Is anyone invested in it?

At first glance, it may strike you that net accounting profit and GAAP EPS are down more than fifty percent year-over-year. But these are mainly last year's one-time effects (such as the impact of the transactions around Kenvue), so management and the market are looking primarily at the adjusted numbers: adjusted earnings per share of $2.70 are only slightly below last year and above analyst estimates.

How did Q1 2026 turn out?

First-quarter revenues $JNJ rose to roughly $24.1 billion, up nearly 10 percent from roughly $21.9 billion in the same period last year. Adjusted for currency effects, revenue grew around six percent, with an adjusted operating view of just over five percent - solid organic growth for a company of this size. Most of the growth was driven by the pharmaceuticals (innovative medicine) division: this added sales to around $15.4 billion, compared to around $13.9 billion last year. The rest came from the medtech segment, which benefited from higher demand for orthopedics, cardiology and eye products.

At the profit level, the picture is two-layered. GAAP net accounting profit fell to about $5.2 billion from about $11.0 billion last year, and GAAP EPS fell from about $4.54 to $2.14 - more than half. This is primarily due to the fact that the comparative base was heavily impacted by one-time items (asset sales, tax effects, etc.), while this year's number is "cleaner" operationally in terms of structure.

However, if we move to adjusted earnings (excluding these one-off effects), the picture is more stable. Adjusted net income was down only about one to two percent at around $6.6 billion, and adjusted earnings per share were $2.70, versus $2.77-$2.77 last year. Importantly, the $2.70 is above the average analyst estimate, which was expecting something around $2.66-$2.68. In other words, margins are under modest pressure, but operating performance is within or slightly above expectations.

Free cash flow was weaker this quarter - estimates are talking about $1.5 billion, compared to about $3.4 billion last year. This is mainly related to the timing of investments, working capital and some payments; more important to JNJ is its full-year ability to generate stable cash, which has been very strong over the long term. The balance sheet remains robust, with low debt and plenty of room for dividends and acquisitions.

• Full presentation with results.

As commented by management

In the press release and presentation , CEO J. Duato talks about the "strong start to 2026" and that the company is "delivering the year of accelerated growth" that it promised. He singles out in particular:

• Nearly 10 percent revenue growth

• strong momentum in innovative medicine

• Confirmed and newly approved products to support growth through the end of the decade

• and, finally, the lifting of the full-year outlook

J&J now expects 2026 revenues of roughly between $100.3 billion and $101.3 billion, with the midpoint of the $100.8 billion range slightly above market consensus. Adjusted earnings per share should be between $11.45 and $11.65 - the midpoint of $11.55 corresponds to about seven percent growth versus 2025 and roughly in line with what the market was expecting. Overall, then, management is sending the signal, "we're growing faster than before, we're raising guidance, and the plan to achieve double-digit growth by the end of the decade is on track."

The stock reacted with a slight upward move after the results. There are two reasons for this:

• A good outlook for the rest of the year

• Expectations of success for a number of products

JNJ's long-term results

The annual numbers for the past four years confirm that J&J is a typically stable company - sales and profits have been growing over the long term, although acquisitions, divestitures and one-off items occasionally speak between years.

Revenues have moved from roughly $80 billion in 2022 to just over $94 billion in 2025 in four years, growing about six and a half percent to $85 billion in 2023, a little over four percent to $88.8 billion in 2024, and more than six percent to $94.2 billion in 2025. That's a very solid pace for a healthcare giant, especially when you consider the spin-off of the consumer business.

Gross profit grew at an even faster rate - roughly 55.4 billion in 2022, 58.6 billion in 2023, 61.4 billion in 2024 and 68.6 billion in 2025. This suggests that the product mix is improving (more high-margin drugs and better medtech portfolios) and that the company is able to keep the cost of goods sold under control.

Operating expenses (research, sales, administration) grew a bit faster - from about 34.4 billion in 2022 through 35.2 billion in 2023 to 39.2 billion in 2024 and 43.0 billion in 2025. Operating profit still grew - around 21.0 billion in 2022, about 23.4 billion in 2023, dropping slightly to 22.1 billion in 2024 (due to one-time factors) but jumping to $25.6 billion in 2025.

Net income is heavily influenced by one-time items - jumping to over $35 billion in 2023 (double that of 2022), falling to about $14.1 billion in 2024, and rising to $26.8 billion in 2025. Importantly, adjusted (normalized) earnings are growing more steadily, so it makes more sense for an investor to track the trend in adjusted EPS and cash flow. For example, the supplemental materials show that normalized adjusted EPS grew from roughly $10.8 in 2025 toward an estimated $11.5 in 2026.

Share count has been declining slightly in recent years due to share repurchases (from about 2.66 billion shares in 2022 to about 2.43 billion in 2025), so some of the EPS growth is attributable to financial policy, but the main driver is business and margin growth. EBITDA is on an upward trend over that period, with a significant jump in 2025 when EBITDA approaches $32.6 billion.

Shareholders

Insider holdings (management, board) account for only about 0.06% of shares - a negligible amount. Institutional investors hold roughly 75-76% of the stock and free float. The rest is held by a broad base of retail investors and smaller institutions.

The largest shareholders are large fund groups:

• Vanguard holds around 240 million shares (roughly 10%)

• BlackRock about 209 million (about 8.7%)

• State Street about 134 million (about 5.6%)

• JPMorgan and Geode Capital each hold about 2.4% of the shares.

That said, the price performance depends heavily on how the large index and actively managed funds view J&J. If they believe that J&J has a quality drug pipeline, a stable medtech business, and the ability to grow the dividend and earnings over the long term, they are willing to hold the stock despite temporary swings in GAAP numbers. Should sentiment toward healthcare or valuations in general deteriorate, pressure could come despite the fact that the results themselves look good.

News and strategic moves

• New approved drugs and indications - J&J has strengthened its portfolio in areas such as dermatology and oncology. It mentions the approval of ICOTYDE as the first targeted oral peptide for psoriasis, the expansion of indications for the TECVAYLI + DARZALEX FASPRO combination in multiple myeloma, and other moves to ensure that the failure of older blockbusters (e.g., Stelara) won't be fatal for the company.

• Medtech innovations - in medical technology, the company is launching products such as VARIPULSE Pro for faster ablations in cardiology and the TECNIS PureSee intraocular lens for cataract patients in the US. These products expand the addressable market and help lift margins in the medtech segment.

• Increased full-year outlook - J&J raised its full-year revenue and earnings estimates during Q1. It now expects sales of about $100.8 billion and adjusted EPS of about $11.55, which is slightly above the previous forecast and in line or slightly above consensus. This confirms the company has "visibility" for the rest of the year.

• Strategic focus post-Kenvue - after spinning off the consumer business, J&J is purely "healthcare" - innovative pharmaceuticals and medtech. Management reiterates that the goal is to achieve double-digit annual growth by the end of the decade, and Q1 2026 is presented as confirmation that they are on that trajectory.

• Planned Enterprise Business Review - the company has announced a plan for December 2026 to show investors in more detail its medium-term strategy, capital allocation and innovation pipeline. This is a signal that it is preparing for the next "chapter" after Kenvue with an emphasis on transparency to the market.

Fair Price

The turnaround, however, is only half‑built. The foundry unit still runs deep in the red, with annual operating losses measured in multiple billions as Intel ramps EUV nodes like 18A and pours more than 100 billion dollars into fabs in the U.S. and Europe, and management is targeting roughly 40% gross margins and break‑even by around 2027 - a goal that assumes new capacity can be filled quickly enough with meaningful external volume, not just internal chips. For investors, Intel’s foundry story has moved from “pure sunk cost” to a real, if risky, option: if the company can turn today’s pipeline of AI, hyperscaler and government deals into durable, high‑margin wafer and packaging contracts, the division could justify its footprint; if not, the expensive experiment will keep weighing on group returns long after the rest of the business has healed.

Top points of the analysis

• IFS has grown to about $17.8 billion in annual sales and is now about a quarter of Intel's sales, whereas the share was in the single digits of one percent two years ago.

• External foundry sales (outside of Intel's own chips) are still only in the hundreds of millions a year, but are growing at double-digit rates and the order book exceeds $15 billion.

• The foundry segment is still generating billions of dollars of operating losses (on the order of USD 2-3 billion per year), which are pushing down group margins and cash flow.

• EUV wafers have moved from less than 1% in 2023 to over 10% in 2025, showing that Intel is realistically moving to the most advanced manufacturing nodes.

• Overall, Intel earns roughly $73.5 billion in 2025 at a gross margin of 48.5% and roughly $3 billion in free cash flow - so it is no longer a "burning house" but still a capital-intensive transformation.

• The CHIPS Act support brought in about USD 1.5 billion, allowing the state to partially share the risk and unlock financing for new factories without a full onus on the balance sheet.

• The share price has already priced in some of the turnaround - after the massive drop in 2024 came a significant rally, so the room for "easy money" has shrunk, but the re-pricing will stand on how foundry margins evolve.

What's changed: From vision to numbers

The key change is that IFS is no longer a fringe activity, but one of the three main arms of the business alongside client PCs and data chips. In 2025, IFS accounted for more than 25% of Intel's revenue, whereas as recently as 2023 it was a unit of one percent. This mix means that any shift in the foundry segment's margins will translate very quickly into overall results.

At the same time, the revenue mix within foundry is changing. Management reports that EUV wafers - i.e., production on the most advanced nodes - already account for more than 10% of wafers, up from less than 1% in 2023. This is critical because it is the advanced nodes that carry the highest prices per wafer and can pull the foundry business out of the red. As long as most of the volume is running on legacy processes, it is hard to compete with TSMC on price and margin.

There has been an important shift in demand as well. According to the latest data, external foundry sales have climbed to about 307 million. USD 307 million in 2025, with a significant acceleration towards the end of the year. While this is still a small number relative to total sales, the trend shows that more customers outside of Intel's own portfolio are interested in Intel's capabilities. If large contracts in AI chips, automotive or datacenter can be concluded, IFS will have a visible external contribution to cash flow.

At the group level, Intel has moved from a period of deep decline to a phase of stabilisation. In 2025, the company will reach revenues of USD 73.5bn, +10.7% y-o-y, with a gross margin of almost 50% and around USD 3bn of free cash flow, despite heavy investments. This suggests that the core business (PCs, data centers) is no longer in crisis management mode and can act as an "engine" to pull the costly foundry ramp-up in the meantime.

What needs to work for this to work

• Intel needs to maintain the technology roadmap and introduce new nodes into real mass production on time.

• External foundry sales must move from "hundreds of millions" to billions of dollars in a few years.

• Foundry margins must approach at least mid double-digit levels or the segment will remain structurally loss-making.

How to work your way to growth?

https://www.youtube.com/embed/IhbQqEMlUz8?rel=1

The first source of potential growth is long-term contracts to produce advanced chips for large designers - from AI accelerators to automotive. At the moment, Intel has a declared order pipeline of over $15bn, which should materialise over the next few years as new factories are launched in the US and Europe. Each major customer that switches a portion of production to IFS moves the segment closer to the tipping point.

The second driver is product mix. As the share of EUV wafers and advanced nodes grows, the average price per wafer and potential gross margin increases. If Intel can maintain high capacity utilization on these nodes, foundry margins could jump significantly from deep losses towards zero and then into the black within 12-36 months - even at relatively conservative prices.

The third source is cost sharing and support with governments. The CHIPS Act has already provided a direct injection of about $1.5 billion, and additional grants and tax credits reduce the effective CAPEX that Intel must fund from its own balance sheet. In practice, this means that every dollar of free cash flow has a higher leverage effect on return on capital because part of the investment in factories is de facto subsidized.

The numbers that support the growth thesis

• Total sales 2025: USD 73.5 billion, +10.7% year-on-year.

• Gross margin 2025: 48.5%, a significant shift from the "crisis" years.

• IFS sales 2025: ~USD 17.8bn, ~25% share of sales.

• IFS growth: ~3-25% per year depending on metrics (reported vs. adjusted).

• External foundry revenue: $307 million. USD 307mn in 2025, of which USD 222mn in 2025. USD 222 million in 4Q.

• Foundry operating loss: on the order of USD 2.3-3.2bn per year.

• Group free cash flow: around USD 3bn in 2025.

• Cash on balance sheet: USD 20-25bn.

These figures show that turnaround is not just a marketing sticker. The core business is growing again, margins have picked up and the company is generating positive cash flow even though the foundry segment is still massively subsidized. At the same time, it shows that IFS is already big enough to move the overall valuation if successful - but would still be a significant liability if unsuccessful.

Strategic news

Partnerships and investment

• Partnership with Nvidia $NVDA (capital entry and joint chips) - Intel and Nvidia announced a strategic collaboration where Nvidia will invest approx $5bn in Intel and the two companies will jointly develop chips for AI platforms and PC SoCs - Intel will supply x86 cores and manufacturing, Nvidia GPUs (RTX) integrated directly into Intel processors. The goal is to connect the x86 ecosystem with Nvidia's accelerated GPUs, to strengthen Intel Foundry Services and to get RTX graphics into PC segments where Nvidia hasn't been so much.

• Capital support from the U.S. government and SoftBank - Intel's "turnaround narrative" was boosted by news of CHIPS Act subsidies and SoftBank's investment of about $2 billion in Intel to accelerate the foundry business and next-generation chip development.

Manufacturing and factories

• Deferral of Ohio mega-factory project - Intel announced a significant delay in the construction of two large fabs in Ohio (originally targeting a start-up around 2025) - the first fab at a cost of c. USD 28bn is not due to be completed until around 2030, with operations planned between 2030-2031, followed by the second around 2032. The main reason is financial savings at a time when Intel is making a costly transition to a contract manufacturing (foundry) model and needs to better align CAPEX with real demand.

Products and roadmap

• Core Ultra 200 (Arrow Lake and others) at CES 2025 - At CES 2025, Intel unveiled new Core Ultra 200 (Arrow Lake) and next-generation (Bartlett Lake, Raptor Lake Refresh, Twin Lake) processors with a focus on AI, efficiency, security (vPro) and modernizing enterprise IT environments. These chips are headed to both notebooks and desktops and are expected to be the core platform for PCs with local AI acceleration in 2025.

• Panther Lake / Core Ultra 300 and Intel 18A process - Intel finally showed chips made with Intel 18A process at CES 2026 - the next generation Core Ultra 300 "Panther Lake" for PCs with significantly higher CPU and integrated graphics performance. The company promises up to 60% more computing power and 77% more graphics performance over the previous generation, while also marking the first commercial deployment of the 18A process ("designed and manufactured in the USA").

• Arrow Lake Refresh (desktop) - According to leaks indirectly confirmed by Intel's timing, it is also planning an Arrow Lake Refresh for desktop in 2026 - improved Core Ultra models for higher performance, though one of the originally planned top models (Core Ultra 9 290K Plus) has been cancelled.

The new platform

• New hybrid AI platform with SambaNova - Intel and SambaNova have introduced a heterogeneous AI platform that combines GPUs, SambaNova SN50 accelerators (RDUs) for decoding, and Intel Xeon 6 processors for orchestration and operation of tools and agents. The goal is to offer data centers an alternative to pure GPU solutions (mainly Nvidia) and to accelerate inference of agent AI systems at lower power and CAPEX requirements. According to internal data, Xeon 6 has up to 50% faster LLVM compilation compared to ARM servers and up to 70% higher performance on vector databases compared to AMD EPYC, while SambaNova SN50 promises up to 5x higher inference performance and significantly lower TCO(total cost of ownership) than previous generations.

• The entry into the Terafab project also remains a significant new feature.

Valuation: what's included and what's not

Intel's current valuation no longer reflects the crunch years of 2022-2024. After a significant decline in 2024, a strong rally has come, reflecting the belief that the turnaround is "real" - the market is already pricing in a return to revenue growth, margin improvement and support from the CHIPS Act. As a result, revenue and P/E multiples are not explicitly "crisis" and investors are no longer just paying for hardware dinosaurs, but potential foundry players.

The key point is that the current valuation clearly does not fully factor in a scenario in which IFS achieves near TSMC-like margins over the long term. IFS is a large loss-making segment for now, so the market is projecting more of a discount into the price - acknowledging that revenues exist and are growing, but not believing that this will quickly translate into high returns. If Intel shows a combination of double-digit operating margins in foundry and stable FCF within 2-4 years, the repricing could be very significant.

Conversely, if foundry doesn't come out of the red even in a few years, the current valuation is easily defensible as "fully priced" or even overpriced - especially given the capital intensity and risk of technology slippage. In such a scenario, the market could depress the valuation again to reflect a traditional, slow-growth manufacturing company rather than a technology leader.

What the market values

• A return to revenue growth and improved gross margins.

• Government support and de-risking of a portion of CAPEX through the CHIPS Act.

• The real emergence of a foundry segment with a significant share of revenue.

What the market fears

• Long-term loss-making foundry business and weak margins.

• Risks of technology slippage against TSMC and Samsung.

• Dividend and balance sheet pressure with high CAPEX.

Macro and market

The whole foundry story is playing out against the backdrop of growing global demand for chips, mainly due to AI, data centers and automotive. The advanced node(sub-5nm) market is expected to grow at a double-digit rate in the coming years, with current capacity led by TSMC $TSM and Samsung $SSNLF. Intel is attempting to enter exactly this tier of the market - the segment where competition is fiercest but margins are highest.

For Western customers, geopolitics and efforts to diversify production outside of Taiwan also play a role. IFS is thus positioning itself not only as a technological but also as a geopolitical alternative, supported by US and European policies. If tensions around Taiwan increase, this could paradoxically play in Intel's favour, even though it would damage the entire sector in the short term.

Risks

The first major risk is technological slippage. If Intel fails to roll out new nodes on time and maintain yield, customers will be unwilling to pay premium prices and will prefer TSMC. In the numbers, this would translate into weaker IFS revenue growth and persistent loss-making.

The second risk is financial. The Foundry segment already generates billions of dollars in operating losses and requires enormous CAPEX. If the PC or server environment were to deteriorate, cash flow from the core business that subsidizes Foundry today would decline. The result could be increased debt, pressure to cut the dividend or defer some projects.

The third risk is commercial - Intel may have the technology and the capacity, but without large enough external customers the foundry business will never reach effective scale. The pipeline of contracts is promising, but it needs to materialize into long-term contracts with real volumes.

Risk Checklist:

• Delay of new production nodes against schedule.

• Insufficient growth in external foundry sales.

• Persistently high foundry losses with no trend towards improvement.

• Increase in debt and rating downgrade.

• Negative changes in support from CHIPS Act and other programs.

• Weaker demand for PC/data chips that fund transformation.

Investment scenarios

Optimistic scenario

In the optimistic scenario, Intel successfully completes its technology roadmap by 2028-2030, acquires several large foundry customers, and IFS reaches double-digit operating margins. Group revenue could grow at a mid-double-digit rate, FCF would increase significantly and valuation would reflect Intel as a combination of an established chip designer and a major foundry player.

• Revenues: 8-10% annual growth, IFS share over 30%.

• Operating margins: return to higher double-digit levels.

• FCF: strong growth, room for dividend and buyback increases.

• Dividend: stable to rising, cover safely above 1.5x.

• Valuation: revaluation at multiples consistent with a combination of growth foundry and stable chip business.

Realistic scenario

In the realistic scenario, foundry gradually reduces its loss, but only reaches a tipping point in the second half of the decade. IFS becomes a significant but not dominant part of the business and Intel remains more of a "hybrid" between a traditional manufacturer and foundry.

• Revenues: 4-6% growth per year, IFS share around 25-30%.

• Operating margins: mid double-digit, but below best years.

• FCF: gradual growth, with significant volatility based on CAPEX.

• Dividend: stable, no aggressive growth, cover around 1.2-1.4 times.

• Valuation: rather average across large chip companies, no extreme premium or discount.

Pessimistic scenario

In the pessimistic scenario, Foundry never reaches competitive margins, external revenues never rebound from the hundreds of millions, and CAPEX remains high. Intel finds itself trapped, funding an expensive project with uncertain returns while the core business stagnates.

• Revenue: minimal growth or stagnation, IFS revenue share high but not very profitable.

• Operating margins: low, under pressure from foundry losses.

• FCF: weak, at risk of negative values in years with highest CAPEX.

• Dividend: stagnating or declining, covering below 1x in worse years.

• Valuation: pressure on share price, valuation as a "heavyweight producer" with no sustainable competitive advantage.

What to watch next

• External foundry sales growth quarter after quarter.

• Foundry segment operating loss development - trend towards improvement.

• Share of EUV wafers in total production volume.

• Announcement of large foundry contracts (AI, automotive, datacenters).

• CAPEX and its relation to sales and FCF.

• Development of gross and operating margins at group level.

• Cash position and changes in debt.

• Signals from CHIPS Act and other programs (grants, rebates).

• PC and data center demand trends.

• Management comments on break-even IFS timing.

What to take away from the article

• Intel Foundry Services has moved from a marketing vision to a segment with nearly $18 billion in revenue and a key impact on the entire company.

• The core business has stabilized, margins are growing, and the company is once again generating positive cash flow.

• The Foundry segment is still deeply in the red but has growing external revenues and order pipeline.

• Intel's valuation already reflects that the turnaround is real, but the full success of Foundry is not yet fully factored in.

• The dividend is sustainable, but payout growth will be limited until foundry "stops hurting".

• Key metrics are IFS external revenue growth, segment loss development and mix towards EUV wafers.

• Government support reduces CAPEX risk, but also "handcuffs" Intel to a strategic infrastructure role, which brings regulatory risks.

• Investors should view Intel as a long-term bet on the emergence of a third global foundry player, not a quick "AI trade".

What makes the print more than an accounting outlier is the breadth behind it: consumer and commercial banking kept growing, investment banking and markets revenues rebounded, wealth and asset management added fee income, and the balance sheet remains stuffed with capital and liquidity, giving the franchise room to keep taking share while others are still patching holes from the last rate shock.

Q1 2026 results

The bank reported managed revenues of around $50.5 billion for the first quarter, up about 10 percent from the same period last year. Roughly half came from interest income - net interest income was around $25.5 billion, up nine per cent on last year - and the other half from fees and trading, where non-interest income was up eleven per cent. This shows that JPMorgan $JPM is able to benefit from both the higher rate environment and the markets and fee business.

Net income came in at $16.5 billion, up from about $14.6 billion in the same period last year. Earnings per share were $5.94, well above last year's $5.07 and also above what the market was expecting. Return on equity comes out to nineteen percent and return on tangible equity to twenty-three percent, which is elite levels in the banking world. Even net of the cyclical favorable environment, that's just a very high profitability.

On the expense side, the bank spent about $26.9 billion, up about fourteen percent from a year ago. So it's true that costs are growing fast, but revenues are growing even faster, so profitability has improved despite higher payroll, marketing and other items. Loan loss provisions were $2.5 billion, with net charge-offs of $2.3 billion - almost the same as last year - and the net addition to reserves was only slightly positive, indicating that the bank sees no deterioration in credit quality.

The balance sheet and capital position show why Dimon keeps talking about a "fortress balance sheet." CET1's core capital is about $291 billion, CET1's capital ratio is about 14.3 percent (standardized methodology), total loss absorbing capacity (TLAC) is about $572 billion, and cash with liquid securities is about $1.5 trillion. Average loans are up eleven percent year-over-year to about 1.5 trillion and average deposits are up seven percent. So the bank is both growing and sitting on a very strong capital cushion.

