•

Advanced Micro Devices sank 8.1% as oil and fresh doubts over returns on AI spending made investors cautious, with Intel also tumbling

•

And Lam Research has our analysts split: Jess Langley sees a premium earned by a 44.1% return on invested capital - Jordan Bittencourt sees 34.1x earnings and a thin 2.3% free cash flow yield. Read their argument below ⬇️

•

🛢️ The headline: Iran's Revolutionary Guards said four vessels were struck and caught fire in the Persian Gulf and three more hit mines in the Strait of Hormuz. President Trump says Iran is making up the hits to push up prices before the midterms, because more oil is passing through Hormuz now than before the conflict began. Both claims are about the same strait.

•

🇨🇳 The Beijing swing: China does not report its inventories, so the story is pieced together from import, refining and production data. It is estimated to have drawn about 530,000 barrels a day from stocks in September, and still holds at least 1.2 billion barrels. Beijing has said almost nothing about any of this.

•

⚠️ The buffer: China is now the last cushion, since other stockpiles have been drawn down. Analysts expect its fourth-quarter imports to fall to 9.2-9.3 million barrels a day, from 11.6 million last year, if prices stay above $​100.

•

Our take: Oil has not wrecked the global economy mostly because one country quietly burned through its savings and did not explain why. Johnston is at seven or eight out of ten on worry, and thinks $​100 oil could persist for a while. Markets are pricing in a world where China keeps helping, which is a strange thing to rely on without having been asked.

•

The valuation claim: Lam earns an operating margin of 35.3% on a 50.5% gross margin, which is rare for an equipment maker. I would rather pay for that profitability after an 11.3% drop than chase it when the tape is calm.

•

The catalyst claim: Lam reported October 21 EPS of $​2.20 against a $​2.18 estimate and revenue of $​8,219M against $​8,142M. I read a clean beat on both lines as proof that order flow held up, so I attribute the selloff to sector nerves while the print itself stayed solid.

•

The risk claim: Ed Yardeni's warning about irrational exuberance in chip stocks is the real danger, because it questions long-term earnings forecasts. I think that risk argues for sizing in stages, with the Nasdaq down 2.60% in a broad tech selloff, and I still see the entry as better than it was.

•

The valuation claim: Jess will point to the drop and call it a discount. But I see 27.9x EV/EBITDA and a free cash flow yield of just 2.3%. A yield that thin means you are paying for years of flawless growth, and the selloff has not changed that.

•

The risk claim: Beta sits at 1.85, so this stock moves nearly twice as hard as the market in both directions. The Nasdaq was down the same ratio in the same session, which makes me think there is more pain to come before a floor appears.

•

The comparison claim: Revenue of that figure beat that figure estimate by only 1.0%. EPS of that figure cleared that figure by 0.9%. Barron's reports that even bullish strategist Ed Yardeni sees irrational exuberance in chip stocks and questions long-term earnings forecasts. A thin beat is a weak defence against forecasts that skeptical.