there is some scare around META’s lawsuit and being liable to creating addictive software, but it is worth to look at

It’s showing early signs of Operating leverage. Expenses are not lifting off as fast as the profits are. This is a sign of a great business. Ofcourse the margins and cash flow is seeing a lift as well

I am super pleased to see the uplift in ARPU in the US as well as the global average revenue. Seems like they have been able to grow their Daily active users as well as the revenue they generate from them

Stockdrifts is working on a feature to identify if growth is accelerating or decelerating. Market is punishing deceleration, so this feature is important. In the meantime here is a snapshot of how growth is slightly accelerating in the US and Internationaly

Buy Zone: $90-$110 is a great accumulation zone

MU

All the news about DRAM prices dropping is peak stupidity.
90% of DRAM is sold as contracts and the contract prices is what actually matters.

This is what reputable research house are talking about. 60% QoQ increase in 2026. HOLD MY BEER!!

There are plenty of X posts talking about how turboquant is a year old innovation and how it is not going to relieve the pressure on tight Memory supply

This correction is a gift. Just look at how this revenue is actually accelerating. Not growing, but accelerating.

Another reason why MU is a better bet than SK Hynix and Samsung because MU has better access to North American helium-linked supply chains

U.S. helium logistics can be more secure during the Iran and US war

Helium prices have roughly doubled since the Iran war began, according to Fitch Ratings. Severe helium disruption is actually bullish for premium memory pricing And that usually helps Micron compared to its Asian competitors

Ofcourse, MU has done 3X suddenly from the last base, so you gotta be careful about your entry points. I am eyeing the 260-290 level. Fingers crossed.

Buy Zone: $260-290

Rest articles covers 2 more names I am excited about

Read more

What Happened & Why the Stock is Down 20%?

For paid subscribers, I have my analysis of T1 and TOYO’s earnings and the arguments about the Ethiopian TOYO’s strategies. Here is a snapshot, TOYO is making a lot of EBITDA vs TE

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They hold a lot of memory patents and is crucial for HBM, MRDIMM memory stack. All the big ones SK, MU, Samsung as well as Google will have to pay them substantial amounts. Litigations going on for over 15 years. Will reach a conclusion this year. District court already ruled in favour with $1B. Should be more actually

There might be partnership deal with SK Hynix coming very very soon. SK Hynix 5 year partnership deal is expiring. The space is too valuable for SK Hynix to NOT renew.

But leaving the litigations aside, their product revenue is ramping up massively. Here is a snapshot from Earnings from a few weeks ago.

There are every indication that Q1 2026 might be better as well.

Here is some commentary from the CEO. I find that very very interesting

“Sales volume for Lightning, Netlist’s overclocked and low latency DDR5 line of products, is ramping up nicely in the system integrator market segment. Adding to this, we’ve completed qualifications at a global server OEM, and they, in turn, are currently in testing with many of their end customers.”

— Chuck Hong, Q4 2025 Earnings Call (prepared remarks)

So their products are coming along well and they are not just relying on litigation and IP fees.

Also,

“A ruling in Netlist’s favor would direct U.S. Customs and Border Protection to stop Samsung memory products that infringe these patents from entering the U.S.”

— Chuck Hong, Q4 2025 Earnings Call (ITC discussion)

Secondly, do you think for a such an important product like memory, Samsung would diddy around and NOT settle? They have already won this case 3 times in district court. ITC is just going to force a fast resolution.

Also, I thought it was interesting to point out that cost of borrowing is at 20%. And now suddenly overnight 8.5M shares become available.

I expect manipulation or some kind of funny business soon. So if it comes to $1-1.2, I might be looking to averaging upwards.

I was the ONLY analyst covering NLST on X, but I can assure that there are plenty of cult retailers on this name over the years.

I am raising some money in my account to profit from the opportunity IF it arrives due to a prolonged war.

I dont think the market’s really realized the risks/chances that Fed might not cut or might actually hike. Market’s been expecting Fed’s control by Trump and this might not materialize in mid terms.

In any case, all you can do is get into misunderstood stocks, at a good entry point and wait for your thesis to play out.

In the next post, I want to share some exciting ways I have been able to build alpha pipelines. Will send the next post soon

Spoiler Alert: $TE will do just fine!!