Shareholders have not been left out - in this quarter alone they received roughly $4.1 billion in dividends ($1.50 per share) and have received another $8.1 billion back through buybacks. So over the past twelve months, the total "payout" - the combination of dividends and buybacks - is about 82% of earnings.

• Full presentation with results.

Retail & Consumer (Consumer & Community Banking)

The Consumer & Community segment delivered a net profit of around five billion dollars, up around twelve percent from a year ago. Revenues were approximately $19.6 billion, up seven percent year-over-year.

Retail Banking & Wealth Management grew primarily due to higher fees and investment management revenues. The mortgage business benefited from higher production, although net interest income in this segment declined slightly. Cards and auto financing were clearly a strong driver, with higher revolving credit card balances and higher auto leasing revenues pulling this subsegment's revenues up more than ten percent.

Retail costs grew rapidly, up about eleven percent. They were pulled up by investments in marketing, higher depreciation in leasing, and higher fees for bankers and consultants. Provisions remain within reasonable limits - net charge-offs rose slightly, but some provisions are dissolving thanks to better real estate prices. The segment's overall return on capital of around thirty-two percent shows that JPM's consumer business is very profitable, albeit cyclical.

Commercial and Investment Bank (CIB)

The Commercial and Investment Bank is the main "driver" of results. Net income was about nine billion dollars, up thirty percent from a year ago, and revenues rose to about 23.4 billion dollars, up nineteen percent.

In investment banking, revenues were up nearly forty percent, and advisory and equity fees were up about 28 percent. This meant that M&A and equity issuance picked up again after a weaker period, and JPM was able to carve out the biggest slice of that - over nine per cent of the global IB fee market in the first quarter. Payments added double-digit growth thanks to higher deposits and fees, while the credit side benefited from higher balances and gains from portfolio hedging.

Trading and securities services were also very strong. Trading revenues were around $11.6 billion, up twenty percent from a year ago, with fixed income trading growing by more than twenty percent and equity trading by around seventeen percent. Securities services benefited from higher market valuations and greater client activity. Costs in CIB rose by around thirteen per cent - mainly due to higher fees and commissions - but the segment's profitability still improved, with return on capital around twenty-one per cent.

Asset & Wealth Management

The wealth management segment generated a net profit of around $1.8 billion, about twelve percent higher than last year. Revenues moved to $6.4 billion, representing about eleven percent growth. The main drivers are higher management fees due to rising market valuations and net capital inflows, as well as higher client trading activity.

Assets under management climbed to about $4.8 trillion, client assets to $7.1 trillion, and long-term net inflows into funds and other products were about $54 billion in the quarter alone. This is important for stability - the larger this cushion, the less reliance on one-off transactions in investment banking.

What Dimon had to say about this and how to think about it

Jamie Dimon's commentary on the results is that performance is strong across the business - retail, investment bank and wealth management are all growing at the same time, in an environment that is supportive but also fraught with risk. He notes that the bank has "plenty of capital and liquidity" and that while changes to the proposed capital rules have removed the biggest extremes, there is still room for improvement.

On the macro front, he says the US economy has been resilient so far: people have jobs, people are spending, companies are in good shape, plus fiscal policy, some deregulation, investment in AI and previous Fed actions are helping. But on the other hand, he warns of a mix of geopolitical risks, tensions in energy markets, trade disputes, high deficits and inflated asset prices. In other words - the numbers look great, but there's no reason to think the risks have gone away.

Long-term results: strong trend, but 2025 was not a new record

JPMorgan had about $153.8 billion in revenue in 2022, about $236.3 billion in 2023 and about $270.8 billion in 2024 - very strong growth, driven mainly by higher rates and activity in the markets. 2025 brought in around 256.5 billion in revenues, a slight decline from 2024 but still well above 2022-2023 levels.

Gross profit rose to about $168.2 billion in 2025, up from $158.8 billion in 2024 and $145.7 billion in 2023. Operating expenses rose to about $95.6 billion, up slightly from $83.7 billion in 2024, so operating profit fell slightly from $75.1 billion to $72.6 billion. Still, that's significantly higher than 2022, when operating profit was around 46 billion.

Net income reached about $57.0 billion in 2025, just a bit less than the $58.5 billion in 2024 but noticeably more than the $49.6 billion in 2023 and $37.7 billion in 2022. Meanwhile, earnings per share moved from about $12.1 in 2022 to $16.3 in 2023, $19.8 in 2024 and $20.1 in 2025, thanks to buybacks and profitability growth.

This implies several things:

• 2024 was the "peak" of the cycle so far in terms of revenue and profit, and 2025 was slightly behind, but it was still a very strong year.

• The trend over the last four years is clearly up - higher earnings, higher EPS, higher gross profit.

• Q1 2026 builds on this trend and shows that the bank has not fallen off the top of the cycle yet, rather it is near the top.

Shareholders

JPMorgan is a classic institutional large bank. Insider holdings are small, around half a percent of the stock, with the majority in the hands of funds.

According to the latest data, they are holding:

• Vanguard roughly 265.8 million shares (about 9.9%)

• BlackRock about 211.6 million (about 7.9%)

• State Street about 125.3 million (about 4.7%)

• Morgan Stanley about 66.4 million (about 2.5%)

The institutions as a whole control over three-quarters of the free float. That said, the evolution of the share price is very much about how the consensus of the big funds evolves. If they recalculate the models and conclude that a 19% ROE and sixteen and a half billion in quarterly earnings is sustainable, they can send the stock significantly higher. If, on the other hand, they see this as the top of the cycle and start counting on a normalization of profitability, they can put the brakes on the upside even after a great quarter.

News and strategic moves over the past period

• The bank continues to clean up and fine-tune retail - building credit cards and consumer finance, but keeping discipline on risk, as seen in stable charge-offs and only modest reserve changes.

• In investment banking, it confirms its number one position globally - a nearly 10 percent share of fees in the first quarter and double-digit fee growth show JPM is taking full advantage of the resurgent M&A and capital markets.

• Wealth management is building on massive growth in assets under management and net inflows, which is key to a stable fee business over the long term.

• The firm communicated a 2026 net interest income outlook of around $103 billion, although it expects rates to fall further - relying on loan growth, particularly in cards and other credit segments, and a better deposit mix.

• At the regulatory level, JPMorgan is actively involved in the debate over the final form of Basel III rules in the US - the aim is that capital rules should not restrict banks' ability to fund the economy while leaving room for a reasonable payout of capital to shareholders.

Fair Price

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I try to sell as little as possible and hold stocks for several years, but I remember, for example, $CVS or $MMM, which I sold because of various problems and lawsuits. A few months later they rose by several tens of percent. Timing isn't always right, but that's just part of investing.

In addition to dividends, there is another important channel in the stock market through which companies return capital to their shareholders. Share buybacks, or share buybacks in English, have become increasingly important in recent years and in many cases exceed dividend payouts in volume. Yet many retail investors pay considerably less attention to them than to traditional dividends. And this is where the investment opportunity may lie.

Buyback yield is an indicator that measures what proportion of a company's market capitalisation has been spent on buying back its own shares over a given period. It works similarly to dividend yield, but instead of paying cash to shareholders, the company reduces the number of shares outstanding. This has a direct impact on earnings per share (EPS), return on equity(ROE) and valuation multiples. When a firm buys back shares below their intrinsic value, this is one of the most efficient forms of shareholder value creation. If, on the other hand, it buys back overpriced shares, value is destroyed.

In the US market today, we find three companies from completely different sectors that have extremely high buyback yields. Dropbox in the cloud software segment, Ready Capital in commercial real estate finance, and Wendy's in fast food. Each has a different reason for aggressive buybacks and each faces different challenges. Our team has thoroughly analyzed these companies and compiled the most important things to know about them.

Dropbox $DBX

Dropbox is one of the most aggressive companies when it comes to share buybacks in the entire U.S. market. The company, which made a name for itself as a cloud storage pioneer, is now generating steady revenue from its subscription model, but its revenue is virtually flat. It is the combination of a stagnant top line and strong free cash flow that has created room for a massive buyback program.

Over the course of 2024 and 2025, the company repurchased approximately $1.46 billion of its own shares, reducing the number of shares outstanding by roughly 19%. The company's three-year average buyback yield is 7.6%, which puts it among the absolute top of the US market. In addition, in September 2025, management approved a new buyback authorization of an additional $1.5 billion, funded through, among other things, a credit facility from Blackstone Credit & Insurance.

Fundamental picture and risks

For the full year 2025, the company reported revenue of $2.52 billion on net income of $508 million. Gross margins have been steady around 80% and free cash flow exceeds $800 million annually. The stock is currently trading around $23 on a market capitalization of approximately $5.4 billion with a P/E ratio of around 12.

The key risk remains whether aggressive buybacks are merely masking the absence of organic growth. The company's revenues are down slightly and the competitive environment in cloud services is getting tougher. Dominant players such as Microsoft $MSFT with OneDrive or Google $GOOG with Google Drive have distribution advantages that Dropbox $DBX is unlikely to overcome. While the company is developing a new AI product , Dash, that enables intelligent search across unstructured data, its monetization is still at an early stage.

For investors, Dropbox is a prime case of a company using buybacks as a tool to boost earnings per share in a declining top-line environment. When management buys back shares below their intrinsic value, it is an efficient allocation of capital. Morningstar, for example, estimates the fair value of the stock at $81, which would suggest a significant undervaluation. Wall Street analysts, however, are more cautious, and the consensus target price is around $28.

Ready Capital $RC

Ready Capital presents a very different case than Dropbox. It is a commercial real estate finance company(mortgage REIT) that focuses on lending for smaller and mid-sized commercial properties and loans guaranteed by the U.S. Small Business Administration (SBA). The firm operates in a highly leveraged model typical of real estate investment trusts.

In January 2025, the company authorized a new share repurchase program of up to $150 million. Given the then market capitalization of under $300 million, this is an extremely aggressive authorization. The company's total shareholder yield is 44%, which includes a combination of the dividend yield, and just the buyback yield. Meanwhile, the company is buying back shares at prices well below book value, which was $8.79 per share at the end of 2025, while the stock was trading around $1.60.

Why is the discount so extreme

The reason for the extreme discount to book value is clear. Ready Capital is going through a period of severe credit problems. In the fourth quarter of 2025, the company reported a loss of $1.46 per share and book value per share fell 14%. The company has significantly increased its loan portfolio allowance and is facing rising delinquencies in the commercial real estate segment. The dividend was drastically reduced to just 1 cent per share for the quarter. At December 2024, the dividend was still $0.25.

Management is trying to restructure the portfolio through loan sales and liquidity releases. For 2025, the company generated approximately $380 million from portfolio sales and loan repayments. However, analysts remain skeptical. Some have lowered the target price to $1.85, while the average analyst target price is $2.81.

Ready Capital is thus an example of a situation where a high buyback yield may not make for an attractive investment. While the company is buying back shares at a fraction of book value, the book value itself is under pressure and may decline further. It is thus a highly speculative bet that management can stabilize the loan portfolio and stop the erosion of value before further asset depreciation occurs.

Wendy's $WEN

Wendy's, the third-largest burger chain in the U.S., represents a third different approach to buybacks. The company deliberately cut its quarterly dividend from $0.25 to $0.14 per share in 2025 and redirected the freed-up capital into an aggressive buyback program. For the full year 2025, it returned a total of $330 million to shareholders through dividends and buybacks, buying back 14.4 million of its own shares. The company's buyback yield is approximately 8.8%.

In the first quarter of 2025, the company launched an accelerated share repurchase (ASR) program of up to $300 million and spent $124 million on buybacks in the first three months alone. Free cash flow for 2025 was $205 million, showing that the buybacks are largely funded by operations, not debt.

The company is under pressure from declining revenues

The context for this aggressive program, however, is a problematic operating reality. Wendy's faces declining U.S. sales, and the stock has lost about half its value since the beginning of 2025. The company unveiled its Project Fresh strategic plan in February 2026, which includes closing 240 to 360 underperforming U.S. restaurants in the first half of 2026, representing 5% to 6% of the entire U.S. network. The stock is currently trading around $7 with a market capitalization of approximately $1.3 billion.

Trian Fund Management (whose founder is Nelson Peltz, who is also a former Wendy's board member) is in discussions with potential partners about strategic transactions, including a possible acquisition, according to a February document. This adds another layer of uncertainty and potential to the situation. Bank JPMorgan $JPM cut its target price to $7 in response to the results, while Citigroup $C maintained its target at $18.50, illustrating the extreme dispersion of opinion on Wall Street.

Thus, Wendy's is an example of a firm that actively shifts capital policy away from dividends and toward buybacks during periods of operational difficulty. The market will be watching closely to see whether Project Fresh actually leads to improved margins and earnings, or whether buybacks merely slow the decline in earnings per share without addressing the fundamental problems of the business.

Comparison and investment context

All three companies have buyback yields well above the market average, but the motivation and quality of these programs differ fundamentally. Dropbox is buying back shares from a position of strength, from a stable and highly profitable software model with minimal capital requirements. Ready Capital is buying back at an extreme discount to book value, but in an environment of rapidly deteriorating asset quality. Wendy's is consciously shifting the capital policy mix from dividends to buybacks to offset pressure on operating performance.

A key differentiator is the source of funding for buybacks. Buybacks funded by strong free cash flow, as in the case of Dropbox, are the most valuable. Buybacks funded by debt or asset sales, as in part with Ready Capital, carry significantly more risk. Investors should also pay attention to the net buyback yield, which takes into account new share issuance, such as for employee compensation plans. A firm that buys back large volumes of shares but also issues new shares through stock-based compensation may have a real impact on the number of shares outstanding that is significantly lower than the gross buyback yield suggests.

A strategic view

Share buybacks are a legitimate and, in many cases, effective capital allocation tool. Research shows that firms with high net buyback yields that repurchase shares at attractive valuations and from sustainable cash flow have historically outperformed the broader market. But as Warren Buffett has pointed out, buybacks only create value if they are done at prices below the intrinsic value of the firm. Otherwise, they harm shareholders.

In the current environment of higher interest rates and a shift in investor sentiment towards earnings quality, buyback yields are becoming more important as part of the overall shareholder yield. Investors who focus solely on dividend yield are missing out on a significant part of the picture. The combination of dividend yield, buyback yield, and possibly deleveraging provides a more comprehensive view of how much capital the firm is actually returning to its shareholders.

What to watch next

• Dropbox: results for Q1 2026 (expected April 30), the evolution of paying users and the first signs of monetization of the Dash product

• Ready Capital: pace of distressed loan sales, delinquency and book value per share trends over the next few quarters, potential action from Trian Fund Management

• Wendy's: the progress of Project Fresh and the impact of restaurant closures on sales, free cash flow trends and a potential strategic transaction initiated by Trian Fund Management

• General: monitor net buyback yield (net of new issues) rather than gross buyback yield and always evaluate buybacks in the context of the company's valuation, cash flow and debt burden

Share buybacks are a tool that can create or destroy value, depending on the terms and sources of the firm's execution. Dropbox, Ready Capital and Wendy's offer three distinct case studies of this mechanism. Dropbox shows how a mature software firm can effectively use stable cash flow to reduce the number of shares outstanding and increase earnings per share. Ready Capital illustrates the risks of aggressive buybacks in an environment of deteriorating asset quality. And Wendy's demonstrates a strategic shift from dividends to buybacks in response to operational pressures.

The key for investors is not to view high buyback yields in isolation, but always in the context of the fundamental quality of the business, the source of funding for buybacks, and the valuations at which buybacks are executed. It is this combination that determines whether buybacks actually increase value per share or merely create the illusion of capital discipline.

What makes the difference is the pace of growth. While Google is set to hold steady this year with digital ad revenue growth of around 11.9%, Meta is set to accelerate from 22.1% in 2025 to 24.1% in 2026, according to Emarketer. In absolute terms, that means Meta is adding tens of billions of dollars more each year, allowing it to outspend even a strong player like Google in global advertising.

How Meta is outgrowing Google in advertising

Emarketer explains the change primarily by the difference in growth dynamics. Meta $META 's ad revenue is projected to accelerate from 22.1% this year to 24.1% in 2025, while Google is projected to hold "only" a steady pace of around 11.9%. In absolute terms, Meta is thus adding tens of billions of extra dollars each year, which will allow it to catch up to and even overtake Google $GOOG in net digital ad revenue in 2026, according to projections.

Driven primarily by ad products across Facebook, Instagram, WhatsApp and, more recently, Threads. Meta has launched ads on WhatsApp and Threads, putting it in direct competition with X (formerly Twitter) and other messaging and social platforms, while Reels on Instagram continues to rival TikTok and YouTube Shorts in short video. It is short video and automated campaigns that are one of the fastest growing segments of digital advertising today.

Advantage+ and the concentration of budgets on big players

Playinga significant role in Meta's growth is the Advantage+ suite of tools, which uses machine learning to automate campaigns - from targeting to budget allocation to creative. Emarketer and other analysts point out that it's the ability to deliver higher return on marketing spend (ROAS) with less "manual" work that makes Meta an attractive option for advertisers, especially for midsize and smaller companies without large in-house teams.

At the same time, in an environment of geopolitical uncertainty and budget cuts, ad spend is concentrated towards the largest platforms. Analysts cited by Reuters say smaller players such as Snap $SNAP or Pinterest $PINS are more vulnerable when budgets are cut, while Meta and Google will capture a larger slice of the "shrinking pie" thanks to the scale and power of their ad systems. Emarketer estimates that by 2026, Google, Meta and Amazon combined will already account for roughly 62% of global digital ad spend.

What Google has in addition and why it may still be falling behind

Alphabet has a more diversified business compared to the Met - in addition to search and YouTube advertising, cloud, hardware, YouTube Premium subscriptions and other segments are still growing rapidly. But it's the broader mix that analysts say may be holding back pure ad growth: Google has more "legs", but not all of them are growing as fast as Meta's ad business, which is still essentially primarily an advertising company.

Analyst Max Willens comments that Google's outperformance in ad revenue is a symbolic endorsement for Meta of its strategy - a focus on performance marketing, massive use of AI in targeting and aggressive monetisation of new spaces like Reels, WhatsApp and Threads. Google still has plenty of growth avenues, according to him, but in the pure advertising line, Meta's higher growth rate may put it behind for some time.

What this means for the digital advertising ecosystem

If Emarketer's forecast comes true, it will end an era when it was taken for granted that Google was the "ad leader" of the internet. For the first time in history, the combination of social, short-form video and messaging would generate more ad revenue than search and YouTube combined.

From the advertisers' perspective, this marks another shift to a few dominant platforms that hold most of the reach, data and optimization tools. For medium and smaller networks, this further increases the pressure - in an era where budgets are shifting rather than growing massively, it will be increasingly difficult to carve out a significant share alongside Meta, Google and Amazon's $AMZN.

Why Meta is accelerating: AI, WhatsApp, Threads

Emarketer attributes Meta's accelerating growth to several factors:

• Advantage+ and AI automation: automated campaigns boost performance and lower the barrier to entry for advertisers who don't have to deal with complex setups.

• WhatsApp and Threads: ads on these apps are estimated to add up to an extra $25 billion a year over the next few years.

• Reels and short video: Meta has been able to monetize Reels in a way that no longer dilutes overall margins - tmp has expanded inventory while maintaining strong ROAS.

Google, by contrast, is growing more steadily but more slowly. YouTube is still going strong, but some of the growth is shifting to subscriptions (YouTube Premium) which are not net ad revenue, and experiments with AI answers in search are not yet multiplying ad revenue at the same rate Meta is growing on social.

In my portfolio I currently hold only one Dutch stock – $ADYEN.AS . I have two positions in it with a combined weight of about 3% of the portfolio. Both are currently at a loss, but I stay calm and hold them with a medium-term horizon and a target price around 1530 USD.

Why I like $ADYEN and why I hold it:

One of the global leaders in payment platforms with a scalable and high-margin model

Strong long-term trends thanks to the shift to digital and cashless payments

High customer “stickiness” – switching to a competitor is costly and complex

Expansion into new regions and segments (especially the US and enterprise clients)

Stable balance sheet and consistent cash flow generation even in a weaker macro environment

I believe the current price does not fully reflect the long-term growth potential, so I’m prepared to be patient and let the position “work” over the coming quarters.

On my Dutch watchlist I also have $ASML . I consider the company to be exceptionally high quality from a long-term perspective, but at current prices I view it as overvalued and I’m not buying yet. My planned entry zone is around 980 USD.

Why $ASML is attractive, but I’m waiting:

Global leader in EUV lithography – practically a monopolistic position in the most advanced chip manufacturing

Key supplier for the largest players like TSMC, Intel, and Samsung

Strong structural demand driven by AI, HPC, and the ongoing need for more powerful chips

Significant technological lead that is extremely difficult to catch up with

On the other hand, the current valuation in my view already largely prices in an optimistic growth scenario and leaves minimal “margin of safety” in case of a slowdown in the semiconductor cycle or order delays. Therefore I prefer to wait for a better entry price.

Discipline on entry prices remains one of my key rules. I’d rather miss part of the upside than enter at an unattractive risk-reward ratio.

How about you? Do you hold Dutch stocks like $ADYEN or $ASML in your portfolio? Are you also waiting for better prices on some names?

The English version of this post is available on my profile on eToro. If you’d like to follow me there or possibly copy my USD portfolio, I’d be happy!

What matters is how the bank got there. The quarter reads less like a one‑off windfall and more like the payoff from a multi‑year course correction: shrinking or exiting low‑return retail experiments, re‑weighting toward advisory franchises, financing and wealth management, and pushing harder on capital discipline and buybacks. With the stock already up sharply over the past year and the share of earnings coming from fee‑rich, balance‑sheet‑light activities rising, Q1 2026 works as a proof‑of‑concept that the “back to our knitting” strategy can support a near‑20% return on equity even in a world of higher capital requirements – a bar most universal banks still only talk about in slide decks.

How Q1 2026 turned out

Revenue and profit

• Net revenues:

  • Approximately USD 17.2 billion

  • Approximately USD 15.1 billion in Q1 a year ago

  • year-on-year growth of around 14%

For a bank that is already very large, double-digit revenue growth in one quarter is clearly a positive signal. At the same time, it is well above the market consensus, which means that Goldman $GS was able to take advantage of the current market situation better than the market expected.

• Net Earnings:

  • Q1 2026 approximately USD 5.6 billion

  • Q1 2025 approximately USD 4.6 billion

Year-on-year, net income will thus increase by around USD 1 billion, or around 20-25%. This is the main number that "pulls" the story of the quarter - the bank was able to translate much of the revenue growth into profit growth, not just "burn" it in costs.

• Earnings per share (EPS):

  • Q1 2026: $17.55

  • Q1 2025: approximately USD 14.1

EPS growth of about $3.4 per share corresponds to a year-over-year increase of about 25%. That's a very solid pace for a bank of this size and confirmation that this is not just a cosmetic improvement.

Return on equity

• Return on Equity (ROE):

  • Q1 2026 around 19.8%

  • a year ago more in the region of 14-15%

A jump close to 20% is crucial - most large US banks typically hover somewhere between 10% and 15%. Nearly 20% means Goldman can earn significantly more per unit of capital than the sector average.

• Return on tangible equity (ROTE):

  • Q1 2026 around 21%. This number strips capital of goodwill and other intangible assets, so it is closer to how efficiently the bank works with "real" capital. Over 20% is a very high level in the banking world, which usually justifies an above-average valuation if it is sustainable.

