MS Portfolio Update | May 2026
CPUs are the new GPUs
It’s been quite a run-up from the March lows for the market. While we timed the buy-the-dip perfectly (we are now fully allocated), the rebound was much stronger than anticipated. Even with oil prices trading at double the level 6 months ago (our oil hedge is now up 16%), investors seem to have ignored this, and QQQ is now up ~10% YTD.
Why?
Big-Tech earnings are crushing it
Last week's earnings from Amazon, Microsoft, Meta, and Google once again validated the strength of the AI super-cycle. All of these companies stated that they are supply-constrained.
Amazon — Revenue of $181.5B (+17% YoY), beat by 2.4% | AWS Revenue of $37.6B (+28% YoY), fastest growth in 15 quarters.
Google — Revenue of $109.9B (+22% YoY), beat by 2.7% | Cloud Revenue of $20.0B (+63% YoY), beat by 8.8%.
Microsoft — Revenue of $82.9B (+18% YoY) | Azure revenue growth of +40%, beat guidance of 37–38%.
Meta — Revenue of $56.3B (+33% YoY), beat by 1.4% | Ad revenue +33% YoY.
It’s worth taking a step back and reading those numbers again! We already had sky-high expectations on incredibly high base numbers, and yet these companies delivered. For example, Google Cloud's expectation was ~50% YoY growth on a $12B base, and it delivered a 63% YoY growth.
The strong growth has led hyperscalers to double down on capex, which bodes well for our bottleneck stocks. MS Portfolio (launched Feb 1st) is now up 33% compared to 7% for QQQ and 4% for SPY.
Also, Intel handed us our first 2x after it reported arguably its best earnings in 2 decades.
While there are some supply constraints, Intel is an asymmetric bet on the US government’s influence in the chip race. — Market Sentiment Jan’26
With that, let’s dig into why compute is becoming the new AI bottleneck, how we are positioning for the next few months, and what the bear case is if oil stays up.
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CPUs are the new GPUs
There’s a reason AMD is up 61%, and Intel is up 153% YTD — AI Agents.
Agents can now plan, reason, and execute multi-step tasks without user input. Planning and coordination tasks rely heavily on CPUs and can account for up to 90% of the processing time in an agentic system.
According to Morgan Stanley Research, earlier server builds used 1 CPU per 12 GPUs. With rising agentic workloads, the ratio is now closer to 1 CPU per 2 GPUs, which is driving the CPU bottleneck.
But, it’s not just AMD and Intel that stand to benefit here: