Future demand is still being priced in, but cash returns are becoming the next test

WhiteLine Daily argues that markets are still willing to pay up for future demand, though the way that demand gets priced is starting to split into different paths. Nvidia is using its balance sheet to lock in long-term AI infrastructure demand by agreeing to provide up to $105 billion in residual value guarantees for an OpenAI data center project in Ohio. In China, robotics company Unitree is heading to the STAR Market on August 19 with an issue price of RMB 150.80 per share and a valuation above RMB 60 billion, showing how investors are willing to pull forward growth expectations through valuation. At the same time, Fabrinet’s latest earnings offered a different reminder. The company beat expectations on revenue, earnings, data center growth, and next-quarter guidance, yet its shares still fell about 7% after hours. The report says the market’s attention may be shifting from headline growth to whether that growth is turning into cash. Fabrinet posted roughly $257 million in operating cash flow against $253 million in capital expenditures, leaving only about $4.2 million in rough free cash flow, while inventory rose from about $581 million to $1.021 billion.