Management reaffirmed its full‑year 2026 guidance: adjusted EPS of 2.25–2.35 dollars, free cash flow of at least 18 billion dollars and a capital‑return plan that calls for more than 45 billion dollars to be returned to shareholders via dividends and buybacks between 2026 and 2028, while gradually bringing net‑debt‑to‑EBITDA down from just over 3x toward a 2.5x target in the following three years. Q1 free cash flow of 2.5 billion dollars was seasonally soft and below last year, but still in the guided 2.0–2.5‑billion range, and the company added 584,000 internet customers (split evenly between fiber and fixed wireless), with nearly 45% of advanced home‑internet users also taking AT&T wireless - a sign that the “advanced connectivity” strategy is doing exactly what it’s supposed to do: grow a sticky, bundled base that can support debt reduction and a high dividend without needing eye‑catching top‑line acceleration

Q1 2026 results

AT&T's consolidated revenue $T reached $31.5 billion in the first quarter, up roughly 2.9 percent from last year's $30.6 billion. The main reason for this is growth in the advanced connectivity and fiber optics segment, fueled in part by newly acquired customers from the Lumen fiber optics acquisition.

Operating profit rose to $6.7 billion from $5.8 billion a year ago and adjusted operating profit to $6.9 billion from $6.4 billion. Net income from continuing operations was $4.2 billion, while diluted earnings per share from continuing operations were $0.54, down from $0.61 last year because last year's figure still included the contribution from the stake in DirecTV. On an adjusted basis, however, earnings per share rose from $0.51 to $0.57, or about twelve percent, easily beating analysts' estimates.

Operating cash flow was $7.6 billion compared to $9 billion last year, with last year's number including about $1.4 billion from DirecTV. Capital expenditures were $4.9 billion, total capital investment including vendor financing repayments was $5.1 billion and free cash flow after those expenditures was $2.5 billion. Total debt at the end of the quarter is $138.4 billion, net debt is $126.4 billion.

Advanced connectivity: a key growth driver

The advanced connectivity segment, which brings together mobile services, fiber optics and fixed wireless, is now the core of AT&T's investment story. In the first quarter, it generated $28.5 billion in revenue, up 4.7 percent year-over-year, while service revenue in this segment grew 3.6 percent to $22.9 billion.

In mobile services, the company added 294,000 new postpaid phone customers and maintained a very low churn rate of 0.89 percent. Mobile service revenues grew around two percent, reflecting a combination of higher client numbers, more expensive tariffs and the unwinding of some promotions.

An even more pronounced shift is seen in fixed internet. Advanced residential and business internet services added a total of 584,000 new connections, with 292,000 on fibre and 292,000 on fixed wireless. The pure residential segment added 512 thousand connections, of which 273 thousand were on fibre and 239 thousand on fixed wireless. Revenues in this segment grew by more than twenty-seven percent, making it the fastest growing part of AT&T $T's business today.

As a result, profitability is picking up. Advanced Connectivity segment operating profit jumped to $6.9 billion, about fourteen and eight-tenths percent growth, and segment operating margin rose to 24.1 percent from 22 percent last year. Adjusted segment EBITDA was $11.6 billion, plus 5.6 percent year-over-year, and EBITDA margin is around 40.6 percent.

The convergence ratio is also an important indicator. Approximately 42 percent of households with advanced Internet from AT&T also have mobile service, and if the new optical customers acquired through the Lumen acquisition are excluded, it's nearly 45 percent. The company says this is the fastest organic convergence growth in history, supporting the thesis that service interconnection increases customer value and profitability.

• Full presentation with results.

Legacy business, Latin America and network

On the flip side stands the legacy business, i.e. legacy voice and data services over copper. Here, first-quarter revenues fell to $1.77 billion, a decline of over 25 percent. The segment's operating profit fell to $612 million and margins slid from roughly 43 to 34.6 percent. But AT&T sees that as part of the plan. The goal is to phase out this business and migrate customers to fiber and wireless.

The Mexico segment posted sales of about $1.17 billion, up about twenty-one percent, primarily due to exchange rates and higher customer numbers and equipment sales. However, operating profit fell to $20 million as costs grew even faster.

In terms of infrastructure, AT&T continues to invest massively in fiber optics. The total reach of the optical network exceeds 37 million addresses, including more than four million added by the acquisition of part of the Lumen optical business. The company confirms that it is targeting over forty million optical addresses by the end of 2026 and over sixty million by 2030, in part by structuring optical assets into subsidiaries with outside capital.

Outlook to 2026 and long-term plan

After the first quarter results, AT&T's outlook for 2026 is only confirmed. It expects total service revenues to grow in the low single digits of percent, advanced connectivity service revenues to grow by more than five percent, and legacy revenues in the copper-based segments to decline by more than twenty percent. Adjusted EBITDA is expected to grow at a rate of three to four per cent, with the advanced connectivity segment growing at over six per cent.

Management continues to see adjusted earnings per share in the range of two dollars twenty-five to two dollars thirty-five. Free cash flow should reach at least eighteen billion dollars, even after accounting for higher cash taxes and pension contributions.

Between 2026 and 2028, AT&T plans to return more than forty-five billion dollars to shareholders, through a combination of dividends and share repurchases, while reducing debt to a target net debt to adjusted EBITDA ratio of about two and a half. That's the core of the long-term thesis: moderate growth, strong free cash flow, debt reduction, and a stable dividend.

Long-term business development

The last few years have been all about "housekeeping" for AT&T. The company has divested media assets, restructured its portfolio, and started investing aggressively in fiber optics and mobile while pushing down debt. Revenues tended to stagnate to grow modestly after the exit of the media businesses, but the quality of those revenues improved as recurring revenue from connectivity gained more weight.

Operating profit has historically been weighed down by high depreciation and one-off costs, but has gradually stabilised and grown in recent quarters. Free cash flow of around fifteen to sixteen billion dollars a year gives the company room to fund significant capital expenditures, pay down debt and pay a dividend without materially straining the balance sheet.

Today, AT&T looks less like a conglomerate and more like a pure telecom operator with two clear priorities. The first is growth in advanced connectivity via fiber, fixed wireless and mobile, the second is gradual debt reduction and return of capital. From this perspective, Q1 2026 fits neatly into the long-term picture.

Shareholders and capital policy

AT&T's ownership structure is typical of a large dividend player. Insiders hold less than one percent of the stock, according to Yahoo Finance, while the institution owns roughly eighty-four percent of the stock and free float. The largest shareholders are Vanguard, Blackrock, State Street and other large global funds, which together control a substantial portion of the company.

The company pays a dividend of $1.11 per share per year, which at the current share price implies an attractive dividend yield in the higher single digits of percentages. In addition, it plans to buy back more than twenty billion dollars worth of its own shares between 2026 and 2028 as part of a package of more than forty-five billion returned to shareholders.

For investors, AT&T today is more a story of steady cash flow than rapid growth. The first quarter of 2026 shows that the company can grow modestly, lift profits in its core connectivity segment, and hold the outlook while sending much of its free cash flow back to shareholders. This makes sense for those looking for yield and stability, not dynamic revenue growth.

Management is leaning into that positioning with a fairly clear long‑term roadmap. They point to multi‑year growth drivers in grid hardening, renewable interconnections, 5G densification and water‑efficient agriculture, backed by a utility‑segment backlog north of 1.25 billion dollars and fiscal‑2026 targets calling for 4.2–4.4 billion dollars in revenue and about 23.5 dollars of EPS, implying another leg up in profitability if execution holds. For an equity portfolio that’s already heavy on “sexy” software and AI, the question isn’t whether a company like this can grow - the demand for electricity, connectivity and food is structurally there - but whether you’re willing to let a diversified, somewhat dull infrastructure compounder sit next to high‑beta tech names and quietly do the job of stability, cash generation and capital discipline over a full cycle.

Top points of analysis

• Stable revenues, hovering around $4 billion over the last 3 years.

• Balance sheet is extremely conservative: debt to equity of 0.04, net debt/EBITDA of -0.11, Altman Z-score of 4.8, interest coverage of over 10 times - risk of financial distress is minimal.

• The business is built on two pillars - infrastructure (70-75% of revenues) and agricultural irrigation (25-30%), which reduces dependence on a single cycle and gives exposure to energy transition and water stress.

• In utility infrastructure, the firm entered 2025 with a backlog of over $1.25 billion, reflecting a wave of investment in transmission upgrades and renewable connections.

• For 2025-2026, management projects revenue growth of $4.2-4.4 billion and EPS of around $23.5, while shifting the mix to higher-margin telecom, grid and digital irrigation solutions.

Company introduction

Valmont $VMI isa typical "picks and shovels" player in infrastructure and agriculture. It doesn't make visually appealing consumer products, but structures and systems that are ubiquitous and critical: transmission towers and masts; lighting for roads, cities and sports fields; support structures for cellular networks; galvanizing and coating services for corrosion control; and pivot irrigation systems that irrigate millions of acres of fields around the world.

The business is divided into two main segments:

• Infrastructure - about 70-75% of sales - includes steel and concrete structures for power transmission, distribution networks, lighting and telecommunications, as well as coating services (galvanizing, coatings).

• Agriculture - roughly 25-30% of sales - includes the Valley brand, a world leader in mechanised irrigation systems (centre pivot, linear), complemented by digital platforms for precision agriculture and monitoring (e.g. Valley 365, acquisition of Prospera Technologies).

Customers are mainly institutions and enterprises: investor-owned utilities and municipal utilities, government (roads, lighting), telecom operators and tower companies, OEMs needing anti-corrosion services, and farmers and water operators in agriculture. The sustainability of the business is high: products are often tied to long-term capital projects, have a lifespan of decades and require service and expansion - switching to another supplier is costly and risky.

Business and products

In infrastructure, the company manufactures:

• Transmission towers and towers - high voltage towers, distribution structures and components used in grid modernization, renewable integration and transmission capacity enhancement.

• Lighting and support structures - poles for public lighting, stadiums, industrial sites, and infrastructure elements for smart city (sensors, cameras).

• Telecommunication towers and structures - masts and supports for mobile networks, including 5G small-cell infrastructure that requires a large number of smaller support elements in urban environments.

• Surface treatments - electroplating and coatings that protect structures from corrosion and extend their life; in many cases, they are also supplied to external clients outside the in-house construction business.

In the agricultural sector, the Valley brand is key. It is estimated to have over 40% of the global market share for mechanised pivot and linear irrigation systems, making it the world leader. It is not just the iron - the irrigation structures themselves - that is important, but also the digital layer: sensors, control, irrigation scheduling based on satellite imagery, soil and weather data. The acquisition of Israel's Prospera Technologies brought AI and computer vision to the company, which is used to monitor crops and optimize irrigation.

The company's pricing strength comes from a combination of: the critical nature of the products (grid, water, telecom), high barriers to entry (know-how, certification, references, logistics) and long-term customer relationships. Infrastructure projects have long cycles and strict standards - once qualified, a supplier has a high probability of winning further contracts. Moreover, in irrigation, regions with chronic water scarcity come into play - where farmers are willing to invest in systems that ensure yields even in dry years.

Market and addressable potential

The infrastructure business is based on three macro trends:

1. Electric grid modernization - the aging grid in the US and other developed countries, the need to increase resilience to extreme weather, and the integration of renewables (wind, solar) require massive investment in transmission and distribution infrastructure. A backlog of over $1.25 billion in the utility segment shows that customers are already planning projects several years in advance.

2. Telecom Networks and 5G - Growing data demand, the 5G and in the future 6G boom, the need for network coverage for IoT and autonomous technologies all mean higher density of small cells and infrastructure that must be physically located somewhere.

3. Urbanisation and smart cities - development of urban infrastructure, lighting, security systems, monitoring technologies - again with the need for load bearing structures and long term durability (surface treatments).

In agriculture, water stress and efficiency is a major driver. Large commercial farms and water authorities in arid regions are investing in mechanized irrigation and precision agriculture to increase yields and reduce water use. The addressable market here is a combination of new installed base and replacement cycle (replacing older systems with more modern, digitized ones).

Realistically, the game is not a total market share change - there are several large global players in utility structures and a number of regional players; in irrigation, the company is already #1. Therefore, growth comes more from expanding project volumes (more grid, more irrigation) and from a shift to higher added value (digital services, smart management, end-to-end solutions instead of "bare metal").

Competition and market position

On the infrastructure side, competition comes from companies that supply steel structures and components for utilities and telecoms - for example, AZZ $AZZ, Trinity Industries (part of the portfolio), regional mast suppliers and galvanisation. Competition is fierce at the price level, but barriers to entry (certification, references, capacity, ability to deliver large projects) limit the number of players. In many segments, the company is either number 1 or 2 in the world.

In irrigation, direct competitors include Lindsay Corporation $LNN (Zimmatic brand) and several smaller regional players. But here too, through the Valley brand, the company is the clear world leader with more than 40% market share in mechanized systems. The competition is struggling to catch up, particularly in digital services and data integration, but the lead in installed base and service network is significant.

A big advantage against "pure" ag players and "pure" infra players is diversification - if there is a weaker cycle in the ag sector (e.g. due to commodity prices or lower willingness of farmers to invest), public and utility projects are still running in the grid and vice versa. This has been evident in recent years when infrastructure has grown while the agrarian sector has gone through a more volatile phase.

Management and CEO

CEO Avner Applbaum took the helm after a long career inside the company, including finance and operations roles, and profiles himself as an "operator" who emphasizes margin expansion, efficient capital allocation and shifting the mix to higher value-added solutions. Under his leadership, the firm:

• Strengthened focus on core segments (grid, telecom, irrigation)

• made acquisitions in the digital ag space(Prospera) and technology platforms

• Restructured the portfolio, including the exit of certain low-margin solar projects in North America

The capital discipline is evident in the numbers: debt is minimal, free cash flow is consistently positive, capex is holding around $80-100 million per year, and buybacks are more of a complementary tool than an aggressive EPS lever. The dividend has been rather token so far (yielding around 1%), suggesting that management prefers reinvesting in growth and technology solutions to high cash distributions.

Management's strategic priorities for the coming years include: growth in the grid (hardening, connecting RES), expanding the telecom portfolio, and monetizing digital ag solutions as recurring services (software, data, analytics). This should gradually transform the company from a "steel structure manufacturer" to a provider of complex, higher margin solutions.

Financial performance

The years 2021-2024 show a combination of cycle and improving efficiency. Revenues grow from $3.50 billion (2021) to $4.35 billion (2022, +24%), then decline slightly to $4.17 billion (2023, -3.9%) and $4.08 billion (2024, -2.4%), with a range of around $4.3 billion for 2025. While the top line is stagnant, profitability has shifted significantly: gross profit has risen from 883 million (2021) to 1.24 billion (2024), up 40%, while gross margin has improved from around 25% to 30%.

Operating profit was around 433 million in 2022 (margin ~10%), fell to 292 million in 2023 (-33%), but jumped to 525 million in 2024 (margin ~12.9%), a nearly 80% year-on-year growth. Net profit moved from 195 million in 2021 to 251 million in 2022, then fell to 143 million in 2023 to shoot up to 348 million in 2024.

Interestingly, the company was able to increase profitability even in a year when revenues fell slightly - indicating either a better mix and higher margins in infrastructure and agri-digital, or successful cost management. Moreover, the bottom line was supported by a slight reduction in share count thanks to share buybacks (c.21.2m shares in 2021 → 20.1m in 2025).

Balance sheet and debt

The balance sheet is one of the strongest in the sector. Debt represents only about 4% of assets, debt to equity is 0.04, and the equity ratio is 1.00. Net debt/EBITDA is -0.11, meaning net cash and current assets exceed interest-bearing debt. The Altman Z-score of 4.8 indicates a very low risk of financial distress.

Liquidity is decent: current ratio of 2.35, quick ratio and cash ratio of 0.26 - the company holds relatively low cash relative to assets, but the combination of operating cash flow and access to credit lines provides ample cushion. Interest cover of around 10 times means that even with rising rates, it would take a material deterioration in profitability for interest costs to become an issue.

Thus, in a stress scenario - a slump in grid and irrigation investments, pressure on margins, postponement of projects - the biggest risk would not be the balance sheet, but a decline in volumes and profitability. The company would have room to adjust capex, tighten the belt and possibly reduce buybacks without risking funding.

Valuation

On current numbers, the stock trades at a P/E of around 23.9, price to sales of 1.91, price to book of 2.33 and price to cash flow of 16.3. FCF yield is around 6%, dividend yield around 1%. This is not a typical "cheap value", but neither is it an overpriced growth stock - rather a quality industrial that the market is pricing at a premium for the combination of growth and business quality.

Compared to other infrastructure and ag players (e.g. Lindsay in irrigation, some utility equipment companies), the valuation is more in the upper half of the range, but with a better ROE and ROIC profile. ROE of around 16%, ROIC of around 9.2%, gross margin of over 30% and operating margin of over 10% are parameters that are not commonplace in such a business.

A fair value of around $345-346 suggests that from a model perspective, the title is not extremely undervalued or overpriced - rather slightly below fair value under conservative growth assumptions. For "cheap" to turn expensive, there would have to be either a significant slowdown in revenue growth (below 3-4% per year) with stagnant margins, or a decline in ROIC if new investments fail to generate comparable returns to the existing portfolio.

Risks

The first risk is cyclical - investments in grid, telecom infrastructure and irrigation, while supported by structural factors in the long term, are dependent on utility, government and farmer budgets in the short term. A recessionary environment, budget cuts or a change in priorities could lead to project postponements. The signal would be a slowdown in backlog growth, weaker orders and management outlook.

The second risk is competitive and margin risk. If new or existing competitors move more into key segments (grid, telecom, irrigation), pricing pressure could thin margins, especially for less differentiated products. This would translate into gross margins falling below 28-29% and operating margins stagnating below 9-10%.

The third risk is execution in digital. Investing in Prospero and other technologies makes sense, but failing to scale and sell to customers could mean that some capital has been allocated to projects with lower returns. In that case, ROIC could fall and the market would reassess the premium it is willing to pay today.

Investment scenarios

Optimistic scenario

In the optimistic scenario, global demand for grid modernization, telecom networks and efficient irrigation remains strong. Revenues will grow at a rate of 5-7% per year, lifting sales above $4.5 billion within a few years. Gross margin will remain above 30%, operating margin above 12-13%, FCF margin around 12-14% and ROIC in the 10-12% range.

EPS could grow to the $24-26 range in this scenario, with P/E settling around 22-25 and EV/EBITDA around 13-15 - similar to today, but on a higher earnings basis. That would mean a decent return on equity (reflecting EPS growth) plus an FCF yield in the high single digits, partially returned to shareholders in the form of dividends and buybacks. This is a scenario where the title acts as a "compounder" - slowly but surely growing the value of the company.

A realistic scenario

In the realistic scenario, revenue growth stabilizes in the 3-5% per year range, with slight cyclicality between segments. Margins remain relatively stable: gross margins around 29-31%, operating margins 10-12%, FCF margins 10-12%, ROIC 8-10%. EPS stays in the $18-22 range, and the company continues moderate share repurchases and a lower dividend.

In such an environment, P/E is around 18-22, EV/EBITDA 10-13, P/FCF around 12-15 - slightly below or near current levels, depending on sentiment. An investor in this scenario could expect a total return combining mid-single digit price growth (replicating EPS growth) and FCF yield partially paid out in dividends - so maybe 8-10% per annum in total.

Negative scenario

In the negative scenario, there will be a combination of a weaker investment cycle in infrastructure (e.g. due to recession or budget cuts) and weaker demand in the agri segment (lower commodity prices, poorer access to finance for farmers). Revenues stagnate in the 3.8-4.1bn range for several years or decline slightly, gross margins compress to 27-28%, operating margins to below 10%, FCF margins to 8-9% and ROIC to below 8%.

EPS in such a scenario will fall into the $12-16 range, P/E could push to 15-17, EV/EBITDA to 8-10, P/FCF to 10-12. This would put pressure on the share price, which could move down double-digit percentages, partially offset by FCF/dividend yield. For an investor coming in today, this would mean "hold and cash in rather than grow" - possibly waiting for a better phase of the cycle to exit.

What to watch next

• Revenue growth rate and backlog in infrastructure - especially utilities and telecom segments ($1+B backlog).

• Gross and operating margin development - keeping gross margin above 30% and operating margin above 10% as a signal of a healthy margin structure.

• Ag segment growth and profitability - volume of new irrigation installations and adoption of digital solutions (Valley 365, Prospera).

• ROIC and ROE - maintaining ROIC in the 9-10% range and ROE around 15-16% as a confirmation of good capital allocation.

• Development of free cash flow - FCF above $400 million per year as a condition for a combination of investments, buybacks and dividends.

• Valuation multiples (P/E, EV/EBITDA, P/FCF) compared to peer group (Lindsay, AZZ, other infra/ag players).

What to take away from the article

• The company is a global leader in infrastructure (masts, grid, telecom, coatings) and mechanized irrigation (Valley), segments directly tied to energy transformation and water stress.

• Revenues have been stable around $4 billion for the last few years, but margins and profitability are growing significantly - operating profit +80%, net profit +143% in 2024.

• Free cash flow of around $500m, FCF margins of ~12% and very low debt give the company great flexibility and reduce risk.

• Valuation is not extremely cheap or overpriced - P/E ~24, FCF yield ~6% - the market is paying a premium for the combination of quality, growth and low leverage.

• Key growth pillars are grid modernization, 5G and precision agriculture; risks are cyclical (utility and farmer investment cycles), competitive and execution in digital.

I opened the $AMD position at the beginning of December 2025 at $217 with a clearly defined target of $258.

In recent weeks the stock rose significantly and quickly broke through the target level. Momentum was very strong and the price continued even higher. At $273 I therefore actively adjusted the trailing stop-loss (TSL) to the original target level of $258.

The position was closed on April 20, 2026 at $275.

Overall I realized a gain of over 26% in roughly 4.5 months, which perfectly matches my approach and expectations.

How I view the situation now:

The stock will continue to rise — In that case I'm satisfied that I rode at least part of the move. I'm not chasing the absolute top — the key is to stick to the plan.