Module assembly capacity has surged to ~65 GW annually, HOWEVER, the supply chain remains imbalanced with only ~8.3 GW of wafer capacity and ~3.2 GW of c-Si cell capacity domestically

Okay while we scratch our heads over that, there is an S&J’s interview with TE’s VP this Thursday. Definitely don’t miss

Okay, lets look at the supply chain that exists. 5 steps to get to that sweet sweet Solar Panel

Supply chain capacities across the world

This chart allows you to appreciate the mismatch and how the dream of full vertical integration is still far far away.

STAGE 1: POLYSILICON

Combined US nameplate: ~50-55K MT/yr. Actual production ~33K MT. If all of that was converted into Solar cells it would be equivalent to ~13-16 GW of solar modules.

Keep in mind that Polysilicon is also required for semi conductors. Albeit the grade gotta be much purer than solar. 98% of Polysilicon is used for Solar

The real issue is that the 45X Credit: $3/kg only and the gap between Western polysilicon and Chinese is around 12$. So that really is a big gap. Pure, US supply chain is going to come at a short term cost. Not to mention there is simply no capacity for Polysilicon in the US

I think that TE, TOYO and eventually Tesla might do the most minimum possible to satisfy FEOC. They are eating glass or paying 3 times the price to get US Polysilicon.

Atleast the Good news is that we can see Corning promising to increase the production massively. These infrastructure companies do not simply increase capacity. They do it when there is massive shortage.

It is also an indication that the demand is through the roof for Polysilicon if GLW is planning to exponentially increase their Solar revenue.

Lastly, I spun up Claude code Python to calculate the difference. When you source from Non China Polysilicon, it suddenly becomes 1/3 your total costs.

I think there is a lot you can do to mitigate this. For eg. Credits might help and some more financial sorcery.

Lets see if this really comes through in 2027-2028. However, it did happen that a lot of Chinese supply shut down and Polysilicon prices bounced up ~30-50% up.

Also P.S. cell-level cost is deceptively low; a company’s success ultimately depends on the quality of its cell manufacturing process. Because a better manufacturing process means higher efficiency for the panels. And even a little bit more efficiency over its lifetime of a few decades can compound quickly.

Have a look at how Solar cells are produced.

I am sure Elon will delete a LOT of steps and rethink the whole industry from fundamental point of view, however the reality of things are still going to be that having American Solar supply chain is not a short term target.

I am planning to give away all of my Solar watchlist to Annual subscribers. My favorite small caps or best multibagger opportunities with liquidity in the space.


I have been sitting on it for far too long. Will also release interesting watchlist in other themes as well.

If you have been looking to invest in alternative grid scale Batteries and never got around to EOSE, here is a really interesting stock <$1B market cap

Before I talk about this stock, lets set the stage right. After the disastrous earnings of FLNC with suppressed margins and having to move around Battery supply chains through 3 different US facilities in order to chase them 45X credits, it’s time to look at something new

Here is CATL’s Founder Robin Zeng saying that Sodium Batteries can displace 50% of the LFP battery market last year

They officially launched it in production 2 weeks ago

There is a way to get exposure to the Western/American Sodium Batteries Via

I wanted to get this report quickly. But in the subsequent deep dives, I will attach a video from my discussions with Battery expert Jordan G from The Limiting Factor Youtube Channel

“Sodium Ion Batteries are better than Lithium Ion LFP batteries in every way. Cheaper, easier to scale, more abundantly available, less risk of fire”

But then we also discussed how LFP batteries enjoy economies of scale and by the time other alternative forms scales LFP batteries would have moved the goal post


I talked about how Javascript is a an inefficient framework, but it STILL took over the world because it was a first mover and early and had network effects.

With that said, lets jump into snapshot.

Technically they are at a perfect point to get in, if the fundamentals are right

Consolidation and a Retest with volume

Here is what I like about them:

• Revenue backlog of ~1GW

• Ownership model rather than . Assets predicted to generated $40M EBITDA per year now and growing

• They are building AI data centre Battery infrastructure with Peak Energy (Bringing Sodium Ion Batteries to production in the west

• Exclusive rights to bring Sodium Battteries from Peak in Japan and Australia

• Private investors believe in it enough to raise 140M convertible

• The deal was oversubscribed that why upsized from $125M to $140M

• Not a dilution Fest.

