Key Context by Tae Kim

“The next six to nine months are going to be bigger than anyone believes... It’ll be dramatically better for AI than the last two years in terms of advancements in capabilities.” “RSI is a lot closer than people think...

Those who do not learn from history are doomed to repeat its mistakes. Financial history is littered with hedge funds that start with a good fundamental idea, post a period of incredible returns, and then through hubris and too much leverage collapse and give it all away. Long-Term Capital Management. Archegos. Amaranth Advisors. And now this week, Leopold Aschenbrenner’s Situational Awareness.

Thanks to Charles Payne for inviting me on to discuss why Google is a secular short, Nvidia, OpenAI/Anthropic, Kimi K3, and chip stock geopolitics. It was a ton of fun. Enjoy!

The smartest investors in the world are piling into Google parent Alphabet’s stock. Warren Buffett recently confirmed that he initiated Berkshire Hathaway’s purchase of Alphabet shares, including a $10 billion private placement last month. Chris Hohn, who has one of the best track records of any fund manager in history and ran the world’s most profitable hedge fund last year, sold most of his Microsoft position earlier this year and bought more Alphabet stock.

It looks like China just made a major advance in the AI model space. On Thursday, Moonshot released Kimi K3, which performed well on many major benchmarks, approaching the frontier, ahead of Anthropic’s Opus 4.8 and OpenAI’s GPT 5.5, though generally behind the most advanced models, Anthropic’s Fable and OpenAI’s GPT 5.6. Moonshot said in a blog post that it plans to release the full model weights by July 27, 2026.

Gaming is at a crossroads. Modern gaming is a frustrating experience. Sometimes it feels like I spend more time waiting for updates than actually playing. We fiddle with drivers, wait for shaders to recompile, and sit through patch after patch when all we want is to turn on the PC or console and just have a good time. The gaming industry may be becoming something different. Not in a good way. Gamers now have to worry about the end of physical games.

The bears are talking again about the unsustainability of the AI infrastructure trade. Like the last dozen times over the past three years, they will likely be wrong again. Two things are driving stocks lower this month: 1) geopolitical uncertainty and 2) hand-wringing about the future fundamentals of the AI trade. Yes, unfortunately, President Trump has decided to escalate the war in Iran again. I don’t know how long this new round of kinetic bombing will last or when it will end.

The big day has arrived. As long time readers know, SK Hynix has been one of our favorite fundamental ideas since this Substack’s launch in February. Make sure you read our prior posts on HBM memory fundamentals: February 18 - I Was Wrong Again on Memory Chip Stocks April 9 - Dell CEO Sees Memory Demand Explosion April 14 - The Best Way to Invest in Memory Chip Stocks June 24 - SK hynix: 14 Most Interesting Things in U.S. ADR Filing Nothing has changed.

Arm is now an AI CPU story. Since Arm CEO Rene Haas unveiled the company’s new AGI CPU at a product event in San Francisco in late March, Arm’s stock has more than doubled. At the time, he predicted that each gigawatt of data center capacity in an agentic world would require 120 million CPU cores, compared with 30 million last year. Arm makes money by licensing its chip designs to semiconductor companies and hardware makers.

One of the most important events of the AI memory trade is almost here. Since the beginning of this Substack, SK hynix has been one of our highest-conviction bull calls. In February, I wrote that the prospect of listing its shares in the U.S. market could help re-rate the stock and close the P/E valuation gap with U.S.-based Micron, on top of strong HBM memory fundamentals. SK hynix’s stock price has tripled in recent months On Wednesday, SK hynix finally filed its ADR prospectus with the SEC.