The stock will undergo a correction — If a decline comes in the following weeks, I'd be happy to re-enter the position at prices below $225.

From my perspective this is a textbook example of disciplined position management: a clearly defined entry, target, use of TSL, and an unemotional exit.

The only real profit is the realized one.

What about you? Are you still holding $AMD, or are you also taking profits?

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The healthcare sector has traditionally been one of the defensive pillars of many equity portfolios. Stable drug demand, long patent protection and predictable cash flow have historically attracted dividend investors looking for steady income even in turbulent market phases. However, in the last two years, the picture for the pharmaceutical sector has become significantly more complicated. Patent issues, aggressive government negotiations over drug prices and political pressure under the USInflation Reduction Act have created an environment in which traditional blue-chip titles are losing valuation premium and their shares are plunging to multi-year lows.

But this very decline has an interesting side effect: it significantly boosts dividend yields. When the share price falls while the dividend remains nominally unchanged or rises, the yield mechanically rises. Thus, four different pharmaceutical and healthcare titles, each with a different risk profile and business model, now offer yields in excess of 4%. The key question for any investor, however, is not just whether the dividend will "survive" at today's level, but what's behind it in the first place. A high yield can be a reward for patience, or a warning that the market is no longer confident that the company can sustain the payout over the long term.

Pfizer $PFE

Pfizer is one of the largest pharmaceutical companies in the world with a market capitalization hovering around $155 billion. The company has a global presence in oncology, vaccinology, immunology, rare diseases and internal medicine. After the pandemic boom associated with the vaccine Comirnaty and the antiviral Paxlovide, Pfizer has entered a phase of painful transition: revenues from the days of covide are rapidly declining while the company is approaching one of the largest patent cliffs in its history. As a result, the stock has lost a significant amount of value since its pandemic peak and is trading at levels investors haven't seen in years.

Financial results and dividend

Total revenue for fiscal year 2025 was approximately $62.6 billion, with the core business, excluding covid products, showing solid 6% growth. For fiscal 2026, management guided for revenue guidance in the range of $59.5 billion to $62.5 billion and adjusted EPS of $2.80 to $3.00. Thus, the company openly admits that it faces a combined pressure of roughly $3 billion from patent losses and a further decline in covid revenue.

The dividend of $1.72 per share per year provides a yield hovering around 6.3%, with a payout ratio in excess of 100% as measured by GAAP net income. This in itself is not alarming if the company is generating sufficient operating cash flow, but it does signal that any significant shortfall in earnings could call into question the sustainability of the payout.

Pfizer has set a target to save a total of $7.7 billion by 2027. The results to date suggest that cost discipline is indeed working.

Pipeline and strategic pivot

A key element of Pfizer's efforts to transform itself into a precision oncology and metabolic disease company. The $43 billion acquisition of biotech Seagen brought to the portfolio an antibody-drug conjugate (ADC) platform that now drives a growing portion of oncology revenues.

Pfizer's recent purchase of Metsera for approximately $10 billion opens the door to the obesity segment, where Pfizer has lagged significantly behind Eli Lilly $LLY and Novo Nordisk $NVO. R&D spending for 2026 is projected to be in the $10.5 billion to $11.5 billion range, with key programs being oncology candidate PF-08634404 and new modalities in immuno-oncology. Patent restrictions coming between 2026 and 2028 will result in an estimated loss of $17 billion to $18 billion in annual revenues from core products including the anticoagulant Eliquis and the oncology Ibrance.

A Stargic view

Pfizer today trades at a very low valuation in the context of its own history and the pharmaceutical sector. The P/E is in the 15-20 range. A dividend yield in excess of 6% is tempting, but a payout ratio of over 100% on a GAAP earnings basis raises legitimate questions about sustainability over the next two to three years, when the wave of patent losses fully hits the company.

Thus, Pfizer now stands at a literal crossroads: if the pipeline can be transformed into new revenues, this could be a classic value opportunity. If the pipeline is delayed or the results of key studies disappoint, the dividend may face downward pressure. For a conservative dividend investor, it is therefore crucial to monitor whether operating free cash flow covers the payout even in the face of rising patent losses.

Bristol-Myers Squibb $BMY

Bristol-Myers Squibb is one of the largest biopharmaceutical companies with a market capitalization hovering around $120 billion. The company is best known for its portfolio in oncology, hematology, immunology and more recently neuroscience.

Revenues for 2025 were $48.2 billion and management estimates a slight decline to a range of $46 billion to $47.5 billion for 2026. The cause is the continued erosion of older products facing generic competition: Revlimid, Pomalyst and Sprycel are losing market share faster than the new generation of drugs can make up the shortfall. Despite this, the core Growth Portfolio comprising Opdivo, Reblozyl, Camzyos, Breyanzi, Cobenfy managed to grow by around 16% in 2025 and now accounts for more than 55% of total revenues.

Financial results and dividend

Bristol-Myers Squibb pays a quarterly dividend of $0.63 per share, or $2.52 per year, with a dividend yield of about 4.2%. The company has increased its dividend for 19 consecutive years, which puts it in the category of so-called dividend aristocrats. The payout ratio on an adjusted EPS basis is around 71%, which leaves enough cushion to maintain the payout even in a declining revenue environment. The forward P/E ratio of around 9.5 times is well below the pharmaceutical sector average.

Pipeline and key catalysts

For Bristol-Myers Squibb, 2026 is an extremely important year in terms of pipeline. The centerpiece is the FDA's decision to approve iberdomide, a new multiple myeloma drug from the CELMoD platform. Approval would mark a key step in building the pipeline to replace the Revlimid shortfall after 2026.

Equally important are the results of the phase 3 clinical trial for milvexian, and other drugs. Cobenfy, an approved antipsychotic for schizophrenia, is potentially entering a much larger indication: clinical trials for Alzheimer's psychosis could yield data by the end of 2026. If Cobenfy succeeds in the Alzheimer's indication, it could generate sales in excess of $3 billion a year and significantly change the company's outlook.

Startegic view

Bristol-Myers Squibb is one of the most polarized stocks in the entire pharmaceutical sector at the moment.

• On one side stands an extremely low valuation, a strong dividend track record and a growing Growth Portfolio.

• On the other side stands one of the largest patent cliffs in the company's modern history, with the results of key programs being major events with significant valuation implications in both directions.

For the dividend investor, BMY is of interest precisely because the payout ratio on an adjusted EPS basis leaves the dividend free of immediate threat for now. The key question is whether the Growth Portfolio and new drugs are enough to replace shortfalls before 2030. For now, the market is skeptical of the company's ability to do so, but that is what creates the potential for a repricing in the event of positive news.

Sanofi $SNY

Business model and current situation

Sanofi is a French pharmaceutical group with a market capitalization of around $115 billion, traded on the US market in ADR form under the ticker $SNY. Unlike Pfizer $PFE and Bristol-Myers Squibb $BMY, Sanofi's investment story in 2026 is significantly more optimistic.

The company has undergone a strategic realignment: it has divested its consumer healthcare division Opella for €10 billion and continues to invest in pharmaceutical R&D with the proceeds. The main growth driver is the drug Dupixent (dupilumab), developed in collaboration with the US company Regeneron $REGN, which focuses on the treatment of atopic dermatitis, asthma and other immunologically based diseases. Dupixent achieved sales of €4.2 billion in the last quarter of 2025, up 32% year-on-year, and continues to expand.

Financial results and dividend

Sanofi's total sales for 2025 were €43.6 billion, up approximately 10% year-on-year at constant exchange rates. The company forecasts continued growth for 2026, with earnings per share growing slightly faster than sales.

Sanofi's dividend is paid annually on US ADRs and yields between 4.6% and 4.9% depending on the dollar-euro exchange rate. The payout ratio is conservative and the company's free cash flow comfortably covers the dividend and planned investments in R&D. The net profit to sales ratio is over 16%, with an operating margin of over 28%. These are parameters that indicate a highly efficient business for the pharmaceutical sector.

Pipeline and strategic diversification

Sanofi is in the best strategic position of the four under review for the transition period to the end of the decade. Dupixent will lose market exclusivity only between 2031 and 2033, so the immediate patent pressure is significantly less than for Pfizer $PFE or Bristol-Myers Squibb $BMY. Meanwhile, the company is building a replacement portfolio: amlitelimab for atopic dermatitis is achieving positive Phase 3 results with approval for a dosing frequency of once every three months, Wayrilz has been approved for the rare disease immune thrombocytopenia, and Ayvakit(acquired through the Blueprint Medicines acquisition) is also on track.

Sanofi is also sharply increasing R&D spending and expanding collaborations with external scientific partners, with total investment in business development and acquisitions reaching €52.4 billion.

A strategic view

For a dividend investor, Sanofi is probably the best trade-off between yield and business quality from today's selection. The company is growing, the dividend is well covered by cash flow, the valuation is attractive (P/E around 20 times on a GAAP basis, with forward P/E on an operating profit basis significantly lower) and the patent cliff is still on the distant horizon.

Currency is a risk for US investors, as the dividend is primarily denominated in euros and the dollar-euro exchange rate can affect ADR yields in both directions. Another risk is the over-reliance on Dupixent, which despite the planned diversification still represents a key part of revenues. Analysts at the J.P. Morgan Healthcare Conference in January 2026 viewed the firm positively, highlighting that Sanofi trades at a discount of around 19% to European pharmaceutical peers.

Embecta $EMBC

Embecta is the smallest and least known title in today's foursome. The company was formed in April 2022 as a spin-off from Becton, Dickinson and Company $BDX and focuses on insulin injection devices, specifically pens, needles and insulin syringes.

With approximately 100 years of history in insulin administration, Embecta is said to be the world's largest manufacturer of insulin injection devices, producing an estimated 8 billion of these devices annually for approximately 30 million patients in more than 100 countries. The market opportunity is well defined: approximately one in ten people in the world have diabetes, with the increasing prevalence of the disease in emerging markets creating sustained demand.

Financial performance and dividend

Embecta generates steady annual revenues of around $1.1 billion with gross margins in excess of 62% and operating margins of over 22%, very solid numbers for a medical supplies manufacturer.

For the first quarter of fiscal year 2026 (ending September 2025), revenue was down slightly year-over-year by 0.3% to $261 million, but the company beat analyst consensus on both EPS ($0.71 vs. estimate of $0.67) and revenue. Annual guidance for fiscal 2026 calls for EPS in the range of $2.80 to $3.00.

A dividend of $0.60 per year ($0.15 per quarter) equates to a yield of about 5.5%. The key positive is the conservative payout ratio of about 37%, which insulates the dividend significantly from short-term earnings fluctuations. The company's debt of $1.38 billion with annual EBITDA of around $300 million is higher, but management plans to reduce it through free cash flow.

Strategic transformation and acquisition of Owen Mumford

For Embecta, 2026 is a watershed year in terms of strategic transformation. The company is leaving its identity as a pure-play manufacturer of diabetic injectables and transforming into a broader supplier of medical consumables.

In March 2026, it announced the acquisition of UK firm Owen Mumford for a price of up to £150m sterling (£100m paid up front, plus up to £50m tied to performance). Owen Mumford brings the Aidaptus biologics delivery platform, global distribution capabilities and revenues in excess of £69 million for fiscal 2025. The transaction, which is expected to close in the third quarter of fiscal 2026, expands Embecta's addressable market far beyond traditional insulin delivery.

Another strategic catalyst is the GLP-1 drug boom: Embecta has already signed agreements to co-package its pens and needles with potential generic GLP-1 therapies, opening up a new revenue stream once generics enter the market.

A strategic view

Embecta is the most controversial headline of the four under review.

• On the one hand, it has a conservative payout ratio, an attractive dividend yield in excess of 5%, and stable demand for basic diabetes care that is not heavily dependent on the innovation cycle. On the other hand, the company operates in a segment where the long-term structural trend is working partly against it: automated insulin administration systems (insulin pumps, closed-loop systems) are gradually reducing the dependence of some patients on manual injections.

• The negative return on equity (ROE) resulting from the post-spin-off accounting structure and the debt burden are other factors to bear in mind.

• The acquisition of Owen Mumford signals the right strategic direction, but the integration risk and temporary increase in debt are short-term burdens.

Comparative table

Overall strategic view

A comparison of these four titles illustrates well how different a seemingly similar situation can be, namely the high dividend yield in the pharmaceutical sector.

• Pfizer $PFE offers the highest yield, but at the cost of the greatest immediate patent risk and a payout ratio in excess of 100% of GAAP earnings.

• Bristol-Myers Squibb $BMY combines a robust dividend history with high pipeline risk and a patent cliff that is more distant than Pfizer's, but all the deeper.

• Sanofi $SNY represents the most favorable ratio of business quality to yield of the group: it is growing, has a conservative payout ratio, and the patent drag is five years away.

• Embecta $EMBC is a defensive revenue title with a low correlation to the pharmaceutical innovation cycle, but with inherent structural pressure in the form of technology substitution for manual injections.

From a capital allocation perspective, it is important to distinguish between two types of high dividend yield.

1. A yield that reflects temporary market pessimism about a real strong business is a value opportunity.

2. A yield that signals market doubt about the firm's long-term ability to sustain its payout is a dividend trap.

What to watch next

• For Pfizer: revenue development beyond covid and patent loss: if the core business grows above 5% and pipeline programs from Metsery or Seagen yield positive phase 3 data, the dividend valuation will improve dramatically.

• For Bristol-Myers Squibb, the key date is August 2026, when the FDA will decide on iberdomide.

• At Sanofi: regulatory trial results for amlitelimab in atopic dermatitis and data from frexalimab in multiple sclerosis as the first indicator of whether the pipeline can actually compensate for the future loss of other drugs.

• At Embecta: closing of the Owen Mumford acquisition planned for the third quarter of fiscal 2026 and management commentary on synergistic revenue from GLP-1

• For the sector as a whole: developments in the US Inflation Reduction Act drug price negotiations and the potential impact of tariff measures on pharmaceutical supply chains that could impact margins across the sector.

The pharmaceutical sector is now a source of extraordinary opportunity for the dividend investor, but also an area of hidden risk.

The key differentiator is not yield per se, but how cash flow is covered, what the company's debt burden is, and what the company plans to do in the next two to three years to replace revenues threatened by patent losses.

The mild pullback in the share price says more about expectations than about the quarter itself. After several years of high‑teens to nearly 20% procedure growth, management is guiding 2026 da Vinci volumes up by about 13–15%, and investors are highly sensitive to any hint that growth is normalizing and that margin headwinds from tariffs and operating‑expense growth in the low‑to‑mid teens could cap upside over the next few years. In that sense, Q1 looks less like a warning sign about the business and more like a reminder about the stock: Intuitive is moving into a more mature phase where it still delivers robust double‑digit growth and expands its robotic footprint, but the valuation is rich enough that even small changes in growth and margin trajectories show up immediately in the price.

Q1 2026 results

Revenues, performance and systems

In the first quarter of 2026, Intuitive $ISRG achieved revenues of $2.77 billion, up 23 percent from $2.25 billion in the same period of 2025. Growth in excess of twenty percent rests on three pillars. The first is a higher number of procedures on the da Vinci and Ion systems, the second is a higher number of new systems installed, and the third is a growing installed base that generates recurring revenue from instruments, accessories and services.

The number of interventions on Intuitive systems increased globally by approximately seventeen percent. Procedures on da Vinci alone grew around sixteen percent, while Ion is going through an even faster phase, with procedures on that system up around 39 percent. The company placed 431 da Vinci systems in the quarter, compared to 367 a year ago, with the number of new da Vinci 5 systems rising from 147 to 232. The da Vinci installed base increased to 11,395 systems, up 12% from a year ago, and Ion to 1,041 systems, up 22% year-over-year.

Revenue structure and profitability

Tooling and accessories revenue was $1.69 billion in the first quarter, up 23% from $1.37 billion a year ago. The main drivers were growth in da Vinci procedures, changes in customer purchasing behavior and rapidly increasing use of the Ion system. Systems revenue increased to $651 million compared to $523 million a year ago, reflecting a higher number of new systems placed, a higher proportion of rentals and higher average selling prices. Of the 431 da Vinci systems, 243 were placed under operating leases and 118 were placed on a usage-dependent basis, compared to 198 leased and 107 placed on a usage-dependent basis a year ago.

Profitability has improved significantly. Accounting-standard operating profit rose to $855 million versus $578 million in the first quarter of 2025, and adjusted operating profit rose to $1.08 billion versus $770 million. Net income by accounting standards was $822 million, which translates to earnings of $2.28 per share versus $1.92 a year ago. Adjusted net income rose to $901 million and adjusted earnings per share to $2.50, compared with $662 million and $1.81 per share in the first quarter of 2025.

Those numbers mean that adjusted earnings per share are growing at about 38% on 23% revenue growth, and the company has significantly beaten analysts' expectations, who were expecting sales of about $2.62 billion and earnings of about $2.12 per share. Still, the stock is down after the results, as the market is looking not just at the last quarter, but at the outlook for growth rates going forward.

• Full presentation with results.

Outlook for 2026

For the full year 2026, Intuitive expects the number of procedures on da Vinci systems to grow by approximately 13.5% to 15.5%. This is still a very respectable pace, but it also marks a slowdown from previous years, when growth was higher and was one of the reasons for the stock's very strong performance. The company also expects adjusted gross margin to be in the range of 67.5% to 68.5% of sales and growth in adjusted operating expenses to be roughly between eleven and fourteen percent.

The impact of customs measures is built into the outlook. The company says directly that it expects the current tariffs to reduce gross margin by about one percentage point. Should tariffs be further extended or tightened, the impact on margins and overall results for the year could be more significant. This is a factor that the market is watching because the company has a global supply chain and most of its manufacturing and components happen outside the United States.

It is the combination of a gradual slowdown in the growth of interventions and the sensitivity of margins to external influences that is one of the reasons why the stock fell in regular trading after an otherwise very good quarter.

The evolution of the business in recent years

Looking at the numbers over the last four years, there is a very clear upward trend. Revenues in 2021 were approximately $5.71 billion. In 2022 they rise to around $6.22 billion, in 2023 to $7.12 billion and in 2024 to $8.35 billion. The growth rate has been between about nine and seventeen percent per year, with growth accelerating in the last two years.

Net income shows a similar pattern. After reaching about $1.70 billion in 2021, it dropped to about $1.32 billion in 2022, only to return to growth in subsequent years. In 2023 it was around 1.80 billion and in 2024 it was around 2.32 billion. Earnings per share, due to a slight decline in the number of shares and growth in net income, rose from about $4.66 to $4.79 in 2021 to about $3.65 to $3.72 in 2022, then to about five dollars in 2023 and to more than six dollars in 2024.

Overall, this means that Intuitive is a long-term growth company with high margins and the ability to grow earnings per share at a higher rate than sales. The brief blip in 2022 was more of an episode than a trend change. The subsequent return to double-digit sales growth and even faster earnings growth shows that the company has been able to switch back into growth mode, and the first quarter of 2026 fits into that picture.

Shareholders and capital structure

Intuitive Surgical's shareholder structure is very similar to other large healthcare titles. According to data from Yahoo Finance, insiders hold roughly one-half of one percent of the stock, while the institution owns approximately eighty-nine percent of all shares and nearly ninety percent of the free float. More than 3,200 institutions hold shares in their portfolios.

Among the largest investors are asset managers, who tend to be the mainstays of large index and actively managed funds. Vanguard holds about 33.6 million shares, about nine and a half percent of the company. Blackrock owns about 30.5 million shares, or roughly eight and a half percent. Other significant positions are held by State Street, T Rowe Price and Geode Capital, which together add another unit of percent. For the investor, this means that the title is heavily in the hands of long-term institutional capital, and short-term price swings are often associated with over-hyped expectations rather than panicked retail moves.

Why the stock is down after earnings despite a strong quarter

At first glance, it would seem that after 23% revenue growth and nearly 40% earnings per share growth, the stock must be rising. Moreover, Intuitive beat estimates on both revenue and earnings and showed another shift in both the number of performers and the size of its installed base. Still, the title lost around three per cent in the regular session and only pulled back some of the decline in post-trade trading.

The reason for this is that the market is looking primarily at the future growth rate for Intuitive. The company itself says it expects growth in da Vinci surgeries in 2026 to be in the range of about thirteen and a half to fifteen and a half percent, down from last year. It also notes that tariffs will continue to put pressure on gross margins and that it must invest in operating costs to maintain its technological edge and relationships with hospitals.

Inversely, Intuitive has had a period of extremely strong growth and some very strong quarters, so some of the positive news has already been priced in. The current quarter confirms that the business is in great shape, but also shows that the growth rate will gradually normalize from very high levels to still decent, but lower levels.

Tim Cook is leaving on September 1. He will be replaced by John Ternus, the current head of hardware. At first glance it’s a calm, logical line of succession. But let’s look beneath the surface.

Who is John Ternus

He’s not an outsider. Ternus is Apple through and through — he understands the products, the culture, and the supply chain. Crucially, the M‑chips were developed under his leadership and are probably Apple’s biggest technological leap in the past decade. Continuity is an advantage here, not a weakness.

Where the problem lies

Cook was more than a CEO. He was the architect of relationships — with China, with suppliers, and with regulators worldwide. That network was built over 15 years and can’t be handed over in a PowerPoint.

And then there’s AI. Siri is an embarrassment compared to competitors in 2026. Apple Intelligence hasn’t convinced yet. $META, $GOOGL and $MSFT are running full throttle on AI; Apple is still figuring out where it fits in this story. But Ternus is a hardware guy. Can he culturally pivot the company toward AI and software?

Valuation leaves no room for mistakes

A P/E around 30 is a premium valuation. For a company that’s growing relatively slowly and whose AI narrative is still taking shape, that’s a lot. The iPhone still makes up roughly half of revenues — without a convincing next big story it’s hard to justify this valuation over the long term.