  
  

  

  

  

  
  
  
  

Lets unpack the Convertible debt terms here

Lets look at fully diluted stocks

These are my estimates for the worst case dilution from this convertible debt raising.

The capped call is the critical detail. Here’s how dilution actually plays out at different stock prices:

Stock Price: Below $5.18

Dilution Impact: Zero dilution

What Happens: Notes stay as debt. No conversion. You just pay 5.25% interest.

────────────────────────────────────────

Stock Price: $5.18 to $8.12

Dilution Impact: Effectively zero dilution

What Happens: Notes are in-the-money BUT the capped call offsets the dilution. Company can settle in cash, stock, or combo.

────────────────────────────────────────

Stock Price: Above $8.12

Dilution Impact: Incremental dilution begins

What Happens: Only on the portion above $8.12. Example: at $10/share, dilution is only on the $10 - $8.12 = $1.88 spread per share, not the full

conversion.

────────────────────────────────────────

Stock Price: Way above $8.12 (e.g., $15+)

Dilution Impact: Full ~27M share dilution

What Happens: But at that point, the stock has nearly 4x’d — dilution is a “good problem to have.”

Key insight: If the stock stays between $4 and $8.12, there is essentially NO dilution from these notes. The dilution only matters if the stock

rips past $8.12, and at that point shareholders have already made 100%+ gains.

I created a thread from the last earnings call. Wanted to get this article out before market open. As I build more conviction on this name, I will share my deep dives into their tech.


DO NOT GO IN WITH SIZING. It’s Only a spec position for me

1/8 Energy Vault (NRGV) pivoted from pure EPC to asset owner, and Q3 shows the Asset Vault story getting real.

• Asset Vault platform formally launched this quarter

• First two Texas and California storage IPP assets now operating

• Strategy targets top-quartile returns at “privileged” interconnect points

2/8 Management frames Q3 2025 as “one of the most pivotal” in company history, with execution catching up to strategy.

• Four projects now operating or in construction totaling 340 MW

• These initial assets expected to deliver >40 M EBITDA annually

• 10–15 year contracted revenue tails as projects come online

3/8 The OIC preferred deal now funds a sizable self-reinforcing growth engine where NRGV builds, owns, and services its own assets.

• 300 M preferred equity from OIC closes, launching Asset Vault Fund 1

• Fund 1 enables >1.1 B CapEx across 1.5 GW storage projects

• NRGV expects 100–150 M cash flow back from project margins and services

4/8 Asset origination is ramping fast, with NRGV leaning into both grid storage and emerging AI power demand.

• Acquired 150 MW SOSA interconnect site near Houston from Savion

• Stoney Creek 125 MW project in Australia backed by 14-year offtake

• Collaboration deepening with Crusoe on AI data center power solutions

5/8 Commercial momentum is visible in backlog and pipeline, even with tariff noise and macro uncertainty in the U.S. market.

• Revenue backlog at 920 M, up 112% year-to-date

• Backlog has more than 4x’d since Q3 2024

• Development pipeline sits around 2.1 B, or 8.7 GWh advanced projects

6/8 On the call, management stressed diversification and agility as buffers against U.S. tariffs and policy volatility.

• Only about 10% of backlog exposed to U.S. tariff swings

• Australia represented more than half of Q3 revenue

• Asset Vault pipeline curated for “upper-tier” IRR and bankable offtake

7/8 Financially, Q3 shows the early earnings power of the new model, even on a small revenue base.

• Q3 revenue 33.3 M vs 1.2 M a year ago, up ~27x

• Q3 gross margin 27%, year-to-date gross margin ~32.6%

• Adjusted EBITDA loss narrows to 6 M from 14.7 M loss last year

I have huge respect for Daniel, S&J, and DVB and value their insights on TE massively. Cherish them as fellow investors. However, I think there are a few angles they might be overlooking. Let’s unpack them

Here Daniel mentioned that having whole domestic US supply chain is important.

TOYO’s been alleged to be trade loop hole extractor

DeepValueBagger is assuming that TOYO isn’t US production.

