Asymmetrical Bets

$PENG just got its highest price target raise on Wall Street Rossenblatt Raises to $75 from $65 - Buy Analyst comments: "We are expecting Penguin Solutions to report a solid beat-and-raise for 2HF26. We expect the company's momentum in both its Advanced Computing and Integrated Memory product lines to accelerate going into 2HC26. For years, we have highlighted PENG shares as the best value in the AI market. In the past three months, investors have moved PENG's valuation from 6.7x to 22.6x forward earnings. We see this increase as justified by the AI market now needing the products and services Penguin provides.” For perspective we bought into $PENG back in May. Earnings could send another massive re-rate.

*B. RILEY SAYS AMAZON'S RNG & OPENAI'S MRC PROTOCOLS POSE MAJOR STRUCTURAL RISK FOR OPTICAL INFRASTRUCTURE / "PHOTONICS" STOCKS, NAMELY APPLIED OPTOELECTRONICS $AAOI Full comments: "Following the OFC conference in March 2025, the AI data center boom triggered an unprecedented optical supercycle. As demonstrated by the parabolic re-rating of optical infrastructure stocks such as Lumentum ($LITE – Buy, $1,142 PT ) and Coherent ($COHR – Neutral, $309 PT ), the prevailing investment thesis assumed an aggressive, compounding multiplier: scaling AI clusters meant building deeper, multi-tiered networks (3-tier or 4-tier Clos topologies), exponentially driving up transceiver demand per unit of compute. This thesis, however, is hitting a structural wall. Just a year after the 2025 explosion, the simultaneous market introduction of Amazon’s ($AMZN, NR) Resilient Network Graphs (RNG) and OpenAI’s Multipath Reliable Connection (MRC) protocol marks a major pivot toward network flattening across both training and inference workloads. Microsoft ($MSFT, NR) and Oracle ($ORCL, NR) are actively integrating the open-source MRC protocol into their frontier AI training supercomputing clusters—such as ORCL’s massive GB200 Abilene site—to execute sender-controlled packet spraying and bypass physical network bottlenecks. Concurrently, AMZN is deploying its quasi-random RNG architecture across its general-purpose cloud fabric. While RNG is isolated from back-end training clusters, it serves as the primary backbone for scale-out generative AI inference, data ingestion, and retrieval-augmented generation (RAG). Crucially, as mature AI models transition from training to mass inference, hyperscaler capex is shifting heavily in favor of these front-end, scale-out environments. Because RNG replaces traditional, active multi-tiered aggregation switches with passive optical ShuffleBoxes, it reduces active networking equipment by over 60%. Consequently, as AI workloads migrate to inference, this architectural deflation loops directly into the broader optical market, stripping out switch-to-switch optical links and dismantling the legacy transceiver-to-compute multiplier. For the transceiver market, this dual-front flattening represents a severe structural headwind that will sharply decelerate the sector's long-term TAM expansion, since these technologies reduce structural transceiver counts by 40% to 50%. We believe Applied Optoelectronics ($AAOI – Neutral, $129 PT) will be especially vulnerable to this development. AMZN and ORCL—the primary network provider to OpenAI—are expected to be the anchor customers for the 800G/1.6T transceivers forecast to drive AAOI's quarterly revenue to ~$1B by 2H27. As ORCL deflates training-cluster transceiver ratios via MRC, and AMZN strips active transceiver requirements from inference rollouts via RNG, AAOI's core revenue growth engines face massive structural risk."

$RDDT trading at $140, down 50.6% from ATH of $283 despite strong fundamentals. Q4 2025 Metrics: Full-year revenue $2.2B, +69% YoY (57% 5-year CAGR) Q4 revenue $726M, +70% YoY Q4 adj. EBITDA margin: 45% (Rule of 115 company) Full-year gross margin: 91.2% Forward P/E: 31.2 (trailing: 53.3) Full-year FCF $684M, +3x YoY ARPU +42% to $5.98 Company initiated $1B buyback on $2.48B cash. Q1 2026 guidance: $595M-$605M revenue, 53% YoY growth at midpoint. CEO Steve Huffman: "Reddit is at the center of a once-in-a-generation shift...more people are turning to Reddit because Reddit is the most human place on the internet." While $META $GOOGL trade near highs, SaaS/growth tech selloff created opportunity in profitable, high-margin social platform. Six consecutive quarters of 60%+ revenue growth. Business expanding while valuation compressed 51% from peak.

Be SemiAnalysis: - Post a scathing piece on CPO delays + optical company valuations, causing a crash. Which $NVDA, analyst desks, and major optical companies refuted - Launch an institutional photonics ETF after optical names dropped 40-60%.

The defense trade just reignited... Last night, $AVAV had a monster quarter, beating revenue by 15% and EPS by 24%. WSJ also put out an article last night titled "America Needs More Weapons. JPMorgan Wants to Add Its Firepower." Jamie Dimon is reportedly pushing JPMorgan more aggressively toward its existing $10B investment plan, targeting companies tied to U.S. national security and economic resilience. This is arguably the most important wall street figure giving a nod to the defense long. We're calling the bottom on defense stocks now, you can read our article breaking down our research thesis and picks in the comments or in bio.

On Monday, we made $AVAV the largest position in our defense portfolio, it's up ~ 40% since. After their earnings, we officially called the bottom on defense. Yesterday the Pentagon awarded AeroVironment a $500M counter-UAS contract. $AVAV is up 15%+ on the news with our other favorites following such as $AVEX +10%. The money is flowing exactly where we said it would. Thesis playing out in real time.