David Moadel
5 min read
Quick Read
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NVDA’s revenue surged 85% and MSFT’s AI business grew 123% year-over-year, giving the summer melt-up thesis a strong earnings foundation.
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META raised its full-year capex guide to $145B while AMZN’s AWS posted its fastest growth in 15 quarters at 28%.
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Expert David Cervantes warns that a Fed pivot toward rate hikes and H200 GPU rental prices already down 38% could deliver the AI trade’s first real stress test.
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Friday’s session broke a nine-week winning streak in the NASDAQ 100, with the index plunging hard enough to make investors wonder whether the AI-led rally in names like NVIDIA (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT) had finally rolled over. Today, the bid is back. The NASDAQ 100 is up 2% to 29,589.50 and the Invesco QQQ Trust (NASDAQ:QQQ) is up 2% to $719.50 in afternoon trading.
That rebound has revived a provocative question: could this be the start of a “summer melt-up”? David Cervantes, founder and principal of Pinebrook Capital, laid out the case on the Forward Guidance podcast (per @ForwardGuidance on X), arguing that the rally in mega-cap tech could extend further.
His thesis sits behind the action in NVIDIA (NASDAQ:NVDA), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), and Amazon (NASDAQ:AMZN). Each posted blowout most-recent quarters that lend numerical weight to the case.
The “Too Much Fuel” Thesis
Cervantes frames AI as “THE macro driver” with “Everything is liquidity now.” The X thread from @ForwardGuidance summarizes it: “The economy has too much fuel to break.” A trillion-dollar AI capex cycle running through hyperscalers like Amazon and Alphabet, combined with rising debt issuance and persistent government deficits, keeps liquidity flowing.
The supporting macro is striking. M2 money supply reached $22.8 trillion in April, sitting in the 91st percentile of its range, while the Fed has cut 75 basis points over 12 months. With unemployment at 4.3% and consumer resilience supported by hidden buffers like boomer wealth transfers, the recession call gets harder, which is good news for Microsoft and the AI cohort.
The Earnings Backbone
NVIDIA’s Q1 FY2027 print delivered revenue of $81.61 billion, up 85% year over year, with Data Center revenue of $75.25 billion, up 92%. CEO Jensen Huang described “the largest infrastructure expansion in human history,” and the SEC 8-K filing disclosed total supply-related commitments of $119 billion. NVDA stock is up 47% over the past year.