However, Even as seasoned/knowledgable these investors are on the Solar topic, here are my assessment and rebuttal on it

INSIGHT 1: TE literally doing the same as TOYO. Shipping their US polysilicon to Asia, converting it into cells and shipping it back

First lets start with what TE/T1 is actually doing with their OWN cells

- T1 Energy CEO Daniel Barcelo in Nov 2025 explicitly stated:

“Until we have our solar cell plant up and running, we currently are sending our polysilicon to Southeast Asia in order to make wafers and cells and then bring those cells back to the United States.”

Here is a timestamped video for when he said that.

So TE/T1 is literally doing what TOYO is doing and getting a lot of shit for it. Since TOYO has now shifted to Ethiopia, travel time there is still lesser than the South east partners of TE/T1

In the show it’s talked about how there are literally 1 or 2 GW of Solar cell capacity in the entire US. Just TE’s G1 capacity is 5GW of modules.

Recall how Solar modules are finally produced

Also, Remember that Tree Oaks collaboration told us that TE/T1 is aiming to be 70% US supply chain by end of 2027. That’s still 2 years away.

Conclusion: Even the American Solar TOP DAWG is doing exactly what TOYO is doing and aiming to be only 70% American by the end of 2027

I wrote 3 TE/T1 deep dives back in start of October. I have spent countless hours diving deep into the industry

INSIGHT 2:

Read more

Just hours later, court rulings removed the biggest risk to this small cap with prejudice. Meaning this small cap has irrevocably won the court rulings. It cannot be appealed again. It’s final

No I am not an insider on this stock, just hundreds of hours research deep into Solar

The stock’s already up about 25% since my post. But I still think this is an incredible buy point here for the following reasons

- The official PR piece is still not yet released

- Market’s yet to realize the implications of this

- Schwab and Fidelity still restrict it due to low liquidity—most investors haven't arrived yet

Here’s the original article if you missed it.

Subscribers have had this name since Friday morning 9.49AM EST.

I’ll publish the full write-up for the wider audience within 24-48 hours since the train might be leaving the station soon

For now, lets dive further on this name

Read more

• “Made-in-USA” Pivot & Supply chain strategy in the Solar sector

• It’s under $300M Enterprise Value ($250M Mcap + $35M bank loans)

• Insider’s own >80% of the stock and Float is under 20%

• Experienced growth of 300% in 2024, and then >100% in 2025. Revenues in 2025 are $350M+

• 2027 Expected EPS is 50% of the current share price (Insane!!). Trading at 2X times 2027 Expected EPS

• Virtually no Analyst coverage

This stock is fairly illiquid so please don’t hit buy button immediately. Assess the risk of chasing and be responsible

The stock is $TOYO

This company figured out how to combine:

1. Cheap African hydro-power
2. US Polysilicon (to keep Uncle Sam happy)
3. Texas final assembly (to get the tax credits $0.07/watt)
4. Vertically integrated Solar supply chain

The result? A Vertically integrated Solar stock trading at under $300M Enterprise Value with insider ownership so high it looks like a dictatorship.

Investment Thesis: Asymmetric risk/reward with 2025 guidance implying ~$375-400M revenue (with 4.2- 4.4 GW) and $39-45M net income at a market cap of only ~$235M (P/E ~5-6x)

INSIGHT 1: THE MATH IS NOT MATHING

Enterprise Value (EV) < $300M
2025 Revenues ≈ Guided for $360-$400M
2027 Projected EPS ≈ $3.61

Wait, pause.
The stock is trading around $7-8. The projected 2027 earnings are $3.61.That means this thing is trading at roughly 2x 2027 Earnings.

How much would you pay for a stock in hot sector growing massively?

INSIGHT 2: THE SUPPLY CHAIN HACK

Trump slapped a 42069% tarriff on Vietnam. The Giga chad Junsei Rye (CEO of TOYO) pivoted the supply from Vietnam’s plant (4GW) for non US. Also ventured into onshoring jobs to America and build Solar supply in the US.

Toyo had acquired Solar module facility from Solar cell in Nov 2024. It’s planned to scale to 1.5GW by 2026, 2.5GW by 2027,then finally to ramp to 6.5GW by 2029. They acquired it cheaply because there was no money in Solar back then and everyone was bankrupt

The Texas facility only began commercial deliveries in mid-October 2025. So it’s ramping up only now

TOYO’S GAMEPLAN:
• Step 1: Buy Polysilicon in the US (Signed a deal Jan 7, 2026). This keeps the “Forced Labor” police (UFLPA) happy.
• Step 2: Ship it to Ethiopia. Why? Because Ethiopia has massive hydro-power dams (cheap electricity) and labor costs that make China look expensive. Also, no AD/CVD tariffs.
• Step 3: Turn Poly into Cells in Ethiopia.
• Step 4: Ship Cells to Houston, Texas.
• Step 5: Assemble Modules in Houston.

Result: You get a “Made in USA” module that qualifies for the 45X tax credits ($0.07/watt), but your cost basis is pretty good.

They are essentially laundering US polysilicon through cheap Ethiopian electricity and bringing it back home as a value-added product. It’s geopolitical arbitrage at its finest.

Have a look.

When compared to TE, they don’t get $0.04/Watt for producing the solar cells yet. However, think of them as G1 facility in the US.

Here is a great slide to understand what the current incentives are. Read my first deep dive on TE to get a clearer picture on credits

So even though they might miss out on $0.04/watt for cells, they can easily make it up for lower land and labor cost for the solar cells in Ethiopia

Now they signed a sales contract with a U.S. polysilicon manufacturer, to secure domestically sourced critical raw materials for TOYO’s solar manufacturing operations. This agreement adds U.S.-sourced polysilicon to TOYO’s existing non-Foreign Entity of Concern (“FEOC”) overseas supply

The company claims that they will be eligible for 45X. Let’s pray and hope that they are right. And that their customers/credit buyers believe it too.

“During the trial production phase, the Company has received strong demand from its U.S. clients for the modules manufactured at the Houston Facility. As operations scale, TOYO anticipates robust demand from utility-scale developers seeking reliable and domestically manufactured modules that qualify for favorable tax incentives.”

“Expected to qualify for tax incentives under Section 45X of the Internal Revenue Code, providing up to $0.07 per watt in production credits through 2030. This strengthens TOYO’s cost competitiveness while supporting broader goals for domestic energy manufacturing.”

INSIGHT 3: Growth and Demand is through the RooF!!!

They shipped as much Solar cells in H1 2025 as they did in it’s entire 2024 Fiscal year of operation. These babies can really scale!!

They just coalesced with sister company VSUN. I will probably make a deep dive 2 to get into the spaghetti of subsidiaries. However for now, focus on the growth and distribution of VSUN.

INSIGHT 4: 82% INSIDER owned with Low Float

One man, Junsei Ryu, controls 67.6% of the company. The public only trades the remaining 32.4% (about 12.2 million shares). This is a highly centralized "low float" stock.

Some credentials on Junsei Ryu. I couldn’t find any interviews of him online, but he seems like a Solar Giga Chad to me

INSIGHT 5:RISKS

a. Jinko Solar Litigated TOYO on IP infringement. The company does not comment on what the damages could be.

However, keep in mind that everybody is suing everybody else for Topcon Patents. It’s an entire Suing-fest. OoooOO

b. Company claims FEOC compliance, but we have to see something real to fully de-risk the fact that the company setting is so convoluted.

CONCLUSION: It’s an Asymmetric Opportunity

If 2025 guidance is achieved ($375-400M revenue, $39-45M net income):

• Forward P/E: ~5-6x (vs. First Solar at ~15x, JinkoSolar at ~5x)

• Revenue growth: ~112-126% YoY

• Price/Sales: ~0.6x on forward revenue

Bull Case

• Tariff arbitrage proves durable and TOYO captures meaningful share of $30-40B U.S. solar module market

• Section 45X credits at full capacity = ~$175M+ annual benefit by 2029

• JinkoSolar patent suit settled or dismissed; TOYO continues growth

• AI-driven energy demand accelerates utility-scale solar buildout

• Target: 3-10x upside quickly (~$18-50/share)

Bear Case

• JinkoSolar wins injunction, blocking U.S. sales of TOPCon products

• Ethiopia loses tariff exemption or faces new trade restrictions

• IRA modifications reduce or eliminate Section 45X benefits

• Module price collapse compresses margins to unprofitability

• Target: >50% downside (~$1.50-3.00/share)

P.S. Neils bought this stock to my attention. He is usually early and gets into very volatile names

DISCLAIMER:

I invested in this stock and is about 1/2 the current TE holdings. As I discover or get more information, I will get in bigger

Serenity has been going viral in 2026 with some posts getting millions of impressions. This account is super respectable

So I had to check out and validate their claims

Debt is low. No crazy dilution. Ofcourse lossmaking. But the revenues is steady since a few quarter. All right, interesting, lets dive deeper.