• Full presentation with results.

How management commented on the results

"The geopolitical environment remains very complex - so disciplined risk management must remain at the core of our operations," Goldman Sachs CEO David Solomon said in a statement.

Management built on two main theses in its commentary.

First, that this is an "earned" number, not just a fluke. Management notes that the bank has been making tough moves in recent years - exiting retail banking, cutting back on loss-making projects, realigning its capital allocation. Q1 2026 shows that the puzzle is coming together nicely: capital is concentrated where Goldman has traditionally had a strong brand, people and processes.

Second, that they recognize the cyclicality of the business despite a strong quarter. Market activity, M&A volumes or new issue creation are sensitive to the macro economy and investor sentiment. Management is therefore stressing that it wants to continue to strengthen the more stable pillars of returns - mainly wealth management, investment products and long-term mandates from large clients.

At the core, then, is the message:

• The numbers are excellent.

• They are not just a fluke, but a result of the changes we have made.

• Still, we're not going to pretend it's going to be like this every quarter, and we're going to continue to build a more stable mix of returns.

The long-term picture

When we step back from one quarter and look at the last few years, a clear turnaround is emerging. After the weaker years of 2022-2023, when results were pressured by weaker market activity and retail losses, both annual revenue and net income have gradually started to pick up.

Revenues have been roughly in the range of USD 46-50bn per annum in recent years, with 2025 bringing further improvement thanks to a recovery in investment banking and trading. Net profit in 2025 was somewhere between USD 15-16 billion, a marked improvement on the weaker years before.

Return on equity has gradually moved from levels around 10-12% closer to the bank's previously communicated target of somewhere in the 15-17% range. Q1 2026 builds on this and adds another step: ROE of nearly 20% and EPS of $17.55 are above the average of recent years.

Investors need to ask themselves two questions:

1. How much of this performance is due to "good markets"? If activity in MA, issues or trading weakens next year, the numbers will go down.

2. What is the structural change? If a lower cost base, a better mix of business and a greater emphasis on asset management is a permanent change, the average year in the future should look better than the average year in the past even after the current boom is subtracted.

Q1 2026 alone doesn't address this issue, but it makes a good case for saying that Goldman has the potential to steadily hold near the top end of the sector as long as regulation and the environment don't throw it a big pitchfork.

Shareholders

Goldman Sachs is a typical "institutional" title.

• Most of its shares are held by large funds - index funds, actively managed funds, pension and insurance portfolios.

• The largest holdings include fund groups such as Vanguard, BlackRock and State Street, which together own a significant portion of the free float.

Insider holdings (the share of management and directors), on the other hand, are relatively small, which is common among similar firms.

Practical implications for the share price:

• the move after earnings is not about "someone big" selling or buying

• but how dozens and hundreds of funds adjust their models

  • increase their estimates of long-term EPS and ROE → more willing to pay more for the stock

  • will see Q1 as just the top of the cycle → will be more likely to hedge profits and put the brakes on further price appreciation

Therefore, even after a very good quarter, the market reaction may be muted if investors start to fear that it won't get better in the short term.

News and strategic moves

Q1 2026 not only gives good numbers, but also fits in with a couple of important moves the bank has been making recently:

• Completing the retreat from retail and consumer lending - Retail banking projects that have historically generated losses and complicated the balance sheet have either been sold or muted. This has freed up capital and management for key areas.

• Focus on core investment banking and trading - Goldman is returning to what it has been doing for decades - advisory, issuance business, equity, bond and derivatives trading. In an environment where capital markets are waking up, it is taking full advantage of this.

• Building a more stable pillar in wealth management - Wealth management and investment products (funds, alternatives) are a priority. The Bank wants a greater proportion of future revenues to come from regular fees, not just "hit and run" income from large transactions.

• Capital policy - Goldman combines dividend with share buybacks. In a high profitability environment, this helps earnings per share growth, but at the same time the bank needs to hold enough capital for regulatory testing and stress scenarios.

• Strengthening its position in the mergers and acquisitions market - Goldman is one of the main advisors in a period when larger deals are starting up again after a hiatus. This is important not only for short-term fees, but also for reputation and future assignments - those who service large deals now are more likely to be called upon next time.

Fair Price

Sitting in that unglamorous layer is a manufacturer that began life as an IBM spin‑off and has since reinvented itself as a specialist contractor for AI data centers, assembling custom systems for cloud giants, chip makers and government programs instead of pushing a consumer brand. Over the last four years, its revenue has climbed from roughly 5.6 billion to more than 12 billion dollars, net income has compounded by several dozen percent a year and returns on invested capital have moved into territory investors usually associate with software, not with factories and contract manufacturing.

Top points of analysis

• The company has shifted from a traditional EMS assembly plant over the past decade to an engineering partner for AI datacenters - designing and integrating 400/800G and emerging 1.6T switches, AI servers, and entire rack-scale systems for hyperscalers and chipmakers.

• Revenues grow from roughly $5.6 billion in 2021 to $9.6 billion in 2024 and around $12.4 billion in 2025, with the CCS datacenter segment being the main driver - growing 64% YoY in Q4 2025 alone and accounting for about 78% of revenues.

• Profitability is growing even faster: net profit increased from $104m to $428m between 2021 and 2024. USD428 (+75% between 2023 and 2024 alone), EPS roughly tripled to USD3.62 and reached USD6.05 in 2025 according to the results, and return on equity (ROIC) is around 21%.

• The balance sheet is strong and relatively conservative: total assets less than USD 6bn, equity around USD 1.9bn, net debt around USD 0.5bn.

• Management, led by Rob Mionis (CEO since 2015), has been open about the fact that AI is not a short-term fad but a structural change, and is investing accordingly - for 2026 it plans CapEx of US$1bn in new capacity in Texas, Thailand, Mexico and Japan, funded primarily by operating cash, and has raised revenue guidance to US$17bn and adjusted EPS to 8.75.

• Key strength is in AI infrastructure: the company is a major supplier of datacenter Ethernet switch platforms (alongside Nvidia/Accton, Cisco, Arista) and builds custom systems for Alphabet's TPU infrastructure, for example, giving it confidence and predictability into orders through 2027.

How an assembly plant became an AI hyperscaler partner

The Celestica $CLS story begins in the late 1990s, when $IBM spun off part of its manufacturing capabilities in Canada into a separate entity. It gradually expanded, came under the ownership of investment group Onex, and became a major player in EMS (Electronic Manufacturing Services) - a company that assembles servers, telecommunications equipment and industrial electronics for other brands. The business was then high volume but not very attractive: price pressure, low margins, minimal bargaining power.

The turning point came when Rob Mionis took the helm in 2015. He brought industry and private equity experience and a relatively cool-headed view of what such a firm needed to do to avoid being doomed to a slow erosion of margins. He started with a challenging period for the portfolio: he had to exit contracts where the firm is just an anonymous assembly line, invest in in-house design teams and move higher up the value chain to design, integration and lifecycle services. Gradually, the Hardware Platform Solutions division was created, no longer waiting for a detailed drawing to be commissioned, but designing entire systems - from mechanics, to power, cooling and cabling, to testing. It was this layer that later proved crucial when the world started building AI datacentres.

What the company does and what it does for a living

Today's business stands on two main legs that differ in dynamics and nature.

The first and most fundamental is the Connectivity & Cloud Solutions (CCS) segment. This is where the AI story unfolds. The company designs and manufactures for large customers:

• Datacenter switches and routers with 400G, 800G throughput and 1.6T Ethernet platforms in development

• AI servers, training and inference nodes, often in the form of custom solutions for specific chip platforms

• entire rack-scale systems, including liquid cooling, power supplies and cabling

These customers include hyperscalers (global cloud companies), chip manufacturers (including players developing their own AI accelerators), and large enterprise customers building their own AI capabilities. In 2024, CCS accounted for roughly $6.5 billion of the $9.65 billion in total revenue, according to available data, and grew roughly 40% year-over-year. In 2025, CCS continued to accelerate, growing 64% year-over-year to $2.86 billion in Q4, accounting for nearly 80% of revenue. This is where the company has the largest margins and the role of "picks and shovels" in the AI boom.

The other leg is Advanced Technology Solutions (ATS). This includes aerospace & defense, industrial electronics, healthcare and capital equipment (machinery for the semiconductor and imaging industries). This portfolio is growing more slowly, sometimes stagnating - in the last quarter of 2025, ATS earned about $0.8 billion in revenue, down 1% year-over-year. But from an investor's perspective, ATS is important because it delivers more stable cash flow and increases diversification. Aerospace & defense is benefiting from the global increase in military budgets, industrial applications from the automation trend, and healthcare from demographics.

The numbers: revenue, margin and capital growth

The company's transformation in recent years is clearly reflected in the numbers. In 2021, the company earned about $5.63 billion, in 2022 already $7.25 billion (+28.7%), a year later $7.96 billion (+9.8%) and in 2024 $9.65 billion (+21.2%). For 2025, according to the company's results, revenues continued to grow and approached $12.4 billion, driven mainly by the CCS segment.

Profitability growth is even stronger. Net income grew from $104 million in 2021 to $180 million in 2022, $244 million in 2023 and $428 million in 2024, rising to above $650 million in 2025, which corresponds to a growing EPS of about $6.05. EPS has thus more than tripled in four years. Much of this is due to a combination:

• CCS revenue growth.

• margin expansion due to higher value added and operating leverage

• a slight decline in the number of shares outstanding due to share buybacks

At first glance, margins don't look huge - gross margins of around 11.6%, operating margins of 7.2%, and net margins of 6.2% in 2024. But in the context of the manufacturing hardware business, the dynamics are significant: gross profit more than doubled between 2021 and 2024, from $487 million in 2021 to $487 million in 2024. Operating profit rose from $487 million to $1.034 billion, operating profit rose from $168 million to $599 million (+77% between 2023 and 2024 alone), and EBITDA moved from $294 million to $736 million. In Q4 2025, the company reported an adjusted operating margin of 7.7%, its all-time high, and CCS segment margin of 8.4% shows that the mix shift towards AI infrastructure is gradually lifting profitability.

The balance sheet adds an important detail: the company is growing without becoming dangerously leveraged. Total assets at the end of 2024 were just under $6 billion, liabilities $4.1 billion and equity $1.9 billion. Net debt was around $0.5 billion, Debt/Assets was 0.14, Debt/Equity was 0.45, and Altman Z-score was 7, corresponding to a low risk of financial distress. Return on capital is high for a manufacturing company: return on assets around 10.5%, return on equity 38.5% and return on invested capital approaching 21%. Simply put: every dollar invested in the business returns a double-digit percentage appreciation.

CEOs, management and their view of the AI boom

Rob Mionis is the quintessential "operator" - a CEO who grew up in the industry and private equity and has a keen eye for operational efficiency. His career prior to joining the firm included various executive roles at industrial companies and a role as an operating partner at Pamplona Capital, where he focused on manufacturing, aerospace and healthcare businesses. When he assumed leadership in 2015, the firm was marginally profitable and heavily dependent on certain EMS contracts.

Mionis isn't just selling AI as a buzzword - in an interview with CNBC, he described the firm's role with the metaphor that if AI is a runaway freight train, they're laying down the tracks in front of it. This captures two aspects of his strategy well: first, the move from "wiring" to designing entire systems, and second, the realization that AI is not just a fad, but a structural change in how datacenters look and what infrastructure they need. Hence the investment in design centers in Austin and Taiwan, hence the emphasis on rack-scale systems and liquid-cooled solutions, hence the partnering with big players like Alphabet in TPU systems.

The CEO openly says 2026 will be an investment year - CapEx around $1bn, FCF margins lower due to ramp-up of new plants - but also stresses that most of the investment will be covered by operating cash and the goal is to keep net debt in a reasonable range. The entire executive team thus comes across as a combination of "operators" rather than visionaries - which can be seen as a plus in a capital-intensive business.

Market share and competitive position

In AI infrastructure, this company is a typical "hidden champion". It doesn't show up on the box, but it's inside it. On the datacenter networking side, it is one of the major manufacturers of Ethernet switch platforms for datacenters alongside names like Nvidia/Accton, Cisco and Arista. In AI switches and routers for 400G/800G networks, it has a substantial market share according to analysis, especially if you focus on OEM and white-box solutions that are subsequently rebranded.

On the AI compute side, it works with big players on custom platforms. One of the most notable examples is its partnership with Alphabet, where it helps design and manufacture systems using TPU chips for Google Cloud's internal AI needs. The combination of these two competencies - networking and rack-scale compute - is key in AI datacenters, as the bottleneck is often the throughput and efficiency of cluster interconnects, not the GPU performance itself.

The competitive landscape consists of:

• Large networking vendors (Cisco, Arista)

• EMS giants (Foxconn, Jabil)

• and specialized players in datacenters

The move this company has made is to focus on design-rich contracts and build long-term partnerships where it is not easily replaced purely on price. The more a customer's AI stack relies on a particular rack, switch and cooling design, the higher the switching costs.

Where the company can grow in the coming years

The near-term horizon is pretty much a given. Management itself says it has "unprecedented visibility" into AI infrastructure orders through 2027 thanks to multi-year programs with hyperscalers and large cloud customers. The outlook for 2026 - revenue of $17 billion and adjusted EPS of 8.75 - stands primarily on continued robust growth in CCS, particularly AI networking and compute.

In addition, it has several structural drivers:

• Moving datacenters to 800G and 1.6T Ethernet and wider deployment of liquid-cooled racks

• continued growth of AI training and inference clusters, including on-premise solutions for large enterprises

• Increasing military budgets, supporting aerospace & defense projects in ATS

• Long-term trend towards automation and robotics in industry, which requires next generation industrial electronics

When we envision the company in five years, the growth scenario will include:

• Have a significant presence in AI networking and rack-scale systems in multiple generations of datacenters

• an important partner for two or three major hyperscalers and one or two major AI chipmakers

• still have a solid aerospace and industrial business as a stabilizing component

• and to operate with margins that are superior to the hardware business

Valuation: what's worth today

Based on a combination of data and current market indicators, the stock is trading today at roughly:

• P/E 53.3

• P/S 3.36

• EV/EBITDA 37.3

• P/B 18.6

• P/CF around 115

These are values that we would consider extremely inflated for a classic EMS player. But the market views this company as a high-growth AI infrastructure company, not an electronics manufacturer. Fair value models that combine EPS growth, ROIC, discounted cash flow, and a risk premium for cyclicality often end up somewhere around $200 per share, and valuation scores of 19/100 suggest that from a purely numerical perspective, the title is more on the expensive side.

An investor buying today is therefore implicitly saying:

• I believe the company will deliver $17 billion in revenue in 2026 and EPS of 8.75

• I believe the AI CapEx hyperscalers won't have an early end

• I believe the mix towards higher value-add and design-rich contracts will sustain margins

• and I'm resigned to the fact that even with good numbers, the market may at some stage reduce multiples

Risks not to be forgotten

The first is the cyclicality of AI investments. While AI looks like a structural trend, the budgets of hyperscalers and chip companies work in cycles. After two or three years of aggressive building, there may come a phase where projects shift into optimization and maintenance rather than expansion. In an environment where the core segment is now growing at tens of percent per year, even "just" a flat year could mean a significant disappointment.

The second risk is the concentration of large customers. In recent results, the company itself admits that its three largest customers collectively generate more than half of its revenues. Any shift in their strategy - a decision to integrate more production in-house, give a larger share to another integrator, or simply temporarily reduce CapEx - would have an immediate impact on the revenue line.

Investment scenarios

Base case scenario - growth with gradual compression of multiples

In the base scenario, the AI wave in datacenters does not subside, but logically slows down after the extremely strong years 2024-2025. The company delivers a raised outlook for 2026 - revenue of around $17 billion and adjusted EPS of 8.75 - and in the following years, revenue growth stabilizes somewhere in the high single-digit to low double-digit percentage range annually. The CCS segment will continue to grow faster than ATS, but no longer at a 60+% pace; margins will hold near today's levels thanks to a mix of design-rich contracts and operating leverage, and CapEx will normalize downward after an investment-heavy 2026, so free cash flow will start to more closely match accounting earnings.

The market will gradually stop accepting P/Es over 50 and EV/EBITDA around 37, and multiples will compress somewhere in the P/E range of 30-35, EV/EBITDA 18-22 - still a premium to conventional EMS players, but lower than today. Thus, the combination of EPS growth (about 15-20% annualized from today's levels) and multiple compression can still deliver a decent total return: roughly a doubling of earnings per share vs. a one-third to one-half reduction in valuation multiple. The investor in this scenario is not betting on further rerating, but on growth in fundamentals to "tighten" today's premium.

Growth scenario - longer AI supercycle

In the growth scenario, the AI datacenter boom turns out to be not just a 2 to 3 year wave, but a longer supercycle. Hyperscalers will ramp up CapEx beyond 2026 to build next-generation training and inference clusters, transitions to 800G and 1.6T Ethernet will happen faster than expected, and large enterprise firms will join in full force alongside cloud giants to build their own AI capacity. Enterprise in this environment:

• Will gain additional "design wins" at two to three major hyperscalers and chipmakers

• expand collaboration on TPU and other custom AI platforms

• and be able to fill new capacity in Texas, Thailand and Mexico without significant margin fluctuations

In such a scenario, revenues could still grow at double-digit rates after 2026, margins could still improve slightly due to a larger share of rack-scale systems, and FCF would start to catch up more sharply to book profits after the 2026-2027 investment wave. The market would then have reason to hold the title at a P/E of 35-40 and EV/EBITDA of around 25, possibly higher if the company profiles itself as an "indispensable" part of the AI infrastructure. An investor coming in today would see a combination of double-digit EPS growth and only modest pressure on multiples in this scenario - a potentially very attractive yield.

Cautious scenario - AI wave breaks, multiples normalise

In the more cautious scenario, the cyclical nature of AI investing becomes fully apparent. After two to three years of aggressive CapEx, hyperscalers will shift from "build" mode to "optimize" mode - focusing on better utilization of existing clusters, software-hardware stack efficiency, and only later on the next wave of large investments. CCS revenues continue to grow, but at a much slower pace, or even stagnate some years; ATS, while holding steady in revenue, cannot fully compensate for weaker momentum in datacenters.

In this mix, the company remains fundamentally sound - it has solid margins, positive cash flow, acceptable debt - but the market no longer wants to pay a growth premium. The P/E may retreat to 20-25, EV/EBITDA to 12-15, closer to better industrial companies than pure growth companies. Meanwhile, EPS may still grow (e.g., due to slight margin expansion, stock buybacks, gradual revenue growth), but compression of multiples will "eat" some of that growth. The result is a more moderate total return, or a period where the fundamentals grow but the price tends to go sideways or undergo volatility for a few years.

What to take away from the story

This is not a story about a cheap stock that the market is overlooking, but about a company that has managed to be in the right place at the right time - in AI datacenter infrastructure - and the market is willingly paying a premium price for it. The assembly plant has become an engineering platform that today designs and assembles the hardware that runs the AI clusters of the world's biggest players. Revenues and profits are growing fast, returns on capital are high and balance sheets are strong. But at the same time, the stock carries multiples that reckon the AI train will run at full speed for years to come, and that this company will remain the one laying its tracks.

If we want physical AI exposure in a portfolio and are willing to accept higher volatility and valuation risk in exchange for exposure to the datacenter boom, it makes sense to think of this stock as a growth stock, not a stable core. If, on the other hand, we are looking for more of a valuation margin of safety and less reliance on the investment cycles of a few hyperscalers, it may be prudent to watch this story from afar for now and wait for either better input or a clearer signal that AI investing is indeed transforming into a long-term sustainable, not just cyclical, business.

The logic is clear: the AI boom means demand for compute power, electricity and physical server halls. More and more companies don’t want to build their own data centers and prefer to “rent” them from specialized players, so having a large pool of capital solely for consolidating and building these assets makes sense from Blackstone’s perspective. For investors, though, it will come down largely to price: if this vehicle hits the market already carrying an “AI premium” in its valuation and with pressure to spend capital quickly, returns could be worse than picking specific, already established REITs/data-center companies. An interesting story, but the question is how much AI hype will already be priced in on IPO day.

Why follow analysts' sell signals

Sell or strong sell analyst recommendations are not as common in the stock market as one might think. Most analysts naturally gravitate toward positive ratings (reviews) because maintaining good relations with corporate management is part of how Wall Street works. Thus, when an analyst issues a sell recommendation, it is usually due to specific and well-founded concerns about fundamental problems that cannot be easily overlooked.

In the current market environment, where investors increasingly value earnings quality, margin stability, and realistic returns on capital, firms with uncertain prospects come under particularly strong pressure. Our team has selected five companies where analysts are sending a clear warning signal. Each faces different challenges, but the common features are a loss of confidence among professional investors and a declining willingness of the market to tolerate poor performance.

Beyond Meat $BYND

Beyond Meat is now a shadow of its former glory. The company, which went public in 2019 as a symbol of the food industry revolution with a share price as high as $240, is now trading below the one-dollar mark. The consensus analyst rating is sell, with an average price target of around $0.66 to $0.73 per share. None of the original enthusiastic buy recommendations remain.

Structural problems with no clear solution

The source of the problem is not just a cyclical downturn, but a structural failure of the business model. Demand for plant-based meat alternatives turned out to be much less than the market had originally expected.

Revenues for the fourth quarter of 2025 were just $61.6 million, gross margins fell to about 10%, and the company continues to generate deep losses. Negative equity of minus $784 million and total debt of more than double the company's market capitalization paint a picture of a company on the brink of insolvency.

The situation is further complicated by a warning notice from the Nasdaq stock exchange of a possible delisting, which the company received in March 2026 after its stock traded below the one dollar mark for 30 consecutive trading days.

The company'sAltman Z-score is deep in the financial distress zone, suggesting a probability of bankruptcy in excess of 65% in the short term, according to independent models.

Cricut $CRCT

Unlike Beyond Meat, this is a company that is profitable, showing an ROE of around 20% and generating a net margin of over 10%. Yet it has a consensus rating of strong sell, with analysts at Goldman Sachs $GS, Barclays $BRC and Citi $C rating it negatively. The average analyst price target is around $3.45 to $3.67, implying a decline of around 15% from the current price.

Stagnation as the main threat

Cricut' s main problem is not the loss, but the lack of growth. Revenues for the full year 2025 remained virtually flat with the previous year and product revenues are declining. While the company is increasing the number of paying subscribers and improving profitability through cost savings, it lacks any organic growth engine. The market for creative cutting machines is inherently limited and market saturation is reflected in declining interest from new users.

Insider behaviour is also a worrying sign. CEO Ashish Arora sold thousands of shares in March 2026, not a signal that inspires confidence in future developments. Institutional holders own less than 20% of the shares, which is an unusually low proportion and reflects the limited willingness of professional investors to engage with the title.

Alexander's $ALX

Alexander's is a real estate investment trust focused on just five properties in the New York metropolitan area. The firm is managed by Vornado Realty Trust and its revenue is heavily dependent on one key tenant, Bloomberg, which accounts for approximately 60% of total revenue. This extreme concentration creates a vulnerability that the market is increasingly taking into account.

Declining FFO (net cash flow from operating activities) and a threatened dividend

The 2025 financial results confirm the negative trend. Net profit fell 35% to US$28.2 million and FFO fell from US$78 million to US$63 million. For the fourth quarter, the decline was even more dramatic, with FFO falling to $12.5 million compared to $20.8 million in the prior year. Dividend coverage declined to approximately 90%, suggesting that the current payout of $4.50 per share per quarter may not be sustainable in the long term.