Ternus is a reasonable choice. But Cook was irreplaceable where business is done off-camera. In the short term I expect volatility; in the long term AAPL will rise or fall based on what they deliver in AI by the end of 2026. Earnings on April 30 will be the first test and, importantly, Cook’s last report as the sitting CEO.

Do you hold $AAPL? How do you view this change?

Yet the share price dropped roughly 9% after the earnings release as investors zeroed in on one line: management’s reaffirmed full‑year outlook for 2026, which points to revenue growth slowing from the current ~16% pace toward 12–14% with an operating‑margin target of about 31.5%. For a market still conditioned to trade Netflix on “top‑line acceleration”, that guidance looked like a classic peak‑growth signal.

Top points of analysis

1. Q1 2026: revenue +16% YoY, EPS and earnings above estimates, operating margin over 30%, strong FCF, but stock has written down -9% due to the outlook for revenue growth slowing to 12-14% for the rest of the year.

2. Netflix is operating with an operating margin target range of 25-30% today and management confirmed on the call that it wants to stay near the top of that range even if revenue growth slows gradually.

3. Free cash flow is in the range of $7-8 billion per year, which gives an FCF yield in the low single-digit percentages - but for a company that is still growing at double-digit rates and has dumped CAPEX behind it.

4. Ad fare is growing faster than the rest of the business, with most new sign-ups in developed countries going to ad-supported or password-sharing plans, while management talks of the ad business as a "multi-billion opportunity".

5. The outlook for 12-14% revenue growth is being read by the market as "the end of the growth story", but at 30% operating margin, that means very healthy profitable growth - which is exactly what most megacaps have not had for a long time.

6. Valuation: Netflix is trading at significantly lower multiples than in the days of "subscriber mania," but the business now has higher margins, better content discipline, and a new source of monetization in the form of advertising.

7. The market still mentally compares Netflix to a 2018-type "growth streaming service" instead of seeing it as an FCF machine with additional optional upside from ads, gaming and IP licensing.

What's changed: from chasing subscribers to profitable streaming with advertising

A few years ago, Netflix $NFLX was a typical "subscriber story": everything revolved around net additions, the market rewarded every strong quarter in new accounts and punished any slowdown regardless of margins. This led to extremely costly race logic - high investment in content, expansion anywhere, anytime, just to keep up the subscriber growth rate.

Today, the structure is completely different. Netflix has delivered several quarters where revenue has grown at double-digit rates, but operating margin has stabilized and exceeds 30% at peak times, which is the exception in the media business. Management openly says it is targeting long-term revenue growth in the low to mid double-digit range and operating margin in the 25%-30% range, which is a typical "rule of 40" configuration for a mature growth company, not a speculative streaming service.

The fundamental is the jump from pure subscriber growth to a mix of ARPU + ads + sharing monetization. Crack-down on account sharing brought another wave of subscriber growth while increasing average monetization per household as a portion of "parasitic" users switched to their own or a shared paid plan. In parallel, Netflix is rolling out an ad plan that has a lower cost per month but openly targets much higher monetization per user through advertising - management is talking about how the ad business could generate billions of dollars per year in a couple of years.

But the market's main reaction to the current results is that revenue growth has accelerated from previous crisis years and is now forecast to decelerate slightly. This is seen as ignoring that the business has moved to a phase where every percentage point of revenue growth generates a multiples contribution to FCF than before, because Netflix no longer has as extreme a CAPEX/cash cost per content as it did in the expansion phase.

• How was the last quarter?

What needs to work for this new model to work

• Netflix needs to maintain double-digit revenue growth without sacrificing operating margin below 25%.

• The ad business needs to grow to a stable multi-billion size with reasonable margins in a couple of years, not remain a "nice to have" add-on.

• Content costs need to stay under control so that FCF doesn't fall due to the chase for more subscriber jumps.

How it becomes money: specific sources of cash flow growth

1) ARPU and tariff mix

The first source of growth is a shift in ARPU and tariff mix, not just subscriber numbers. Sharing crack-down has already produced several quarters where revenue per user growth and net additions growth have run concurrently. Management points out that most new sign-ups are coming either on cheaper ad-supported plans or on new sharing plans that generate higher revenue per household than the original "family sharing". This translates directly into higher revenue per member and at 30% operating margin, every extra dollar in ARPU has a very strong impact on profits.

2) Advertising as a second engine

The second driver is the advertising business. The ad tier is more in the external numbers so far, but management is talking about several million active users in ad-supported plans and growth in inventory and CPM. Analyst estimates and management commentary point the way: by 2026, the ad segment could bring in on the order of $3 billion in revenue, with the potential to grow further as geographic reach and integration with large ad platforms expands. Given that the cost base for ads is largely fixed (existing content + tech), every additional ad dollar has an above-average margin.

3) Content discipline and CAPEX

The third source is a more disciplined approach to content. Netflix has shown in recent years that it can spin off global hits and long-form IP without exponential growth in content costs - a combination of local production, licensing, and the longer lifespan of big brands (e.g., series universes). As a result, CAPEX on content is growing slower than revenues and free cash flow is stabilizing at $7-8 billion per year, with potential for further growth unless a massive wave of library investment hits. For shareholders, this means that the combination of 12-14% revenue growth and >25% operating margin gives FCF a profile that is comparable to large technology companies, even after accounting for stock-based compensation.

Figures

• Q1 2026 revenue growth: approximately +16% YoY, above consensus.

• Q1 2026 operating margin: around 30% (targeting a range of 25-30% p.a.).

• EPS and revenue: beating analysts' estimates.

• FCF trailing: around $7-8bn (depending on definition and year), after years of FCF being volatile.

• Outlook - 2026 revenue growth: ~12-14% vs ~16% in Q1.

• Ads business: heading towards multi-billion revenue in a few years, yet rapidly growing share of sign-ups to ad-supported plans.

Interpretation: results show a business that is clearly past the growth "peak" in subscribers, but at the revenue, margin and FCF level is in its healthiest shape ever. The market's reaction is thus to focus on the slowing pace of revenues, rather than appreciating that the combination of high profitability and a new source of monetization (ads) is exactly what investors want in a mature growth company.

Valuation - what's included and what's not

Netflix is trading at significantly lower multiples after this earnings reaction than when it was a pure "tradable subscriber story", yet it has a significantly better mix of growth and profitability. In plain English: the market is not willing to pay the same P/E today, even though EPS and FCF are growing faster and more steadily than when it was euphorically valuing each new subscriber.

If we take a trailing FCF of about $7-8 billion and a market cap in the low hundreds of billions range, we are getting FCF yields in the low single digits of percent, which is not "cheap" on the face of it. But in the context of double-digit revenue growth, 25-30% operating margin and still relatively low ad penetration, this is more of a valuation of a quality growth stock than an overblown bubble.

What the market values

• Stabilized revenue growth after the covide swing

• Significantly improved margins and content discipline

• Visible progress in monetization of sharing and advertising

What the market fears

• Gradual slowdown in growth to 10-12% with no further growth engine

• Risks of market saturation and competitive pressure (Disney+ $DIS, Amazon $AMZN, regional players)

• Possibility of ad business not reaching expected size or margins

In short: the price no longer reflects extreme growth expectations, but it doesn't seem to fully appreciate that Netflix is now in a "slow growth deceleration" phase with high profitability, not a "falling off a cliff" phase.

Future potential: where Netflix may yet surprise

In the short term, it's all about whether it delivers 12-14% revenue growth and 30% margin. But the medium-term potential is broader: management openly says Netflix is only at around 7% of the addressable market so far, if you take into account a combination of time spent on TV and content and ad spend. This means that even if subscriber growth slows, the company has room to grow through higher monetization of its existing user base and through new verticals.

The first and most immediate driver is advertising. It brought in over USD1.5bn in 2025, about 3% of revenue, and management reckons the ad business will roughly double to around USD3bn in 2026. External estimates like Warc/Omdia then talk about how advertising on Netflix could grow to USD8bn a year by 2030, and the firm could capture up to around 10% of global CTV ad spend. If this scenario comes close to reality, Netflix will have a second separate growth pillar within a few years that is not dependent on net subscriber numbers, but on its ability to grow CPMs and share of the ad pie.

The second pillar is live content and sports. Netflix has started to enter live streaming and sports content more systematically because this is where ad formats are most valuable - viewers don't skip ads as much and advertisers are willing to pay a premium. The deal to broadcast WWE RAW for roughly $5 billion over ten years is a big first step, but at the same time management stresses that it doesn't want to replicate the expensive "all-in" models of ESPN or traditional TV. Thus, live sports and events are meant to be select premium hits that pull down viewership, rather than an across-the-board loss-making strategy.

The third layer is gaming and the broader ecosystem around IP. Netflix is gradually building a gaming business, including cloud gaming and bringing its brands to interactive, both on mobile and on TV. The gaming division is now small in absolute numbers, but strategically important: the goal is to pull additional hours of engagement from existing users, strengthen platform loyalty, and open the door to other forms of monetization (branded integrations, in-game collaborations, merchandising). If successful, Netflix may gradually become an "IP and attention platform" rather than a pure video service, which would justify a higher long-term valuation than the market typically gives to media companies.

In summary: while the short-term headlines mainly address whether revenue growth falls from 16% to 13%, the medium-term potential rests on whether Netflix can deliver on three things - making advertising a stable multi-billion engine, monetizing live content and sports without destroying margins, and melding its content library into a broader ecosystem (games, events, branded collaborations). If so, we may look back on today in a few years as a period when the market dealt with deceleration while the company quietly built additional floors above its already strong FCF foundation.

Risks

1. Macro and advertising - If the global economy slows, advertising is the first place where companies are cutting budgets. This could cut off ad growth just when Netflix needs the ad segment to take over as a second growth engine.

2. Competitive pressure and content costs - Competition from other streaming services may force Netflix to increase content investment again to maintain share. This would push down FCF and margins, especially if the market starts to become more divided among several large platforms.

3. Regulation and pricing power - Regulators and consumer pressure may limit Netflix's ability to frequently raise prices. If ARPU growth slows and ADSs don't take over as driver, it will be harder to sustain double-digit revenue growth at current margins.

Investment scenarios

Optimistic scenario

• Revenue growth stabilizes around 12-15% per annum for several years.

• Operating margin stays near the upper end of the range (28-30%).

• Ads business grows to USD 5-7bn over 3-5 years with high margins.

• FCF grows faster than revenue due to leverage on cost base, FCF yield is internally "cheapening" from today's levels.

In this scenario, a revaluation multiple or at least strong EPS/FCF growth to fill out the valuation makes sense.

A realistic scenario

• Revenues gradually decelerate towards 10-12% per annum.

• Operating margin fluctuates in the 25-28% range.

• Ads business reaches a few billion annually, but at the lower end of optimistic estimates.

• Netflix generates a steady $7-9 billion FCF per year and uses it primarily for buybacks and selective M&A.

This is a scenario where the current valuation may be fair - the return comes mainly through earnings/FCF growth, not through revaluation.

Pessimistic scenario

• Revenue falls below 10% growth, ADSs fail to meet expectations and ARPU growth gets stuck.

• Competition forces Netflix to increase content costs, operating margin falls below 25%.

• FCF stagnates or declines, the company still generates decent absolute cash, but investors value it as a "mature media" title.

In this scenario, the current valuation would be more of an upper bound, and room for multiples to fall would be real.

What to watch next

• Quarterly revenue growth vs. outlook - if 12-14% isn't a conservative number.

• Operating margin development - if it stays at the top of the 25-30% range.

• Adoption rate of ad-supported tariffs, proportion of new sign-ups on ads vs. standard tariffs.

• Estimated and reported ad revenues, management comment on medium-term ad target.

• CAPEX per content vs. revenue, so that FCF is not "disposable".

What to take away from the article

• The market punished Netflix mainly for weaker revenue growth outlook, not for the Q1 numbers themselves, which were very strong.

• The company is now in its best shape ever in terms of margins and FCF, though subscriber growth is not as giant.

• Ads, ARPU and share monetization are gradually taking over as the main growth drivers, not net accounts.

• Valuation is no longer in "euphoria mode", but it doesn't seem to fully appreciate that this is a stabilized FCF machine with double-digit growth.

The headline GAAP numbers look far less flattering. GAAP EPS fell 40% to 1.23 dollars per share, with management again flagging litigation and other one‑offs tied to PFAS contamination and combat earplug settlements as the main drag. Those legal outflows have already cost 3M tens of billions of dollars in recent years and are set to continue weighing on cash flow into the 2030s, which is why full‑year 2026 guidance was reiterated without much top‑line ambition: low‑single‑digit sales growth, high‑teens GAAP margin and mid‑20s adjusted margin. For investors, Q1 underlines the core dilemma: operationally, 3M is starting to look more like its old self on margin; on a reported basis, the stock is still chained to a legal bill that makes the gap between GAAP and “clean” earnings too big to ignore.

Q1 2026 results

Revenues and segments

For Q1 2026, 3M's GAAP revenue was $MMM.0 billion, up 1.3% year-over-year. On an adjusted basis, it's the same number, with organic growth of 1.2%. From the perspective of a cyclical industry giant, this is more of a "stagnation with a slight plus" than a return to double-digit growth.

According to the presentation, the segments were mixed:

• Safety & Industrial delivered organic growth of around 3% and overall sales were up around 6-7%, which was one of the main drivers.

• Transportation & Electronics was slightly negative organically (around -0.3%), but overall sales grew slightly due to currencies and mix.

• TheConsumer segment was down around 1-1.5% organically, but total sales were up slightly due to pricing and currencies.

Regionally, China was the main performer, with sales up around 8-9%, while the Americas saw a decline of around 1-2%. This shows well that 3M's business is still very sensitive to the local industry cycle and consumer demand.

Margins and profitability

The strength of the quarter is the improvement in margins. GAAP operating margin rose to 23.2%, up 230 basis points from a year ago. Adjusted operating margin moved to 23.8%, up 30 basis points year-over-year. Thus, management can rightly claim in the presentation that the "value creation framework" is gradually starting to work at the profitability level.

At the net profit level, the picture is more complex. GAAP EPS fell to $1.23, down about 40% from last year and well below consensus of about $1.97. This is due to a combination of higher non-operating expenses and the revaluation of the stake in the spun-off healthcare company Solventum, which translates into "other expense" and pulls down GAAP net income.

In contrast, adjusted EPS of $2.14 implies 14% year-over-year growth and beating the analyst estimate of around $1.97-2.02. So if you "peel away" the impact of Solventum and other one-time items, Q1 is surprisingly solid in terms of net income - but the market has to decide how much it's willing to trust these adjusted numbers.

Cash flow

On the cash front, things are looking more sober. Q1 operating cash flow was $0.6 billion and adjusted free cash flow was $0.5 billion. It's not disappointing, but with the size of the company and the volume of legal liabilities, it's not even a number where an investor would think the problem is definitively solved.

• Full presentation with results.

What the CEO says and what the tone of management is

The same themes are repeated in the presentation and the press release. Chairman and CEO William Brown talks about a "value creation framework" to transform 3M into a stronger and more predictable enterprise.

Brown emphasizes three main points in his comments:

• An emphasis on fundamentals and execution - better cost management, standardization of processes, and simplification of manufacturing and organizational structure.

• Portfolio transformation - reducing less profitable or problematic parts, concentrating capital in segments with higher returns and better margins.

• Long-term goals - a structure to enable "structurally higher growth" and "stronger margin performance", i.e. gradually moving 3M away from a period defined by litigation and restructuring.

At the same time, Brown says the company has had a "good start to the year" and that despite the volatile environment, management remains confident in achieving its 2026 target, both in terms of revenue growth and profitability. So the tone is cautiously optimistic: no big marketing slogans, but an emphasis on discipline and execution.

Outlook for 2026

3M confirms its full-year outlook after Q1 2026. It expects approx:

• 3% growth in adjusted sales in 2026

• Adjusted operating margin higher by approximately 70-80 basis points

• adjusted EPS in the range of $8.50-8.70 per share, which is roughly in line with market expectations.

In addition, the presentation highlights several newer strategic moves and targets:

• Aiming to launch around 350 new products in 2026 to support organic growth and a better mix with higher margins

• the company continues its transformation - consolidating production, reducing complexity and thereby freeing up some capital and operating costs

• 3M wants to remain a large payer of cash to shareholders, but also declares that some of the free cash will be used to invest in growth and strengthen the balance sheet.

Long-term performance

Historically, 3M has been synonymous with steady growth and high margins. However, recent years have brought a combination of stagnant sales and legal issues, which has taken a toll on GAAP numbers as well as valuation and sentiment around the stock.

Analyst reports show that in previous years, sales have averaged declining or stagnant in the low single-digit percentages per year rather than growing. Meanwhile, profitability remained relatively solid on an adjusted basis, but GAAP margins and EPS were roiled by provisions and one-time costs.

Today's Q1 2026 fits the "slowly stabilizing" 3M picture:

• Revenues no longer declining, but only growing 1-2%

• margins are gradually improving

• Adjusted EPS is growing, while GAAP EPS is still under pressure

Not very attractive for an investor looking for a growth story. But for someone looking for steady cash flow, a high dividend, and willing to live with a legal history and slower growth, this could be an interesting value/dividend bet.

Shareholders, dividend and capital policy

3M is a typical institutional title today. According to ownership summaries, large asset managers like Vanguard and BlackRock hold key positions, each with a few percent stake, supplemented by other funds and ETFs. Insiders own relatively little, which is standard for such a large, established firm.

The dividend remains a key part of the investment story. 3M recently approved a quarterly dividend of $0.78 per share, an increase of roughly 7% year-over-year. At the current share price, the dividend yield is in the higher units of percent, well above the index average.

In Q1 2026, 3M returned approximately $2.4 billion to shareholders through a combination of dividends and share repurchases. That's a strong signal toward shareholders, but it also opens up the debate about whether some of those funds should go more aggressively toward deleveraging and further strengthening the balance sheet until the legal past is definitively closed.

What does this imply for the investor

Q1 2026 and the presentation on the results confirm that 3M today is mainly a stabilization and dividend story, not a growth story:

• Revenue only growing in units of percentages

• margins are improving and adjusted EPS is rising

• GAAP numbers are still weighed down by the past

• the dividend is high and the company is actively returning cash to shareholders

If we're looking for momentum, double-digit organic growth and "clean" numbers without legal noise, 3M still doesn't offer it after Q1 2026. But if we're looking for a large, global industrial company with decent margins, a conservative outlook, a high dividend yield and gradual normalization after a series of tough years, then Q1 and the CEO's comments rather confirm that the story is moving in the right direction - just slowly.

A Buy rating from a Wall Street analyst isn't just a formal announcement. It's a signal that the big banks and see concrete fundamental reason for optimism in a given stock and are willing to put their reputations behind a public recommendation.

Yet even that consensus doesn't guarantee performance, which is why it's worth looking beneath the surface of each of these six titles. What exactly do analysts see, how strong are those expectations, and where are the biggest risks for investors.

Lam Research $LRCX

Lam Research is one of the key semiconductor equipment companies. The company specializes in the processes of etching, layer deposition, and surface cleaning of silicon wafers, steps without which no modern chip can be created. While the name Nvidia $NVDA or TSMC $TSM resonates more in the public mind, Lam Research stands in the background as a necessary infrastructure of the entire industry.

Analysts hailing Lam Research as a "strong buy" build their argument on simple logic: as long as hyperscalers like Microsoft $MSFT, Amazon $AMZN or Google $GOOG invest massively in AI data centers, someone has to make the chips for these infrastructures. And the production of those chips depends on devices from Lam Research. The company posted revenue of over $18 billion in its most recent fiscal year, a year-over-year increase of over 23%.

Analyst sentiment and outlook

Of the 25 analysts covering $LRCX, the consensus rating gives it a Strong Buy, with an average target price of around $243. B. Riley recently raised the price target to $330 and Deutsche Bank moved the target to $300, indicating that the bullish sentiment of the analyst community persists. Total revenue for fiscal year 2026 is estimated by analysts to be approximately $22.9 billion.

Exposure to China, which has long accounted for around 35% of the firm's revenue, remains a key risk. Export restrictions and geopolitical tensions around technology shipments to China could threaten this revenue. At the same time, any slowdown in the investment cycle at large customers such as TSMC, Intel $INTC or Samsung $SSNLF would quickly spill over into Lam Research's orders.

The main competitors are Applied Materials $AMAT and ASML $ASML, (more on them in the stock detail) with each of these companies dominating different segments of the manufacturing process. Lam Research is particularly strong in etching technologies, where it has hard-to-contest know-how. The barriers to entry in this segment are extremely high because customers do not like to change equipment suppliers in the middle of a production line.

GE Aerospace $GE

The GE Aerospace story is one of the most impressive U.S. market turns in the last decade. After years of complex restructuring, as parent General Electric spun off its medical division and energy business, GE Aerospace has established itself as a player in aircraft engines and services. And analysts agree: the company has entered a harvest phase after years of costly investments.

In the fourth quarter of 2025, the company reported revenue of $11.87 billion, up 20% year-over-year and well ahead of analysts' estimates. Adjusted earnings per share came in at $1.57. For 2026, management reaffirmed adjusted EPS guidance in the range of $7.10 to $7.40 and targets operating profit between $9.85 billion and $10.25 billion, $1 billion higher than the original guidance.

Growth engine: LEAP and aftermarket service

The company's key asset is its LEAP engine program, which powers Boeing 737 MAX and Airbus A320neo aircraft. The volume of service visits for these engines grew 27 percent in 2025, and the installed base is expected to approximately triple by 2030. Aftermarket service, i.e. spare parts sales and MRO services, is the segment with significantly higher margins than engine sales alone. The company entered 2026 with a backlog of $190 billion.

18 of the 20 analysts covering GE Aerospace give it a buy or outperform rating, with an average target price of around $351. The company's ROE is exceptionally high at nearly 46%, with operating margins of over 20%. The company plans to invest $1 billion in U.S. manufacturing and add 5,000 jobs in 2026.

Key risks include supply chain difficulties that have constrained commercial production in recent years and margin pressure from ongoing investments in MRO capacity. Analysts also note that the current valuation, with a P/E ratio of around 37.7, leaves little room for error. Should aftermarket pricing slow or rising R&D spending, which is expected to reach $3 billion per year in the foreseeable future, push margins lower, valuations could normalize or decline relatively quickly.