It’s an Israeli company so they are not required to file 10Q. But I found the relevant file quickly. I fact checked claims and formed opinion about the company in this article

You all know how deep in fundamentals I like to get

The inventories claim actually check out. It is indeed only $10.9M. Lets fact check all important claims

1. Claim: “$93.5M in Cash, 0 Debt.”

• Verdict: TRUE.

• Evidence: The Balance Sheet shows Cash and cash equivalents ($31,588) + Short-term deposits ($61,961) = $93,549 (thousands).

• Debt: There is no line item for “Long-term debt” or “Bank loans.” The only liabilities are trade payables, accrued compensation, and lease liabilities (which are operational, not interest-bearing debt in the traditional sense)

2. Claim: “~$11M inventory.”

• Verdict: TRUE.

• Evidence: The Balance Sheet lists Inventories at $10,974 (thousands).

3. Claim: “High gross margins ~69.1% (CIB/ProAV) margins, 43.2% automotive.”

• Verdict: MOSTLY TRUE (Automotive is actually higher).

• Evidence: Note 14 (Segment Info) for 9 months ended Sept 30, 2025:

  • CIB: Gross Profit $25,966 / Revenue $37,802 = 68.7% (Very close to 69.1%).

  • Automotive: Gross Profit $6,373 / Revenue $13,420 = 47.5%.

  • Note: The tweet actually understates the Automotive margins (43.2% vs actual 47.5%), perhaps relying on Q3 specific data (which was 43.2%), but the 9-month trend is strong.

4. Claim: “Inventory of US$82 million... is a typo.”

• Verdict: TRUE (The math supports the typo theory).

• Evidence: Total Assets are $136,691 (thousands).

  • Cash/Deposits: ~$93,549.

  • Remaining assets allowed: $136,691 - $93,549 = $43,142.

  • It is mathematically impossible for the company to have $82M in inventory because $93M (Cash) + $82M (Inventory) = $175M, which exceeds the Total Assets reported ($136M). The inventory is definitively ~$11M.

5. Claim: “New CES 2026 info... pivot to robotics.”

• Verdict: TRUE

• Evidence: The acquisition of Acroname (described in Note 3 as “specializing in advanced automation and control technologies”) and the massive growth in the CIB segment (which includes machine vision/industrial) financially supports the narrative that they are pivoting to robotics.

6. Claim: “Extremely heavy dilution at $11.5 Strike from warrants.”

• Verdict: TRUE.

• Evidence: Note 12 lists “Private Warrants: 3,330,000” and “Public Warrants: 5,750,000” that were excluded from EPS calculations because they are anti-dilutive (meaning the stock price is currently below the strike price). While the filing doesn’t explicitly list the “$11.50” strike price in the text, this is the standard SPAC warrant strike price, and the presence of ~9M warrants is confirmed in the notes.

Following are some of my insights on the company that might help you decide if you want to jump in with Serenity

1. The “Growth” Story is Lopsided (Automotive is actually shrinking)

While the company is often pitched as an Automotive AI play, the filing reveals that Automotive revenue actually declined year-over-year for the 9-month period (from $16.6M in 2024 to $13.4M in 2025). The entire revenue growth of the company is currently being driven by the Cross Industry Business (CIB) segment, which grew back ~53% ($24.6M to $37.8M).

Could this be the start of CIB recovery? I love the thesis that Robotics play will be able to be validated quickly (~6 months)

2. Aggressive Buybacks Despite Operating Losses

It is highly unintuitive for a company reporting a Net Loss of $(22.8M) to spend more cash on share repurchases ($23.4M) than it lost in operations. Usually, loss-making growth companies hoard cash. Valens is aggressively returning capital to shareholders, behaving more like a mature cash-cow than a loss-making semi growth stock.

