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Table of Contents
FOMC Photoshoot
— #Not Jerome Powell (#@alifarhat79)
1:28 PM • Jul 30, 2025
🔥 Here’s What’s Happening Now
First shoes to drop in a massive week. FOMC was pretty much a nothing burger. Two dissents for the first time since 1993, but that wasn’t unexpected.
The market got jittery when Powell said we are in the early days of tariff inflation. We do have PCE this morning which could be important.
The biggest news was after hours with MSFT and META earnings, both with big beats. The highlight from MSFT was the growth of it’s Azure cloud business.
At META, Zuckerberg said….
“We continue to see very compelling returns from our AI capacity investments in our core ads and organic engagement initiatives, and expect to continue investing significantly there in 2026. We also expect that developing leading AI infrastructure will be a core advantage in developing the best AI models and product experiences, so we expect to ramp our investments significantly in 2026 to support that work.”
All of this ought to be great news for anything AI related as one of the biggest concerns from the market is when/if AI investments will start to pay off.
So far my idea to add to hedges is not working out great, but we have a ton more data to come.
🧠 China’s AI Counterstrike 2.0: From Glasses to Clusters, the Red Dragon Reloads
While U.S. investors fixate on Fed pivots and election drama, China is launching an AI offensive that's not just reactionary—it’s full-spectrum and state-backed.
And it’s working.
The Hang Seng is up +25% YTD. The Shanghai Composite just posted its strongest monthly close in two years. But what’s happening beneath the surface is far more important:
👓 Smart glasses
🧠 Large language models
🏭 Data center REITs
🧱 Silicon-on-silicon clustering to rival $NVDA
This is not just a trade. It’s a re-rating in progress. And smart investors are finally taking notice.
👓 Alibaba Takes on Meta: China’s Wearables Playbook
Last week, $BABA dropped its Quark AI Glasses, powered by its Qwen LLM and fully integrated into Alipay, Taobao, and Baidu Maps.
Real-time translation
Meeting transcription
Mobile payments
Turn-by-turn nav
This isn’t a gimmick. It’s China’s answer to Meta’s Ray-Ban AI glasses—but plugged into a complete ecosystem.
📊 Jefferies notes AI/AR glasses remain a “0.5 bubble” tech—early stage with form-factor limits—but $BABA is pushing ahead.
🔁 Huawei’s Ascend vs. Nvidia’s CUDA: The Cluster War
Huawei’s CloudMatrix 384-node cluster reportedly outperforms Nvidia’s GB200 setup on select benchmarks.
But don’t count $NVDA out. Jefferies reminds us:
Its recent China write-down wasn't lost revenue—it was tied to unsold chips already ordered.
Demand remains strong: China ordered 1.8M H20 chips. Only 300K shipped so far.
Huawei clusters reportedly break after 20–25 days of training due to lack of NVLink/NVSwitch.
Nvidia clusters can run non-stop for 3 months—that’s a mission-critical edge.
📦 Bottom line: CUDA is still king. Even China’s hyperscalers admit it.
🏢 Real Assets: The REITification of Chinese Data Centers
Jefferies sees a major catalyst in China's approval of data center REITs, enabling cloud giants to:
Monetize mature assets (≥85% utilization)
Sell to insurance/pension funds seeking yield
Recycle capital into next-gen GPU clusters
Case in point:
$GDS’s REIT IPO priced at 17x 2025E EV/EBITDA (5.2% yield). If that yield compresses to 3–4%, valuations jump 30–50%.
🧮 GDS and $VNET currently trade at 11–12x EV/EBITDA. That’s a deep discount to implied REIT value.
📅 GDS’s REIT begins trading August 8 on China's A-shares market.
💰 Beijing Unleashes $108B in AI CAPEX for 2025
Jefferies raised its China AI CAPEX forecast:
+40% to $108B for 2025
+28% to $806B for 2025–2030
📈 This jump is fueled by:
Reinstated $NVDA H20 sales
GPU inventory shortfall (900K+ units)
CUDA compatibility dominance
State-level coordination post-WAIC 2025
🚨 WAIC 2025 hosted 800+ companies. Premier Li Qiang announced a new AI governance body. This is now top-level policy.