Applied Materials $AMAT

Applied Materials is the world's largest semiconductor equipment and process company by market share. While Lam Research $LRCX dominates in etching and $ASML dominates in lithography, Applied Materials covers the broadest range of manufacturing processes, from material deposition to material modification to inspection and diagnostics. It is this breadth of coverage that is a source of competitive advantage and structural defense against cyclical variation.

In the first quarter of fiscal year 2026, the company reported revenue of $7.01 billion, with adjusted EPS of $2.38 beating analyst estimates by more than 7%. The Applied Global Services segment posted record results with revenue of $1.56 billion, up 15% year-over-year. Meanwhile, CEO Gary Dickerson forecasts semiconductor equipment revenue growth of more than 20% for the full calendar year 2026.

HBM, gate-all-around and advanced technology positions

Applied Materials has established itself as the clear leader in the high-bandwidth memory and supply segment for 3D chiplet-stacking. For gate-all-around technologies for future logic nodes, the company expects a market share of over 50%. Revenues from e-beam technologies are expected to double to more than $1 billion in 2026. Project EPIC, a new research center in Silicon Valley, further strengthens the technology lead.

Consensus ratings from 43 analysts point to a bullish outlook with an average target price of around $424 and 81% of analysts on the buy side. Revenue for Q2 FY2026 is estimated to be $7.65 billion, with semiconductor systems accounting for approximately $5.8 billion. The company's ROE is over 38% and operating margin is around 30%, an exceptional result for an industrial business of this complexity.

China has traditionally accounted for around 27-30% of total revenue, but in Q1 2026, this segment saw a 7% year-on-year decline. The US government's export restrictions and the pressure to supply advanced technologies to China are therefore an existential risk for Applied Materials, not a marginal note. The company is offsetting this risk with record demand from other customers in the US, South Korea and Taiwan.

Citigroup $C

Citigroup is one of the world's largest banks with operations in more than 160 countries, but its story over the past three years has been defined largely by a major restructuring under CEO Jane Fraser. The bank is shedding underperforming markets, simplifying its operational structure and focusing on five key segments: services, markets, banking, wealth management and US retail.

Results for Q1 2026 showed that the restructuring is delivering tangible results. Revenues rose 14% year-over-year to $24.6 billion, and net income increased to $5.8 billion, or $3.06 per share. Yet the stock trades around $132, a slight premium to tangible book value, but still well below where its competitors like JPMorgan $JPM are trading.

Discount to competitors and potential for revaluation

It is this discount that is the central argument of analysts recommending a purchase. Morgan Stanley $MS has set a price target of $144 with an Overweight rating and Goldman Sachs $GS has raised its target to $137. The average target price from 16 analysts is around $135. Even according to the Fair Price Index on Bulios, $C stock is currently still below its intrinsic value.

The full-year 2026 outlook calls for net interest income growth of 5% to 6% and targets an effective ratio of around 60%. Analysts estimate EPS for 2026 to average $10.49, with a peak estimate of over $11. For 2027 and 2028, the forecasts are even more ambitious.

Citigroup remains one of the most complex and difficult-to-read institutions in the global market. Large exposure to volatile segments such as markets and investment banking adds to the erratic nature of results. Regulatory concerns in recent years have resulted in fines and compliance pressures that have cost the bank enormously. Moreover, the 2026 ROA forecast of 0.85 percent is still below the industry average of 1.39 percent, showing how far the bank is from reaching its full operating potential.

Arista Networks $ANET

Arista Networks has established itself as the most important network player in the AI era in 2026. While GPUs and chips drive computing power, it is Arista's high-speed Ethernet switches that enable thousands of GPUs to communicate as a single system. Without a reliable, low-latency network infrastructure, the computing power of data centers would dramatically decrease in practice.

The company reported revenue of $9 billion for fiscal year 2025, a 28.6% year-over-year increase. Operating margin was 42.8%, with the firm surpassing $1 billion in quarterly profit for the first time in its history. For 2026, management raised the AI networking revenue target to $3.25 billion, with total revenue expected to reach approximately $11.25 billion. AI revenue is expected to approximately double in 2026 compared to 2025.

Transition from InfiniBand to Ethernet

A key catalyst for this year's performance (28% growth) is the industry's shift away from the proprietary InfiniBand, long dominated by Nvidia $NVDA, towards open Ethernet architectures. As AI clusters grow from thousands to millions of GPUs, InfiniBand networks are running into both structural limits and cost disadvantages. Arista's Etherlink products are becoming the standard for these massive infrastructures, and the company has further strengthened its position by joining Nvidia's NVLink Fusion ecosystem, giving it access to additional opportunities.

16 out of 24 analysts are recommending Strong Buy, with an average price target around $167 and top estimates reaching $185. The valuation, with a forward P/E of around 50x, is significantly more premium than competitors, but analysts say it is justified by the giant operating leverage: the company is increasing revenue by 30% without proportionately increasing costs.

Arista's risk profile is mainly defined by its concentration in key customers. Hyperscalers such as Microsoft, Meta or Google account for a large part of revenues and any change in their capex plans would quickly become apparent. In addition, export restrictions and customs policies add a geopolitical dimension, as the global supply chain for networking hardware is complex and vulnerable. Valuation at a forward P/E of 50x also leaves little room for market disappointment. While analysts still see potential in the stock, the Fair Price Index on Bulios is already glowing red here.

NextEra Energy $NEE

NextEra Energy is a defensive company on the surface: it operates Florida Power and Light, one of the largest regulated distribution utilities in the U.S., and has over 28,000 megawatts of installed capacity. But in 2026, the company's story changes fundamentally. Management is transforming NextEra from a pure-play energy player to a data center era energy platform, with the company targeting 15 to 30 GW of new capacity interconnected to data center customers by 2035.

In 2025, the firm reported adjusted EPS of $3.71, meeting its guidance with year-over-year growth of +8.2 percent. For 2026, management reiterated guidance of $3.92 to $4.02 per share and targets annual EPS growth of more than 8 percent through 2035. Renewables backlog reached 30 GW, with the Energy Resources segment adding over 13.5 GW of new projects in recent quarters. Analysts estimate Q1 2026 revenue of around $7.16 billion.

Data centres as a new growth engine

Exposure to data centers adds a whole new dimension to the NextEra story. Data centers that run AI infrastructure are extremely energy-intensive, and NextEra is actively courting them by supplying electricity directly from renewable sources. Meanwhile, Florida Power and Light is seeing steady additions of new customers thanks to reasonable tariff prices and Florida's dynamic economic environment.

20 analysts give the stock a buy rating, with only two recommending a hold. The average price target is around $93 to $95. UBS moved the March 2026 target to $104 and Morgan Stanley maintains a buy rating. The dividend yield is 2.71%. The firm also raised $2.3 billion in February 2026 funding through equity units.

The main risks for NextEra are related to the regulatory environment and political priorities. A reduction in federal support for renewable energy could affect the economics of new projects. The premium valuation, with a P/E of 27.87, is above average for the energy sector and leaves less cushion for negative surprises.

Overview

What to watch next

• $LRCX: Q3 FY2026 results and management commentary on order trends from Korea, Taiwan and Japan

• $GE: backlog development in the defense segment

• $AMAT: revenue from HBM and advanced supply segment in Q2 FY2026 and demand indications for the second half of the year

• $C: net interest income generation rate

• $ANET: Q1 FY2026 earnings on May 5, 2026 and management commentary on AI networking pipeline development at hyperscalers

• $NEE: Q1 2026 earnings on April 21, 2026 and an update on the regulatory process in Florida

Six stocks with Wall Street buy ratings in four different sectors.

The common denominator is neither sector nor valuation level, but one thing: the analyst community sees each of these companies as a specific catalyst for outperformance of the broader market over a 12-month horizon.

Still, it is important to read the recommendations in context. A buy rating from analysts at a major bank is a starting point for analysis, not a substitute for it. For each of these six stocks, there is a scenario in which the expected growth does not materialize and valuations come under pressure.

Tim Cook has led Apple since 2011 and is set to step down on September 1 this year. However, Cook isn’t leaving the company entirely and will move into the role of executive chairman of the board. The new CEO will be John Ternus, who has so far led hardware development. Personally I don't have any specific expectations, so I'll wait to see which direction the company goes. The company is currently doing well; its products are, in my view, excellent, and I hope that continues.

Do you think the new leadership will bring major changes? Do you have shares of $AAPL in your portfolio?

What investors will focus on now are the problems he inherits, not just his résumé. Analysts highlight a cluster of strategic challenges that will define his tenure: closing Apple’s perceived AI gap versus rivals after years of under‑investment, navigating rising regulatory and geopolitical pressure around China and antitrust actions, stabilising iPhone unit and revenue growth in a saturated premium market, finding the next meaningful hardware or services growth driver after mixed results with devices like Vision Pro, and managing a broader leadership transition while keeping Apple’s massive capital‑return programme attractive to shareholders. In other words, Ternus takes over a company that is still hugely profitable but faces harder questions about where the next wave of growth comes from than it did at the start of the Cook era – and his first years as CEO will be judged on whether he can turn Apple’s hardware and silicon strengths into a more convincing AI‑first, post‑iPhone story.

Tim Cook is handing over a company in extraordinary shape: Apple $AAPL is worth about three trillion dollars, has a strong balance sheet and a giant base of loyal users, but it also faces slowing growth, pressure in artificial intelligence and more regulation. So John Ternus, who has worked his way up at Apple from engineer to hardware chief to new CEO, will not just "stay the course" but must take the company through another major change in direction.

Unlike Steve Jobs - the visionary - and Tim Cook, the supply chain master, Ternus is first and foremost a product and technical details man. That's why his first few years at the helm of Apple will be defined mainly by three areas: how quickly Apple can catch up with its AI backlog, how it keeps key products attractive, and how it handles pressure from politicians and regulators on both sides of the Atlantic.

What are the challenges ahead?

Catching up with the AI backlog

The biggest issue is artificial intelligence. While Microsoft $MSFT, Google $GOOG, Meta $META or Nvidia $NVDA are investing tens of billions of dollars in generative AI, Apple is seen as lagging behind in this wave. The company shelved a major update to its Siri voice assistant last year and had to reshuffle the leadership of its AI division, with a veteran from Google replacing the old boss.

Apple plans to launch a new version of Siri this year built on Google's Gemini model, which is expected to vastly improve natural speech understanding and context work. Ternus will need to ensure that "Apple Intelligence" appears across products in a way that makes sense to everyday users - that is, that AI actually saves time and improves how you work with your iPhone, Mac and other devices, not just impresses with technical demonstrations.

Dependence on China and tense geopolitics

Another big challenge is the supply chain. Apple has long manufactured much of its products in China, and this makes it vulnerable to trade disputes, tariffs and political tensions. President Donald Trump's administration has kept in place some tariffs on Chinese goods and added new export controls on chips and technology, complicating electronics makers' plans.

Cook has begun shifting some production to India, Vietnam and other countries, and Ternus will need to continue that strategy without compromising quality and production capacity. The challenge is to diversify more into final assembly of products, but also protect the development and production of key components - such as Apple's own Silicon chips - that are at the heart of the company's competitive advantage.

Keeping iPhone as Apple's engine

The iPhone still accounts for the largest portion of Apple's revenue and is a major gateway to other products and services. But sales growth has slowed in recent years, leaving investors wondering where the next wave of demand will come from. The iPhone 17 may be selling well, but Apple faces pressure to deliver more compelling news than just camera and performance improvements.

As the "hardware" boss, Ternus has a good understanding of what else can be wrung out of the iPhone - whether it's better AI integration, longer battery life, new types of photo/video features, or better connectivity with other products. His challenge will be to strike a balance between technological innovation and margins so that Apple doesn't overspend while losing its appeal to users who today often replace their phones after three or more years.

New products and the "next big thing" after the iPhone

Apple has been searching for several years for the next big product that could even partially build on the success of the iPhone. AirPods and the Apple Watch are successful, but they are far from replacing the iPhone in sales and profits. The Apple Vision Pro headset was supposed to be a ticket to the world of spatial computing, but so far it is more of an expensive device for enthusiasts and professionals.

Ternus will have to decide how much further to bet on Vision Pro and similar projects and whether it makes sense to accelerate the development of other forms of wearable devices, such as smart glasses. At the same time, he's expected to have a clearer plan for where the company will take the iPad, Mac and other devices so that it doesn't appear fragmented and so that users know exactly what each product is for.

Reassure investors and keep the stock attractive

Finally, there's shareholder relations. Tim Cook has been very successful in the eyes of Wall Street - under his leadership, Apple's market value has increased manifold, the company has generated huge free cash flow, paid dividends and bought back its own stock in large numbers. John Ternus comes at a time when growth is not so obvious, competition in AI is growing, and some investors are nervous that Apple has "slept through" the new technology wave.

The new CEO will need to present a compelling story - how he plans to jumpstart innovation, where he will grow in the coming years, and how he will maintain high profitability in the process. His first big moves, whether on AI, products or working with capital, will set the tone for the "John Ternus era" and show whether Apple can remain one of the major winners in the tech sector in a post-Tim Cook era.

The reaction of the stock exchange has so far been mixed. Shares in UniCredit in Milan fell by around 2.3% to 68.5 euros, while Commerzbank in Frankfurt added around 0.9% to around 36.4 euros. Thus, the market perceives that Italy is increasing pressure on the target bank, but at the same time, the likelihood is growing that Commerzbank shareholders will demand a higher price, if they agree to the transaction at all.

The €35 billion bid

UniCredit made a formal bid for Commerzbank $CBK.DEin March worth around €35bn, which it constructed to push its stake slightly above 30% without formally gaining full control. The Italian bank already holds around 26% of the shares, and controls another 4% or so through total return swaps, so it is de facto just below the threshold that triggers a mandatory bid under German law.

UniCredit criticises that Commerzbank's management overestimates its own 'Momentum' growth plan. It claims that the 2025 results actually mask a miss on cost targets by about €200m, which has been replaced by higher net interest income of about €500m. The Italian bank also points out that loan growth outside the key markets of Germany and Poland has reached 24%, while in Germany itself it has only reached about 1%, which it says points to an "overly staggered" and riskier international model.

As part of its own "Commerzbank Unlocked" proposal, UniCredit $CRIN.DE promises that it would be able to increase Commerzbank's return on tangible equity to above 19% by 2028, compared to its current target of 15%. It would like to reduce the cost-to-income ratio to around 40% (compared to 47% in the Momentum plan) and increase the bank's net profit to around €5.1bn, compared to the expected €4.5bn. However, Orcel said this would require an investment of about €1.7bn in the transformation and the creation of additional loan loss provisions of about €500m.

Combination with HypoVereinsbank: a "German-Italian giant" by 2030

Another part of the plan envisages that Commerzbank would eventually merge with HypoVereinsbank (HVB), the existing German subsidiary of UniCredit. In the so-called "combination" scenario, UniCredit aims for the merged group to have a net profit of around €21 billion and a cost-to-income ratio of around 30% by 2030 - parameters that are close to the most efficient European banks.

At the same time, UniCredit assures that Commerzbank would operate separately and under its own name for the first 18 months after gaining control, before deeper integration with HVB. On jobs, the bank promises that about 60% of the projected cost savings are to come from areas outside its direct staff in Germany - i.e. its international network and support activities - and the overall reduction in staff in Germany over five years should be less than half of the 15,000 positions speculated by some critics.

Commerzbank: no "added value", we stick to 2028 targets

However, Commerzbank's management is making it clear that it is not interested in the transaction in its current form. Already on 7 April, the bank announced that, following discussions with UniCredit, it "does not see the basis for a mutually agreed value-adding transaction" and that the Italian side had failed to show additional shareholder benefits compared to Momentum's current strategy.

In an interview with Bloomberg TV, CEO Bettina Orlopp said that while there had been some discussions with UniCredit, the views of the two sides were "fundamentally different" on the valuation and share exchange ratio itself. Commerzbank therefore confirms its targets for 2028: a return on tangible equity of 15%, a cost/income ratio of 50%, a CET1 capital ratio of 13.5% and a net profit of around €4.2 billion.

For 2024, the bank generated a net profit of EUR 2.63 billion (after EUR 2.68 billion in 2023), despite restructuring costs. Net profit before these costs rose by around 13% to a record €3bn, which Commerzbank presents as proof that Momentum works and there is no need to undergo a controversial cross-border merger.

German state opposes: 'hostile attack' on key bank

The German government, which holds a stake of around 12-13% in Commerzbank following the bank's rescue during the financial crisis, has also taken a completely negative stance. According to the German media and statements by politicians, the cabinet sees UniCredit's move as a "hostile attack" because it considers Commerzbank a key domestic institution for financing SMEs and exports.

The Social Democratic Party, which is part of the ruling coalition, is reportedly opposed to the sale of the bank into foreign hands, despite earlier talk of a gradual reduction of the state's stake. The government is now one of the most vocal opponents of the takeover, even though it was its participation and capital injection that opened the way for UniCredit to gradually increase its stake.

Next steps: bid in May, market and regulators to decide

UniCredit's formal offer is due to be launched at the beginning of May, with around four weeks for Commerzbank shareholders to decide whether to accept it. The Italian bank has called an extraordinary general meeting for 4 May to seek approval for the capital increase needed to issue new shares for the exchange.

If UniCredit manages to acquire a stake of over 30% and convince a sufficient number of shareholders, the transaction would face a complex approval process by European and domestic regulators. In an optimistic scenario, UniCredit envisages a settlement in the first half of 2027, once all approvals have been obtained.

For now, however, what is clear is that the battle for Commerzbank is heating up: UniCredit is stepping up public pressure and painting a picture of a supposedly "underperforming and overpriced" German bank, while Commerzbank's management and the German state are fighting back and betting on their own Momentum plan. How UniCredit's aggressive strategy ultimately plays out will now depend largely on the patience of investors, the attitude of regulators and the willingness of German politicians to allow the country's second largest bank to come under the wing of an Italian competitor.

The valuation reflects the earnings slump more than the cash engine. On current numbers the stock trades at roughly 10× earnings, with a price‑to‑sales ratio well below 0.4× and price‑to‑book around 0.6× – multiples the market usually reserves for mid‑cycle volume manufacturers, not a global luxury badge with an A‑rated balance sheet. Management’s “Next Level Performance” plan is explicitly aimed at closing that gap: the roadmap calls for at least a 10% adjusted return on sales in the core cars division over the mid‑term, a 10% cut in production costs and further reductions in material and fixed costs by 2027, while keeping a capital‑allocation framework where free cash flow beyond a roughly 40% payout ratio is systematically returned to shareholders via buybacks. Put together, that leaves investors with a classic tension: the headline P/E and 5–6.5% dividend could be the front door to a value trap if margins never re‑rate above high single digits – but if the brand can defend pricing power through the EV shift, the combination of strong free cash flow, disciplined buybacks and still‑depressed multiples offers a rare chance to buy a premium franchise at a “regular automaker” price.

Top points of the analysis

• Electric vehicle (BEV) sales fell 23% to around 185k units, total deliveries in China fell 7%, while the entire German premium segment in China faced a decline of around 12%.

• 2 years of sales decline (2024,2025), net profit down for the third year.

• Valuation is low: P/E around 10, price to sales of 0.39 and price to book of 0.56 puts the title at the lower end of the global auto makers, despite a premium brand and FCF margin of around 11%.

• The Next Level Performance program envisages a 10% reduction in production costs per car, 10% in fixed costs and 8% in material costs by 2027, with more aggressive targets in China.

• The medium-term margin target range of 8-10% is lower than the earlier 10%, suggesting that management accepts structurally lower profitability than in the post-covide boom era.

Company performance

The company is one of the best-known passenger car manufacturers in the world and has long profiled itself as a premium brand targeting the higher end of the market. Over the past two decades, it has transformed itself from a historic manufacturer of luxury sedans, limousines and sports cars into a global automotive conglomerate with an extensive portfolio ranging from compact models and SUVs to top-of-the-line limousines and highly profitable sub-brands such as Maybach and AMG. The brand benefits from a reputation built over more than a century of design, comfort and technical innovation.

The business model is built on a combination of high prices, a broad product range and the ability to monetise the brand across regions and segments. The European and US markets have traditionally acted as a strong base, but over the past two decades the focus of growth has shifted significantly to China, where premium European brands have long benefited from the aspirational demand of a growing middle class. This has been changing in recent years, with local competition and changing preferences pushing margins and volumes.

Business sustainability relies on three elements: brand, service ecosystem (service, financing, leasing) and customer experience. Once customers buy a premium car, they often tend to stay within the brand because they are used to a particular ergonomics, infotainment and service network. While switching manufacturers is not technically difficult, it is a psychological and comfort 'cost', which helps the company maintain repeat sales and a high proportion of fleets, leases and pre-paid service packages.

Business and products

The core of $MBG.DE s portfolio is made up of the Cars division's passenger cars: compacts (A-Class, CLA), midsize (C-Class, GLC), upper midsize and luxury (E-Class, S-Class, GLS), and specialized SUV and coupe models. Above this are the luxury sub-brands Maybach (luxury versions of the S-Class and SUV) and AMG (high-performance sports derivatives). It is the top models and sub-brands that carry the highest margins - combining high unit prices with relatively limited volumes and high customer willingness to pay for customisation and equipment.

In recent years, the company has invested heavily in electrification. In addition to electric versions of existing models (EQS, EQE, EQS SUV), it is developing a new MMA modular architecture on which to base a new generation of compact and midsize models, including the new CLA from 2025. But electric cars cannot yet deliver comparable margins to the combustion high-end - partly because of higher production costs (batteries, new platforms) and partly because of strong competitive pressure and discounts.

In addition to cars, the group has other pillars: financial services (leasing, financing, insurance) and commercial vehicles (vans, light trucks) - while not as profitable as premium passenger cars, these contribute to diversifying revenues and create additional customer touch points. The business thus does not rely purely on car sales, but on the entire lifecycle of mobility services.