3. The “Acroname” Acquisition Masked Organic Burn

The acquisition of Acroname (Note 3) added ~$4.1M in revenue for the 9-month period. Without this acquisition, the company’s revenue growth would look less impressive. Furthermore, the acquisition brought in $1.3M in cash, slightly padding the cash flow statement against the purchase price.

4. Inventory Composition Shift (Finished Goods vs. WIP)

While total inventory rose slightly ($10.1M to $10.9M), the mix shifted drastically. Work in Process (WIP) dropped by ~21%, while Finished Goods spiked by ~32%. This suggests the company has converted raw materials into sellable chips but hasn’t shipped them yet. This could indicate either preparation for a big order or a sudden slowdown in demand where production outpaced sales

5. Acroname might be hitting ambitious targets

The company has a liability of ~$2.5M for “Earnout” payments to Acroname shareholders (Note 8). The fair value of this liability increased (an expense of $81k), which unintuitively is a “good” sign—it implies the acquired company (Acroname) is likely hitting the performance targets required to trigger those payments.

6. They filed important design wins in 2026

This a great long-term opportunity and it is definitely real, but near-term catalysts for technical products and growth remain 12-18 months away.

7. Subsequent Event: CEO Change Signals Pivot

There is a new CEO appointed in Nov 2025. Combined with the shrinking Automotive revenue and the massive options grant (4M options) to the new CEO, this suggests the Board was dissatisfied with the previous trajectory. It validates the “pivot” narrative

MY VERDICT

This is indeed mispriced and might still be substantially cheap after a 50% move on Friday. Fair value seems to put the stock price at $4-7. I am keeping this in my watchlist. As for the future of the product it requires more due diligence

RISKS

1. One of the risks not mentioned in his post, is that there is considerable Insider sales. CEO has been periodically selling,

Founder Ex CEO Dror has sold about 10% of his holdings in the last month (Total only 1% of the outstanding shares). Maybe it’s not such a bad thing since he stepped down as CEO in Nov 2025

2. One-Time “Insurance” Profit Boosted Q3
In Q3 2025, the General and Administrative (G&A) expenses were unusually low ($2.2M vs $5.8M in Q3 2024). Note 5 reveals this was due to an insurance recovery asset of $1.476M recognized regarding a customer claim. This is a non-recurring event that artificially made the Q3 operating loss look significantly better than it actually was operationally

3. High Stock-Based Compensation (SBC) Relative to Revenue
   The company incurred $11.7M in stock-based compensation on $51.2M in revenue (9 months). This means ~23 cents of every dollar of revenue is effectively paid out in equity to employees. While this preserves cash, it is a significant dilution driver that is excluded from “Adjusted EBITDA” metrics often used by analysts.

I promise to provide more alpha and insightful posts this year

Back in May/June, the battery sector was dead money. Nobody wanted to touch it. But contrarian investing is about identifying value before the crowd arrives. The market has finally understood the importance of storage. Most names in my watchlist delivered 4-6X returns in just a few months

Just look at this insane stock prices.

Now Solar is shifting gears.

The sector is catching a bid, charts are bottoming out, and we are seeing breakouts from long bases. This is the ‘sweet spot’ for entry.

Allright, let me show you exhibits of why this sector is going to nail it in the next months/years

EXHIBIT 1

Hate him or love him, but nobody’s made money SHORTING him

EXHIBIT 2

TAN, the Solar ETF broke out of it’s 4-5 year trend.

EXHIBIT 3

The economics and the markets are clear on this one

EXHIBIT 4

Most new additional capacity added was Solar. Yes, even under Trump Regime.

EXHIBIT 5

You can now pack your Solar power in a lunch box and eat it when you please. Pack me some Sun please!!

EXHIBIT 6

It’s one of the fastest and cheapest way to bring power online quick

EXHIBIT 7

Big companies are signing very long renewable contracts. Microsoft recently signed 20 year contract. And now Google and META. These companies are Pro’s and they know what they are doing

EXHIBIT 8

Regardless of unclear policies in the coming years, Solar and Batteries are the biggest interconnection request in ERCOT

In the Following posts, I will be detailing my favorite names. Some with higher risks and some with the best R/R. There’s a large number of stocks to choose from for different risk spectrums

Stay tuned for the next one. I will do a deep dive into a name I am currently accumulating, and hope would become my next TE like conviction