JPM | Industrial Spec Sales - Sunday Machinations: Mega earnings dump due next week

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JPM | Industrial Spec Sales - Sunday Machinations: Mega earnings dump due next week

ns like 3 shifts per day, 7 days a week vs a significant increase in capex - so the fixed cost

overhang will be less pronounced when the market does finally start to cool. Cooling markets, or peak orders and potentially

peak pricing are on many people's minds - not just for power gen equipment - but for everything related to the AI/DC build out.

Given the generally frenetic nature of the build out this is not surprising - but there are some indicators that the upcycle is some

way from being done. Prysmian announced on Monday its long awaited capacity expansion plan for its fibre optic business with

a €5.5bn framework contract from Molex and an additional €4.5bn of contracts from hyperscalers and others. The press release

was not the clearest I've ever read - but it did say that the contracts would bring an incremental €1.1bn of revenues p.a. 'from

2031'. That is a new facility coming to maturity quite some time in the future. We also had Google results this week - and they

upped their capex forecasts for the year - and, importantly, said that the increase in capex was to deliver more compute power and

was not a reflection of cost inflation. Note that our Alphabet analyst, Doug Anmuth, has $378bn of capex in 2028E which

represents 85% y/y growth vs 2026E. Doug's post earnings wrap for Alphabet is HERE.

There was an encouraging reaction to Metso’s Q2 results on Friday where better orders offset a small P&L miss - very much

vindicating Chit’s update on the Mining OEM’s (here) where she downgraded Sandvik to N and upgraded Epiroc to N - which

came after she had shifted preference from the upstream names (SAND, EPIA) to the downstream names (WEIR, FLS, METSO)

with this note.