Market and addressable potential

In recent years, the global automotive market has been transformed by three structural trends: electrification, digitalisation and geopolitics. In Europe and partly in the US, regulation is pushing emissions reductions and encouraging a shift to EVs, while in China, electromobility is growing organically through a combination of government support, a local technology ecosystem and aggressive competition from domestic brands. The premium segment in which the company operates has long been considered relatively cycle-proof, with customers there being less price-sensitive and more brand and quality-sensitive.

But we can see from the 2024 and 2025 data that even premium brands are not immune. Total group sales have fallen, despite price increases in recent years, suggesting that both volumes and mix are deteriorating. In China, one of the key markets, sales are declining, and the entire German premium segment has seen a decline of around 12% due to pressure from domestic electric competitors and customer preferences. This is crucial, as China was until recently the main source of growth and high mix.

The addressable market for the company is not limited - there is still demand for mobility and premium cars in emerging economies, but the competitive map has changed. Where it used to compete primarily with other European and Japanese premium brands, it now faces new players, particularly Chinese EV manufacturers that combine aggressive pricing, advanced technology and strong local support. Thus, the realistic scenario is not "world conquest", but rather maintaining share in Europe and the US, stabilizing in China and growing selectively in other regions.

Competition and market position

The main competitors include the traditional premium brands BMW $BMW.DE and Audi (Volkswagen Group $VWAGY), on a global level also manufacturers like Tesla $TSLA in the EV segment, Stellantis $STLA in the broader mass segment and growing Chinese players like BYD $BY6.F, NIO $NIO, Li Auto $LI. Compared to BMW today, the company has lower margins - BMW's is around 11.9%, while here it's 8.1% - and lower return on capital, even though both target similar customer segments and price levels.

Compared to Stellantis, which has margins of over 12%, the situation looks even less flattering: a premium brand generates lower profitability than a broad concern with many mass brands. Tesla remains a special case - its P/E multiples of over 25-30 are in a different league - but in the premium EV segment it competes directly for the wallets of customers who are choosing between a "pure" technology EV and a traditional premium manufacturer in an electrified version.

The perceived quality and status of the brand is still the company's strong point - for a certain segment of customers, the logo on the bonnet is a decisive factor and the traditional German "three stars" still have a high value in their eyes. The weakness is that in an electrified world, some of this advantage is being erased - customers are more concerned with software, range, charging infrastructure and integration into the digital ecosystem. There, tech and Chinese competitors often have the upper hand, and a premium brand no longer automatically guarantees technological leadership.

Management and CEO

Ola Källenius is at the helm, having taken over with the ambition to streamline the group, simplify the portfolio and move the company towards a "luxury & tech" position. Since then, several strategic moves have been made: the separation of the truck division (Daimler Truck), the simplification of the model range, an emphasis on high-margin models (S-Class, G-Class, Maybach) and significant investments in electrification and software.

The capital discipline is twofold. On the one hand, we see a company with strong free cash flow, a robust dividend stream and large buybacks; on the other hand, the leveraged balance sheet (debt to assets around 0.4, debt to equity 1.12) and Altman Z-score of 1.4 show that this is not a debt-free "cash cow" giant, but a cyclical company that needs to manage investments and capital distribution very carefully. The decision to cut the dividend in response to weaker years shows some caution and a willingness to adjust payouts to reality.

Management's priorities for the next few years are clear: reduce the cost base (Next Level Performance), deliver a full electric generation of key models (MMA platform, new CLA, electric versions of SUVs and sedans) and stabilize margins in the 8-10% range. This makes sense strategically - but investors will judge whether the targets are realistic in an environment where competition is evolving perhaps faster.

News and strategic moves in recent years

The last three years have been a combination of records and setbacks for the company. In the post-Covid years 2021-2022, it benefited from an extremely tight supply of new cars - limited production capacity and a shortage of chips allowed it to hold prices high, cut discounts and refocus the mix on more expensive versions, which pulled revenues to around €150bn and operating profit to €18bn with a margin of around 12%. This was the foundation on which management began to build the ambition of double-digit margins "forever" and rapid electrification.

But from 2023 onwards, a more sober phase came. The company gradually admitted that the transition to electro-mobility was not going as fast as it had planned, and in 2024 it officially adjusted its strategy: instead of the original goal of being virtually all-electric by around 2030, it talks about "Ambition 2039" - a combination of 50-60% electrified sales in Europe by 2030 and maintaining premium internal combustion engines beyond that horizon. The reason is simple: demand for clean BEVs is growing more slowly, while investment and production costs are high.

On the product side, the company has also launched the biggest model offensive in its history. It plans to launch over 40 new models by 2028, including around 15 pure electric models, with 16 new or significantly upgraded models coming in 2026 alone - including electric versions of the GLB, GLC, C-Class, "Baby G" SUV, new AMG GT variants and a split of the V-Class into a luxury VLS and mid-premium VLE. From a production perspective, a major modernisation of European plants is underway under the banner of "Next Level Performance / Production" at a cost of more than €2 billion, with the aim of reducing operating costs by around 10% by 2027.

At the same time, the portfolio strategy is being adjusted: production of the A-Class, which was originally considered for discontinuation, has been extended to 2028 but moved to Hungary to free up capacity in Germany for more profitable models. The company is also gradually revising its body version range - the electric C-Class, for example, will focus only on the sedan - and concentrating investment in models where it sees either high margins or strategic importance for electrification.

What the market looks like for Mercedes today: demand trends and adaptation

The market situation today is considerably more complex than in the post-covid boom era. At a global level, new car sales remain relatively high, but the demand structure is changing: some customers are postponing purchases due to higher tariffs and economic uncertainty, some are confused between combustion and electric drives, and some - especially in China - are consciously preferring local brands and new technology players.

For Mercedes in particular, this means:

• Europe - the market is saturated and heavily regulated, but the company has a deep customer base here. Demand for luxury models (S-Class, G-Class, Maybach) remains relatively stable, but the mainstream segments suffer from a combination of high prices, competition and uncertainty around future powertrains. The modernisation of key models (S-Class facelift, new engines, interior digitisation) should maintain appeal even as customers are more likely to consider whether to buy another premium car or stay longer with their current one.

• The US - represents a relatively strong pillar where premium European brands are able to maintain higher margins, especially in the SUV segments and for AMG/Maybach models. The company therefore explicitly mentions in its 2026 strategy that the "top-end" segment and regions such as the US and other overseas markets will remain a growth priority - the aim is to increase sales of the most expensive models by more than 15% and to strengthen market share in segments where customers have a higher willingness to pay for the brand.

• China - the former 'goldmine' has become the biggest question mark. In recent years, there has been a noticeable cooling in demand for European premium cars, while Chinese EV brands have grown rapidly and aggressively. Mercedes' sales in China are down units of percent, but even worse is the pressure on pricing - to maintain volume, the company has to discount more, which squeezes margins. In response, it is directing part of its savings program to its Chinese operations, with the aim of cutting costs by more than 20% and tailoring the range to local preferences, including specific EV models and software features.

The overall trend in orders and bookings reflects this combination: after a period of overhang in demand, when there was a months-long wait for cars, things are back to normal - delivery times are shorter, warehouses are filling up and customers have a choice again. The company itself admits in recent conference calls that the "pricing discipline" it could afford in 2021-2022 is no longer a given; fleet sales are returning in some segments to maintain volumes.

Looking ahead, the carmaker is adapting in three main directions:

1. Recalibrating its electrification strategy - instead of a clear commitment to "all EVs by 2030", it now talks about a flexible mix: 50-60% electrified sales in Europe by 2030, keeping premium combustion engines where they make economic sense, and an aggressive electric offensive in segments where EV customers want them (urban and mid-range, SUVs, top-end performance).

2. A product offensive in key segments - a complete portfolio rebuild by 2028, including the electric CLA, GLC, C-Class, "Baby G" and others - is designed to appeal to a new generation of customers looking for a combination of premium branding and modern EV/hybrid. At the same time, upgrades to flagship models (S-Class, G-Class) and the expansion of luxury versions (Maybach, AMG) are intended to maintain the high-margin top-end.

3. Tough cost-cutting - The Next Level Performance / Production program is a frank admission that the company's cost structure was set for a world of higher margins than the market allows today. The targets of 10% savings in manufacturing and fixed costs (and more in China) are aggressive, but if achieved will allow the company to generate double-digit returns even in a more realistic environment of lower prices and more competition.

Financial performance

The four-year income statement shows a "peak" for 2021-2022 and a gradual weakening. Revenues rise from €133.9bn in 2021 to €150bn in 2022 (+12%), hover around €152.4bn in 2023 (+1.6%) and decline from 2024. Gross profit was around 30.7 billion (2021), 34 billion (2022), 35 billion (2023) and then dropped to 28.6 billion in 2024 and then slightly in 2025.

Operating profit peaked in 2022 (€17.9 billion, margin around 11.9%), fell slightly to €17.5 billion in 2023 and then fell to €12.3 billion in 2024 (margin around 8.4%). Net profit shows a similar picture: 23 billion in 2021, 14.5 billion in 2022, 14.3 billion in 2023 and 10.2 billion in 2024. EPS follows this trajectory: around 21.5 euros (2021) → 13.55 (2022) → 13.46 (2023) → 10.19 (2024).

So we see two things: first, a strong post-covide "peak" in profitability, which the company used to raise prices and optimize the mix in a time of car shortages; second, a subsequent normalization where volumes and mix deteriorate but the cost base (especially EV investment) remains high. The number of shares outstanding is slightly declining (1.07 billion in 2021 → 1.07 in 2022 → 1.06 in 2023 → 1.00 in 2024), which means that buybacks are helping to at least partially counter the decline in EPS.

Balance sheet and debt

The balance sheet is a mixed picture. On the one hand, there is solid liquidity - current ratio 1.27, quick ratio 0.83, cash position around 14.5 billion and working capital around 21 billion. On the other hand, a relatively high debt ratio: debt to assets around 0.40, debt to equity 1.12, long-term debt to total capital around 0.33.

The Altman Z-score of 1.4 is low - in theory, this means that according to this synthetic indicator, the company is in a zone where the risk of financial problems cannot be ignored. But for large automotive concerns, this ratio is traditionally lower due to capital intensity, lease books and asset structure, so it should be read with caution. Still, it's a reminder that this is not a "risk-free bond replacement" but a cyclical firm with significant leverage.

In a stress scenario - deeper recession in Europe, continued pressure in China, EV sales issues - the combination of lower EBIT and fixed costs could push the balance sheet into an uncomfortable position, especially if the company wants to continue to hold high dividends and buybacks.

Valuation

Valuation is the main argument in favour. A P/E of around 10, price to sales of 0.39, price to cash flow of 3.5 and price to book of around 0.56 mean that the market is valuing every euro of sales, cash flow and book value very conservatively. An FCF yield of around 11-12% (according to the latest data) and a dividend yield of around 5% are numbers we expect to see more from a cyclical commodity producer than a brand that still sells S-Classes and Maybachs.

Compared to the competition: BMW trades at a P/E of around 7-8, but with higher margins and ROE; Tesla has a P/E well above 25 and price to sales several times higher; Stellantis has a lower P/E but a less premium mix. So here we get a mix - cheaper than the "growth" EV story, more expensive than the cheapest European car companies, but with a proprietary brand and FCF mix.

Internal models and conservative DCF, show a fair value of around €57-61 per share, while analyst consensus sees the price around €62-63, a few percent above current levels. This is not a "50% upside value play", but rather a bet that the market is pricing the margin and China problem too pessimistically today. For "cheap" to turn into expensive, either the market would have to swing into euphoria about EVs and premium margins, or earnings would have to fall further without the share price reacting.

Growth catalysts and outlook

A key catalyst is the success of the Next Level Performance program. This is set to deliver a 10% reduction in manufacturing cost per car, 10% in fixed costs and 8% in material costs by 2027, with even more aggressive targets in China (20%). If these savings can be realised, it could lift EBIT margin by several percentage points even on flat sales and offset some of the pressure from pricing and mix.

Another trigger is the product offensive on the new MMA platform - starting with the CLA 2025 - and the upgrade of key models (S-Class 2026, electric GLC and C-Class). If the new models can convince customers in Europe and the US, and at least stabilize the situation in China, the mix may shift again towards more profitable configurations and high-end models.

The macro catalyst may be the eventual normalisation of geopolitical pressures (tariffs, regulations) and a softer tariff environment, which would support demand for more expensive cars in Europe and the US. Among the measurable KPIs, investors will mainly be looking at: EBIT margin (heading towards 8-10%?), volumes and margins in China, EV sales and profitability vs. ICE, FCF development and buyback pace.

Investment scenarios

Optimistic scenario

In the optimistic scenario, the company successfully implements Next Level Performance, reduces manufacturing and fixed costs as planned, and manages to at least stabilize sales in China. EBIT margins will return to the 9-10% range in 3-4 years, sales will stabilize around €145-150 billion and net profit will move back into the €12-15 billion range, with EPS around €12-15 billion.

With such profitability, the market could afford to price the title at a P/E of 12-13, EV/EBITDA of around 7-8 and price to book of around 0.8-1.0 - so at some premium to cyclical carmakers but below EV growth stories. That would imply a potential price range of somewhere between €70-90 per share, which represents an interesting upside from current levels, especially if you add in the dividend yield.

A realistic scenario

In a realistic scenario, margins stabilise in the new target range of 8-10%, but more towards the lower end. Revenues fluctuate slightly in the €140-150bn range, China remains problematic but not catastrophic, EV portfolio sells but does not match combustion high-end margins. Net profit is around 9-11 billion euros, EPS around 9-11 euros.

In such an environment, the market will maintain a P/E around 8-10, EV/EBITDA around 5-7 and P/B between 0.5-0.7. In practice, this means that the capital return on the share price will be rather limited (a range of ±20% around today's levels), but the investor will get a stable dividend yield of 5-6.5% p.a., plus a possible doubling of the yield on redemptions. This is a "bond-like equity" scenario - the title as the income component of the portfolio, not the growth star.

Negative scenario

In the negative scenario, the growth of Chinese competition and regulatory pressure on EVs combine to form the "perfect storm". Sales in China will continue to decline, BEV margins will remain low, the savings program will fall short and EBIT margins will settle around 5-7%. Revenues may fall below €140bn, net profit below €7bn and EPS into the €6-8 range.

The market may then value the title as a pure cyclical carmaker - P/E 6-7, EV/EBITDA 3-5, P/B 0.3-0.5. This implies a price band somewhere between 30-45 euros per share. The dividend would likely have to be cut in such an environment to allow the balance sheet to sustain lower profitability as well as investment. An investor buying today would indeed collect a decent return for some time in this scenario, but the equity component could wipe out much of that income.

What to take away from the article

• This is a premium carmaker that went through peak margins in the post-covid era and is now struggling to return to double-digit profitability.

• The years 2024-2025 show a combination of a slight decline in sales and a significant drop in EBIT and net profit, mainly due to margin pressure.

• Electric mobility is not yet a source of growth, but a problem - BEV sales are down more than 20% and profitability is lagging.

• Yet the company generates strong free cash flow, funds high dividends and significant buybacks, but has a relatively volatile balance sheet on the back of this.

• Valuation is low - P/E ~10, P/B ~0.6, FCF yield around 11% - the market values the brand as a cyclical carmaker rather than a premium brand.

• The key to the investment thesis is whether management can actually cut costs, stabilize China and make the EV portfolio a source of margins, not just a regulatory-enforced expense.

Small and mid-sized companies with market capitalizations of less than $2 billion are probably the least explored space in the U.S. stock market. Large institutions often ignore them and liquidity is lower. However, this is precisely what can be an advantage for investors who can identify these companies before their market capitalization begins to rise steeply.

Each of the three selected companies operates in a radically different segment. Axogen is a manufacturer of surgical products. Polestar is a Swedish electric car manufacturer struggling to survive in a price war. And Okeanis Eco Tankers is a Greek tanker operator benefiting from the geopolitical restructuring of global oil flows.

Axogen $AXGN

Axogen is an American company headquartered in Alachua, Florida, that specializes entirely in surgical technologies for restoring peripheral nerve function. It is not a broadly diversified company. Axogen does only one thing, but it does it with such breadth that it is not easy to compete.

The core of the portfolio is the Avance Nerve Graft, a processed human nerve allograft that serves to grow severed nerves. The difference from the traditional method is that the patient does not need a second surgical procedure to harvest the autologous graft, which reduces mortality and recovery time. Other products include Axoguard Nerve Connector, Axoguard Nerve Protector and Axoguard HA+ Nerve Protector.

In December 2025, Avance received BLA approval from the U.S. FDA as a biological product. This approval is a major turning point in the company's history. Axogen also estimates that it would take at least eight years for another market participant to develop and approve a direct competitive product. The regulation then grants protection to the reference product for at least twelve years from the approval of the BLA, effectively creating a significant regulatory moat.

Financial results and growth dynamics

For the full year 2025, the Company reported preliminary revenues of approximately $225.2 million, representing a year-over-year increase of 20.2%. Gross margin exceeded 74%.

In the third quarter of 2025, revenue grew 23.5 percent to $60.1 million and Adjusted EBITDA reached a positive $9.2 million, signaling that the company is slowly moving toward operational profitability.

The company still reported a net loss of $3.8 million in the first quarter of 2025. The path to consistent profitability is gradual but measurable. Cash, equivalents and investments were approximately $45.5 million at December 31, 2025, an increase of $6 million from 2024

Axogen's key financial metrics

Opportunity and competition

Axogen operates in three main groups:

1. Peripheral nerve injuries in the extremities (Extremities),

2. Oro-Maxillofacial and Craniofacial Surgery (OMF and Head and Neck)

3. breast reconstruction after mastectomy

A key procedure in this third group, called Resensation, allows for the restoration of sensation after breast removal, and it is this segment that is experiencing the fastest growing penetration.

Direct competition is limited. A new nerve drug (treatment) would need to go through full clinical development and receive its own BLA approval, which the company estimates will take at least eight years. Axogen's products are then protected by a dedicated twelve-year protection period from the date of approval. As the lead registered product in the category, Avance has a significant regulatory barrier to entry and protection until at least 2037.

Indirect competition lies in autologous nerve grafting, where the patient's own nerve is harvested from elsewhere in the body. However, this method carries significant drawbacks for the donor and the second surgery, which plays into Axogen's hands.

Risks

Axogen still does not have a consistently profitable operation, and the cash reserve of around $45 million does not allow it to fund its extremely rapid growth without external financing or further equity issuance. The business model is also dependent on the process of educating surgeons who must change established procedures and adopt new techniques. The pace of adoption is real. The stock has also historically reacted strongly to clinical and regulatory news, adding volatility to the brand.

Polestar $PSNY

Polestar is a Swedish electric vehicle brand with roots in Volvo Cars and Geely that targets the lower end of the premium EV segment. With its emphasis on design and sportiness, the company has four models in its lineup, the Polestar 2, 3, 4 and the newly launched 5, with more on the way. Globally, it has operations in 28 markets, and its dealer network has grown by more than 50 percent to 230 locations by 2025.

In 2025, the company achieved record sales of 60,119 vehicles, a 34 percent increase over 2024. Full-year 2025 revenue was $3.058 billion, up 50 percent. Compared to 2024, when sales dropped to $2.03 billion from an earlier $2.37 billion, this seems like a dramatic turnaround. Adjusted EBITDA loss improved by $297 million to $783 million and gross loss narrowed to just $22 million.

The structural problem: negative margins and cash burn

Despite impressive revenue growth, Polestar remains fundamentally unprofitable. The net loss for 2025 was $2.357 billion, much of which was non-cash asset losses of about $1.1 billion. Gross margin remains in negative numbers. In Q1 2026, Polestar reported sales of 13,126 vehicles, a 7% growth rate from Q1 2025.

Polestar's key financial metrics

Threat of capital dilution

Polestar has a complex capital structure. Funding from Geely, Volvo Cars, investors and new equity offerings add pressure on existing shareholders.

In January 2026, the company made another equity issue for $130m. In December 2025, it raised $300 million through a PIPE and a $600 million loan from Geely.

The company also faces a Nasdaq requirement to maintain listing standards, adding another layer of legislative pressure.

Position relative to competitors

In the global EV market, Polestar faces a battle on two fronts. In Europe, it is being squeezed by German brands moving to full electrification as well as nearly unbeatable Chinese price competition led by BYD. In the US, it's tariff barriers and the loss of tax incentives for EV purchases. Polestar's strengths remain design, technology and branding in the premium segment. Weaknesses are dependence on external financing and lack of autonomous profitability.

Okeanis Eco Tankers $ECO

Okeanis Eco Tankers is a Greek company founded in 2018 that owns and operates 16 crude tankers, namely eight Suezmax and eight VLCC (Very Large Crude Carriers). The fleet is modern with an average ship age of just six years. Okeanis was founded with a clearly focused strategy: to build a portfolio of energy efficient ships that can deliver higher TCE rates due to lower operating costs and better technical specification compared to older ships in the market.

The spot oil market is the predominant business model for OET, with all ships deployed on short-term or spot voyages. This strategy maximises exposure to rate rises but also increases yield volatility. It is a conscious and consistent management decision that offers investors direct leverage on spot oil market price movements.

Financial profile and dividend policy

For 2025, the company reported revenues of $391.55 million, about the same level as in 2024. However, net income increased by 12.94% to $122.95 million, representing a net profit margin of 31.4%.

In Q4 2025, the company reported EPS of $1.78, beating the consensus of $1.30 by almost 37%. The total VLCC TCE rate for Q4 2025 was around $91,300 per day, while Suezmax was around $50,800 per day.

A key consideration for investors is the generous dividend policy. The company declared a dividend of $1.55 per share in Q4 2025. The company is actively expanding its fleet: in January 2026, it conducted a $130 million equity issue to finance four new Suezmax ships from a construction site in South Korea. Two of these were delivered in January 2026 and the other two are expected in Q2 2026

Okeanis Eco Tankers key financial metrics

Cycle and macroeconomic context

The oil tanker market has entered a new phase of the cycle as of summer 2025. Geopolitical tensions in the Middle East and a change in Venezuelan oil flows have caused spot rates to rise. CEO Aristidis Alafouzos described the situation at the Q4 2025 earnings call by saying that as of August 2025 the large tanker market has entered a cycle that the company has been preparing its business for for years.