🌐 “Project Spare Tire”: Xi’s Bet on Self-Sufficiency
As revealed by WSJ, Huawei and 2,000+ firms are racing to reach 70% domestic semiconductor self-sufficiency by 2028.
Clustering weaker chips to match U.S. systems
Investing $700M+ in Shenzhen alone
Funding grid expansion (up 40%) to power AI
Launching 600+ university AI degree programs
Rolling out mandatory AI education in Beijing schools
“While the world’s best LLM is still American, the best open-source model is now Chinese.” — Artificial Analysis
🧭 Market Implications: The Trade is Widening
🚀 Long China AI Stack
Ticker | Company | Rating | Catalyst |
|---|---|---|---|
$BABA | Alibaba | 9 | AI glasses, LLM stack |
$TCEHY | Tencent | 8 | World models, WeChat scaling |
$GDS | GDS Holdings | 9 | REIT monetization |
$VNET | VNET | 8 | Undervalued DC assets |
Huawei | (Private) | 8 | OEM & chip cluster nexus |
🧨 Short the U.S. Leverage to China
Ticker | Company | Rating | Risk |
|---|---|---|---|
$NVDA | Nvidia | 4 | Export risk remains |
$SMCI | Supermicro | 3 | Cluster substitution |
$AMD | AMD | 4 | MI308 blocked |
$ASML | ASML | 2 | Locked out of Chinese fabs |
$MRVL | Marvell | 5 | Networking chips exposed |
🧬 Strategic Takeaway
U.S. still leads in AI innovation and IP.
But China now leads in open source, infrastructure velocity, and national coordination.
📊 Jefferies sees a China tech re-rating in progress, with under-owned names ($GDS, $VNET, $BABA) trading well below intrinsic value. WSJ confirms the nation-scale effort is real—and accelerating.
🧭 In this global AI war, smart investors should stop asking “who’s ahead?” and start asking:
“Where is the multiple compression or expansion mispriced?”
Right now, the answer is China.
Today’s Episode, click below to register:
📈 Stock Corner
Today’s stock is Modine Manufacturing (MOD)….
Lost in the hype around META and MSFT earnings was MOD earnings. MOD is an under the radar screen AI infrastructure name that I’ve owned for a while. Looks like it’s going to pop this morning. Here’s a write of from GPT on how this name fits into AI…..
Modine Manufacturing ($MOD) is an under-the-radar but increasingly critical player in AI infrastructure, specifically through its role in cooling high-density data centers that power AI compute.
🏗️ What Modine Does (Core Business)
Modine designs and manufactures thermal management systems for commercial HVAC, industrial, and data center applications. It historically focused on auto and commercial vehicle radiators, but has successfully pivoted into data center cooling, where it now has high-margin growth.
🤖 Relevance to AI Infrastructure
The AI boom — driven by GPU clusters from $NVDA, $AMD, etc. — is triggering a massive buildout of data center infrastructure, with a key bottleneck: heat. High-density AI servers require:
Precision cooling systems
Energy-efficient thermal regulation
Liquid and hybrid cooling technologies
Modine provides:
✅ Advanced Cooling Solutions
Chillers, CRAC/CRAH systems, and fluid coolers tailored for hyperscale and edge data centers
Capable of managing extreme heat loads generated by GPUs used in LLM training and inference
✅ Modular Data Center Support
Products support modular, rapidly deployable data center pods — ideal for AI-focused capacity buildouts (used by hyperscalers and cloud service providers)
✅ Strategic Growth in Data Center Segment
Modine has an entire business unit now focused on "Data Center Solutions"
Management has cited AI infrastructure demand as a key secular tailwind
The company is winning new contracts from hyperscale operators looking to scale AI compute
📈 Why It Matters for Investors
Modine offers a picks-and-shovels angle to AI — like $VRT (Vertiv), but less crowded
Growth in AI compute = growth in high-performance thermal management
Asset-light, profitable, and levered to infrastructure capex, not consumer AI hype
🧠 TL;DR
Modine ($MOD) is becoming a critical player in the AI arms race by solving one of its biggest infrastructure problems: keeping data centers cool. If you're building a thematic portfolio around AI infrastructure, Modine is a strong, differentiated, mid-cap bet.
📬 In Case You Missed It
Launching Today!!!!
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