This is compounded by high debt levels, with a debt-to-equity ratio of 7.6, and analysts' forecasts expecting a further decline in earnings of 9% per annum on average over the next three years. Revenues for 2025 have fallen by almost 6% and profit margins have declined from 19% to 13%. Moreover, short selling (shorts) of the stock rose 21% in March 2026, signaling growing negative bets for further downside. In addition, the company announced the sale of Rego Park I for net proceeds of $202 million in March 2026, which, while improving the balance sheet, will reduce future earnings.

SandRidge Energy $SD

SandRidge Energy is an independent oil and gas production company focused on the Mid-Continent region of Oklahoma and Kansas. The company is significantly smaller than most competitors in the sector with a market capitalization of around $600 million and limited analyst coverage. This limited size and liquidity is one of the factors contributing to the negative rating.

Volatile results and dependence on commodity prices

The fourth quarter of 2025 highlighted key weaknesses. Revenue was $39.4 million, slightly below analysts' expectations. Earnings per share of $0.34 fell short of the consensus of $0.37. The realised oil price fell to $57.56 per barrel compared to $65.23 in the previous quarter and $71.44 at the end of 2024, illustrating the company's extreme dependence on commodity prices. This trend is very likely to change in future results due to the rapid rise in oil prices as a result of the conflict in the Middle East.

Freedom Capital dramatically downgraded the rating from a strong buy to a strong sell in March 2026, an unusually sharp reversal. Oil and gas producers of this size are inherently risky investments because they lack the diversification of large integrated companies and their operating costs per barrel are relatively higher. In an environment of falling oil prices, this disadvantage is particularly pronounced. Although Carl Icahn, one of the best-known investors, holds a stake in the company, even his presence in the shareholder structure has not prevented a decline in analyst confidence.

Hovnanian Enterprises $HOV

Hovnanian Enterprises is an American residential real estate builder that focuses on the entry, mid-rise and luxury home segments. The company has come under significant pressure in recent months due to a combination of high mortgage rates, rising incentives and weaker sales momentum. Analysts at Citizens initiated coverage in April 2026 with an underperform rating and a price target of $74, down approximately 35% from the current price.

Margins in a downward spiral

Financial results for the first quarter of fiscal 2026 revealed the extent of the problems. Gross margin in the homebuilding segment fell to 10.1% from 15.2% in the prior year, a decline of nearly 500 basis points. Adjusted gross margin declined to 13.4% from 18.3%. The biggest problem, however, is the net margin, which fell to just 2.08% in 2025. The company was thus only able to earn less than $69 million on nearly $3 billion in revenue.

The main reason for this is rising incentives for buyers, which mainly include rising mortgage rates. Incentives as a percentage of average sales price reached 12.6%, up from 9.7% in the previous year, and this trend has continued for seven consecutive quarters.

Sales (for the most recent quarter) decreased 6% to $632 million on a 12% decline in home deliveries. Net income decreased from $28.2 million to $20.9 million. While Hovnanian has successfully refinanced its debt and all major obligations are now unsecured for the first time since 2008, operational performance is deteriorating.

Common features and differences

All five companies are facing different challenges, but several commonalities unite them. First and foremost, they are companies where the negative trend is reflected in fundamentals, not just sentiment. Beyond Meat is struggling to survive, Cricut is stagnant in a tight market, Alexander's is losing revenue from a concentrated portfolio, SandRidge is exposed to commodity risk and Hovnanian is facing structural margin pressure from high interest rates.

Meanwhile, there is no obvious catalyst for any of these companies that could reverse the negative trend in the short term. This is a significant difference from firms that are temporarily undervalued due to cyclical factors. Here, in most cases, the problems are structural and require either a fundamental change in the business model or a significant change in the macroeconomic environment.

Strategic view

From the perspective of potential investors, the key is to distinguish between a stock that is cheap and a stock that is cheap legitimately. For Beyond Meat, bankruptcy risk is a real scenario, not a marginal possibility. Cricut can be an interesting value trap for investors who only focus on a P/E ratio of around 11, but ignore the absence of a growth engine. Alexander's offers a high dividend yield of nearly 8%, but dividend coverage below 100% of FFO is a warning sign.

SandRidge Energy and Hovnanian are then examples of companies whose performance is heavily tied to macroeconomic factors outside of their control. In SandRidge's case, it is oil and gas prices, and in Hovnanian's case it is mortgage rates. If these factors develop favorably, both firms could surprise positively. Otherwise, however, there is room for further downside.

What to watch next

• Beyond Meat's stock price performance relative to the Nasdaq compliance deadline (August 2026) and a potential reverse stock split

• Cricut's quarterly results, highlighting trends in active users and product sales

• Alexander's decision regarding a potential dividend cut and the impact of the sale of Rego Park I on future FFO

• Development of WTI crude oil prices and realized prices at SandRidge Energy in future quarters

• Incentive trends at Hovnanian, in particular whether the company will be able to stabilize gross margin at 13% to 14% based on guidance

• The evolution of mortgage rates in the US and their impact on housing affordability for the entry-level buyer segment

Sell recommendations from analysts are not common in the stock market, and when they do occur, they are usually backed by well-founded concerns. For all five companies analyzed, there is a specific fundamental issue that cannot be easily resolved in the short term.

This does not mean that all these stocks must necessarily continue to weaken. The market sometimes punishes troubled companies too much, creating opportunities for contrarian investors. But the key is to distinguish between temporary cyclical pressure and permanent structural damage to a business model.

Tesla has finally received FSD approval in the Netherlands, and this is the first such authorization in the EU. In my view this is very bullish news and it’s only a matter of time before other countries allow the system as well. Tesla hasn’t been doing great lately, so this could help. I’m not buying more shares right now, but I definitely plan to hold them long-term.

The package on the block includes the century‑old Boron mine in the Mojave Desert town that literally bears the element’s name, still the world’s largest borax operation, along with processing plants, a refinery and export terminal at the Port of Los Angeles, and the Owens Lake mining operation near the Sierra Nevada. Geology is part of the appeal: estimates suggest reserves that can sustain output into the early 2040s, giving chemical producers and private‑equity buyers not just scale but a long‑duration position in a mineral that the U.S. has reclassified as “critical” for everything from fertilizers and heat‑resistant glass to renewable‑energy hardware and even nuclear applications.

What exactly is Rio Tinto $RIO selling

According to reports from Bloomberg, Mining.com and other sources, Rio Tinto is looking to sell the entire package of its pine operations in California. This includes:

• An open pit mine and processing facility in the Mojave Desert town of Boron, the world's largest borax mine

• a refinery and shipping terminal at the Port of Los Angeles

• mining at Owens Lake near Sierra Nevada

These operations, according to company and analyst data, account for approximately 30-33% of global demand for refined boron and borates, making them literally the backbone of the global market for this critical mineral. Sources cited by Bloomberg say Rio has already instructed UBS and JPMorgan to structure the deal, and the official "auction process" is expected to be underway in the first half of the year.

Serious bidders include WE Soda, Magris Resources and U.S. Silica Holdings, according to Bloomberg and Reuters, and binding bids are expected to be submitted by June. Given the deposit's long life (reserves into the early 40s) and strategic position in global supply, it is estimated that the package could reach a valuation of up to $2 billion.

Why boron is strategic and who needs it

Boron is one of the lesser known but increasingly important "critical" minerals. It is used in a wide range of industries:

• Specialty glasses and ceramics (e.g. heat resistant glass, displays)

• Renewable energy - components for wind turbines, solar technology

• nuclear energy, insulation and high-resistance materials

• fertilisers and agrochemicals

• chemical industry, detergents and as an additive for drilling in the oil and gas sector

In 2023/2024, the U.S. Geological Survey and the U.S. Department of the Interior listed boron as a critical mineral due to supply risks, limited substitutes, and high concentration of production outside the U.S. This is what makes Rio Tinto's California project a strategic asset: a large 'domestic' deposit in a country that wants to reduce its reliance on imports for key materials for the energy and high-tech industries.

What the sale could bring to Rio Tinto

For Rio Tinto, the divestment of the pine assets is part of a broader strategy to 'narrow' its portfolio. Last year, CEO Simon Trott unveiled a plan to generate $5-10 billion through a combination of "non-core" asset sales and productivity improvements to allow the company to channel more capital into its core pillars (iron ore, copper, aluminium and new battery metals).

An expected price of up to $2 billion would enable Rio:

• strengthen its balance sheet and possibly reduce net debt

• free up capital for large growth projects in copper, lithium or iron ore

• Simplify the operational structure and management, as the boron operations have a different logic than the company's core mining segments

The market has so far viewed the news positively. Following news of interest from more than a dozen bidders and valuation estimates, Rio Tinto $RIO shares briefly added roughly 1-1.5% in New York, reflecting expectations that the firm can sell the asset at an attractive price in a competitive process.

Impact on the boronmarket and possible scenarios

As Rio Tinto's California complex covers approximately one-third of the world's demand for refined boron, owning these assets will change the market balance. If the assets are taken over by a specialty chemical company or an industrial player such as WE Soda or U.S. Silica, the following may occur:

• better vertical integration: linking boron mining with the production of final products (glass, chemicals, fertilisers)

• changes in pricing policy and long-term offtake contracts

• greater investment in capacity expansion or modernisation of processing if the new owner sees room for margin expansion

Conversely, the entry of a strong private-equity fund could mean a more financially oriented approach - cost optimization, perhaps restructuring of contracts and subsequent sale after a few years with appreciation. But in both cases, the asset is long-lived (reserves into the 40s) and the industry benefits from the long-term trend of electrification, renewables and demand for specialty materials.

For Rio Tinto, it is thus more a question of capital allocation than of exiting a promising segment - the company is betting that it will make $2 billion better in other projects than by continuing to operate a "chemical-oriented" US pine portfolio on its own.

This morning U.S. Vice President JD Vance returned from Islamabad (where peace talks were held) without an agreement and with a statement the markets did not want to hear.

Twenty-one hours of talks with Iranian negotiators ended, well… with nothing.

The U.S. presented its final offer; Iran rejected it. Tehran reportedly does not currently plan another round of talks.

Iran’s negotiating position is stronger than it appears

Iran currently holds better cards than the U.S.

Iran controls the strait and continues to limit the number of ships that can pass through it. Former U.S. negotiator Aaron David Miller said that clearly. Iran possesses highly enriched uranium, controls a key maritime route, and the regime has survived. That gives it time. The U.S., on the other hand, is pushing for a quick resolution.

Vance himself admitted that Iran has not yet committed to refraining from developing a nuclear weapon even in the long term. And without that, no agreement is acceptable to Washington.

Markets are closed today, so we can’t observe a direct reaction. However, Bitcoin trades over the weekend and it weakened by more than 2%. We can therefore expect markets to open lower tomorrow than they closed on Friday after a record week.

Whether that visibility translates into a real turnaround is another question. Nike is entering this deal while it wrestles with slowing sales growth, bloated inventories and a perception that product innovation has lagged, especially as faster, more focused challengers like On and Hoka eat into the running category and Chinese competitors press harder in Asia. Analysts point out that even wall‑to‑wall exposure on Champions League nights cannot by itself fix weak sell‑through in key markets such as China, where Nike has been losing momentum and shelf space, so the new UEFA contract looks less like a silver bullet and more like an expensive stage on which the company will still need fresh designs and sharper execution if it wants to turn marketing dominance back into performance on the income statement.

Nike takes the ball from Adidas and heads to the Champions League

According to UC3, Nike and UEFA are in exclusive contract negotiations for official balls for men's club competitions from the 2027/28 season to 2030/31. If the deal is concluded, it will be the first time that balls for the Champions League and other competitions will not be supplied by Adidas $ADS.DE, which has held the rights continuously since 2001.

Nike $NKE has previously shown a willingness to significantly overpay competitors to win key football contracts. In 2023, it also overbid Adidas for a contract with the German Football Association (DFB), offering double the roughly €50 million a year Adidas was paying at the time, according to Handelsblatt. The upcoming FIFA World Cup in 2026 thus represents another major marketing platform for Nike, to which the new ball for European competitions logically connects.

According to the FT and other sources, the total value of the contract with UEFA could exceed €40 million a year, roughly twice as much as the current contract. In addition, the Guardian points out that the upcoming change of supplier also marks the end of the iconic "star" design of the Champions League ball that Adidas has used since 2001, and opens up space for a completely new visual language associated with the Nike logo. This may trigger a new wave of fan interest in replicas and collector's editions, but the impact on the main sales segment - footwear and apparel -will be rather indirect.

Visibility yes, problem solving no

Analysts agree that this is a marketing-attractive win for Nike, but not a solution to the company's major pain points. Morningstar analyst David Swartz called the negotiations with UEFA a "nicely won deal," but added that he personally never saw the logo on the ball and didn't say: "I need to buy new shoes." Similarly, David Bartosiak of Zacks pointed out that "a highly visible corporate partnership is not a silver bullet" unless the brand brings genuinely new and functional products to market.

This is precisely Nike's biggest problem. In recent years, the company has been losing shelf space to brands like On Holding and Hoka, which bring fresh designs and technically distinctive running models. YipitData data cited by Reuters showed that Nike's share of footwear at major U.S. retail partners has fallen, while On and Hoka have increased their share several-fold in a single year. That has forced Nike to launch a three-year, $2 billion cost-cutting program that includes, among other things, cutting some iconic but lower-growth lines like the Air Force 1.

At the same time, Nike has struggled with excess inventory and repeated disappointing quarterly results. In late March, the company warned that sales would fall in the fiscal fourth quarter, with a key drag coming from China, where sales have fallen by double-digit percentages for several quarters in a row. New CEO Elliott Hill, who takes over in 2024, may have declared a return to "core sports" like running and football, but specific product innovations that would generate mass enthusiasm like Air Jordans once did are so far absent.

Champions League as a showcase of credibility

From a marketing perspective, however, this is still a very valuable victory. The Champions League has a global audience of around 1.2 billion viewers per season, according to UEFA's annual reports, which is a showcase of the highest order for any sports brand. M Science analyst Drake MacFarlane said the deal could help Nike in the medium term, particularly in Europe, and "support the regaining of athletic credibility" with fans and players, but added that the effect would only be felt over time.

Brands like Nike and Adidas have traditionally used official balls and jerseys primarily to build image, associate with big moments and to boost replica sales. The real boost to footwear and textile sales comes when these symbols are backed by strong product innovations - iconic cleats, running models or lifestyle silhouettes that fans want to wear off the field.

It's the latter part of the equation that Nike is missing so far: the ball will draw eyeballs, but the shoes and apparel have to convince on their own. Without genuinely new, functional and well-communicated products, the exclusive UEFA ball will remain more of a luxury billboard than a real sales engine.

Yet the stock trades at only about 15 times net income and about eight to nine times free cash flow, multiples that are more typical of the average communications services title than a global industry leader with such profitability. The market discounts stagnant revenues, declining payer numbers and increasing competition in the price, but it also overlooks how rapidly monetization per user is growing, how much room AI features have, and how aggressively the company is returning cash through buybacks and the dividend.

Top points of analysis

• Revenues of around $3.5 billion have been essentially flat for the past two years, but profitability is improving - net margins have risen to around 18% and adjusted EBITDA margins are around 35-38% after adjusting for one-time items.

• Free cash flow in 2024 is about $882 million, in 2025 it has already exceeded $1 billion, and the 2026 outlook calls for $1.085-1.135 billion, or about 8% growth.

• Valuations: a P/E of about 14-15, P/S of about 2.1 and P/FCF of about 7-9 are well below historical averages and valuations of many other profitable internet companies.

• Dominant position: an estimated 60-65% of all dating app downloads, with Tinder as the global leader, Hinge as a fast-growing "relationship" app, and the rest of the portfolio covering older, price-sensitive and specific segments.

• User base: payers are fewer but pay more - payer numbers are declining at around 5% per year, but average revenue per payer (RPP) is growing at 7-8%, reaching roughly $20.7 per user in Q4 2025, which is holding sales.

• Return of capital: over 100% of free cash flow in 2025 was returned to shareholders through aggressive buybacks and a growing dividend, which increased 5% to $0.20 per share in 2026.

• Outlook: management expects 2026 revenue of roughly $3.41-3.535 billion, or zero growth, but an adjusted EBITDA margin of 37.5% and free cash flow of over $1.1 billion; growth to be driven by Hinge, Tinder to undergo a "revitalization."

Company performance

Match Group $MTCH is essentially a "love tax in the digital world". It gathers a number of brands under one roof: Tinder for the young and quick to meet, Hinge for those looking for a relationship, Match.com and Meetic for an older and more conservative audience, OkCupid for those who want a detailed compatibility analysis, and Plenty of Fish for more price-sensitive users. Together, this covers most of the major demographics and motivations in online dating.

The basis of monetization is a freemium model. All apps have free entry, which creates a large base of active users and a "live" ecosystem, but key features are paid for. These include:

• Increased profile visibility in the list

• the ability to see who has "liked" you

• advanced filters and preferential search

• "boosts" for short-term attention boosts

• more daily swipes or interactions

Revenue comes mainly from subscriptions (monthly, quarterly, annual plans) and in-app purchases. The marginal cost of each additional paying user is minimal - it's about server bandwidth, customer support, security and continuous development, but not about materials or logistics. This explains why the company can afford such high margins.

Origin, development and where the company operates

The roots of today's online dating leader go back to the 1990s, when Match.com was founded as one of the first major online dating services. Gradually, other brands such as OkCupid and Meetic were added, and the company became part of billionaire Barry Diller's IAC conglomerate, which made online dating a pillar of the business in its own right.

The turning point came with the advent of mobile apps. In 2012, Tinder was born in the Hatch Labs incubator - an app that took the simple principle of "swipe right - like, swipe left - dislike" and brought it to mobile. Thanks to gamification and rapid expansion on college campuses, Tinder exploded in popularity, became a mobile dating icon, and gradually grew into a major growth engine for the entire group. Today, the company's Apps operate in more than 190 countries, in dozens of languages, and collectively serve an estimated hundred million active users.

Match Group now operates globally: it is strong in North America and Europe, where it has developed monetization, and is growing in Latin America and Asia, where it is gaining users, although average per capita revenues are still lower. Within the online dating market, it is estimated that around 60-65% of all app downloads are attributable to brands in this group, mainly due to the combination of Tinder, Hinge and Match.com.

Market share and competitive position

The company that owns Tinder has the widest reach in online dating today. According to available statistics:

• Tinder alone holds over 30% of the global dating app revenue market and generates sales of around $1.9 billion annually.

• The entire group, including Hinge, Match.com, OkCupid, Plenty of Fish and others, has an estimated 60-65% of all dating app downloads in major markets.

• Competitors such as Bumble, Badoo or regional players have significantly smaller revenues and operate without such a broad portfolio of brands.

The advantage of this company is that it covers the whole spectrum of needs - from "casual" swiping to serious relationships and different age and social groups. Another strength of the ecosystem is that the technology infrastructure, security systems and some of the data is shared across applications. Data from Tinder helps tune algorithms in Hinge and vice versa, creating network effects and a barrier for new players who would have yet to build a similar data base.

Management and who runs the company today

The firm behind Tinder has been led since February 2025 by Spencer Rascoff, co-founder and former longtime CEO of Zillow Group. He succeeds Bernard Kim as CEO, and the board views his appointment as the start of a new phase - Rascoff has more than a decade of experience leading a public technology firm and a track record of turning a relatively narrow segment (real estate) into a dominant platform.

Spencer Rascoff isn't a new face to the firm - he's sat on the board since March 2024, so he's had time to get to know the portfolio of brands (Tinder, Hinge, OkCupid and others) and their challenges before assuming the executive role. As CEO, he publicly emphasizes three priorities: to operate more like a smaller, product-obsessed startup, to aggressively continue to build AI capabilities around Tinder and Hinge, while maintaining a high bar for every AI "dollar" spent so that investments have a clear impact on growth and profitability.

At the board level, Rascoff has the backing of independent chairman Thomas McInerney and other experienced board members who come from media, technology and finance. The operations team is rounded out by newly promoted COO Hesam Hosseini, who previously led some of the brands in the portfolio and is in charge of the day-to-day execution of strategy, while outgoing president Gary Swidler has retreated to an advisory role. That lineup - a tech CEO with a history of "scaling" platforms, a COO with detailed knowledge of individual applications, and a board that pushes for efficient capital allocation - forms the framework within which decisions are made about Tinder's transformation, Hinge's growth, AI functions and returning cash to shareholders.

Financial performance

Revenues and segments

Based on 2025 results, total revenue is around $3.5 billion, virtually flat with the prior year. Here we can see how the online dating market has moved from a phase of rapid expansion to a period of more "mature" growth:

• In 2024, sales grew by about 3.4%.

• in 2025 they were at a similar level

• the outlook for 2026 foresees revenues of 3.41-3.535 billion, i.e. growth in the range of stagnation to low unit percentages

In terms of users, the situation is mixed. The number of payers in Q4 2025 fell by about 5% year-on-year to 13.8 million, while average revenue per paying user (RPP) rose by 7% to $20.72. So, on average, fewer people are paying, but those who are paying are willing to pay more for premium features - especially in North America and Europe, where there is a growing willingness to spend on digital services.

From a brand-by-brand perspective:

• Tinder still accounts for the largest portion of revenue, but its growth rate has slowed and some periods have seen a slight decline in direct sales.

• Hinge, on the other hand, is the star of the portfolio - management is targeting $1 billion in annual revenue by 2027, which would be a significant jump from today.

• Other brands are stable, but no longer the main driver of growth, rather holding specific segments and contributing to overall stability.

Margins and profits

A gross profit of around $2.49 billion in 2024 implies a gross margin of 72.26%, which has been above 70% for a long time. Operating profit of $823 million corresponds to an operating margin of 23.38%, while net profit of $551 million represents a net margin of around 16.2%.

For 2025, management reports:

• Net income of $613 million, implying a net margin of approximately 18% and year-over-year earnings growth of 11%.

• Adjusted EBITDA of $1.2 billion, which on revenue of $3.5 billion implies an adjusted EBITDA margin of around 35%, adjusted for one-time legal and restructuring costs, the margin would be around 38%, better than the original target of 36.5%

Thus: sales are flat, but profitability is rising. The company has managed to cut costs on some fronts while improving payer monetisation.

Cash flow

Free cash flow is the biggest plus of the whole story. It was roughly $882 million in 2024 and exceeded $1 billion in 2025. For 2026, management expects free cash flow in the range of 1.085-1.135 billion, or roughly 8% year-over-year growth.

The conversion from operating cash flow to free cash flow is very high - capital expenditures are relatively low and much of the investment in the product is charged directly to operating expenses. For the investor, this means that accounting profits are not "paper" and that the company has real scope to generate cash for buyouts or dividends.

News, strategy and where the company can grow

1) The transformation of Tinder and Hinge

Management openly admits that Tinder's growth has slowed and that the brand needs to undergo a "revitalisation". The goal is to shift the experience towards a "low-pressure, spontaneous" dating experience that better matches the expectations of Generation Z. The company is testing changes to the user interface, new AI features to help with photo selection and creating authentic profiles, and working on new pricing and product adjustments, some of which will negatively impact revenue in the short term but are meant to strengthen long-term loyalty.

Hinge has the opposite problem - he is a "victim of his own success". Management expects it can reach $1 billion in revenue around 2027, a big jump for a "relationship" app. Growth is expected to come from:

• International expansion (Europe, Asia)

• Use of AI for better matching and "coaching" during dating

• better monetization of engaged users

2) AI as a growth engine

Match has been positioning itself in the last two years as the "AI network" for the entire dating process. According to shareholder letters and presentations, it wants to use AI in three phases:

• Before making contact - AI helps with selecting photos, writing a bio and answering questions in a way that feels authentic and increases the chance of a match

• during the actual matching process - deeper analysis of behavioural and preference data should lead to more relevant partner suggestions

• post-match - AI can suggest first messages, date tips or alerts when the conversation stagnates

In doing so, the company is trying to address two things: increasing the success rate of real introductions (which increases the value of the service) and keeping users active, which encourages subscriptions and in-app purchases.

3) Alternative payments and margins

Another significant source of profitability growth comes from "alternative payments". The company is trying to reduce its reliance on app store fees (Google Play, App Store) by driving users to direct payments outside of these platforms. Management expects these initiatives to deliver approximately $110 million of adjusted EBITDA savings in 2026, reflected in a projected margin of 37.5%.

4) Outlook and Targets

For 2026, the Company expects to:

• Revenues of $3.41-3.535 billion, implying approximately flat growth at the midpoint

• Adjusted EBITDA of $1.28-1.325 billion and a margin of 37.5%

• Free cash flow of $1.085-1.135 billion, growth of approximately 8%

Longer term, we can expect:

• Hinge will be the main growth driver

• Tinder will undergo a transformation to reduce the risk of younger generations leaving for alternatives

• AI features will improve engagement and monetization across the portfolio

• alternative payments and cost optimization will lift margins

Valuation: what's worth it today

In terms of fundamentals, the company looks like this today: market capitalization of about $7.4 billion, enterprise value of about $10 billion, P/E of about 14.7, P/S of 2.14, P/CF of less than 8. For context:

• Historical P/E used to be much higher, the 10-year average is over 80 by some statistics, the 5-year average is closer to 60, but is skewed by extreme periods of growth and optimism

• the average P/E in the peer internet services sector is often around 20-25

• firms with similar margins and free cash flow typically trade on P/FCF between 10 and 15

Fair-price models estimate a base share value somewhere between $33 and $39, with conservative approaches that account for stagnant revenues and risk ending up at the lower end, and more optimistic scenarios with moderate growth and higher P/Es around 18-19 aiming for the upper end. For today's buyer, this means:

• Roughly 10% upside in a conservative view

• roughly 25-30% upside in a base case scenario

• Potentially higher if Hinge turns out to deliver faster growth and the market is willing to pay a multiple closer to 20

Investment scenarios

Base case scenario

Revenues remain in a range of flat to modest growth of around 3-4% per year, Hinge gradually adds a new contribution, but Tinder grows more slowly or just around zero. Margins will improve through alternative payments and better cost management, so adjusted EBITDA margin will hold at 37-38% and free cash flow will grow at around 8-10% per annum. In such a scenario, the market could value the company with a P/E approaching 18-19 and P/FCF around 10-11, which moves the stock price towards $35-39 over a few years.

Growth scenario

Hinge reaches its 1 billion revenue target faster than expected, AI features significantly lift engagement and monetization at Tinder and other apps, and revenue as a whole returns to 6-8% annual growth. Margins will remain at least at the level projected for 2026, free cash flow will grow at a double-digit rate and debt will slowly decline. In this scenario, the stock is approaching the profile of a "quality growth stock" and a P/E of around 20-22 no longer looks outsized. Combined with buybacks and a dividend, the total return could be well above 30% over a few years.

A cautious scenario

The number of payers declines faster than per capita revenue grows, new AI applications take a bite out of more younger users, and regulations or security incidents force the company to significantly increase costs. Revenue will stagnate, margins will narrow by a few percentage points, and free cash flow will grow only slowly. In such a situation, the market sees no reason to rerate and the stock will remain in the P/E range of 13-15, P/FCF around 8. The return to the investor is then mainly about the dividend and a slight increase in earnings per share due to buybacks, the price itself will not move fundamentally.

Risks

The main weakness is the nature of the business. Online dating sites are vulnerable to security - fraud, fake profiles and abuse are a systematic problem. Each major case attracts media and regulatory attention, which can mean higher compliance and technology costs. The company has already faced criticism for inadequate protections and must invest in authentication and moderation to maintain trust.

The second risk is competition. In addition to established players like Bumble, new apps built around AI are emerging that promise "smarter" matching and a better user experience. If the Tinder generation loses trust, some of it may leave for startups, and while this won't threaten the business overnight, it may make growth more difficult.

The third factor is macro and currency. Because a portion of revenue comes from non-US markets, a strong dollar reduces the dollar value of results when converted. In addition, an economic recession could limit the willingness to spend on premium features, although historically dating sites have proven relatively resilient.

What to take away from the article

This stock is basically a textbook example of a "boring money machine" in a not-so-boring industry. Sales may not be growing at double-digit rates, but the business is generating gross margins of over 70%, adjusted EBITDA margins of over 35%, and free cash flow that is heading toward $1.1 billion per year. Management is actively returning this cash to shareholders through buybacks and a growing dividend, while the current valuation of around 15 times earnings and around 8 times free cash flow looks conservative both against history and against other digital platforms.

When you say thematic ETFs, most investors think of technology funds focused on artificial intelligence, the cloud or semiconductors. However, there are sectors that, while they have not been in the spotlight in recent years, have strong structural trends behind them that could significantly change the balance of entire industries within a few years. Water, nuclear power and rare earths are among such areas.

The common denominator among these four ETFs is that none of them is a typical "fad" that attracts a crowd of investors for a few months and then exposes holders to high volatility. Instead, these funds are based on fundamental changes in the global economy that are unlikely to change in a quarter or two. Clean water shortages, the return of nuclear power as a key source of clean energy, and the geopolitical battle over strategic metals are trends that will shape the investment opportunities of the next decade.

For each of these funds, we looked at the megatrend behind it, how the portfolio is structured, how it has performed to date, and what factors may determine its future.

Invesco Water Resources ETF $PHO

This January, the United Nations officially declared that the world has entered an era of global water bankruptcy. This is not a temporary crisis, but a permanent change in conditions where humanity is consuming more water than it is naturally replenishing. According to the World Bank, approximately $6.7 trillion will need to be invested in water infrastructure by 2030, and this could rise to $22.6 trillion by 2050. The World Economic Forum estimates that the investment gap in water infrastructure today is €6.5 trillion and that every euro invested can generate €1.30 of added value for the global economy.

It is in this context that the $PHO ETF, which invests in companies focused on water purification, treatment and conservation, gains importance. The fund tracks the NASDAQ OMX US Water index and holds 37 positions in its portfolio. It focuses primarily on U.S. companies involved in the entire water value chain, from water utilities to water treatment equipment manufacturers to analytical instruments for quality control.

Portfolio structure and key positions

The fund's largest positions include Roper Technologies $ROPwith a weight of 8.54%, Waters $WAT with 8.35%, Ferguson Enterprises $FERG8.03%, American Water Works $AWK with 7.31% and Ecolab $ECL with 7.45%. The top 10 positions account for approximately 59.5% of the portfolio. The fund's expense ratio is 0.59% annually and total assets under management exceed $2 billion.

As of the beginning of 2026, the fund is losing approximately 1%. The P/E ratio (TTM) is around 25.7 and the dividend yield is 0.54%. The beta over the past five years is 1.12, meaning the fund is only slightly more volatile than the broader market.

The advantage of $PHO is that the water sector is defensive in nature while benefiting from structural trends such as the construction of over $8 billion in U.S. infrastructure renewal funded by federal programs. At the same time, there is a growing demand for water solutions from data centers, which consume huge amounts of water for cooling. For example, Microsoft's $MSFT water consumption has increased by 34% in recent years just to train AI models.

Global X Uranium ETF $URA

Nuclear energy is experiencing arguably the strongest wave of support since its inception. According to BloombergNEF, approximately 15 new reactors are expected to come online in 2026, adding roughly 12 gigawatts of new capacity. US executive orders target an increase in nuclear capacity from 100 GW to 400 GW by 2050. In the US, the first small modular reactor (SMR) from Kairos Power is currently under construction, and plans are underway to restart the Palisades plant in Michigan, which would be the first-ever reactivation of a US nuclear power plant after shutdown.

At the same time, the geopolitical context is changing. The closure of the Strait of Hormuz and instability in energy markets increase the strategic importance of nuclear power as a stable, fossil fuel independent resource. The World Nuclear Association has increased its estimate of uranium demand growth to 5.3% per annum (CAGR) until 2040. Demand for uranium is expected to more than double over the next 15 years from around 69,000 metric tonnes today to more than 150,000 metric tonnes per year.

Fund structure and performance

Global X's $URA ETF invests in companies involved in uranium mining and nuclear component manufacturing. The fund holds 52 positions with total assets under management in excess of $6.95 billion. Canadian company Cameco $CCO is the largest position with a weight of 23.88%, followed by NexGen Energy $NXE with 6.31% and innovative firm Oklo $OKLO with 5.28%. Other notable positions include Uranium Energy $UEC with 5.85% and Kazakhstan's state-owned producer Kazatomprom with 4.84%.

The fund is up approximately 20.3% year-to-date. The Expense ratio is 0.69%, the P/E ratio (TTM) is 39.6 and the dividend yield is 4.4%. The beta of 1.47 indicates significantly higher volatility compared to the broader market, which is consistent with the nature of the commodities sector.

The uranium price trend remains a key driver of future performance. Spot prices have returned above the $100/lb mark in recent months and forward curves suggest further strength. Meanwhile, global uranium production only covers around 90% of current reactor demand, and this deficit will widen as the number of reactors grows.

VanEck Rare Earth and Strategic Metals ETF $REMX

China now controls approximately 70% of global rare earth mining and up to 94% of the production of permanent magnets, which are essential for electric vehicles, wind turbines, defense systems and data centers. In 2025 and 2026, China significantly tightened export controls on these materials in response to US tariffs. While it has temporarily suspended the second wave of restrictions until November 2026, licensing requirements for heavy rare earths such as dysprosium, terbium or yttrium remain in place without exception.

This situation puts unprecedented pressure on Western economies to diversify their supply chains. The US has announced the creation of a $12 billion strategic stockpile of critical minerals. The European Central Bank has found that over 80% of large European companies are no more than three supply links from a Chinese rare earths producer. The International Energy Agency has warned that rare earth prices in Europe have risen up to sixfold following Chinese restrictions.

Fund structure and performance

VanEck's $REMX ETF invests in global companies involved in the mining, refining and recycling of rare earths and strategic metals. The portfolio contains 34 equity positions with significant exposure to titanium, molybdenum, cerium, manganese and tungsten producers. The fund has a strong representation of foreign companies including Chinese, Australian and Canadian miners.

The fund's price has risen approximately 26.5% since the beginning of 2026 and has appreciated 175% over the past 12 months. The expense ratio is 0.58%, assets under management exceed $2.5 billion and the P/E ratio (TTM) is 39.18. The dividend yield is 1.48%.

However, investors should expect high risk. The rare earths sector has historically been extremely volatile and heavily dependent on geopolitical decisions. Any calming of US-China relations may reduce the pressure to diversify in the short term and thus reduce interest in Western producers. Moreover, production development projects outside China typically have a lead time of around eight years, meaning that short-term fundamental improvements in supply are limited.

Sprott Junior Uranium Miners ETF $URNJ

While $URA covers the entire spectrum of the uranium industry, including large producers like Cameco $CCO, the $URNJ ETF specifically targets small and medium-sized uranium miners, which offer higher growth potential but also significantly higher risk. The fund from Sprott tracks the Nasdaq Sprott Junior Uranium Miners Index and typically holds 30 to 40 positions (currently 33) in exploration and development uranium companies.

If global uranium demand significantly exceeds current production, as projections suggest, it will be the smaller miners that will have to step in to make up the shortfall. But new mines require years of preparation and mean that companies developing new projects today could see significant value growth in the coming years if the demand scenario comes to fruition.

Performance and risk profile

The fund has appreciated by over 20% since the start of 2026 and has returned over 150% over the past 12 months. The Expense Ratio is 0.80%, which is higher than $URA but reflects a more specialized focus. Assets under management exceed $420 million, significantly less than $URA. This may lead to lower liquidity.

The main risk of $URNJ is that smaller mining companies are heavily dependent on the uranium price and do not have as strong balance sheets as the large producers. If the uranium price were to drop significantly in the short term, the fund could see a deeper decline than $URA. Therefore, the fund is better suited for investors with a higher risk tolerance who want more exposure to a potential uranium supercycle.

Fund Comparison

Strategic view

Each of these four ETFs represents a different part of the risk/reward spectrum. $PHO offers a more defensive profile with lower volatility, stable positions in U.S. utilities and a direct link to federal infrastructure spending. For investors seeking exposure to a structural megatrend with a relatively conservative risk profile, it is an interesting choice.

$URA and $REMX stand in the middle. Both funds benefit from geopolitical changes and structural shifts in global energy and industry. However, their performance will depend on commodity price movements and policy decisions, which brings higher volatility. $URA has the advantage of greater liquidity and broader diversification, while $REMX offers unique exposure to a segment that has no equivalent in the market.

$URNJ is clearly the most aggressive choice. The fund offers leverage to the uranium cycle through small miners, and its performance in recent months shows how significant this effect can be in a rising uranium price environment. At the same time, however, in the event of a uranium market correction, this fund would face the deepest drawdown of the four.

What to watch next

• Spot uranium price movements and the volume of new utility contracts with miners

• Progress on Palisades restart and SMR reactor construction in the US

• Developments in US-China trade relations and the future of suspended export controls on rare earths (deadline: November 2026)

• The planned UN water conference in December 2026 in the UAE and its impact on global investment commitments

• Commodity price developments in the context of the ongoing conflict in the Middle East and its impact on energy security

These four ETFs demonstrate that there are investment opportunities outside of mainstream technology and AI funds that are underpinned by fundamental structural changes in the global economy. Water scarcity, the return of nuclear power, and the struggle for control of strategic commodities are trends that transcend one market cycle and may shape the investment landscape for the next decade or more.

At the same time, it is important to remember that thematic ETFs carry specific risks. Narrow sector concentrations, dependence on commodity cycles and geopolitical events, and greater volatility compared to broad indices are factors that investors must consider along with often lower liquidity. This is why it is key to view these funds as complementary positions within a broader diversified portfolio, not as the core of it.

As an investor, I can interpret this figure simply: SpaceX today is not a “finished money-making machine,” but a company in a massive expansion phase where profits are sacrificed for growth and new projects — and an IPO valuing it at Tesla’s level is a bet that this model will eventually deliver the corresponding cash flow.

At the same time, Amazon is finally putting hard numbers on AI revenue inside AWS itself. Jassy disclosed that AI services in the cloud unit crossed a 15 billion dollar annual run‑rate in the first quarter of 2026, while overall AWS revenue is tracking at roughly 142 billion dollars a year after reaccelerating in late 2025. To feed that demand, Amazon plans record capital expenditures of about 200 billion dollars in 2026, largely on AI infrastructure, but argues this is not a blind bet: management points to a swelling AWS backlog and long‑term customer commitments that already cover a substantial share of that budget, including what market reports describe as more than 100 billion dollars of contracted capacity tied to OpenAI and other frontier‑model customers.

Amazon's chip division: 20 billion today, 50 billion in potential

According to Jassy's letter, Amazon's chip business is running $AMZN on annualized revenue of over $20 billion, double the roughly $10 billion the company reported as recently as the fourth quarter results of the previous year. The division includes three key products: the Graviton CPU for general computing tasks, Trainium AI accelerators for training and model inference, and Nitro network cards that improve the efficiency and security of AWS servers.

Jassy describes that demand for these chips is so high that it's quite possible that they will sell entire racks of chips to third parties in the future. In the letter, he adds that if the chip division were to operate as a standalone company selling semiconductors to both AWS customers and external clients, its annual revenue run rate would be around $50 billion. That implicitly puts the chip unit in the league of the semiconductor market's big players - and also suggests that Amazon has a "hidden" business inside the company with the parameters of another megacap title.

Today, this division exists exclusively inside AWS: customers access both Traini and Graviton through EC2 instances, not by buying chips directly. Opening up direct sales would make Amazon a hybrid between a cloud provider and an AI hardware vendor, similar to what Google is doing with TPU via Google Cloud, but with a potentially broader reach towards on-premise installations by large customers.

Trainium3 sold out, Trainium4 reserved. AWS AI at 15 billion a year

A key driver of growth in the chip division is the Trainium generation. In December 2025, AWS announced the availability of Trainium3 UltraServers, which deliver up to 4.4x higher compute performance, four times the energy efficiency, and nearly four times the memory bandwidth versus Trainium2-based configurations. Trainium3 can scale up to 144 chips in a single system, with up to 362 FP8 PFLOPs of performance, allowing larger models to be trained faster and cheaper.

According to Jassy, Trainium3 is almost completely sold out, with customers that have moved their AI jobs to it including Uber $UBER. A significant portion of the next-generation Trainium4, which is roughly 18 months away from wide availability, is already booked by key AWS customers. This pre-sale demonstrates both the oversupply of high-end AI accelerators globally and the confidence of large clients in Amazon's roadmap.

At the same time, Amazon for the first time released a direct number for AWS' AI business: AI services reached an annual revenue run rate of over $15 billion in Q1 2026 and are "growing rapidly." By comparison, AWS's total revenue was around $128.7 billion in 2025, and the cloud division is expected to head to around $142 billion this year. Jassy notes that AWS' growth would be even more aggressive if the entire industry didn't run into infrastructure capacity constraints.

Two large customers, he says, have even asked for the option to buy all available Graviton chip capacity for 2026, which Amazon has declined in order to preserve CPU capacity for other users. This again confirms that demand for Amazon's own silicon exceeds current production capacity - and increases the attractiveness of a potential direct sale of the chips.

Duel with Nvidia in the $200 billion AI chip market

Amazon is entering the next phase of the conflict over AI hardware at a time when Nvidia $NVDA dominates the market with around 85% share in AI accelerators and 60-75% in inference thanks to a combination of GPUs and the CUDA software ecosystem. The AI chip market is estimated to exceed $200 billion by 2026, although Nvidia's share could gradually decline to around 75% due to the emergence of its own hyperscaler chips and competition from AMD.

AMD holds about 7% share of the fast-growing AI market, with the rest coming from the proprietary chips of big cloud players such as Google TPU, Microsoft's "Maia/Mauri" project and Amazon's Trainium. In his letter, Jassy openly says that Amazon will continue to use Nvidia's chips, but customers "want better price/performance ratio", which is exactly the area where Trainium is expected to deliver an advantage.

By considering selling racks directly with its own chips, Amazon is entering - at least in part - Nvidia and AMD territory. The difference is that Amazon can sell its own hardware "backed" by the AWS cloud and software, so customers get both on-premise performance and the ability to easily integrate with cloud services. If this model takes hold, it could erode some of the traditional GPU manufacturers' business while reinforcing the dependence of large clients directly on hyperscalers.

USD 200 billion capex: "We don't invest on a hunch"

The big question for investors is how Amazon is funding such an expansive AI strategy. In the letter, Jassy reminds us that the company is planning around $200 billion in capital expenditures in 2026, the vast majority of which is going into AI infrastructure - data centers, chip manufacturing, and networking capabilities. Some in the market have been spooked by these sums, but Jassy assures that Amazon is "not investing on a hunch" and that much of this capex is covered by long-term customer commitments.

According to information leaked to the media, those commitments include, among other things, a more than $100 billion contract with OpenAI to use AWS to train and run its models. At the same time, Jassy has previously hinted that AI should help AWS reach up to $600 billion in annual revenue in the longer term, roughly double its previously communicated goal.

These numbers show that Amazon sees AI infrastructure as the next "backbone layer" of its business after e-commerce, logistics and traditional cloud. Combined with the chip division's potential to become a standalone business with $50 billion in annual sales, this is one of the most ambitious investment theses within the big five tech companies.

How the market is responding to Jassy's AI vision

Following the release of the letter to shareholders and a new set of numbers for the AI and chip division, Amazon shares rose roughly 1.5-3.5%, according to various sources and measurement times. Investors particularly appreciated the transparency around the $20 billion number for the chip division and $15 billion for AI services, which gives a more concrete outline of the "hidden" components of Amazon's valuation.

It's a signal to the market that Amazon doesn't just want to play the role of "infra add-on" for OpenAI and others in AI, but that it potentially has another big semiconductor company and a standalone AI cloud giant in it at the same time. How quickly this story translates into actual profits and margins will depend on Amazon's ability to continue to increase its use of Trainium and Graviton chips, open up direct sales to third parties, while managing its giant capex plan in a disciplined manner.

Last week something happened that I had been waiting for a long time. Andy Jassy, Amazon’s CEO, for the first time in history released concrete figures about how much money the company makes from artificial intelligence. And that number honestly surprised me.

But first a bit of context, because that’s key to understanding why this is important news.

Why this is a historic moment

Amazon Web Services, Amazon’s cloud division, has existed since 2006. For two decades AWS has been something of the company’s “quiet engine,” less sexy than Prime Video or Alexa, but generating the vast majority of operating profit that funded everything else. Investors knew it, analysts knew it, but Amazon never broke down the numbers so precisely to make clear exactly where the future lies.

Now Jassy did it for the first time. And the message is clear: Amazon is not a retail company. Amazon is increasingly an infrastructure company for the digital era, and AI is the new chapter of that story.

15 billion from AI, 20 billion from chips

Let’s start with a factual overview of what Jassy actually disclosed.

AWS currently generates annual revenues exceeding $142 billion. Of that, roughly $15 billion comes directly from AI services — that is, from companies and developers using AWS to train models, run inference workloads, and build AI applications. That represents about 10% of the overall AWS “pie.” And this number is growing quickly. Jassy himself admitted that the cloud business would grow even faster if not for capacity constraints that trouble the entire tech industry today.

But even more interesting than AI revenues is the second number Jassy revealed.

Amazon’s own chip business doubled last quarter from $10 to more than $20 billion in annualized revenue. It is growing at a triple‑digit year‑over‑year rate. For comparison: Nvidia, whose GPUs are now the symbol of the whole AI revolution, reported chip revenues of roughly $115 billion per year. Amazon is therefore still a fraction of that, but the dynamics are dizzying.

Then came a sentence that immediately caught my attention.

A strategic move that changes the game

In his letter to shareholders Jassy hinted at something Amazon has never done before: the possibility of directly selling its own chips to external companies. “Demand for our chips is so high that it is very possible we will sell entire racks to third parties in the future,” said the Amazon chief.

To be clear what this means for investors: Amazon has so far used its chips exclusively internally, either in AWS for its own needs or as an option for AWS customers. Opening sales to external players would mean entering a market segment today dominated by Nvidia and partly by AMD.

The strategy outside AWS is also being tested by $GOOGL. Last October it struck a deal with Anthropic to supply millions of its own AI chips. For Amazon this would be an analogous step, only on an even larger scale.

Jassy illustrated it with a thought experiment: if the chip business were a standalone company and sold chips like other leading chipmakers, annual revenues would be roughly $50 billion. That’s a number that demands attention from anyone who holds or is considering Amazon in their portfolio.

Trainium vs. $NVDA: A price war that’s just heating up

To understand why Amazon’s chip division is strategically important, you need to grasp the core problem of the entire industry.

Nvidia’s GPUs are expensive. Training large language models costs hundreds of thousands to millions of dollars, with a large portion of those costs going to hardware. Anyone who can offer an alternative with a better price‑to‑performance ratio enters the game with enormous leverage.

Amazon claims its Trainium chips have a 30–40% better price‑to‑performance ratio compared to competitive hardware available on AWS. Trainium 2 costs approximately 40% less than comparable GPUs from Nvidia. These figures are not just a marketing slogan — they are confirmed by firms like Anthropic, Databricks, and Deutsche Telekom, which are among the chip testers.

Jassy himself stated in the shareholder letter that at full deployment Trainium could save Amazon tens of billions of dollars in capital expenditures annually and add several percentage points of operating margin compared to dependence on external chip suppliers. That is a concrete, measurable number.

$200 billion into capex: Fear, or opportunity?

When Amazon announced earlier this year that it plans to invest roughly $200 billion this year into capital expenditures focused primarily on AI infrastructure, the market reaction was mixed. Some investors were horrified — that’s a brutal number even by the standards of the world’s largest tech company.

Jassy counters this skepticism with concrete arguments. From the planned AWS expenditures meant to be “monetized” in 2027 and 2028, Amazon already holds customer commitments for a substantial portion. Among them is a deal with OpenAI exceeding $100 billion. In other words: Amazon is not building capacity based on forecasts, but on real contracts with clients.

The market logic is simple: demand for compute capacity for AI exceeds supply, and by a lot. Two large AWS customers reportedly asked to buy all available Graviton processor capacity for the entire year 2026. Amazon had to refuse because other customers would have been left without service.

That is a problem solved in one way: build more.

Vojta’s thoughts

Amazon is one of my largest positions, and this disclosure only confirmed why I added it to my portfolio.

There is no “if” here — the numbers are real, the customer commitments are real, and the dynamics of the chip business honestly surprised me more than the AI revenues themselves. Doubling from $10 to $20 billion in a single quarter and triple‑digit year‑over‑year growth — that doesn’t happen every day for a $20 billion business.

What interested me most, however, is the strategic move to sell chips to external companies. Amazon has so far presented itself as a cloud platform. If it truly opens chip sales outside AWS, it will enter direct competition with Nvidia and do so with a 40% price advantage. This is not a small step.

Of course there are risks. $200 billion in capex is a huge bet that demand for AI infrastructure will continue. If the AI bubble bursts or it turns out AI revenues are insufficient to cover the costs of building infrastructure, Amazon will feel it. But with the customer commitments Jassy describes, I believe the risk is well calibrated.

I am bullish on $AMZN, and these numbers strengthen that conviction.

Amazon is transforming from an e‑commerce and cloud company into an AI infrastructure powerhouse. The combination of proprietary chips, a gigantic cloud platform, and customer commitments worth hundreds of billions of dollars creates a moat that will be hard for competitors to overcome over the next several years.

Do you believe Amazon can realistically threaten Nvidia’s dominance in the AI chip market, or will it remain exclusively an internal AWS tool? Where do you see the biggest risk in this $200 billion bet?

Do you trust $AMZN and hold their shares in your portfolio?

The find comes at a time when OXY has a much cleaner "oil & gas" producer profile following the sale of its chemical division to OxyChem and aggressive debt reduction. The combination of new potential in offshore projects and strong cash flow from Permian puts the title back on the radar of investors looking for leverage in oil but not wanting an extremely leveraged name.

What we know about the new discovery in the Gulf of America

Occidental $OXY has been ramping up activity in the Gulf of Mexico in recent years, using the term "Gulf of America" as part of a broader package of offshore projects. It's an area where the company is betting on deepwater projects in paleogenic formations that may hide significant volumes of oil, in addition to established fields.

According to company commentary and sector analysis, OXY plans to increase capital expenditures in the "Gulf of America" by about $250 million, precisely because of new opportunities in the deeper horizons of the Gulf of Mexico and parallel projects in Oman. Already in 2025, the company launched the ultra-deep "Bandit" well targeting paleogene structures, a clear signal that it wanted to resume an aggressive exploration role in the region.

The new find builds on that story: it confirms that the Gulf of Mexico - or "Gulf of America" as some US companies are using it after President Donald Trump's policy advice - still offers attractive growth opportunities, even though the region has been mined for decades. Exact figures on the size of the deposit and expected costs are not yet publicly available, but the mere fact of a commercially interesting discovery boosts market confidence in OXY's long-term reserves.

A clean balance sheet: OxyChem gone, debt below target

In parallel with exploration and new projects, Occidental is undergoing a significant financial transformation. The company closed the sale of its chemical division OxyChem to Berkshire Hathaway for $9.7 billion, of which roughly $6.5 billion was used to reduce debt. This brought net debt below the long-term target of about $15 billion and significantly reduced the leverage that the market had blamed the firm for after the Anadarko acquisition.

In terms of the structure of the business, this means that OXY is now a much "cleaner" energy company whose results are mainly driven by oil and gas in the Permian, Rockies and Gulf of Mexico. It's a clearer story for investors: less of a conglomerate mix of chemicals and upstream, more direct exposure to oil, but with a balance sheet that can afford higher buybacks and a more stable dividend.

Production, capex and reserves: where OXY stands

For 2026, Occidental projects capex in the $5.5-5.9 billion range and average production of 1.42-1.48 million barrels of oil equivalent per day. The main driver of growth remains the Permian, where the company has acquired additional prime assets in the high-return Midland Basin following its acquisition of CrownRock.

Analysts point out that cost optimization and infrastructure sharing at Permian have resulted in OXY's "all-in" cost per barrel hovering somewhere around $30-35, allowing the company to generate solid free cash flow even at relatively conservative oil prices. Reserves at the end of 2025 were in the single billion boe range, and the high recovery rate shows that the company can replenish reserves both in the Permian and in offshore projects.

New discoveries in the Gulf of America should further strengthen these long-term reserves. Combined with the production growth in the Permian and the potential to increase profitability through Stratos-type projects (CCUS, CO₂ recovery in EOR), this gives OXY a relatively comprehensive portfolio - from conventional production to low-carbon projects that may be worthwhile in the future thanks to tax incentives.

How OXY shares are reacting

The market is reacting positively to the combination of the new find, improved balance sheet and higher oil prices. In recent weeks, Occidental shares have hit new 52-week highs in the $56-$66 range, driven by the oil price, but also by improved results and the outlook for steady or slightly rising production.

The rise in oil prices following heightened geopolitical tensions and signals of renewed interest in offshore exploration (including in the Gulf of Mexico) by major energy companies are creating an environment in which investors are reassessing the valuations of producers like OXY. The company itself has repeatedly beaten earnings expectations over the past year, thanks to a combination of higher-than-planned volumes and a more efficient midstream environment, helping it to mitigate the impact of oil price volatility.

Importantly for the valuation, OXY is no longer in 'survival mode', but in managed growth and return on capital mode. Lower debt, stable capex and new discoveries in the Gulf of America give management room to continue its mix of dividends, buybacks and selective investments without having to reach for extensive new debt.

What this means for investors

For investors who believe in continued structurally higher oil prices and a shift in production from some from shale back to offshore projects as well, Occidental is one of the visible beneficiaries. The company has quality assets in the Permian, is growing in the Gulf of Mexico ("Gulf of America") and at the same time has a significantly improved balance sheet following the sale to OxyChem.

On the other hand, the classic risks of the energy sector have to be taken into account: the oil price, the regulatory environment and the technical risks of deepwater projects. If the combination of lower oil prices and weaker demand is prolonged, it could knock both profits and the market's willingness to pay current multiples for Oxy.

Do you think Meta’s AI model can outperform ChatGPT? Do you own shares of $META?

$TSLA once again raises a topic the company has promised and postponed for years – a truly affordable electric car. According to current reports, the firm is working on a smaller, more accessible model, likely a compact SUV, which should cost less than the current Model 3.

This move comes at a time when demand for electric cars is weakening and competition, especially from China, is pushing prices down. At first glance it looks like a return to Elon Musk’s original vision – making electric cars accessible to the masses.

A turnaround strategy, or a sign of trouble

Optimists see the cheap model as a chance to reignite growth and appeal to a broader market. Tesla is facing slowing sales and growing inventories of unsold cars, which points to softened demand. Skeptics, however, note that the company has changed or canceled similar plans several times before — for example the “Model 2” project. Moreover, in recent years Tesla has focused more on robotaxis, AI and robotics than on traditional cars. The budget model could therefore be more of a reaction to pressure than a well-considered strategy.

Tesla’s future: cars or technology

The key question is where Tesla is actually heading. The company still earns most of its money from car sales, but its leadership increasingly speaks about autonomy and artificial intelligence as the crucial future. An affordable electric car could be a bridge between the present and that vision — or conversely proof that Tesla still can’t do without conventional cars for now. Investors are watching to see whether this is a new beginning or just a step backwards.

Is a cheap Tesla a real game-changer, or just a necessity?

On March 17-18, 2026, the Federal Open Market Committee (FOMC) agreed to keep interest rates in the 3.50%-3.75% range. The decision was made by a vote of 11 to 1, with the only dissenting vote coming from Stephen Mirano, who favored a 25 basis point cut. While the rate decision itself surprised no one, the content of the minutes reveals deeper tensions within the committee than the brief press release suggests.

The March meeting took place in an environment of greatly heightened uncertainty. The conflict in the Middle East, which led to the closure of the Strait of Hormuz, shot up oil prices by around 50%. At the same time, concerns remain about the impact of artificial intelligence on certain sectors of the economy, particularly the software industry. Inflation as measured by the PCE index remains at 2.8%, still well above the Fed's 2% target. It was this combination of factors that made the March meeting minutes some of the most important in years.

US interest rate developments in 2018-2026

What the Fed said: key points from the minutes

The FOMC minutes reveal several key insights that go beyond the brief press statement.

• First, most participants noted that upside risks to inflation and downside risks to employment have increased. This is a very important signal because it suggests that the Fed is facing a so-called stagflation dilemma, a situation where the economy is slowing while inflation remains elevated. In such an environment, the central bank cannot simply cut rates without the risk of further price increases, nor can it raise them without the risk of deepening the economic downturn.

• Second, some Committee members openly discussed the possibility of raising rates. The minutes indicate that some participants saw a strong case for a possible increase in future interest rates. This is a significant shift in rhetoric from previous meetings, where the debate focused primarily on the pace and timing of rate cuts.

• Third, futures markets were already signaling at the time of the meeting that the probability of a rate hike by early next year had risen to around 30%. At the same time, options markets pushed back the expected timing of the first rate cut to December 2026. This is a fundamentally different situation from expectations at the start of the year, when markets were still pricing in two cuts during 2026.

Inflation: oil shock complicates disinflationary trajectory

One of the most discussed topics at the March meeting was inflation and its outlook in the context of the surge in energy prices. Headline PCE inflation was 2.8% in January and core inflation (excluding food and energy) was 3.1%. Both readings were about a quarter percentage point higher than a year ago.

Fed projections from above: GDP, unemployment, inflation, core inflation

Source: Federal Reserve

Causes of elevated inflation

Two factors are primarily behind the rise in core inflation.

• The first is the continued impact of tariffs, which raise the prices of core goods.

• The second factor is still elevated non-residential services inflation, which remains above pre-pandemic levels.

On the positive side, inflation in the housing sector has slowed considerably and is approaching pre-pandemic levels.

However, the oil shock brings a whole new dynamic to the situation. Oil futures rose by around 50% during March, which is already feeding through to consumer energy prices. Oil companies, however, have benefited from this trend. Shares in companies such as $XOM, $CVX and $COP have strengthened significantly during this period. Meanwhile, the equity markets as represented by the $^GSPC index weakened.

The annual inflation swap rose by almost 50 basis points. Interestingly, however, forward inflation compensation rates at horizons beyond one year remained virtually unchanged. This suggests that markets believe that the current oil shock will be relatively short-lived.

In its updated projections, the Fed raised its estimate of headline and core PCE inflation for 2026 to 2.7% (up from December's estimate of 2.4% for headline and 2.5% for core inflation). The estimate remains at 2.2% for 2027 and the target 2.0% for 2028. However, a major concern of Committee members relates to the possibility that longer-term inflation expectations could become more sensitive to energy prices after several years of above-target inflation. If this were to happen, a temporary oil shock could turn into a more permanent inflation problem.

Updated FOMC Economic Projections (March 2026)

Labour market: stability on the surface, vulnerability under the surface

The unemployment rate remained at 4.4% in February, the same level as in September 2025. However, average monthly employment gains remained low and February's data were further affected by the health sector strike and unusually harsh winter weather. Most meeting participants assessed the labor market as broadly balanced, but some pointed to worrying signs.

Hidden risks in the labour market

Several factors are worth noting and are explicitly mentioned in the minutes.

The concentration of job creation in health care and a few other sectors suggests that the broad base of the economy is not strong enough to generate new jobs. Several meeting participants also warned that firms are beginning to delay or reduce hiring in anticipation of adopting AI and other technologies, which could lead to a more significant increase in unemployment if another negative shock comes.

The vast majority of participants assessed the risks to employment as tilted to the downside. Many pointed out that in an environment of low job creation, the labour market was particularly vulnerable to adverse shocks. Most Committee members also mentioned the risk that conflict in the Middle East could weaken business confidence and further reduce hiring. The Fed's projections for unemployment remained relatively stable: 4.4% for 2026, 4.3% for 2027 and 4.2% for 2028.

Economic growth and financial markets

Despite all risks, participants noted that economic activity continued to expand at a solid pace. Consumer spending remained resilient, supported by growth in household wealth. Corporate investment remained robust, mainly driven by the technology sector and AI-related investments. The Fed raised its GDP growth estimate for 2026 to 2.4% (from 2.3% in December) and for 2027 to 2.3% (from 2.0%).

There have been several notable trends in financial markets over the recent period. Equity indices weakened by around 5%, with the software sector again lagging due to concerns about artificial intelligence. The dollar held steady thanks to its safe-haven status and the US position as a net energy exporter.

International developments are also worth noting. Several central banks, including the European Central Bank, the Bank of Canada and the Swiss National Bank, have started to expect a modest rate hike later this year, although initially they were expected to stay put or ease further. Increased energy prices are thus creating global inflationary pressures that are affecting monetary policy around the world.

Projections for real GDP in 2026-2028 and beyond

Source: Federal Reserve

Dot plot and rate projections: one cut, but with an asterisk

The updated dot plot from the March meeting shows that the median of the FOMC members' projections assumes one rate cut during 2026 (median year-end rate of 3.4%) and another cut in 2027 (median 3.1%). What is important, however, is what lies below this median.

Seven out of 19 participants expect rates to remain unchanged this year, one more than in the December projections. The spread of projections for 2027 is considerably wider than before, with a range from 2.4% to nearly 4.0%. The long-term neutral rate moved higher to 3.1%, signaling a collective belief that the neutral rate level is higher than previously thought.

It is key for investors to understand the difference between the dot plot and market expectations. While the dot plot still points to one cut this year, the CME FedWatch at the time of the meeting assigned approximately a 75% probability that rates would remain unchanged through the end of the year. So the markets don't have much faith in the Fed to actually get to a cut.

This chart shows the Fed's assumptions about the future path of interest rates.

Source: Federal Reserve

Change of Chairman

The March meeting also has a political dimension. Jerome Powell is likely to chair the Fed for the last time. President Trump has named Kevin Warsh, a former member of the Board of Governors who is widely perceived to be more supportive of lower rates, as his successor, although he has not publicly commented on current monetary policy.

At the same time, the legal dispute surrounding Powell is ongoing. U.S. Attorney Jeanine Pirro issued a subpoena in Washington in connection with the renovation of the Fed's headquarters, which Powell has described as a pretext to push for rate cuts. The court sided with Powell and dismissed the subpoena, but the appeal process continues.

What this means for investors

The minutes from the March FOMC meeting offer several important takeaways for investors.

The first key takeaway is that the Fed is in wait-and-see mode. All participants agreed that monetary policy is not on a predetermined path and will be determined based on incoming data. That said, any other major economic report, from inflation data to labor market numbers to oil price developments, could move market expectations significantly.

The second key point is that the rate hike scenario is no longer purely academic. The fact that some FOMC members have openly talked about the possibility of a rate hike if inflation remains elevated is an important signal. For growth stocks and highly leveraged companies, such a development would present significant hurdles.

A third key theme is the growing importance of geopolitics for monetary policy. The conflict in the Middle East and its impact on energy prices has become a central factor in Fed decision-making. Despite the current two-week truce, oil prices are still high and will feed through to the economy in future data releases.

What to watch next

• The evolution of the Middle East conflict and oil prices: if oil prices remain at current levels or rise further, inflationary pressure will increase and the likelihood of a rate cut will drop significantly.

• Inflation data for March and April: Any further number exceeding expectations will strengthen the case for higher rates for a longer period of time.

• Next FOMC meeting April 28-29: No update on the dot plot, but with minutes that may show whether the rate hike debate has widened.

• Transition in Fed leadership: The end of Powell's term in May and the arrival of Kevin Warsh may bring a change in communication strategy and monetary policy priorities.

• Impact of AI on the labor market: the Fed explicitly mentions that firms are delaying hiring due to expectations of AI adoption. This trend may slow job creation even without a recession.

The March FOMC meeting minutes confirm that the Fed is in one of its most complicated periods in years. The combination of still elevated inflation, the Middle East oil shock, a slowing labor market, and structural changes associated with artificial intelligence are creating an environment in which the central bank has no easy path forward.

For investors in particular, this means increased volatility, uncertainty about the direction of rates and the need to closely monitor every other economic report. There is a path to further rate cuts, but it is narrower than at the start of the year and depends on developments that the Fed has only partial control over.

What complicates the decision today is not the quality of the company, but the price you are being asked to pay for that quality. With the share price up about 37% over the last five years, the key question is whether it can keep compounding revenue and margins fast enough for current valuation multiples to make sense, or whether too many good years are already priced in and future returns will be constrained even if the business continues to execute well.

Top points of the analysis

• Baidu made CNY129.1bn (about USD18.5bn) in 2025, down 3% from a year earlier; but in Q4 2025, revenue grew sequentially by 5% to CNY32.7bn (USD4.68bn).

• New AI business already accounts for 43% of core segment revenue and generated over CNY40bn (roughly USD5.6bn) for the full year with 48% growth; AI infrastructure (cloud for AI) alone brought in about CNY19.8bn (USD2.8bn) and grew 34%.

• Net profit in 2025 was about CNY14.1 billion (about USD2.0 billion) and earnings per share was CNY6.99, up about 11-17% year-on-year by metrics; in Q4, profit was CNY1.8 billion (USD255 million) and earnings per share was CNY3.71.

• Apollo Go's robotaxi has completed more than 17 million rides, has been driven in more than 20 cities in China, is being tested in Europe and Dubai, and works with platforms like Uber and Lyft; it travels hundreds of millions of kilometers annually in autonomous mode.

• The company is sitting on cash and short-term investments of over CNY294-296 billion (about USD42 billion), has launched a USD5 billion share buyback and announced a plan to pay its first dividend, an exceptional signal for a Chinese tech firm of this type.

What has changed

Until a few years ago, Baidu $BIDU was all about search, advertising and a few ancillary digital services. Today, the revenue structure is different: the "new" business related to artificial intelligence - i.e. AI infrastructure, services on top of the ERNIE model and automation - makes up almost half of the core, while traditional advertising is stagnant or slightly declining. In the 2025 numbers, it's easy to see: while overall revenue is down 3%, revenue from the new AI business is up nearly 50%, so it's starting to take over as the main driver.

At the same time, profitability has changed. Instead of higher investment in AI leading to a deep loss, Baidu has managed to maintain solid margins: net profit of CNY14.1 billion (USD2.0 billion), earnings per share of CNY6.99 and total operating profit of CNY20.2 billion mean that the AI transition is proceeding on a relatively sound financial footing. In the fourth quarter of 2025 alone, AI activities already accounted for CNY11.3bn (USD1.6bn) in revenue, or 43% of the underlying business, and their growth momentum is much higher than the rest of the company.

There has also been a big shift in robotaxi. Apollo Go is no longer just a trial program in two cities, but a service with millions of actual rides, driverless operations in multiple locations, and plans to expand outside of China. It has reportedly completed more than 17 million rides and is operating in more than 20 Chinese cities, with tests and pilots also underway in Europe and the Middle East. Baidu is thus collecting valuable real-world traffic data that is critical to the quality of autonomous driving.

How it becomes money

From an investor's perspective, the most important thing is that Baidu is starting to have three distinct sources of future value.

The first is the AI infrastructure itself. Baidu is not just selling a "cloud" but a specific AI building block: data centers, computing power, its own ERNIE model, and ready-made enterprise services. AI infrastructure revenues of around CNY19.8 billion (about USD2.8 billion) a year and 34% growth show that there is interest in this offering. This is a business that is high-margin when scaled - once built, the facilities can serve many clients.

The second source is Apollo Go robotaxis. In the short term, it's a project that costs more than it makes, but as mileage and cities grow, it starts to approach economics where the cost of operation spreads out significantly. Additionally, Baidu doesn't need to build its own app for end customers everywhere - it integrates its system into existing platforms like Uber and Lyft to focus on technology and fleet management, while leaving marketing and user interface to partners. If autonomous transportation takes off, this puts Baidu in a good position to earn a commission or royalties from it.

The third source is working with capital. The company has over CNY 294 billion (roughly USD 42 billion) in cash and liquid investments, which is almost comparable to its entire market capitalization. This cash is funding both its large-scale AI investments and its US$5bn share buyback and, more recently, its dividend. If profitability and growth can be sustained, the combination of buybacks and dividends can significantly increase earnings per share and gradually create a "floor" under the stock price.

The numbers that support this thesis

Several key numbers emerge from the 2025 results. Total annual turnover of CNY129.1bn (USD18.5bn) was down 3%, but of this, new AI business was around CNY40bn (USD5.6bn), growing 48% year-on-year. AI infrastructure turnover of around CNY19.8bn (USD2.8bn) grew 34%, with AI activities accounting for CNY11.3bn (around USD1.6bn) in Q4, or 43% of the underlying business.

Net profit of CNY14.1bn (USD2.0bn) and earnings per share of CNY6.99 imply year-on-year growth of around 11-18%, confirming that Baidu is managing to increase profitability even without strong growth in overall revenue. In Q4, net profit was CNY1.8bn (USD255m) and earnings per share CNY3.71, with a margin of around 5%; at the operating level, the firm is seeing margins of around 5-10% depending on whether we look at accounting or adjusted results.

The balance sheet remains very strong: total cash and investments at the end of the year exceed CNY294bn (over USD42bn), with a debt-equity mix more consistent with a conservative profile than an overbought growth title. This is an important difference from many other AI companies - Baidu can invest for the future from a strong balance sheet, not from debt risk.

Comparison with competitors

Compared to other large Chinese tech firms (Alibaba $BABA, Tencent $TCEHY), Baidu looks like the purest AI bet, but also the most "punished" title in terms of return on capital. While Alibaba and Tencent have significantly higher ROEs and stronger, more mature businesses in e-commerce and gaming, Baidu has ROEs of only around 3-4% and again, much of its profits are being tipped into AI projects that are just getting off the ground in terms of numbers. On the other hand, Baidu is trading just below book value (P/B ~0.98) and at less than double sales, while both Alibaba and Tencent are trading higher - so the investor is paying relatively less for each yuan of sales and equity.