For Q1 2026, the company has already locked in 67% VLCC spot at an average rate of $104,200 per day and 64% Suezmax at $84,600 per day. Analysts at B. Riley Securities raised the target price to $55 in February 2026, and Clarksons upgraded the recommendation to Buy in January 2026.

Risks: cyclicality and debt

The tanker business is fundamentally cyclical. Rates can fall as fast as they rise, depending on global oil demand, the pace of new ship deliveries from construction sites, geopolitical developments and OPEC+ decisions.

In addition, Okeanis is undertaking a fleet expansion with debt ($605 million), which greatly reduces operational flexibility in a slowing cycle. In addition, the stock is dually listed on both the NYSE and Oslo Stock Exchange.

Strategic view

Comparing these three companies clearly shows how different investment theses can be found in small market cap companies.

• Axogen$AXGN) is a de facto monopolist in its narrow segment with strong regulatory protection, growing revenues and a gradual transition to operational profitability. The investment thesis is clear and understandable: the market for nerve regeneration is small. The main risks are the need for additional capital before consistent profitability is achieved and the dependence on the pace of adoption by surgical teams.

• Polestar$PSNY) is the most complex case. Revenues are growing, but profitability is a matter for the future, into which the company must capital finance itself. Shareholder dilution is systemic and recurring. The price war, the outflow of tax incentives in the US, and the dependence on Geely, including its conversion of receivables into shares, are factors that an investor must assess directly and soberly.

• Okeanis Eco Tankers$ECO) is the most straightforward case. A modern fleet, high TCE rates in the growth phase of the cycle, and a generous dividend policy make for an attractive combination for investors willing to accept cyclicality. A P/E of around 13 and a double-digit dividend yield are strong incentives not easily found elsewhere. However, the inevitable risk is the debt structure and further equity issuance as the fleet expands.

What to watch next

• $AXGN: Avance's first commercial shipments as a biologics product (Q2 2026) and the evolution of margins towards higher levels

• $PSNY: Full FY 2025 results (April 17, 2026)

• $PSNY: Q2 2026 sales momentum following new model launches and dealer network expansion

• $ECO: Deliveries of remaining two new ships from Korea in Q2 2026

• $ECO: Oil price developments and geopolitical tensions affecting trade lanes and tanker demand

On a relative basis, the call is just as aggressive. Using the same 2027 estimates, Mizuho notes that Texas Instruments and NXP are expected to grow EPS at about 21% and 19% respectively, but trade on similar or higher earnings multiples, implying PEG ratios comfortably above STM’s. For investors hunting for growth in semis, the message behind the 123% and 71% EPS lines isn’t just that STM’s profit rebound could be sharp coming out of the down‑cycle; it’s that, on these assumptions, the market is charging a lower multiple for each point of earnings growth than it does for some of the sector’s more established U.S. peers.

Strong link to AI data centres

One of Mizuho'smain arguments is that $STM has favorably stacked revenues by industry. Approximately 15 percent of revenue comes directly from equipment for AI-focused data centers, where demand for powerful yet cost-effective power and control chips is growing. Analysts estimate that the value of STMicroelectronics ' components on each new gigawatt of power for these data centers is now approaching $230 million and is set to continue to grow, particularly for new high-voltage server enclosures for Nvidia $NVDA.

In addition, the company announced in March that it was ramping up mass production of its own silicon photonics technology, chips that transmit data inside data centers using light instead of electricity. These components are important for fast optical interconnects between servers and graphics accelerators in artificial intelligence clusters. STMicroelectronics manufactures them on 300-millimeter wafer lines, allowing it to rapidly increase capacity; the company plans to more than quadruple production by 2027, with capacity largely secured by long-term contracts with large customers.

Mizuho says that large cloud operators such as Amazon Web Services $AMZN, and optical module maker Innolight are expected to be among the customers for the silicon photonics. Analysts estimate that if growth is successful, this business could reach annual revenues of around $500 million in 2029.

Other growth pillars: automotive and satellites

In addition to data centers , Mizuho mentions two other interesting segments:

• Automotive - although it expects slightly weaker demand for 2026, STMicroelectronics is benefiting from the growth in the number of electronic components in electric cars, especially in China. Each new electric car contains more power electronics, sensors and control chips, increasing the value of supply per car.

• Low Earth Orbit (LEO) and Satellite Networks - Mizuho estimates that the market for chips for low earth orbit satellites could reach an annual value of around $1.6 billion by 2029, at an average growth rate of around 20 percent per year. STMicroelectronics already operates in this segment, and analysts expect the accelerating pace of satellite launches to be another source of growth for the company.

Summing up, Mizuho says STMicroelectronics has several well-distributed growth engines - data centers for artificial intelligence, silicon photonics, automotive and the space business - yet it trades on a valuation that doesn't match the pace of expected earnings growth. This is what was behind the sharp rise in the share price following the publication of this analysis.

Just as important as the specs is the scarcity. Micron says its entire high‑bandwidth memory output for calendar 2026 is already fully committed under long‑term, binding contracts, locking in all of next year’s HBM4 supply and most of its premium HBM capacity before many AI projects have even left the whiteboard. That “sold‑out before it ships” status gives Micron unusually high revenue visibility in what used to be a brutally cyclical business and underlines a simple reality of the current AI infrastructure race: for at least the next couple of years, it’s not just who designs the fastest GPU that matters, but who can actually secure the stacks of ultra‑fast memory to feed it.

HBM4: 36 GB today, 48 GB tomorrow and 2.8 TB/s per stack

The HBM4 36GB 12-Hi (12H) is built on Micron's 1-beta DRAM process and uses a wider 2048-bit bus that enables throughput greater than 2.8 TB/s per stack at pin rates above 11 Gbps. Compared to the previous generation HBM3E in the same 36GB 12H configuration, this is roughly a 2.3X increase in throughput and more than 20% improvement in power efficiency according to Micron's internal $MU metrics.

In addition to the 36GB variant, the company also demonstrated a 16-layer HBM4 48GB 16H version, which it is already shipping in sample form to select customers. Adding four layers means a roughly 33% increase in capacity per HBM "location" over the 36GB 12H while maintaining high throughput, which is key for accelerators looking to maximize both memory space for giant models and data access speed.

In terms of the Vera Rubin architecture, Micron points out that it is the first manufacturer to simultaneously mass-produce a trio of key components for this platform: the HBM4 36GB 12H, the Micron 9650 PCIe Gen6 SSD, and the 192GB SOCAMM2 module. This positions the company as a "full-stack" memory and storage partner for the next wave of GPU clusters.

Micron shares at record highs

The market took the HBM4 news as confirmation that Micron is one of the major structural winners of the AI cycle. Following the announcement of a mass production HBM4 36GB 12H for Nvidia at GTC 2026, the stock jumped and has continued to rise since. Then on Tuesday, the share price reached $465.

But even more important than the short-term price movement is the outlook. Micron confirmed that all HBM production for the full calendar year 2026 has already been pre-sold under long-term contracts, giving the company unprecedented revenue and margin visibility. Analyst commentary points out that such a sell-through means a de facto locked-in business for 22 months ahead, including pricing and volumes, and moves the memory segment from its traditionally cyclical phase to one where demand for AI memory exceeds supply over the long term.

By some estimates, Micron plans to invest up to around $200 billion in expanding DRAM and HBM capacity over the next few years to capture long-term demand for AI infrastructure. Some analysis suggests that with HBM capacity fully sold, gross margin around 68% and EPS over $8 in fiscal 2026, the stock may still be conservatively valued given its growth profile.

Tough fight: SK Hynix, Samsung and the race for HBM4

But Micron is not alone in the HBM4 race. SK Hynix in particular dominates the market, followed by Samsung $SSNLF, and the HBM4 market for Nvidia $NVDA is quickly turning into a fierce battle for every wafer. According to UBS and South Korean media, SK Hynix could capture around 70% of the HBM4 supply share for NVIDIA's Rubin platform by 2026, with Micron and Samsung as smaller but fast-growing players.

Counterpoint Research's data for the HBM market in the third quarter of 2025 shows SK Hynix holding around 53-55% of the market, Samsung 27-35% and Micron around 11%. Samsung, meanwhile, has announced plans to increase HBM capacity by around 47-50% by the end of 2026, to around 250k wafers per month, up from around 170k currently, and highlighted that customers praise the competitiveness of performance and power efficiency in its HBM4 chips.

According to TweakTown and other sources, Nvidia has asked all of its key suppliers - SK Hynix, Samsung and Micron - to supply 16-Hi HBM4 chips by the fourth quarter of 2026, with mass shipments of 12-Hi HBM4 to kick off in early 2026. The outcome of this selection will affect how HBM4 shares are split between the three firms in the second half of the decade.

What's next?

Micron is already looking beyond the HBM4 horizon. The company said it plans to sample HBM4E in the second half of 2026, a generation that should further increase both throughput and power efficiency and push the standard for GPU and AI accelerators even higher. In parallel, development of 16-Hi HBM4 modules is accelerating - as indicated by requested sample shipments by the end of 2026 - which will push stack capacities further above today's 48GB.

In addition to HBM, Micron is also expanding its portfolio for AI infrastructure:

• Micron 9650 PCIe Gen6 SSD - the first PCIe 6.0 datacenter SSD in volume production, with up to twice the sequential read performance of Gen5, 100% better efficiency per watt, and optimization for agent-based AI workloads on NVIDIA BlueField-4 STX architecture.

• 192GB SOCAMM2 - A low-power, high-density server memory module designed for AI inference and other data-intensive applications, also now in volume production.

This combination of HBM4, high-end SSDs and server modules means Micron is profiling itself as a key supplier of not just "raw memory" but the entire memory and storage tier of AI datacenters, from GPU modules to storage.

Another contract in the chain of defense agreements

Lockheed Martin announced a contract modification with the U.S. Army worth approximately $101.6 million. At first glance this is not a major sum compared with the company’s billion-dollar projects, but the market sees it as further evidence of steady demand for defense services.

The contract includes technical support, maintenance, testing and service operations that are key to the long-term operation of military systems.

Emphasis on long-term contracts

The project will take place in New Jersey and is scheduled for completion in 2029, underscoring the long-term nature of revenues in the defense sector. Part of the funding comes from the U.S. Army’s research and development budget, which suggests this is not just routine servicing but also support for technological development. The combination of maintenance and innovation is key for Lockheed Martin, as it ensures stable cash flow and future growth.

Wider context: rising defense spending

This contract fits into the broader trend of increasing military budgets. $LMT has secured several large contracts in recent months, including billion-dollar deals for the production of missile systems and F-35 fighter jets.

Even smaller contracts like this play an important role because they ensure the operation and support of these systems throughout their lifecycle. This creates a stable and predictable business model that investors appreciate.

Stability over rapid growth

For investors, it’s important to understand that Lockheed Martin is not a typical growth stock. The company grows more slowly than technology firms but offers a high degree of stability thanks to long-term government contracts. This week’s contract is therefore not about size, but about confirming the trend. The defense sector remains one of the most predictable market segments, especially in times of geopolitical uncertainty.

On paper, the move fits where Kering is actually making money. Group results show that while Gucci’s sales continue to fall – down roughly high single digits to low teens in Western Europe and parts of Asia – Kering Eyewear just delivered its best quarter ever, with revenue around 489 million euros and mid‑single‑digit comparable growth, and jewelry is also hitting record highs. Tying the first generation of Gucci x Google glasses to that fast‑growing eyewear division gives Kering a way to lean into a category that is structurally healthier than ready‑to‑wear, while trying to reposition Gucci as a brand that belongs in the “AI wearable” conversation, not only in fashion shows – a gamble that could either give the house a new product pillar or go down as another expensive attempt to mix tech hype with luxury heritage.

Weak quarter: Gucci pulls Kering down, Eyewear up

The smart eyewear announcement came at the same time as unpleasant numbers for the first quarter of 2026. Kering $KER.PA reported sales of 3.56-3.57 billion euros, down about 6% in reported terms and flat on a comparable basis. Gucci remains the biggest problem: sales of the flagship brand fell to around €1.34-1.35bn, down 14% on a reported basis and 8% on an organic basis - worse than the -6% expected by analysts.

Regionally, the situation varies: Western Europe fell by around 7%, Asia-Pacific by 4% and Japan by 3%, while North America managed to grow by around 9%. However, Gucci still accounts for more than 40% of group sales and around 60% of operating profit, so any decline for this brand immediately drags down the entire group.

The exception to the gloomy picture is Kering Eyewear. This division achieved record sales of around €489m in the first quarter, which means around 3% growth on a reported basis and 7% organically - in an environment where the rest of the portfolio is struggling, this is one of the few truly growing assets. It is on Eyewear that de Meo is now building part of its "ReconKering" strategy: it is not to remain an add-on, but to become a full-fledged growth pillar.

Google, Android XR and AI eyewear as the "new Ray-Ban Meta"

The $GOOGL partnership with Google isn't news out of nowhere - it follows a May 2025 agreement between Kering Eyewear and Google to develop AI glasses built on Android XR. Android XR is a new platform designed for glasses and headsets with integrated Gemini AI, focusing on spatial computing and an "in-eye assistant": a camera, microphones, speakers and an optional in-lens display for messaging, navigation, photography or real-time translation.

Google is also working in parallel with Warby Parker and Gentle Monster, with Warby Parker committing up to $150 million - half in product development, the other half as an equity investment, according to fashion media. The model is clear: Google will supply the technology platform and the underlying hardware, while brands like Gucci, Warby Parker and Gentle Monster will bring design, distribution and branding.

Kering is thus essentially copying the successful recipe of its competitors. Meta $META and EssilorLuxottica's Ray-Ban Meta glasses sold more than 7 million units in 2025, more than triple the cumulative 2 million in 2023-2024. These glasses - in a price range of roughly $299-800 - have become one of the main drivers of EssilorLuxottica's wholesale growth and have shown that a mass market for "AI glasses" exists. In addition, Bloomberg and other media outlets have reported that Meta and EssilorLuxottica are considering ramping up production to 20 million units by the end of 2026 due to demand exceeding expectations.

The luxury Gucci variants will likely aim for a higher price point than Meta's Ray-Ban, but the goal is similar in effect: to combine the everyday wearability of the glasses with the added value of an AI assistant, and to capitalize on both hardware and image and ancillary services.

It's the prototypes of Google's Android XR glasses that hint at what the underlying hardware might look like before Gucci strings its own design codes onto it.

"ReconKering": double margins and a Gucci reboot

Luca de Meo took the helm at Kering in September 2025 and at April's Capital Markets Day unveiled a "ReconKering" plan to more than double the group's recurring operating margin (roughly 11.1% in 2025) and push return on equity above 20% over the medium term.

In practice, this means a combination:

• a radical overhaul of the retail sector - refurbishing or relocating two-thirds of Gucci boutiques, reducing selling space by around 20% and reducing outlets by a third

• a €1 billion reduction in inventories over the next year

• a stronger emphasis on the classic Gucci aesthetic codes and less on the "fads" of Alessandro Michele's hyper-creative period

For him, smart eyewear is both a symbolic and practical tool: both an extension of the Eyewear division and a way to redefine "next luxury", that is, combining high fashion with useful, human-centric technology. De Meo talks openly about the fact that the old one-size-fits-all model of global luxury no longer works, and that we can no longer rely on bags and logos alone - we need to create products that make sense in everyday life while carrying a clear brand signature.

Valuations under pressure: high P/E, falling price

Despite the technological ambitions, the market is still focused on hard numbers. According to GuruFocus, Kering has a market capitalization of around $35 billion and a consolidated P/E in the hundreds (the analysis puts it at around 460 times), reflecting the earnings slump in recent years at a still relatively robust stock price.

Following the release of the first quarter results, the stock reacted by falling around 9% to around 254 euros as investors re-priced the risk of a slow Gucci turnaround and the group's sensitivity to geopolitical tensions in Europe, Asia and the Middle East. It is Gucci - more than 40% of sales and over 60% of operating profit - that is the Achilles heel that smart glasses alone will not save, but may be a visible signal that the brand is finding its way to relevant modern luxury.

From an investor's perspective, the Gucci x Google smart glasses project is thus not an immediate solution, but part of a broader experiment: whether fashion, eyewear as a traditionally strong category and AI technology can be combined in a way that will bring not only publicity but also a tangible contribution to Kering's sales and margins over the next three to five years.

A few days ago I added $HOOD to my watchlist, because the stock has fallen more than 50% from its all-time high. The drop was largely caused by the decline in $BTCUSD and also by lower trading activity from investors. It still carries risks, but personally I think the valuation is already very interesting. In addition, investor activity is increasing again, which could help the company and the shares to grow further. I’m not buying anything yet, but it’s one of the interesting stocks I’m watching right now.

The combination of record production of around 17 million ounces of silver in 2025, high-grade mines in the US and Canada, declining costs per ounce, and plans for capital investment to ensure mine life into the 40s add up to a profile that moves from a cyclical "commodity bet" closer to silver market infrastructure.

Top points of the analysis

• Revenues grow from about $719 million in 2022 to $929 million (2023) and $1.423 billion (2025), up more than 53% between 2024 and 2025 alone.

• Net income turns from -$84 million in 2023 to +35.8 million (2024) and 321.7 million in 2025, with net margins of over 30%.

• The balance sheet is exceptionally strong: low debt, net debt/EBITDA of -0.43, equity ratio of 73% and Altman Z-score of 7.5 indicate minimal financial stress.

• The three key silver mines (Greens Creek, Lucky Friday, Keno Hill) produced around 17 million ounces of silver in 2025, all meeting or exceeding guidance, and expectations for 2026 are 15.1-16.5 million ounces at very competitive costs.

• The global silver market is heading into its sixth year of deficit, with a global shortfall of around 67 million ounces estimated for 2026 alone, creating support for the silver price.

• Valuation is high: P/E of 39, EV/EBITDA of 22.5, P/S of over 9 and P/B of almost 5 - the market is already partially pricing in continued high margins and strong silver prices.

Company performance

Hecla Mining Company $HL is one of the largest silver producers in North America and has been building its position for a long time - its roots go back to the 19th century and its mining operations are deeply tied to regions such as Alaska and Idaho. Today, it operates key silver mines at Greens Creek in Alaska, Lucky Friday in Idaho and Keno Hill in Canada's Yukon, supplemented by gold and base metals (lead, zinc) as by-products. Unlike some of its competitors, it has become largely a "pure" silver player after selling non-core gold assets - about three-quarters of its revenues come from silver, the rest from other metals.

The business model is a classic mining one: the company invests in geological exploration, mine development and infrastructure, mines the ore, processes it in treatment plants and sells the metal to refiners and customers in the industrial and financial sectors. High operating leverage means that small changes in the price of silver or in mining costs translate strongly into profits - a rise in the price of metal at stable costs can help profits multifold, just as the opposite movement can knock margins down very quickly.

Business sustainability is different in mining than in software, for example, but it is significant: capital-intensive mines with long lifetimes, permitting processes in safe jurisdictions (US, Canada), infrastructure and know-how mean high barriers to entry for new players. While buyers are not tied to a specific mine, the global supply of silver is limited and any large mining unit that generates stable production in a safe country has de facto "semi-infrastructure" value to the market.

Business

The most important asset is Greens Creek on Admiralty Island, Alaska, one of the most profitable underground silver mines in the world. It produced approximately 8.7 million ounces of silver and 59,000 ounces of gold in 2025, slightly above the previous year due to higher grade ore. Thanks to by-products (gold, base metals), unit silver costs after these credits are factored in are kept low - the outlook calls for cash costs near zero or in the small negative range per ounce and all-in sustaining costs(AISC) in the $15-16.25 per ounce range.

The second pillar is Lucky Friday in Idaho, a mine with a very long history that produced a record 5.3 million ounces of silver in 2025, up about 8% from 2024, thanks to higher flows and better ore grades. In recent years, the mine has undergone significant investments - a new tailings pile, cooling system and underground development - to increase capacity and extend the life of reserves to more than 17 years. Lucky Friday is also important for diversification - when Greens Creek has an operational problem, it can make up some of the shortfall.

The third silver engine is Keno Hill in the Yukon, which is ramping up production and gradually approaching target volumes. It is complemented by the Casa Berardi gold mine in Quebec, which, following restructuring and a change in strategy, is operating more as a "by-product" for overall margins. The company's pricing power is not that it can dictate the price of silver, but that it can profitably mine even at relatively low metal prices, thanks to high grade deposits and by-products, and translates almost all of the price growth into margin in periods of higher silver prices.

Market and addressable potential

The global silver market is undergoing a structural shift. Beyond its traditional "monetary" role and jewellery, an increasing proportion of demand is shifting to industrial applications - notably photovoltaic panels, electronics, semiconductors, high-voltage infrastructure and the growing data centre and AI segment, where silver is used in contacts, solder and other components. Organizations monitoring the silver market (such as the Silver Institute) estimate that 2026 will be the sixth consecutive year of global shortages, with talk of a shortage of around 67 million ounces for 2026.

This creates an environment in which low-cost, stable producers from safe countries have an advantage. Hecla is profiling itself as a major silver player in North America following the divestment of non-core assets: it produced around 17 million ounces of silver in 2025 and guidance for 2026 envisages 15.1-16.5 million ounces at very competitive costs. This means it has direct leverage on the silver price, but is not as vulnerable to short-term downturns as high-cost producers.

The addressable market for the company is not the "bigger slice of the pie" in terms of tonnes - it is not realistic that it would take a significant share from large Latin American or Asian producers. Rather, it's about being able to incrementally increase capacity at existing mines, extend their life by investing in infrastructure (e.g. Greens Creek tailings expansion to 2045), and potentially add smaller acquisitions in safe jurisdictions. In an environment of structural silver shortages, even a relatively small increase in own volume makes an interesting contribution to earnings.

