Daily Earnings: Software hits a physical hardware wall (ZS, SMTC) | May 26

The AI software boom is running head-first into a massive physical hardware wall, forcing companies to sacrifice near-term financials just to secure tangible infrastructure. On today's episode, we explore the contradiction between high-growth cloud platforms and the expensive physical constraints required to keep them running.• Zscaler (ZS) is front-loading physical server purchases to dodge AI-driven component inflation.• Semtech (SMTC) is absorbing severe margin drops just to fund required factory space.• Security architectures are actively pivoting to track autonomous AI agents instead of human employees.Physical manufacturing limits are officially overpowering the theoretical profit margins of pure software models.