Even more interesting is the comparison with US AI-related companies. Large providers of cloud services and computing power for AI, such as Microsoft, Alphabet or Amazon, have significantly higher revenue multiples (often 4-8 times) and profit margins, but also much greater exposure to Western regulation and an oversaturated market. Baidu trades at around 2 times revenue against them, with similar gross margins but significantly lower return on capital - so the market is clearly discounting it for the Chinese environment and the fact that some AI projects are still in the build phase.

In the autonomous transport segment, Apollo Go is a direct competitor to projects like Waymo (Google), Cruise or robotaxis from Tesla and other manufacturers. In terms of cities, mileage and fully driverless driving, Baidu is among the world leaders, but unlike Waymo or Tesla, it does not receive as much attention in the Western press. From an investment perspective, this means that much of Robotaxi's value is probably priced more conservatively in the share price than its US competitors - while investors there often "overpay" for a story, with Baidu we get that story more as a lesser paid bonus.

Valuation

According to current indicators, Baidu is trading at about 36 times earnings, less than twice sales and just below book value - the price to equity ratio is 0.98. That's a combination that we hardly see in a classic "AI growth" title: they typically have significantly higher price-to-earnings and book value ratios, but at the same time often have weaker or negative profitability.

A gross margin of around 45% shows that Baidu still has a very decent margin between revenues and direct costs, but the operating margin is still slightly negative (-2.6%), reflecting the high investment in AI, robotaxis and robotics. The resulting net margin of around 6.9% means that the company can remain profitable on an overall operating level, but the return on capital is still low - a return on assets of just over 2% and a return on equity of around 3.4%. This is significantly lower than what, for example, large US technology firms are achieving today.

From a balance sheet perspective, Baidu looks relatively conservative: debt to assets is 22%, debt to equity is 37% and an interest coverage ratio of 8.5 shows that the company has no problem paying interest on its debt. Liquidity is solid (current ratio 1.91, quick ratio 1.65) and working capital of about CNY 75 billion provides comfort for current operations. Altman's Z-score of 1.60 does suggest that the company is not in a "worry-free" zone, but in light of the high cash and stable earnings, this is not an immediate warning sign, but rather a reflection of the capital-intensive industry.

Investment scenarios

In a favorable scenario, Baidu manages to sustain high AI revenue growth, Apollo Go's robotaxi gets into profit mode in at least some cities, and the licensing model expands with partners in Europe and the Middle East. Overall sales will return to growth, margins will remain in double digits, and the combination of earnings, buybacks and dividends will lead to a gradual revaluation of the stock towards the levels we see today in Western AI titles with similar momentum.

In a realistic scenario, the AI business will gradually fully replace the decline of the legacy segments, total revenues will grow at a mid-single digit rate, robotaxis will act as a long-term option, and capital will be returned mainly through earnings, a modest dividend and buybacks. In that case, it makes sense to expect the current "discount" to historical valuations and to Western competitors to close at least partially.

In a pessimistic scenario, politics come into play - tighter AI regulation in China, conflicted relations with the United States, or reduced cooperation with foreign partners. Combined with a possible slowdown in the Chinese economy, this could limit the growth of AI services, slow the adoption of robotaxis, and prompt investors to demand an even higher risk premium. In such a world, Baidu will remain profitable and liquid, but a valuation discount may become the "new normal."

Risks

Geopolitics and regulation are key risks. Baidu operates in an environment where the state imposes strict requirements on content, data and technology development, and the company is also exposed to tensions between China and the West - be it sanctions, restrictions on technology exports or possible restrictions on Chinese apps and services abroad. The second big risk is technological: autonomous driving and robotics are long-term plays dependent on security, public trust and support from authorities. All it takes is a few serious incidents or a change in rules to slow deployment for years.

Similarly, the competitive pressure cannot be overlooked - in both AI and autonomous mobility, Baidu is competing not only with other Chinese companies, but also with global giants that have a strong position in cloud and model development. Although Baidu has a head start in some areas (for example, in the scale of robotaxi traffic), this head start is not guaranteed. Last but not least, there is the risk that investments in AI and robotaxi will drag on, remain low-margin for a long time, and investors will become impatient.

What to take away

Baidu today is more of a Chinese "AI infrastructure and autonomous" player than a traditional internet company. It brings a combination of a growing AI business, a big bet on robotaxis, a very strong balance sheet and, more recently, a return of capital in the form of dividends and share buybacks - all at a valuation that is strikingly lower than comparable Western titles. For the investor who is not afraid of Chinese risk and wants exposure to AI and autonomous mobility at some "discount", Baidu could be an interesting medium to long-term opportunity.

Underneath that product roadmap lies one of the most aggressive AI capex plans in the market. Meta has guided for 2026 capital expenditure in a range of roughly 115–135 billion dollars tied largely to AI infrastructure, yet still generates tens of billions in annual free cash flow from its core advertising machine, leaving room for buybacks and dividends even after the AI build‑out. For investors, the message is that Mango and Avocado are not being financed with leverage or financial engineering, but with the cash gushing out of Facebook, Instagram and WhatsApp – a bet that today’s ad profits can underwrite tomorrow’s push toward superintelligence.

Mango and Avocado: the first wave after the Llama era

$META has officially unveiled Mango, aimed at generating images and videos, and Avocado, for text-based tasks, logic and programming. These are the first major products from Meta's new Superintelligence Labs division, which builds on the Llama family of models but aims higher in both multimodality and programming capabilities.

The company openly admits that Mango and Avocado may not be instantly the best in all areas compared to OpenAI, Anthropic or Google's $GOOG models. The goal is to have several strong domains that will be attractive to end users - especially in visual content generation and hands-on programming. It is these areas that are intended to help Meta strengthen its core products, from social networking to tools for creators.

Meta initially focused on a flagship model, codenamed "Behemoth," which was intended to be an answer to the most powerful models of the competition. However, its release has been repeatedly delayed due to concerns over performance and its ability to keep up with the top. Llama 4, launched in April, has not received the reception from developers that management expected, deepening Mark Zuckerberg's frustration with the pace of progress. Mango and Avocado thus come as a more pragmatic first step - preferring well-performing models in clearly chosen segments rather than a belated "perfect" jack of all trades.

135 billion dollars: Meta buys the future, but with its own money

Meta is planning capital investments in the range of $115 billion to $135 billion in 2026, nearly double the roughly $72 billion in 2025. The bulk of this is going into AI infrastructure: data centers, compute clusters, and specialized chips for training and deploying models.

The financial results for the fourth quarter of 2025 confirm the quality picture. Revenues were approximately $59.9 billion, up about 24% year-over-year, while net income increased to about $22.8 billion, up 9%. Earnings per share were around $8.9. Thus, Meta is showing that it is able to dramatically increase investment in AI without sacrificing margins and profitability.

This essentially raises the bar for the entire sector: it shows that if the underlying advertising business is strong enough, a tech firm can afford AI investments in the hundreds of billions of dollars without losing Wall Street's confidence. The planned $135 billion in capital spending thus doesn't feel like a gamble, but rather a statement of ambition - Meta wants to be one of the players that define the next generation of AI, not just one of many users of someone else's model.

Alexander Wang and Meta Superintelligence Labs

A key figure in Meta's new AI chapter is Alexander Wang. The 28-year-old entrepreneur, who became a self-made billionaire at the age of 24 thanks to Scale AI, now heads Meta's Superintelligence Labs division while remaining a member of Scale AI's board of directors.

Meta paid approximately $14.3 billion for a 49% stake in Scale AI, securing both the technology and the talent. Wang brought part of his team - the "Scalien" employees - to Meta, along with the know-how in data annotation, data infrastructure and practical deployment of AI in large organizations. Combined with Meta's in-house capabilities, this creates one of the largest integrated AI workplaces in the world.

Mark Zuckerberg is personally orchestrating the recruitment of this new generation of AI leaders. Meta has poached more than twenty researchers from OpenAI and other leading labs and is purposefully building a team to compete with Silicon Valley's elite research groups. Wang also maintains a close relationship with the US government - his Scale AI has won contracts to supply AI tools to the Pentagon, and Wang attended President Donald Trump's inauguration.

Meanwhile, the reorganization within Meta is one of the biggest in the company's history: AI is shifting from its role as a support tool for advertising to a central pillar to influence all major products - from feed and recommendation algorithms to messaging to virtual and augmented reality. Mango and Avocado are the first visible output layer of this transformation, but the real impact will depend on how quickly the company manages to transform internal processes, product teams and the development cycle around the next generation of models.

A partially open approach: between community and competitive advantage

Meta has long profiled itself as a proponent of a relatively open approach to models - something it has already demonstrated with the Llama family. With Mango and Avocado, however, the company is opting for a more sophisticated, "partially open" strategy.

Unlike competitors' fully closed models, Meta wants to make its models available to a wide range of users and developers around the world. The goal is clear: to create the largest possible ecosystem of applications and tools built on its models, thereby locking in its position as the preferred AI platform for consumers in the long term.

But at the same time, the company doesn't want openness to undermine security and its own competitive advantage. For Avocado, for example, it will not include the full range of capabilities to generate advanced cybersecurity or exploit code in publicly available versions. These features will remain limited or only available in a regulated environment to reduce the risk of exploitation.

This "calculated trade-off" is intended to keep Meta in an advantageous position: open enough to attract developers and users, but closed enough to maintain a technological edge where the most valuable capabilities are concerned. At the same time, the company is counting on its models not being the best "across the board," but it wants to dominate in a few strategic segments-for example, optimizing to run on mainstream PCs and end devices, where Meta can leverage its experience with mass-market consumer products.

The total funding package is expected to reach roughly 16 billion dollars, including about 2 billion of equity from Blackstone, with Bank of America leading the design and potential syndication of the debt. The deal is being assembled just as investors are becoming increasingly uneasy about Oracle’s rising leverage, with the stock under pressure this year on concerns that aggressive AI infrastructure spending is stretching the balance sheet. For Pimco and its clients, the appeal lies in the yield on a loan backed by Oracle’s long‑term contracts, but the risk is clear: it is also a leveraged wager that Oracle can manage its growing debt load and that OpenAI‑driven demand will stay strong enough for the campus economics to hold up.

What the financing for Oracle's data centre should look like

According to Bloomberg, Pimco is in talks with Bank of America $BAC about a debt package of about $14 billion that would finance the construction of Oracle's $ORCL data center in Saline Township. If the deal is completed, Pimco will become the lead lender on the project, with some of the risk likely to be spread among other institutional investors.

According to reports, the debt is being considered to be structured as a Rule 144A bond issue, a form of privately placed debt that can be traded by qualified institutional investors. This setup allows the issuer to raise a large amount of funds with a relatively limited pool of investors who are accustomed to dealing with complexly structured debt associated with infrastructure projects.

According to Reuters, developer Related Digital is aiming to close a total of $16 billion in financing for the project, with the debt component led by Bank of America and roughly $2 billion in capital supplied by Blackstone $BX. The negotiations with Pimco add another layer to long-running efforts to secure stable funding sources for the project, despite previous doubts from some partners.

Data centre for OpenAI and part of the Stargate megaproject

Oracle and OpenAI's planned data center in Saline Township is part of a previously announced partnership to deliver additional capacity for the 4.5 gigawatt Stargate project across the United States. According to Oracle, construction is scheduled to begin in early 2026, and the company will ensure the operation of the data center and the integration of the latest technologies for OpenAI's needs once it is completed.

The campus, nicknamed "The Barn" because of the preserved historic red barn at the entrance, will consist of a trio of single-story buildings totaling roughly five hundred and fifty thousand square feet. The data center, with an investment of about seven billion dollars and a projected capacity of approximately 1.4 gigawatts, is to be built on a roughly five hundred and seventy-five acres of farmland south of Ann Arbor.

The project is to be LEED certified and the design calls for minimum building setbacks of seventy-five feet from public roads as well as extensive shading to better integrate the site into the surrounding landscape. Regulators in the State of Michigan have already approved expedited review of contracts with DTE Energy to provide the necessary capacity to connect the data center.

Negotiations continue despite investor concerns

The Oracle data centre project in Michigan has also been met with some scepticism from financial partners in recent months. According to the Financial Times, Blue Owl Capital, which specialises in data centre financing, has decided not to support the project further after negotiations with Oracle stalled.

Oracle responded by saying that developer Related Digital had selected "the best capital partner from a competitive set of options" and that the equity portion of the financing was progressing as planned. A company spokesperson told both Bloomberg and Reuters that Oracle is encouraged by the rapid progress in both financing and site development, and highlighted the ongoing collaboration with OpenAI, Related Digital, Bank of America and other partners.

Oracle's comments reiterate that work on both financing and site preparation is on schedule and that the data center is a key part of the company's broader AI infrastructure expansion strategy. However, it is critical for investors and lenders alike whether the debt structuring can be successfully concluded and the market convinced that the company can finance such a large investment programme without a material deterioration in its credit profile.

Rising debt and pressure on Oracle shares

Aggressive expansion into AI infrastructure is taking a toll on Oracle's balance sheet. Analysts say Oracle shares have fallen more than 25% this year as investors worry about a combination of high capital spending and rapid debt growth. The company has already secured roughly $30 billion through bonds and convertible preferred stock and plans to raise up to another $50 billion in debt and equity.

Extensive investments in data centers have pushed Oracle's free cash flow deep into negative territory, with long-term debt rising to more than $120 billion over the past few years. Credit risk indicators, including the cost of five-year default hedges, are near all-time highs, a signal that the market perceives the risk associated with the company's debt as elevated.

Ratings agencies S&P and Moody's rate Oracle in the investment-grade range, but both companies have previously placed the rating on negative outlook due to the potential for further debt increases. Therefore, the successful closing of financing for the Michigan data center, including Pimco's potential participation, will be an important test of market confidence in the long-term sustainability of Oracle's investment strategy.

Economic benefits for Michigan

The Oracle data center project and OpenAI also have a significant economic impact on the region. According to materials from Oracle and local authorities, the construction of the campus is expected to create approximately two and a half thousand union construction jobs. Upon completion, the complex is expected to directly employ approximately 450 people and indirectly create approximately 1,500 additional jobs in the greater Washtenaw County region.

Oracle has committed to invest millions of dollars in local schools and public infrastructure. The project is estimated to generate about eight million dollars annually for the school district, at least $1.6 million annually in direct tax revenue for Saline Township, and more than fourteen million dollars in direct community benefits. Michigan regulators have already approved the necessary energy contracts, confirming political support for the project at the state level.

The balance sheet looks more like that of a cautious industrial than a flashy AI stock. With roughly 1.7 billion dollars in cash and securities, negligible debt and its first fully GAAP‑profitable fiscal year behind it, the company carries real optionality for buybacks, acquisitions or simply riding out a bad macro patch. Yet the market only asks around four times current‑year revenue and about twice next year’s sales estimate for that combination of sticky enterprise relationships, mid‑teens growth and a fortress balance sheet – a multiple that would be unremarkable for a slow, on‑prem licence vendor, but looks almost suspiciously low in a segment where anything with an “AI” label often clears ten‑plus times revenue.

Top points of analysis

• Revenue in fiscal year 2026 (ending January 31, 2026) was $1.611 billion, up 13% year-over-year; annual recurring revenue (ARR) rose to $1.853 billion, +11%.

• In Q3 and Q4, the company beat its own guidance, with Q3 delivering $411 million in revenue (+16%) and Q4 delivering $481 million (+14%), a decent pace in pure growth terms on an already relatively large base.

• Gross margin is around 83%, GAAP operating margin has gone into the black ($57 million operating profit for the full year and $80 million in Q4 alone), net margin is around 15%.

• Operating cash flow for 2026 was $371 million, the company has been generating positive free cash flow for several quarters now, so the accounting profit is not "paper".

• The firm completed a $1 billion share buyback program and announced a new program of up to $500 million, which at a market capitalization of around $6 billion is a significant signal of management's confidence in its own valuation.

What UiPath does and how it makes money

UiPath $PATH was founded as a company that focuses on one seemingly boring thing: how to make a computer do what people do today at a monitor. In banks, insurance companies, hospitals and industry sit "armies" of people whose job it is to open applications, copy numbers, click approvals and create reports. Each step is regular, but together there are so many that no one can keep track of them manually.

UiPath offers an end-to-end platform where:

• Process analysis and mapping tools identify where there is room for automation

• design tools (often in a low-code environment) allow an analyst or advanced user to define a process

• a "robot" then executes that process - opens applications, fills out forms, reads documents, interacts with databases

• an "orchestrator" runs on top of it all, controlling how many robots run, when, on what tasks, and who is responsible for them

Revenues come mostly from recurring licenses and subscriptions (ARR around 1.85 billion), with a smaller portion from consulting and implementation services that help customers with deployment, integration and training. This makes the business relatively predictable, plus a tight link to how many licenses the client has active and the volume of processes they use.

How UiPath engages artificial intelligence

Previously, people talked about UiPath as a player in robotic process automation. The company itself now talks about "agent automation" - a shift from simply mimicking clicks to a system that can understand context and make more complex decisions.

In practice, for example, it looks like this:

• The AI model can read unstructured documents (invoices, contracts, emails) and extract the data it needs from them.

• Based on the content, it decides what process the document belongs to, what exception needs to be handled or who to send it to for approval

• generative AI allows the user to describe in plain language what they want to automate, and the platform itself will suggest a process structure

UiPath has integrated with major AI model providers (e.g. OpenAI, Microsoft $MSFT, Nvidia $NVDA) in recent years and is trying to be the layer that translates these models into specific enterprise work-flows. From an investor's perspective, it's important that it's not just about marketing: more comprehensive automation means more value per deployment, bigger contracts, and a stronger connection to the customer.

Where UiPath is growing and where it is slowing down

Growth is no longer as explosive as in the early years after going public, but the numbers show solid momentum:

• $1.611 billion in revenue (+13%)

• ARR 1.853 billion (+11%)

• Q3 sales 411 million (+16%), Q4 sales 481 million (+14%)

• Net new ARR $186 million for the year

In terms of momentum, we can see that:

• ARR growth may have slowed from earlier higher double-digits, but the company is still adding significant annual recurring revenue

• dollar-based net retention of around 107% shows that existing customers are spending more than last year, although not at the pace of "hyper growth" cloud companies.

At the same time, however, some analysts are pointing out that a pace of 11-16 percent annually is no longer "wow" for this type of technology - which is why the stock came under pressure after the March 2026 results, despite beating expectations. This is important context: the numbers are good, but sentiment is negative at times due to the view that growth is slowing and that competition from big platforms (Microsoft, other players) may continue to steal potential.

Management and corporate governance

UiPath is led by co-founder Daniel Dines, who was at the birth of the company in Romania and took it from a small team of developers to a listing on the New York Stock Exchange. Dines has long been seen as someone who understands both the technical side of the product and how large enterprises operate - which is why the company often emphasizes stories of concrete implementations, not just "AI in the abstract."

CFO Ashim Gupta, who has been in the CFO role since 2019, is one of the key figures in the transition from "growth at any cost" to a sustainable profit model. It was under his tenure that the company significantly improved operational discipline, managed to get to GAAP profit while building a cash cushion of around $1.7 billion without any material debt.

Management has given some clear signals in recent quarters on how it views capital:

• The priority is a combination of growth and profitability, not a return to aggressive cash burn

• cash is to serve as both an insurance policy and a tool - for potential acquisitions and for a continued share buyback programme if valuations are attractive

• AI is not to become a marketing slogan, but a practical layer that will lift the value of automation with existing clients and accelerate adoption with new ones

Importantly for the investor, the combination of a founder on the board and a CFO who has a proven track record of driving the company to profitability reduces the risk of chaotic strategic turnarounds. On the other hand, it will need to watch how it handles cash - whether it sticks with disciplined buybacks and targeted acquisitions or embarks on larger, riskier purchases.

Profitability and cash flow: switching from "growth at any cost" mode

A few years ago, UiPath was a typical "growth at a loss" business: high sales, marketing and development costs, pressure from investors to acquire positions quickly. 2026 looks different:

• GAAP operating profit of $57 million for the full year, $13 million in the third quarter, and $80 million in the fourth, meaning the company is managing to maintain profits even as it invests in AI and growth.

• Non-GAAP operating profit of $370 million, an operating margin of around 23%, already a level that is consistent with a "mature" software company.

• Operating cash flow of $371 million and adjusted free cash flow of a similar amount, proof that profitability is not just about accounting adjustments to stock compensation.

A return on assets (ROA) of around 7.9% and return on equity (ROE) of around 12.9% from the data confirm that capital is starting to work decently, although the company is not yet "maxed out" to the max - it is still investing in growth and AI direction.

Balance sheet, cash and share buyback program

UiPath is one of the few tech companies that are combining today:

• a large cash reserve

• lower debt

• while growing profitability

As of Jan. 31, 2026, the company had about $1.69 billion in cash, equivalents and marketable securities, working capital of about $1.2 billion, a debt-to-assets ratio of 0.02 and a debt-to-equity ratio of 0.04. Altman's Z-score of 3.5 indicates a sufficient buffer against financial distress.

The approach to return on capital is also interesting:

• The company has completed a $1 billion share repurchase program

• and announced a new share repurchase program of up to $500 million

With a market capitalization of around 6 billion, this means that management is willing to theoretically buy back around eight percent of the company if the price makes sense. Combined with rising free cash flow, this creates the potential for earnings per share growth even with only moderate earnings growth.

Valuation

The following picture emergesfrom the key metrics:

• Sales of 1.61 billion, market capitalization of 6 billion → price to sales of approximately 3.87

• net profit and earnings per share correspond to a price-to-earnings ratio of 26.66

• free cash flow or operating cash flow gives a price to cash flow ratio of around 19.3

• price to book value is about 3.12

For an investor comparing within the software, this can be summarized as follows:

• On the quality side, there is a high gross margin, a positive and growing operating profit, solid cash flow and a very strong balance sheet.

• on the valuation side, the numbers are not "worth a song" but are lower down the bandwidth, not higher, compared to many other AI and automation titles

But part of the market is particularly noting slowing growth. Some analysts argue that the low multiple to revenue is deserved - better businesses are said to have higher "earnings power" and grow faster. Against this is the contrarian view that around 2-4 times expected sales, a first fully profitable year and a billion and a half in cash create an asymmetry that is interesting to the patient investor.

Where UiPath can grow and what it plans to do

UiPath is no longer a start-up, but it's also still at a point where it has some clear growth vectors ahead of it. Management has been quite specific on calls and in investor materials about where it wants to take the company.

1) Target: 2 billion in ARR and more

The company has set an internal milestone of achieving at least $2 billion in annual recurring revenue by fiscal 2027, counting on existing large customers to drive much of the growth. It already has more than 2,500 customers with ARRs over $100k (plus more than 10% year-over-year), and the number of clients with more than 1 million ARRs has grown from roughly 317 to 357 in a single year. This moving "up the ladder" - from smaller contracts to million-dollar contracts - is a key driver of growth because it shows that UiPath is becoming a topic for senior management and not just a one-department experiment.

2) Agent automation and new products

Much of the future growth is set to come from what UiPath calls agent automation. The company is investing massively in tools such as Maestro, Agent Builder, Autopilot and AI Trust Layer to enable the creation of "digital workers" - agents that can independently handle entire processes, not just individual tasks.