• Silver price development over the last 5 years

Competition and market position

Direct competitors include other silver mining companies such as Coeur Mining $CDE, but also large diversified mining houses such as Freeport-McMoRan $FCX, BHP $BHP or RIO $RIO, which, although not pure silver players, compete for investor capital in the metals segment. Across the group, you can see that the multiples vary significantly: while Rio Tinto, for example, trades on an EV/EBITDA of around 4.3 and a P/E of around 7.3, Hecla has an EV/EBITDA of over 22 and a P/E of over 39 - a valuation premium that reflects silver's upside potential and a cleaner exposure to the metal.

Compared to Coeur Mining, which has an EV/EBITDA of around 17 and a P/E of around 22, Hecla looks more expensive on EBITDA but similarly expensive on P/E, both of which have similar returns on invested capital of around 17-18%. Compared to the giant diversified players (BHP, Vale, Rio Tinto), Hecla has a significantly worse valuation on the face of it, but they have a lower growth profile and much higher exposure to cyclical segments such as iron ore or coal.

Hecla's competitive advantage is a combination of: a high silver revenue share, safe jurisdictions, mines with relatively low costs and long lives, and near-zero debt. The weaknesses, on the other hand, are the concentration on a few assets - Greens Creek and Lucky Friday are critical to overall performance - and the fact that in an environment of falling silver prices and weaker demand, there is "nowhere to run" if investors start shedding silver producers as a class.

Management and CEO

The company is led by Robert L. Krcmarov, who joined as President and CEO after a career in the mining industry with a focus on technical and operational roles. His background is not that of a typical "financial engineer", but rather an operations person, which in the mining industry often means an emphasis on efficiency, safety and life-of-field planning. Combined with a team that is experienced in finance, this creates a fairly balanced mix.

Meanwhile, the capital discipline can be seen in the numbers: after years of higher debt, the company has gradually paid down its long-term debt and now has virtually zero interest-bearing liabilities, interest coverage of over 10 times and a very high Altman Z-score. It is funding its significant investments in mine development (about $250-280 million per year in capex) primarily from operating cash flow, not aggressive debt.

Management's priorities are fairly clear from recent updates: maximize silver production in safe jurisdictions, reduce unit costs through operational improvements and by-products, invest in extending the life of key mines (tailings to 2045, underground development, cooling) while keeping the balance sheet strong to prepare the company for potential recessionary periods and acquisition opportunities. From an investor's perspective, this strategy makes sense - you're paying a high multiple, but for a very disciplined managed business.

Financial performance

The four-year series shows exceptional turnaround. In 2022, sales were about $719 million, gross profit was $116 million, operating loss was about $12 million, net loss was $37 million, and EPS was -0.07. A year later, sales rose slightly to 720 million, but due to higher costs and lower margins, gross profit was only 113 million and net loss widened to 84 million, EPS -0.14.

The turning point came in 2024: sales shot up to 930 million (+29%), gross profit rose to 198 million and operating profit to 106 million, still relatively low but already solid operating margins. Net income turned positive to $35.8 million, EPS $0.06. Then in 2025, the company "caught up" fully on a combination of higher metal prices, higher volumes and lower costs: sales jumped to 1.423 billion (+53%), gross profit to 622 million (+214%), operating profit to 515 million (+384%) and net profit to 322 million, EPS $0.49.

Thus, the operating margin and net margin in 2025 will be approximately 36% and 30% respectively, while return on assets will be over 12% and return on invested capital will be 17.4%. It's important to note that some of this jump is cyclical - the miner is benefiting from high silver prices and a favourable spread to costs - but at the same time, the numbers show the effect of completed mine investments that are enabling higher volumes and more efficient operations.

Cash flow and capital discipline

Cash flow confirms the turnaround picture: in 2022, operating cash flow generated around 90 million, falling to 75 million in 2023, but jumping to 218 million in 2024 and 563 million in 2025. Capex has been in the range of $210-250 million per year in recent years, meaning free cash flow was negative in 2022-2023, slightly positive in 2024 (about $3.8 million), and already robust in 2025 - around $310 million.

This is a key shift: the firm has moved from "invest and hope" mode to "invest while generating significant free cash flow" mode. With a market capitalization of around $13 billion, that translates to an FCF yield of around 1.8-2%, which matches the number you have in your overview. It's not a value bomb, but in light of silver's debt-free balance sheet and growth profile, it's a decent combination.

The dividend so far is token - about $0.0038 per share, with virtually zero dividend yield. Management clearly prefers to reinvest cash flow into mine development and exploration, rather than aggressively increase payouts and risk having to cut them again at a worse stage of the cycle. If there were to be a significant dividend increase, it would be more of a signal that the company is entering a more mature phase or that management expects a sustained higher silver price level.

Valuation

On current numbers, the valuation clearly looks like a "growth" mining stock. A P/E of around 39.4, EV/EBITDA of 22.5, P/S of 9.1 and P/B of 5 place the company at the upper end of the value spectrum within the metals miners. It looks extremely expensive against miners like BHP or Rio Tinto with P/Es of 7-11 and EV/EBITDA of 4-6, but they operate in different commodities and at different stages of the cycle.

A more meaningful comparison is with other silver and "EV/AI metal" players. Coeur Mining has an EV/EBITDA of around 17 and a P/E of around 22, Southern Copper has a P/E of around 35.5 and an EV/EBITDA of around 21.7, Freeport-McMoRan has a P/E of around 43.7 and an EV/EBITDA of 10.5. Hecla is thus straddling the line between "premium pure silver" and general commodity growth - the market gives it a premium for its combination of safe jurisdictions, high leverage to silver and strong balance sheet.

Whether it's expensive or cheap depends on two things: how long the high margins last and how high the long-term silver price is. If silver stays in a range where an all-in sustaining cost of $15-16 stands against a price well above $20, the company can generate double-digit returns on capital over the long term, and a P/E of around 25-30 might not be unreasonable. However, if the silver price were to return to lower levels and margins were to fall, the current P/E of 39 would quickly become unsustainable.

Growth catalysts and outlook

The near-term catalysts are primarily operational: confirmation that the company can deliver 15.1-16.5 million ounces of silver in 2026 at cash costs of between $1.50 and $1.25 per ounce (after by-product credits) and AISC of $15-16.25, and that capital expenditure of around $255-279 million will further strengthen the mine's infrastructure position into the 40s. The next trigger may be if the global silver deficit continues to be confirmed and prices remain in a range that allows for high margins.

Measurable KPIs to watch: annual silver production volumes (around 15-17 million ounces), AISC per ounce (target range $15-16.25), operating cash flow (above $400 million per year), free cash flow (above $250-300 million), ROIC (hold around 15-20%) and debt ratio. If these metrics remain strong in an environment of slightly fluctuating prices, the argument for a premium in valuation will continue to hold.

The narrative around industrial silver may also play a strategic "soft" catalyst role - as more is said about silver as an essential metal for energy transformation and data infrastructure, Hecla may become the "go-to" name for investors who want pure exposure to this story in safe jurisdictions. This can support multiples even in periods when metal prices oscillate in the short term.

Risks

The first and most obvious risk is commodity - if the silver price were to fall significantly below the levels the company is planning for (for example, a combination of lower demand from PV and normalising industrial demand), margins would quickly thin and a P/E of 39 would become untenable. The signal would be the confluence of a falling silver price and a declining outlook for margins.

The second risk is operational and technical. Mines like Lucky Friday and Greens Creek are complex underground operations where accidents, outages or permitting issues can significantly impact production. A heavy concentration on a few assets means that a failure at one mine is felt in the overall numbers - a signal would be a repeated lowering of production estimates at a particular mine or a failure to meet guidance.

The third risk is valuation. The market is now putting a premium on the company - P/E, EV/EBITDA and P/B are all well above the sector average - and this means that any disappointment, however temporary, could lead to a sharp compression in multiples even with relatively stable fundamentals. The signal would be a downgrade or a series of quarters where production, margins or cash flow fall short of expectations - in such a situation, pricing may overreact.

Investment scenarios

Optimistic scenario

Indeed, in the optimistic scenario, silver profiles as a strategic metal for energy transformation and data infrastructure in the coming years. The global deficit persists, prices stay at elevated levels or continue to rise, and Hecla takes full advantage of its projects - silver production stays around 16-18 million ounces per year, AISC remains in the $14-16 range, ROIC around 20%, and free cash flow steadily above $300 million.

In such an environment, EPS could rise gradually towards $0.60-0.80, while maintaining high margins. The market could value the company at a P/E of 30-35, EV/EBITDA of 18-20 and P/B of 5-6, which implies a potential share price in the $18-22 range (vs. today's levels) on NAV growth. An investor would benefit from a combination of profitability growth, expansion and sector rerating. The dividend could gradually rise, but the main driver would be capital appreciation.

A realistic scenario

In a realistic scenario, silver remains in a range where an AISC of around $15-16 still allows for decent margins, but prices are not consistently extremely high. Production stays in the 15-17 million ounce range, AISC is in the target range, free cash flow hovers around 250-300 million per annum and ROIC remains in the 15-18% range.

EPS is around $0.45-0.60, the market is gradually "flattening" multiples to less extreme but still above average levels - P/E 20-25, EV/EBITDA 12-16 and P/B 3-4. This means that even with stable or slightly rising earnings, there may be some compression in multiples, so the capital return won't be as glowing, but the investor will still get a combination of decent value growth and a low but rising dividend stream. The total expected return can be single digits to low double digits annually depending on the starting price.

Negative scenario

In a negative scenario, silver turns out to have been an overvalued story. Global demand will calm (e.g. due to technological changes in PV or slower infrastructure growth), prices will fall significantly, for example to a range where they are significantly closer to AISC, and the company will remain profitable but with very low margins. Output stagnates or declines slightly, costs rise, ROIC falls into single digits, and free cash flow thins significantly.

EPS in such a scenario could fall back into the $0.20-0.30 range, P/E would approach standard mining multiples - around 10-15, EV/EBITDA 6-8 and P/B 1.5-2.5. That means the share price could fall somewhere in the $6-9 range, even without the company being in the red - it would be more of a revaluation from a "premium growth" to a normal cyclical miner. The dividend in such a case would likely remain nominal or be raised only cosmetically.

What to watch next

• Annual and quarterly silver production - whether it is holding in the 15-17 million ounce range or trending lower.

• AISC per ounce of silver - whether it stays in the $15-16.25 target range or moves significantly higher.

• Free cash flow - maintaining FCF above $250-300 million per year as a signal that the company is generating "excess" cash even after investments.

• Balance sheet condition - in particular, whether the firm retains a net cash position or begins to significantly increase debt.

• The evolution of the global silver deficit and the trend in industrial demand (PV, electronics, data centers).

• Capital investment in mine life extensions (tailings, underground development) and their returns.

• Valuation multiples - whether they are holding high or starting to fall towards normal mining levels.

What to take away from the article

• This is one of the major silver producers in North America with key mines in safe jurisdictions and high leverage on the silver price.

• The company has turned losses in the hundreds of millions into net income of over $320 million and free cash flow of over $300 million in two years, with almost zero debt.

• The global silver market is heading into another year of deficit, supporting prices and margins for low-cost producers.

• Valuations are high: a P/E of nearly 40, EV/EBITDA of over 22 and P/B near 5 mean investors are paying a premium for a growth story and safe exposure.

• The strong balance sheet and low costs provide protection against a worse phase of the cycle, but valuation risk is real - a disappointing silver price or traffic could see a sharp compression in multiples.

• The title makes sense as a growth bet on silver and industrial demand, not as a "value" miner - entry price and holding horizon are therefore key.

In the fourth quarter of 2025 $TSLA registered 7,071 Cybertrucks in the U.S. A number that went into reports, headlines, and investor presentations.

But of those 7,071 units, 1,279, that is over 18%, were bought by SpaceX. Musk's rocket company. Same owner, different pocket. Add another 60 vehicles purchased through xAI, The Boring Company and Neuralink and you reach 19% of all Cybertruck registrations coming from connected companies.

Without these "sales" Cybertruck registrations would have fallen quarter-over-quarter by 51%.

This smells a bit like an accounting trick.

Musk's promise

In 2019 Musk promised that the Cybertruck would be the best-selling pickup in America. He predicted sales of 250,000 units per year by 2025.

Reality? In the entire year 2025 $TSLA sold approximately 20,300 Cybertrucks. That's 8% of the original promise.

Original price? Musk said less than $40,000. Today's base price? $72,235. An increase of 81% compared to his own promise.

And now the most important part: the real sales pace, after subtracting inter-company purchases, is according to analysts closer to 20,000 units per year. Total, not just for one quarter.

Vojta's thoughts

I'm not making money on $TSLA. And honestly, I don't want to.

The Cybertruck was a meme project from the start. A blocky piece of stainless steel that promised a revolution and delivered a premium pickup at the price of a German sedan.

When the company sells 19% of production to itself so the numbers don't look catastrophic.

$TSLA has real problems. Sales are declining for the third year in a row. $BY6.F has overtaken it as the largest seller of electric vehicles in the world. Margins are under pressure. And a brand that three years ago was synonymous with innovation and aspiration is today toxic in half of the world's markets because of the political activities of one person.

Q1 2026 results come out on April 22. I'm waiting for them with popcorn, not a buy order.

Tesla is a meme stock. It trades on stories, on a tweet, on promises. Fundamentals take a back seat. And that's the biggest risk, because meme stocks can go much higher than you think, but they can also fall much faster and deeper than anyone admits.

The Cybertruck isn't a story about a bad car. It's a story about a company that stopped telling the market the truth and is relying on the market not to find out.

Does anyone hold shares of $TSLA? If so, I'll pray for you on Sunday. ✝️

The investment boom around AI and semiconductors has grown into one of the most significant structural trends in global capital markets since 2023.

Hyperscalers such as Microsoft $MSFT, Amazon $AMZN and Google $GOOG are increasing capital spending on building data centers every year, which directly drives demand for GPU accelerators, memory, fiber optics and other components of the semiconductor value chain.

For investors who want to benefit from this trend without having to pick and choose individual titles, ETFs represent a logical path.

But not all semiconductor and AI funds are the same. Some offer narrow exposure to the 25 largest chipmakers, while others cover the entire value chain from chip design to manufacturing equipment to robotics and autonomous systems. Key differences can be found in the number of positions held, the weighting of the largest positions, geographic diversification and fee structure. It is these parameters that can significantly affect the real return on investment in the long run.

Moreover, the current market environment adds further layers of complexity. Geopolitical tensions in the Middle East, new export restrictions on chips, and the question of the sustainability of the current investment cycle of hyperscalers are all factors that can significantly impact the performance of these funds. That is why it is important to understand what each of these ETFs actually contains and what risk factors they entail.

VanEck Semiconductor ETF $SMH

The VanEck Semiconductor ETF is one of the most popular semiconductor funds on the market and one of the largest ETFs in the entire technology segment. The fund tracks the MVIS US Listed Semiconductor 25 index, which includes the 25 largest chip companies listed on U.S. exchanges. It is this high concentration that is both the fund's greatest strength and potential risk.

The largest positions include Nvidia $NVDA with a weighting of approximately 19%, followed by TSMC $TSM with a weighting of around 11% and Broadcom $AVGO with approximately 8.5%. The top 10 positions thus account for more than two-thirds of the fund's total assets. This structure means that $SMH s performance is strongly tied to a narrow group of dominant chip players. If Nvidia grows, the fund grows with it. If it weakens, it shows up in a big way.

Performance and key parameters

Since the beginning of 2026, the fund has earned appreciation in excess of 26%, making it one of the best performing ETFs in the technology category. Over the past year, then, the total return has exceeded 120%. The fund's total net assets exceed $51.5 billion, making it by far the largest semiconductor ETF in the world.

An expense ratio of 0.35% places the fund among the most affordable products in its category. For investors seeking concentrated exposure to the largest chip companies with Nvidia's dominant role, $SMH represents a primary choice. However, one must account for higher volatility, which is directly related to the level of portfolio concentration.

iShares Semiconductor ETF $SOXX

BlackRock'siShares Semiconductor ETF is the second-largest semiconductor ETF in the market with around $26.9 billion in assets. Unlike $SMH, the fund offers a broader portfolio with 3ch positions . The key difference, however, is the distribution of weightings across the titles with a cap, which limits the dominance of any one stock in the portfolio.

The largest positions in the portfolio are Broadcom $AVGO with a weighting of around 8.6%, followed by Micron $MU, Nvidia $NVDA and AMD $AMD, each with a weighting between 6 and 8%. In addition, the fund holds significant positions in Texas Instruments $TXN, Analog Devices $ADI or NXP Semiconductors $NXPI. This structure means that $SOXX is not as heavily dependent on the performance of a single firm as $SMH.

Structure and fees

Expense ratio of 0.34% is almost identical to the $SMH fund, which means that investors make their choices primarily based on portfolio structure and concentration levels, not fees. $SOXX is a much smaller fund, however, which may result in lower liquidity during periods of increased volatility. Morningstar rates the fund four stars over three and five-year periods and five stars over 10-year periods.

For investors who prefer a more balanced exposure across the entire semiconductor value chain, including chip equipment manufacturers and analog chip makers, $SOXX may be a better choice than the heavily concentrated $SMH. The fund also offers a longer history, allowing investors to better evaluate its behavior in different market conditions.

Global X Artificial Intelligence & Technology ETF $AIQ

The Global X Artificial Intelligence & Technology ETF differs fundamentally from the previous two funds in its investment focus. While $SMH and $SOXX are pure semiconductor funds, $AIQ covers the broader ecosystem of artificial intelligence and big data. The fund tracks the Artificial Intelligence & Big Data Index and invests in companies that develop or use AI technologies, including companies that provide hardware infrastructure for big data analytics.

The fund's portfolio is significantly more diversified than pure semiconductor ETFs. With 84 positions and the top 10 firms making up roughly 35% of assets, the fund spreads risk across a larger number of companies. Some of the largest positions include SK hynix $HY9H.F, Apple $AAPL, Alphabet $GOOG, TSMC $TSM and Netflix $NFLX. The fund thus combines tech giants with companies that are actively implementing AI into their business processes.

Global reach and performance

Over the past year, the fund has delivered a total return in excess of 58%, a remarkable result for a thematic ETF with such broad diversification. Geographic diversification is also an important aspect, as approximately one-third of the portfolio is outside the United States. The fund thus captures AI developments not only in the US, but also in developed markets in Europe and Asia.

The higher expense ratio of 0.68% is the trade-off investors pay for the thematic focus and broader coverage of the AI ecosystem. For those who want to bet not just on the chips themselves, but on the entire AI infrastructure, including software platforms and companies implementing AI into their services, $AIQ represents an interesting alternative to pure semiconductor funds.

Global X Robotics & Artificial Intelligence ETF $BOTZ

TheGlobal X Robotics & Artificial Intelligence ETF represents the most different fund in today's selection.

While the previous three ETFs focus on chips or the broader AI software ecosystem, $BOTZ targets companies that benefit from the increased adoption of robotics and artificial intelligence in industrial applications. This includes industrial automation, collaborative robots, autonomous vehicles and healthcare robots.

The fund's portfolio is comprised of 62 positions and is distinctly global in nature. The largest positions are Nvidia $NVDA, ABB $ABBNY, Fanuc $FANUY, Keyence $KYCCF and Intuitive Surgical $ISRG. It is the latter company, a leader in robotic surgery, that illustrates the breadth of the fund's coverage. Sector-wise, the fund allocates approximately 45% of its assets to industrials, 33% to technology and approximately 11% to healthcare.

Global diversification with an emphasis on Japan

Geographically, the fund allocates approximately 34% to the US, approximately 27% to Japan and 9% to Switzerland. It is the high proportion of Japanese companies such as Fanuc, Keyence and SMC Corporation that gives the fund unique exposure to global leaders in industrial automation that are virtually absent in other AI funds.

The fund's total return over the past year is over 37%, significantly lower than pure semiconductor funds. However, this reflects the different portfolio structure, which is less focused on the chip series and more on physical AI applications. For investors who believe that the next wave of the AI boom will shift from chips to robotics, autonomous systems and industrial automation, $BOTZ may represent an interesting strategic portfolio component.

Fund Comparison

Selecting the best ETF

Each of the four funds covers a different part of the AI and semiconductor ecosystem, and that's where the main value of this comparison lies.

• $SMH is a tool for investors who want the most concentrated bet on the dominant chip companies, led by Nvidia. But the high concentration means the fund is highly sensitive to sentiment around AI investments and any changes in capital spending by hyperscalers.

• $SOXX offers similar exposure but with a more balanced distribution. Investors gain access to the entire semiconductor value chain, including analog chip, sensor and chip equipment manufacturers. This can reduce volatility during periods when the market rotates from growth to value semiconductor companies.

• $AIQ is an option for investors looking to capture the broader AI trend including software companies, companies using AI in their services and global players outside the US. The higher fees of 0.68% are a trade-off for thematic breadth of coverage. The fund is also less correlated to the chip cycle itself.

• $BOTZ then brings a completely different exposure, focused on physical AI applications. The high proportion of Asian and European industrial companies makes this fund an interesting position for investors who believe in the next wave of robotics adoption. With the advent of humanoid robots and advanced manufacturing automation, this segment could be the next growth driver.

What to watch next

• Hyperscalers' capital spending pace on AI infrastructure in the second half of 2026, which directly impacts chip demand

• The impact of new export restrictions on semiconductors, particularly towards China

• Developing geopolitical tensions in the Middle East and its impact on the supply of key materials for chip manufacturing

• Accelerating adoption of humanoid robots and industrial automation as a catalyst for $BOTZ

• Valuation of the entire semiconductor sector, which is trading around 22 times forward P/E after this week's gains

• Semiconductor companies' quarterly earnings season and guidance for Q3/Q4 2026

Choosing the right ETF fund with a focus on AI and chips depends primarily on what part of the ecosystem an investor wants to cover and what level of concentration they are willing to accept.

