Four spicy lines from earnings seasons

Most corporate earnings calls devolve into dull jargon about streamlining and synergising the paperclip procurement process to shave costs by 0.03% or whatever. But a few lines caught our eye this earnings season, starting with…

1. “If fentanyl was killing 60,000 Yale grads instead of 60,000 working-class people, we’d be dropping a nuclear bomb on whoever was sending it from South America.” — Alex Karp, Palantir CEO

Criticise defence tech firm Palantir all you like, but its earnings calls leave little to yawn at.

That’s to be expected when you’ve got an eccentric chief like Alex Karp, who never learned to drive (“I was too poor. And then I was too rich”); or a polarising chair like Peter Thiel, who riffs on apocalyptic theology when not dunking on colleges as medieval guilds.

Anyway, there’s an ongoing joke about what Palantir even does, so here’s your answer: it makes software that weaves across entire data ecosystems so users can make sharper decisions, whether on drone targeting or fraud detection. And it’s infamously ‘sticky’, which might be why (along with those tight Trump ties) its price has doubled this year.

But despite Monday’s bumper earnings call, Palantir’s stock has since dropped ~9%. Why? An analyst highlighted its “extreme” forward-price-to-earnings ratio (quadruple even Nvidia’s), while The Big Short’s Michael Burry revealed he’s now massively shorting both AI giants in another example of the bear case we explored last week. Meanwhile…

2. “We continue to observe the rising emergence of sovereign AI” — Che-Chia Wei, TSMC

The CEO of Taiwan’s legendary chipmaker is referring here to the way governments are building their own AI models and infrastructure. And when tech CEOs start throwing around the kind of word (sovereign) you’d ordinarily find in government communiques, it’s a reminder these capitals are more focused on control than innovation.

They want AI a) trained on their own data, b) running on their own chips, and c) operating under their own laws. Own, own, own, because there’s nobody you can trust, trust, trust.

But while the US (with US-aligned Taiwan and others) still leads on chips, China is playing catch-up: its homegrown Cambricon chipmaker just recorded a 14-fold revenue spike in a quarter amid US limits on China’s US chip access.

Meanwhile, Nvidia’s Jensen Huang just made headlines with his suggestion China will win the AI race thanks to looser regulations and cheaper energy — he’s since reiterated his pro-US cred, and might be using the China bogeyman to push for more favourable US conditions, but that doesn’t necessarily mean his forecast is wrong.

And speaking of energy…

3. “America is in a golden age of power demand” — John W. Ketchum, NextEra

AI-linked data centres are now driving an estimated half of all growth in US energy demand, but supply is struggling to keep up, not because America can’t build, but because it won’t: permitting delays mean a single solar plant can take four years or more, while China just deployed more solar in Q2 than the US has ever deployed.

It’s a vivid example of Dan Wang’s ‘lawyerly America’ versus ‘engineering China’ contrast. And now to close…

4. “We see a growing momentum when it comes to European strategic autonomy” — Guillaume Faury, Airbus

That’s a polished Frenchman’s way of saying that as a rattled Europe races to both a) re-arm against an expansionist Russia, and b) hedge against an America First America, Europe’s biggest aerospace and defence player is well placed to profit.

In fact, it’s already happening, with Faury highlighting another €5B rise in his order backlog thanks to European contracts.

But interestingly, his comments also revealed that autonomy doesn’t necessarily mean autarky (self-sufficiency) — he emphasised, for example, India’s role in his manufacturing plans as a way to diversify Airbus supply risks longer-term.

Anyway, from AI sovereignty to energy crunches, this latest earnings season reveals a world racing to control its own destiny.

Intrigue’s Take

We quit our foreign service careers on a hunch that geopolitics might become The Next Big Thing, so we’re now watching in awe as each new earnings season morphs into a major geopolitics conference starring billionaires instead of nerds.

Anyway, this is not investment advice, but any Intriguers will by now have clocked that a world hustling for control will fray into a labyrinth of bottlenecks. And while individual stocks will come and go, and valuations will soar and plunge, the basic principle to keep in mind is that anyone straddling a bottleneck (chips, energy, defence) should do well.