• Maestro is meant to manage "swarms" of agents that collectively handle complex multi-step processes across departments.

• Agent Builder and Autopilot are meant to speed up the creation of automations by tens of percent, making adoption easier at companies where there is a shortage of developers and specialists.

• AI Trust Layer is to ensure that AI agents can be deployed securely from a data, regulatory and compliance perspective - a prerequisite for banks, insurance companies or the public sector.

For the investor, this means that UiPath does not want to remain just an "RPA tool", but is moving towards a broader role as a platform that manages the entire digital workforce.

3) Product expansion and new verticals

Growth is not just to come from more bots, but from a wider variety of what the platform can do. The company plans to keep expanding:

• process and task mining - tools that automatically map how work actually gets done in the enterprise and where it pays to automate

• test automation - an entry into the world of DevOps, where a robot tests new versions of systems

• communication and document processing - emails, chats, voice, scans

• contact centre automation - connecting robots with customer support agents

The strategy is to expand the volume that UiPath can bill in a single enterprise through these adjacent areas, while leaning into the verticals where the push for automation is greatest: financial services, healthcare, industrial, public sector. The company itself is targeting to grow in these segments at a rate in the "upper teens" per year, faster than the rest of its portfolio.

4) Partnerships and ecosystem

UiPath is building on the fact that it won't do everything on its own. It strategically relies on:

• Deep integrations with large "hyperscalers" (Azure, Google Cloud, others) that bring both AI models and distribution channels

• a marketplace with over 2,000 prebuilt components and a goal of 20-30 percent of new automations being built from ready-made blocks, not from scratch

• Growing partners' share of new business: the goal is for over 40 percent of new contract value to be generated through partners, which would significantly cheapen and accelerate expansion

A strong ecosystem is important at a time when automation is becoming a common part of large companies' IT architecture. A partner that can deliver the whole package (cloud, AI, data, automation) has an easier position with large customers than a standalone vendor.

5) Geography and public sector

Already, roughly half of UiPath's revenue comes from outside the United States, which means the company is no longer a purely American story. It wants to continue to grow, particularly in Europe and Asia, with an important role to play:

• Local data residency - cloud-based solutions where data never leaves a given country or region

• a sovereign cloud for the public sector - so that government institutions can automate in an environment that meets their security regulations

This is where the space opens up for large and long-term contracts in the public sector, which are slower to win but often more stable over time.

Investment scenarios

Baseline scenario

In the UiPath baseline:

• maintains revenue growth in the 12-15% per annum range

• improve operating margins slightly and continue to generate growing free cash flow

• Use some of the cash for continued share buybacks and possibly smaller acquisitions

In such a situation, the multiples would not need to change dramatically - the investor would profit mainly from earnings per share growth combining sales growth, improved margins and the impact of buybacks. If held for several years, one would expect decent, if relatively "boring", appreciation.

Growth scenario

A more optimistic scenario assumes that:

• agent automation and AI integration prove to be a significant driver of demand

• ARR growth returns to above 20% per annum

• the company is able to deepen the use of the platform with existing customers while convincing more medium-sized businesses.

In this case, the market could decide to price UiPath similarly to other "AI winners", at 6-8 times sales, with profits growing at a double-digit rate - a combination that would offer a potentially very attractive return.

A more cautious scenario

At the other end is a scenario in which:

• growth slows further and falls to single digits

• competition from large platforms persuades some clients to use a 'part of the package' rather than a dedicated platform

• management misuses cash (overpriced acquisitions, inefficient investments)

In such a scenario, UiPath would trade as "mature" software for the long term at somewhere around 2-3 times sales, without significant re-rating. While the investor would not have much risk in terms of solvency, the return would be limited.

What may surprise UiPath positively

• Acceleration in ARR growth due to AI - if the new AI layer proves to lead to bigger contracts and deeper client deployment, it may cause the market to realign its expectations.

• Stronger use of buybacks - if management judges that the share price is well below their intrinsic value, a $500m buyback program could mean a noticeable reduction in share count and faster earnings per share growth.

• Partnership network - better integration with the big players (Microsoft, Nvidia and others) can bring UiPath closer to being a "standard layer" of automation within the AI ecosystem, not just one of many options.

Risks to keep on the table

• Slowing growth - if revenue and ARR slow further, the market may refuse to pay higher multiples in the long term and the stock will remain "stuck".

• Competition - large cloud players have the ability to offer "sufficient" automation as part of a broader suite of services, which may satisfy some of the market.

• Cash utilization strategy - a large cash position is a plus, but also a test of whether management can invest capital in a way that generates value for shareholders.

What to take away from the analysis

UiPath is not the wildest growth stock or the cheapest "deep value" bet today. Rather, it's a solid automation platform that:

• has high margins, is growing at a decent pace

• is profitable and generates cash

• has a very strong balance sheet and actively returns capital through buybacks

• and yet trades at multiples that are not exorbitant for quality software

The key question for investors is whether they believe the combination of AI and automation is not yet fully valued, and whether UiPath will be among those who benefit from it in the next decade. If so, the current price may represent an interesting entry, especially for someone willing to give the company a few years.

For shareholders, this means the narrative of “pure growth on the wave of AI servers” is now burdened by an additional legal and reputational layer: it will be investigated whether this was the excess of a few individuals or whether the company systematically benefited from these sales to China and underestimated export control risks. Until there is clarity, SMCI will face heightened risk of further actions by authorities and investors (lawsuits, potential fines), which could, in the short term, outweigh otherwise strong demand for its AI servers.

Why low debt is a key advantage in 2026

In equity markets, investors have traditionally focused primarily on revenue growth, profit margins or valuation multiples.

However, the Debt-to-Equity ratio, the ratio of total debt to equity, is often overlooked, even though it is particularly important in times of higher interest rates and geopolitical uncertainty.

Companies with low D/E ratios operate in a fundamentally different position than their debt-laden competitors. They don't have to spend hundreds of millions of dollars a year on interest expense, they don't have the risk of refinancing at an inopportune time, and they have the financial flexibility to make strategic moves that debt-laden companies simply can't afford.

2026 will amplify this dynamic. Interest rates in the US continue to hold at elevated levels and the Federal Reserve has not yet signaled significant monetary easing. In this environment, the difference between a firm with minimal debt and one operating with high leverage is much more visible than in the era of cheap money. Moreover, companies with a net cash position can actively use higher rates to their advantage, as their free cash generates higher interest income.

The following six companies combine virtually zero debt with dominant positions in their sectors. From European luxury to enterprise software and e-commerce to gold mining and memory chips. They have one thing in common: a strong balance sheet that gives them a strategic advantage in any market environment.

Hermès $RMS.PA

Luxury without compromise and without debt

Hermès is one of the most exclusive luxury brands in the world, and its financial profile is as exceptional as its products. Founded in Paris in 1837, the company today operates with a Debt-to-Equity ratio of just 0.13. This makes it one of the most financially sound companies in the entire luxury sector. With a market capitalisation of over 170 billion euros, this is a remarkable figure that reflects management's conservative approach to capital structure.

This financial strength is mainly due to the extreme profitability of the business. Hermès achieves a net profit margin of around 28.5% and a return on equity (ROE) of over 25%. The company has cash of around €12.2 billion, while its total debt is only €2.3 billion. Hermès thus operates with a net cash position of almost €10 billion, a position that few companies in the world can afford.

Pricing power as a source of financial independence

The key to Hermès' financial strength is its extraordinary pricing power. Unlike many of its competitors in the luxury segment, the company regularly increases the prices of its products without adversely affecting demand. Waiting lists for the iconic Birkin and Kelly handbags last months to years, allowing the company to maintain extremely high margins without having to resort to any external financing. Revenues for last year were approximately 16 billion euros. In the context of the sector as a whole, the comparison with LVMH $MC.PA, which operates with significantly higher debt and lower margins, is interesting.

However, it is important to note that Hermès shares have depreciated by more than 35% in the last year, reflecting the broader rotation of capital out of the luxury sector. Despite this, the company remains valued at relatively high multiples with a P/E of around 49.

According to the Fair Price Index on Bulios, the stock is still, even after falling 22%, still 16.6% above its intrinsic value.

SAP $SAP

European software giant with minimal debt

SAP is Europe's largest software company and one of the global leaders in enterprise software. With a Debt-to-Equity ratio of 0.21, it is one of the least indebted technology companies in its size category. The company has a market capitalization of over $169 billion and annual revenues of $36.8 billion, making it one of the largest software players in the world.

SAP's financial strength comes from its position in the enterprise resource planning (ERP) segment, which is business process management software. This type of software is extremely difficult for customers to replace, which provides the company with highly predictable subscription-based revenue. SAP has cash of approximately $11.2 billion against total debt of $8.78 billion, a net cash position of about $2.4 billion.

Cloud transformation and its impact on the balance sheet

The company has been undergoing a major transformation toward cloud services in recent years, with its flagship product , S/4HANA Cloud, gradually replacing legacy on-premise installations. While this transition increases capital costs in the short term, it strengthens revenue predictability and improves the margin profile in the long term. Importantly, SAP is financing this transformation largely from its own resources, without the need to significantly raise debt. In addition, the company is actively integrating artificial intelligence into its products through the SAP Business AI platform, which opens up further growth opportunities.

Shares of $SAP have depreciated approximately 31% this year, creating an interesting valuation situation with a forward P/E of around 20. In addition, the beta of 0.69 indicates that the stock is less volatile than the broader market.

Salesforce $CRM

From aggressive acquisitions to a disciplined balance sheet

Salesforce has undergone a significant transformation in its approach to capital allocation in recent years. While the company grew aggressively through large acquisitions between 2020 and 2023 (such as the $27.7 billion takeover of Slack ), it now operates with a Debt-to-Equity ratio of around 0.11 to 0.29, depending on the calculation methodology. This shift reflects a new approach by management, which, under pressure from activist investors, has rethought its strategy towards financial discipline and higher returns on capital.

Salesforce is a global leader in CRM (Customer Relationship Management) software and today serves customers across virtually every industry. The company's annual revenue exceeds $41.5 billion and profit margins have stabilized around 18%, which would have been unthinkable just a few years ago. The company generates free cash flow in excess of $12 billion annually, allowing it to pay down debt while returning capital to shareholders.

AI ambitions funded by its own cash flow

A key theme for Salesforce is the integration of artificial intelligence across its product portfolio through its Agentforce platform. The company is investing in AI agents that can automate customer business processes. A key advantage over many competitors is that Salesforce is funding these investments from its own operating cash flow, without having to raise debt. In an environment where many technology companies are massively increasing CapEx on AI infrastructure and funding it with debt, this is a significant competitive advantage.

Shares of Salesforce have depreciated by about 31% this year, pushing the forward P/E to around 13.6. With a PEG ratio of 0.77, Salesforce trades at valuations that are well below historical averages.

PDD Holdings $PDD

Chinese e-commerce giant with virtually zero debt

PDD Holdings, the parent company of the Pinduoduo platform and global marketplace Temu, has one of the lowest Debt-to-Equity ratios in the entire stock market. With a value of just 0.03, this is a company that is funded almost entirely with equity. This is particularly notable given how aggressively the company is expanding in global markets through the Temu platform.

PDD's financial numbers are extraordinary. The firm has approximately $59.5 billion in cash and short-term investments, while its total debt is only $1.5 billion. Thus, its net cash position is over $58 billion, which is extremely strong for a market capitalization of around $140 billion. Annual sales exceed $60 billion with a net profit margin of around 23% and a return on equity of over 30%.

Risks despite a strong balance sheet

Despite the impressive financials, investing in PDD comes with significant risks, not related to the balance sheet but to the geopolitical and regulatory environment. The company operates in a jurisdiction where regulatory interventions can come unexpectedly and can have a dramatic impact on the business model. In addition, Temu's platform expansion faces increasing protectionist pressure in the US and Europe, where rules for low-value shipments from China are tightening. Added to this is the question of the sustainability of Temu's aggressive pricing strategy, which is based on massive marketing spend. Each quarter's results are so closely monitored.

Yet it cannot be overlooked that PDD Holdings has one of the strongest balance sheets in the entire market. In an environment where many e-commerce companies operate with high debt, this position is a clear advantage. Moreover, the beta coefficient of 0.05 shows an extremely low correlation with the US market.

Despite the rise in $PDD share price in the early days of this year, the price is now 12% below the January 1, 2026 opening price.

Newmont $NEM

Largest gold producer with a conservative balance sheet

Newmont is the largest gold-focused mining company in the world. After integrating the 2023 acquisition of Newcrest Mining, the company operates with a Debt-to-Equity ratio of around 0.15. This is very low for a mining company of this size, especially given the massive capital intensity of the mining industry. The firm's market capitalization is around $124 billion and annual revenues will reach a record $22.1 billion in 2025.

A key factor in Newmont's current financial strength is the record gold price, which is around $4,800 per troy ounce this year. At these prices, the company is generating extremely strong operating cash flow, allowing it to reduce debt quickly. The company holds cash in excess of $8.2 billion against total debt of around $5.7 billion, which puts it in a position of being a net creditor. Profitability has improved dramatically, with a net margin of over 32% and a Piotroski F-Score of 9 out of 9, signaling excellent financial health.

Strategic diversification and outlook

Newmont has completed a $4.5 billion program of non-performing asset divestitures in recent months and is now focusing on its 12 most productive mines. In addition, the company is strengthening its exposure to copper, the production of which from mines such as Cadia and Boddington adds an important secondary source of revenue in the context of the energy transition. Production guidance for 2026 calls for slightly lower output of 5.3 million ounces of gold as the company prioritises value over volume.

What makes Newmont interesting is the combination of a strong balance sheet and exposure to gold in an environment where geopolitical uncertainty and inflationary pressures are fuelling demand for safe-haven assets. However, unlike previous companies, the shares have managed to appreciate this year and now command a YTD appreciation of just under 15%.

SanDisk $SNDK

A new player on the stock market with a clean balance sheet

SanDisk returned to the stock market as a standalone company in March 2025 after being spun off from Western Digital $WDC. Entering the market with a virtually clean balance sheet and a Debt-to-Equity ratio of just 0.08 gives the company significant strategic flexibility in a sector where many competitors operate with significantly higher debt. The firm's market capitalization has shot up to approximately $105 billion, reflecting the extraordinary investor interest in the memory sector.

The firm has cash of $1.54 billion against total debt of $813 million, a net cash position of over $700 million. Annual sales are $8.93 billion, and the company is focused exclusively on NAND flash memory, which finds applications in consumer electronics as well as data center and SSD storage.

Memory cycle and valuation risk

The main driver of SanDisk stock growth is the ongoing recovery in the memory cycle. The shortage of NAND flash memory in the market, caused by a shift in production capacity to high-margin HBM chips for AI, has dramatically increased flash memory prices. SanDisk has benefited from this development as its product portfolio includes both consumer and datacenter segments. In addition, the separation from Western Digital has allowed the company to focus management's attention exclusively on flash memory.

However, two important factors should be noted

• First, the company is currently loss-making with a negative ROE of around minus 9.4%, which is due to the accounting costs associated with the separation.

• Second, valuation is very tight after the stock's meteoric rise (over 1,100% in the past year). The forward P/E of around 13.8 may not look excessive, but one has to take into account that this is a highly cyclical sector where margins can normalize quickly.

Table

Comparison and common features

Looking across the six firms, it is evident that a low Debt-to-Equity ratio is not in itself a guarantee of a good investment, but it provides an important structural basis for financial stability. PDD Holdings $PDD has the strongest balance sheet with a D/E of just 0.03 and a net cash position of $58 billion. Hermès $RMS.PA and SanDisk $SNDK also operate with minimal debt and strong cash positions. SAP $SAP, Salesforce $CRM, and Newmont $NEM have slightly higher D/Es but are still well below their sector averages.

Interestingly, all six companies cover very different sectors. They range from luxury (Hermès), to enterprise software (SAP, Salesforce), to e-commerce (PDD), to gold mining (Newmont), to memory chips (SanDisk). This diversification shows that a conservative approach to debt is not limited to one sector, but is rather a matter of corporate culture and management.

A strategic view

In an environment of elevated interest rates and geopolitical uncertainty, low debt has several practical advantages. Companies with minimal D/E ratios can take advantage of market corrections to make acquisitions at attractive prices, while debt-laden competitors focus on survival at such times. They can launch aggressive share buyback programs when valuations are low. And they can invest in growth opportunities without having to issue new debt on unfavourable terms.

But it is also important not to confuse low debt with automatic investment attractiveness. Some companies are underleveraged simply because they do not have sufficiently attractive opportunities to allocate capital to. The key therefore is whether the firm can combine a strong balance sheet with a high return on capital and clear growth catalysts. Hermès in particular stands out in this respect, with an ROE of over 25% and PDD Holdings with an ROE of over 30%.

What to watch next

• Fed interest rate developments that directly impact the relative advantage of low-leverage companies

• Memory cycle and sustainability of current NAND flash memory pricing for SanDisk

• The regulatory environment in China and trade tensions with the U.S. for PDD Holdings

• Gold and copper price trends determining Newmont's profitability and cash flow

• The pace of SAP's cloud transformation and adoption of Salesforce's AI solution

• Consumer sentiment in the luxury segment and Hermès' ability to maintain pricing power

A low Debt-to-Equity ratio is one of the most valuable attributes a company can have in the current market environment. In an era of higher interest rates, increased volatility and uncertainty about the global economic outlook, companies with minimal debt enjoy greater financial flexibility, a lower cost of capital and are better positioned to make strategic moves.

These companies are showing that a conservative approach to balance sheets is not a barrier to growth. Conversely, companies such as Hermès, PDD Holdings and SAP demonstrate that it is possible to achieve strong profitability and dynamic growth without massive financial leverage.

What happened in the markets and what does it mean for your portfolio?

WTI oil plunged within hours from $117 to just under $94 per barrel, a drop of more than 16% in a single session. Brent fell to approximately $91. S&P 500 futures immediately jumped by more than 2.5%, Dow futures added 1,000 points and Nasdaq 100 futures shot up nearly 3%.

The conflict between the U.S., Israel and Iran has been ongoing since February 28, 2026, when the U.S. military launched Operation Epic Fury. Over 38 days U.S. forces struck approximately 7,800 targets in Iran and carried out over 8,000 combat sorties. The Strait of Hormuz, through which roughly 20% of the world's daily oil production flows, was effectively closed from early March. Maritime traffic all but stopped, and tankers refused to enter the narrow strait for fear of Iranian attacks.

Pakistan acted as mediator

Pakistani Prime Minister Shehbaz Sharif played a key role, asking Trump for a two-week delay to his ultimatum while also urging Tehran to open the strait "as a gesture of goodwill."

Iran ultimately agreed and presented a 10-point peace plan that includes, among other things, a coordinated transit through the Strait of Hormuz under the supervision of Iranian armed forces, the withdrawal of U.S. troops from the region, the lifting of sanctions and compensation for war damages. Trump described the plan as "a usable basis for negotiations." Peace talks are scheduled to begin on Friday, April 10 in Islamabad.

Israel also supported the ceasefire and pledged to halt bombing of Iran.

What does this mean for markets and investors?

The energy sector gained nearly 38% in the first quarter of 2026. But with the potential reopening of the strait, the cards are being reshuffled. Oil giants like $XOM and $CVX, which had benefited from tight supply, will face price normalization. Conversely, airlines such as $DAL and $UAL immediately strengthened, as jet fuel futures began to plunge.

Be careful though of false optimism. The two-week ceasefire likely means two more weeks of status quo, with only a minimal number of tankers passing through. Real restoration of shipping will take at least two months, experts say. U.S. oil is, even after Tuesday's drop, still more than 70% higher than at the start of the year.

Equity indices led by the S&P 500 are currently 7.6% above this year's low and only 3.1% below their ATH. Will the rally continue, or will prices get "stuck" again after the peak they reached at the end of last year and the beginning of this year?

The market has rewarded the narrative shift, at least initially. Intel’s shares jumped more than 2–3% on the announcement and are now roughly 35% higher since the start of the year, helped by earlier optimism around AI‑focused Xeon chips and fab restructuring. To underscore the symbolism, the company pushed out a photo of chief executive Lip‑Bu Tan shaking hands with Musk on its California campus and stressed that the deal caps off months of talks – a visual way of saying that, this time, Intel intends to be inside the next big AI build‑out rather than watching it from the sidelines.

Intel and Terafab: target one terawatt of computing capacity per year

Terafab is a new chip manufacturingcomplex being built in Austin, Texas, to serve as a vertically integrated facility covering the entire process from design to manufacturing to testing. Tesla $TSLA, SpaceX, and xAI, a company recently integrated into the SpaceX structure, are collaborating on the project to provide enough chips for autonomous cars, humanoid robots, and future space data centers.

Elon Musk unveiled Terafab in March 2026 with the ambition of producing chips with a total of one terawatt of computing capacity per year, multiples of current global production of advanced AI chips. The project is estimated to cost at least twenty to twenty-five billion dollars, with some analyses putting the final cost as high as thirty-five to forty-five billion dollars.

The complex is to include two high-tech factories: one focused on chips for Tesla electric cars and Optimus humanoid robots, the other designed for chips destined for data centres in space. At the same time, analytical estimates warn that Tesla's long-term plans to produce tens of millions of robots a year could mean demand for hundreds of millions of highly specialised chips, far exceeding the current production capacity of traditional suppliers.

Strategic context: the merger of SpaceX and xAI and the planned IPO

Intel $INTC 's entry into Terafab fits into Elon Musk's broader strategy to build a self-sustaining technology ecosystem for both artificial intelligence and space projects. SpaceX recently completed its acquisition of xAI in a transaction that was reportedly valued at more than $1 trillion and is one of the largest deals in the history of the technology sector. The structure of the deal allows xAI shareholders to convert their holdings into SpaceX shares according to a pre-determined ratio, bringing artificial intelligence activities under one roof.

SpaceX has also filed a confidential application for an initial public offering of shares in the United States, with media reports that the target valuation is up to around the $800 billion mark. If these plans come to fruition, it would be one of the largest share issues in history and a significant source of capital to fund projects such as Terafab.

What Intel brings to the project

Intel said it is entering Terafab to fundamentally accelerate the development and production of ultra-high-performance chips for future generations of artificial intelligence and robotics. The company brings to the project its capabilities in chip design, manufacturing and advanced packaging, which are key to achieving high performance at reasonable power consumption.

CEO Lip Bu Tan described Terafab as a fundamental change in how silicon logic, memories and their integration into a single unit will be designed and manufactured in the coming years. The factory is to be designed from the outset to handle mass production of highly specialised chips for a variety of deployments - from automotive to industrial and home robotics to the extreme conditions of space data centres.

Strengthening Intel's position in the race for artificial intelligence

For Intel, which in recent years has lagged behind Nvidia $NVDA in AI accelerators and behind AMD in the server segment, Terafab represents an opportunity to become a key technology partner for one of the world's largest AI projects. News of the partnership has boosted investor confidence, which has been reflected in the stock, which has already benefited this year from expectations of a turnaround in earnings and new contracts in advanced chips.

Elon Musk has repeatedly warned that current global chip manufacturing capacity will only meet a small fraction of the future needs of Tesla, SpaceX and his other projects. He says the companies face a simple choice: either build Terafab or not have enough chips to fulfill their plans. The partnership with Intel is therefore another step towards chip self-sufficiency as well as strengthening the position of the US semiconductor industry in the era of artificial intelligence.