The $SMH and $SOXX funds offer direct exposure to the core of the chip industry with low fees, while $AIQ and $BOTZ bring a broader thematic scope including the AI software layer and physical applications in robotics.

The current market environment is favorable for the processor and AI sector, with demand for AI infrastructure remaining strong and hyperscaler capital spending continuing to grow.

At the same time, however, there are risks that include geopolitical tensions, regulatory changes in chip exports, and the question of whether current valuations reflect an already fully optimistic scenario. This is why it may be prudent to consider diversifying across multiple funds with different focuses, rather than concentrating all exposure in one product.

Still, the stock lost more than 9% in the aftermarket after the results were announced. The reason is not the weak quarter, but the earnings structure and a more cautious outlook for the second quarter. Investors see that much of the jump in net profit is one-off and that margins and earnings per share in Q2 will be weaker than they have managed to paint after a very strong Q1.

Q1 2026 results

Netflix's $NFLX revenue in the first quarter was roughly $12.25 billion. That's a 16% growth year-over-year, and about 14% after adjusting for currency effects. Revenue growth is on three legs: continued subscriber growth, higher average revenue per user due to price adjustments, and a growing share of advertising revenue. The company itself says revenue was "slightly above plan" precisely because of higher-than-expected subscriber growth and favorable currency.

Operating profit in Q1 was about $4 billion, up about 18% from the same period last year. Operating margin moved to 32.3%, compared to 31.7% in Q1 2025. This means that Netflix was able to not only increase revenue, but also keep costs under control enough to improve margins slightly. For a company that just a few years ago was burning much of its cash flow into content and expansion, this is confirmation of a transition into a "profitable" growth phase.

At the net profit level, the numbers look even better. Netflix earned about $5.3 billion versus about $2.9 billion a year earlier. Diluted earnings per share rose from $0.66 to $1.23, up roughly 86%, while market expectations were around $0.75-0.80. Thus, the company significantly beat estimates in terms of net income and EPS.

The important thing is why EPS jumped so dramatically. In the first quarter, Netflix collected $2.8 billion as a fee for the cancellation of a planned deal with Warner Bros. Discovery, which was part of a broader deal with Paramount. The amount is a one-time charge, appearing on the books as "interest and other income" and artificially inflating net income and earnings per share. Without it, EPS would still be solidly above estimates, but the difference from consensus would not be nearly as spectacular.

The significant impact of this payment can also be seen in cash flow. Net operating cash flow increased roughly year-over-year from $2.8 billion to $5.3 billion and free cash flow from $2.7 billion to $5.1 billion. As a result, Netflix adjusted its free cash flow estimate for 2026 from roughly $11 billion to $12.5 billion. It also reiterates that it wants to keep the ratio of cash spend on content to its book amortization around 1.1 times, so it intends to continue to invest heavily in content despite strong cash flow.

Overall, then, Q1 2026 in terms of revenue, operating profit and cash flow confirms that Netflix can grow at double-digit rates while generating high margins. However, much of the jump in net profit is one-off and the market is not forgetting that when interpreting the results.

• Full presentation with results.

Outlook and why the stock is falling after the results

For the full year 2026, Netflix leaves its own outlook unchanged. It still expects revenues in the range of $50.7 billion to $51.7 billion, which equates to roughly 12-14% growth, and an operating margin of around 31.5%. That's up about two percentage points from 29.5% in 2025. The company thus confirms that it sees itself as a steady double-digit growth business with improving profitability and strong free cash flow.

So where is the problem? In the detailed outlook for the second quarter. Netflix itself says that content cost growth this year will be mainly concentrated in the first half of the year and that it is the second quarter that will have the highest year-on-year growth in content amortisation. This means that even with double-digit revenue growth, operating margins will deteriorate year-on-year in Q2. The company expects Q2 operating margin to be roughly 32.6%, compared to 34.1% in Q2 2025.

At the same time, the market is sensitive to the Q2 earnings per share estimate. Based on the numbers Netflix is reporting, Q2 EPS should be around $0.78, which is less than what most analysts were counting on. After a first quarter where EPS significantly beat expectations thanks to a combination of higher operating profit and a one-time charge from Warner/Paramount, investors were hoping for a more aggressive tone in the months ahead. The reality is more cautious: the second quarter will be more cost-intensive, and so earnings per share are unlikely to be as strong as would be consistent with the post-Q1 "euphoria."

Add to that the psychological equation around the failed acquisition of Warner Bros. Discovery. Netflix explains in a letter to shareholders that Warner would be a nice accelerator to the strategy, but only at a price it considers reasonable. The company stresses that it has multiple avenues to fulfill its ambitions - in-house production, licensing, partnerships - and that it would rather focus on disciplined capital management and organic growth than a "deal at any price." But part of the market was clearly hoping for a big leap forward through acquisition, and with it more flagship brands in the library. Instead, there's a one-time revenue of $2.8 billion, no Warner in the catalog, and the prospect of "only" 12-14% revenue growth annually.

The result is a typical scenario where short-term players react to the combination of inflated one-time earnings and a less optimistic short-term outlook by realizing gains. That's why we see the stock fall more than 9% in the aftermarket, even though the quarterly numbers themselves are very good and the full-year outlook remains stable.

Long-term results

If we look at the last four years, we can see how Netflix has gradually transitioned from a "grow at any cost" phase to a model that combines a decent revenue growth rate with high profitability.

Revenues in 2022 were roughly $31.6 billion. By 2023, they have moved to 33.7 billion, a growth rate of about seven percent. In 2024, they reached $39 billion, and in 2025, more than $45.2 billion. This corresponds to roughly sixteen percent growth in two consecutive years. After a slower year in 2023, when the streaming market took a breather after the covid boom, Netflix was able to return to double-digit growth thanks to paid account sharing, pricing adjustments, and the rollout of an advertising plan.

Gross profit increased faster than revenue during this period. It was around $12.4 billion in 2022, $14 billion a year later, $18 billion in 2024 and around $21.9 billion in 2025. The improving gross margin confirms that Netflix can get more out of every dollar of revenue, whether by better managing content costs or monetizing users more effectively.

Operating profit grew from roughly $5.6 billion in 2022 to $7 billion in 2023, $10.4 billion in 2024 and $13.3 billion in 2025, more than doubling in three years. Net profit has moved from $4.5 billion in 2022 to $5.4 billion in 2023 and $8.7 billion in 2024 to about $11 billion in 2025. Profits are growing faster than sales, which is exactly the shift you want to see from a more mature but still growing business.

A looser but important figure is EBITDA. This was around $20.3 billion in 2022, $21.5 billion in 2023, $26.3 billion in 2024, and around $30.2 billion in 2025. This makes Netflix a company that is not only growing fast, but also generating very high operating cash flow on a steady basis. It is Q1 2026, with free cash flow of over $5 billion, that fits into this picture, even if part of that increment is due to a one-time payment.

Shareholders

Netflix is now a classic big blue chip, with institutional ownership playing a major role. Management and other insiders hold less than one percent of the shares, while institutions own more than 80% of the total number of shares and free float. The largest shareholders are global asset managers such as Vanguard, BlackRock, Fidelity and State Street, each with a few percent stake. This means that short-term price swings are very sensitive to the mood of a few dozen large funds - when they decide to reduce exposure after earnings for a more conservative earnings outlook, the stock can react very quickly, even if the company's fundamental story doesn't change much.

In terms of capital deployment, Netflix continues to pursue a strategy of prioritizing investment in content, technology and any smaller acquisitions, before returning excess cash to shareholders through share buybacks. During the period when the potential transaction with Warner Bros. Discovery, the buyback program was temporarily suspended, but resumed in full swing following the withdrawal from the deal and the collection of the break-up fee. In the first quarter, Netflix repurchased roughly 13.5 million shares for about $1.3 billion, leaving it with several billion dollars of room on its existing program. The company is not yet paying a dividend, and the priority is to continue to build its content and technology base, and to do so by gradually reducing the number of shares outstanding.

Strategic directions and news

Strategically, Netflix is looking to expand its role from "just" a streaming platform to the broader entertainment ecosystem. It is adding video podcasts, games and live streaming alongside its core series and movies. In the first quarter, it broadcast over 70 live events, including the World Baseball Classic in Japan, which attracted over thirty million viewers and became the most-watched program in Netflix's history in that market. Similarly, a live stream of a BTS band event brought in tens of millions of viewers worldwide and topped the charts in many countries.

In games, Netflix is developing several categories ranging from narrative titles to party and puzzle games to children's games. The new Netflix Playground app specifically targets children's users, and the company says it's already seeing early promising signs - roughly ten percent of children's profiles are at least trying out games, and nearly half of children's profiles watch Netflix on mobile and tablet devices, where games can be easily integrated.

Technologically, Netflix is betting on the next wave of personalisation and the use of artificial intelligence. AI is meant to help both in recommending content and customizing the user interface, as well as in the creation and post-production of the content itself. This shift includes a redesign of the mobile app and tests of new formats such as vertical video.

In terms of governance, the important news is the formal departure of co-founder Reed Hastings from the board. Hastings had previously stepped down from the role of co-CEO and moved into the role of executive chairman. He has now announced that he will no longer run for the board and wants to focus more on philanthropy and other projects. In practice, this only completes the handover of the reins to the current leadership, but it symbolically closes a chapter in Netflix's history and confirms that the future of the company rests on the duo of Greg Peters and Ted Sarandos and the culture that Hastings helped build.

Fair Price

Yes, this happens on equity markets—even on days when stock indices trade at all-time highs. Netflix $NFLX just showed us that live.

Q1 2026 results beat expectations

Netflix reported first-quarter revenue of $12.25 billion versus the market estimate of $12.17 billion.

Adjusted earnings per share reached $1.23 versus the consensus of $0.76.

For comparison, in the same quarter last year the company reported revenue of $10.54 billion and earnings of $0.66 per share, so that’s roughly a 16% year‑over‑year revenue increase and nearly double EPS.

Yet the stock is plunging after the results!

Guidance for Q2 disappointed. Netflix expects revenue of $12.57 billion, while Wall Street was modeling $12.64 billion. The EPS outlook of $0.78 missed the $0.84 consensus, and operating income of $4.11 billion was well below the Street consensus of $4.34 billion. Shares are down as much as 9.72% in after-hours trading.

Founder departure

Reed Hastings, the company’s co‑founder, announced he will leave the board in June. Hastings stepped down as co‑CEO in January 2023, then moved to executive chairman, and last spring shifted to a non‑executive chairman role. This is his final farewell to the company he built from scratch. Day‑to‑day leadership is handled by co‑CEOs Ted Sarandos and Greg Peters.

Lost battle for Warner Bros $WBD

This is also the first report after the unsuccessful bid to acquire Warner Bros. Discovery $WBD. The offer was ultimately won by Paramount Skydance $PSKY, and Netflix ended up with a breakup fee of $2.8 billion, which analysts say could be invested in content and advertising infrastructure.

Advertising is becoming a second growth engine. Ad revenue in 2025 grew more than 2.5x to $1.5 billion, and management is targeting a doubling to $3 billion in 2026.

Price increases as a sign of strength

Netflix $NFLX raised prices across all subscription tiers in March. The ad‑supported Standard tier rose by $1 to $8.99 per month, while the ad‑free Standard and Premium tiers rose by $2 to $19.99 and $26.99. These price adjustments were expected to bring roughly $1.5 billion in additional revenue in 2026.

How are the shares performing?

Shares of $NFLX traded around $107.71 before the results. Year‑to‑date they were up about 15%, but after the recent drop due to the weaker outlook they’re trading below $100.

Do you have $NFLX in your portfolio, or do you find it too expensive at these levels?

We will focus exclusively on two axes: obesity and IMID (autoimmune and inflammatory diseases). We'll show who's really selling today, who has better data, what the pricing and addressable market is, and what the current valuation of both companies says about investor expectations. The goal is that by the end of the text, everyone will be able to decide whether it makes more sense for them to pay a "premium" for Lilly, or rather bet on the cheaper but riskier Amgen.

Top points of the analysis

• Lilly already collects tens of billions of dollars a year from Mounjaro and Zepbound, which account for more than half of the company's revenues; Amgen has no approved product in obesity yet.

• Zepbound sales were up to around $2-2.3 billion in one quarter, Mounjaro around $3.5-3.8 billion in the same period, and growth is still in double digits.

• Amgen'sMariTide (AMG 133) is showing up to 20% average weight reduction in 52 weeks in early studies with no apparent adverse effect, with potentially longer efficacy and less frequent dosing.

• Valuation: Lilly trades at extremely high multiples relative to EPS and sales, with the market attributing a "GLP-1 super-premium" to it; Amgen has multiples significantly lower and valuation reflects a more diversified big pharma profile with an obesity option.

• In the IMID segment, both have broad portfolios, but Lilly has a strong growth profile due to newer biologics, while Amgen is positioned more on established, slower-growth products.

• Regulation and reimbursement: for Lilly, we are already addressing the issue of manufacturing capacity, long-term pricing and indication expansion; for Amgen, the main binary risk is whether MariTide will get to market and under what conditions.

Obesity and IMID are not "just another indication"

At $Lilly, the fundamental change is that GLP-1 is no longer just one of the pillars, but the real core of the business. Mounjaro and Zepbound will account for approximately 50-56% of total revenue in 2025, growing each quarter at a rate unprecedented in big pharma. This means that investors today are not buying a "diversified farm" but rather an obesity and diabetes platform. Any hit to the price, reimbursement or safety of GLP-1 has an immediate impact on valuation.

For Amgen $AMGN, a different type of change has taken place in recent years. The company dropped one of its obesity drug candidates (AMG 786) and "went all in" on MariTide (AMG 133), which in early stages was able to deliver around 20% average weight loss over 52 weeks, with no indication of adverse events, which is different from some of the data with current GLP-1. In addition, MariTide promises a longer dosing interval (monthly or less frequent injections), which may be a major competitive advantage in practice.

In the IMID segment, Lilly has strengthened its portfolio of autoimmune disease-targeted drugs - in addition to GLP-1, it has a number of advanced biologics and immunomodulatory drugs that complement the company's growth profile beyond obesity alone. Amgen, on the other hand, is built on a combination of established immunology drugs and a few newer products; its IMID business is stable and profitable, but no longer delivers the same "wow factor" as Lilly.

So what changes for shareholders? At Lilly, obesity is becoming both the main value driver and the main concentration of risk - the company is becoming more expensive and more sensitive to any wobble in its GLP-1 portfolio. For Amgen, by contrast, obesity is evolving differently - the core business is valued relatively conservatively and MariTide represents a potential revaluation item if the data and commercialization pan out.

What it takes for companies to succeed:

• Lilly needs to sustain revenue growth at Mounjaro/Zepbound over the long term and expand indications without margin pressure on pricing and reimbursement.

• Amgen needs to take MariTide through Phase 3 to registration and reimbursement, ideally with a clear differentiator (longer acting, lower rebound, less frequent dosing).

• Both companies need to develop IMID portfolios so that they are not purely a one-dimensional "obesity bet".

Growth drivers for LLY vs. AMGN

For Lilly, the main driver is a simple equation: high GLP-1 sales volume + high prices = explosive revenue and profit growth. Revenue from Mounjaro exceeded $3.5-3.8 billion in each quarter, Zepbound approached $2-2.3 billion, and both products continue to grow at double-digit rates as the company increases production capacity and expands availability into new markets. Thus, within 12-36 months, it may be realistic for Lilly's GLP-1 portfolio alone to generate over $50-60 billion annually.

The second source of growth at Lilly is expanding indications and adding lower-priced options, such as new Zepbound formulations that open the market to out-of-pocket paying patients. While this may slightly push down the average price per dose, it dramatically expands volume - and with high manufacturing leverage, this can be positive at the operating profit level. IMID and other segments then provide diversification and stable cash flow.

For Amgen, whether MariTide turns from a clinical candidate into a true blockbuster will be critical over the next 3-5 years. Current data show that the combined mechanism (GLP-1 agonist + GIPR antagonist) leads to significant and sustained weight reduction, without the rapid yo-yo effect and side effects seen with some competing products. It is the long-term weight maintenance and favorable safety profile that may be the key to reimbursement and premium pricing.

The third driver for Amgen is the combination of IMID and oncology. While the IMID portfolio is not growing as fast as Lilly, it is generating robust margins and cash that can fund the development of MariTide and other candidates. Thus, in a realistic 12-36 month timeframe, Amgen may remain a "classic big pharma player" with modest growth, but in the longer term, it may become a major player in obesity if MariTide succeeds and the company manages commercialization.

Figures

• Lilly: Mounjaro Q4 sales of about $3.5bn, year-on-year growth of about 60-113% depending on the period.

• Lilly: Zepbound Q4 sales approx US$1.9-2.3bn, more than tenfold growth vs first months post launch.

• Lilly: GLP-1 portfolio (Mounjaro + Zepbound) accounts for an estimated 50-56% of total company revenues.

• Lilly: total revenues of $58-61bn in 2025, with growth of around 40-45% driven by GLP-1.

• Amgen: MariTide Phase 2 - up to ~20% average weight reduction in 52 weeks without a plateau.

• Amgen: discontinuation of AMG 786 and focus on MariTide as lead obesity candidate.

• Both companies: strong IMID/autoimmune portfolio at different phases, different growth rates.

Interpretation is relatively straightforward: Lilly is already cashing in, growth is visible in revenues, and valuation reflects "GLP-1 euphoria" and real results. Amgen only has data, not obesity sales, yet - but its pipeline (MariTide) has parameters that may be competitively strong if confirmed by the later stage and regulatory process.

Valuation: how much is paid for the product/expected product

Valuation is where the difference between Lilly and Amgen becomes fully apparent. Lilly is trading at multiples that are well above the average for big pharma after a huge growth spurt in its stock - the market attributes to it the role of the clear leader in obesity and diabetes and is willing to pay significantly more for every dollar of sales and profits than its competitors. In practice, this means that part of the future growth of the obesity market is already priced in, so repricing further up requires everything to work almost flawlessly.

Amgen's multiples are many times lower - it trades closer to a "classic big pharma" valuation. The market values its established portfolios and robust cash flow, but MariTide and the obesity pipeline at the price are not yet fully reflected as a surefire blockbuster, more of an opportunity. This provides some cushion: if the obesity program succeeds, there may be a significant revaluation; if it fails, the impact on valuation is less than for Lilly, where negative news on GLP-1 would hit the very core of the business.

Lilly vs. Amgen (obesity)

What the market values

• For Lilly: rapidly visible GLP-1 revenues, high growth rate and leadership position in duopoly with Novo Nordisk.

• For Amgen: stable cash flow from IMID and oncology, potential for MariTide as a differentiated obesity product with less frequent dosing.

What the market fears

• For Lilly: concentration of risk on GLP-1, price regulation, reimbursement and potential safety signals.

• For Amgen: clinical and regulatory risk of MariTide, later market entry and strong competition from Lilly/Novo.

Lilly vs. Amgen (IMID)

Risks: where's the hidden catch

For Lilly, the biggest risk is that the "perfect story" starts to get complicated. If negative safety data, greater pricing pressure (especially in the US) or regulatory intervention in obesity drug reimbursement were to emerge, the impact on Mounjaro/Zepbound revenues would be significant - and with it, the valuation. Another risk is that high expectations will not translate into margins as high as the market expects if prices have to come down significantly to make obesity widely available.

For Amgen, most of the risk is concentrated in the clinical and commercialization phases of MariTide. A very promising Phase 2 does not mean certain success in Phase 3, and even in the event of registration, Amgen will be entering a market where Lilly and Novo Nordisk already have a huge head start and an established brand. MariTide also risks becoming a "nice to have" supplement, not a true leader, unless it delivers clearly better results or ease of administration.

Investor Risk Checklist:

• Lilly: signals of slowing GLP-1 growth, pricing/reimbursement pressure, safety data, reliance on a few drugs.

• Amgen: negative or ambiguous late-stage MariTide data, regulatory delays, lack of significant sales in obesity even after launch.

• Both: general regulation of obesity drugs, competitive pipeline of other companies, payer cost pressures.

Investment scenarios: Lilly vs. Amgen

Optimistic scenario

In the optimistic scenario, Lilly continues to dominate obesity and diabetes, GLP-1 sales grow tens of percent annually, IMID and other segments add steady growth, and valuation maintains a premium.

Amgen manages to market MariTide with clear differentiation (long-term effect, less frequent dosing) and becomes the "third big" obesity player.

• Lilly: revenue grows at a high double-digit rate, margins remain high, dividend grows slower than earnings, P/E and EV/EBITDA remain high.

• Amgen: obesity revenue adds several billion per year, IMID and oncology growth remains steady, valuation approaches today's Lilly multiples (relatively), dividend yield remains interesting.

A realistic scenario

In the realistic scenario, Lilly sustains GLP-1 growth, but it gradually slows as the market saturates and prices come under pressure. Valuation normalizes slightly, but the company remains a leader and generates massive cash flow. Amgen succeeds with MariTide, but more as a smaller, complementary player - revenues are solid, but not comparable to Lilly/Novo.

• Lilly: revenue growth in low to mid double digits, P/E falls from extremes but remains above sector average.

• Amgen: modest valuation change, stable dividend title with obesity bonus but no "explosive" scenario.

Pessimistic scenario

In the pessimistic scenario, Lilly faces strong pricing pressure, reimbursement constraints and possibly safety issues that slow GLP-1 growth or worsen margins. Valuation reverts closer to the sector average, implying a significant decline in share price. Amgen, on the other hand, fails to take MariTide to a commercially successful launch, leaving obesity as a "missed opportunity."

• Lilly: revenue growth slows significantly, P/E compresses, capital is returned to investors through dividends and buybacks rather than revaluation.

• Amgen: valuation remains near current levels, sales grow only modestly, but dividend remains the main reason to hold.

What to watch next

• Lilly: quarterly sales of Mounjaro and Zepbound, growth rate and share of total sales.

• Lilly: reimbursement decisions, caps and potential pricing pressures, especially in the US.

• Amgen: key data from the next phases of the MariTide studies, especially long-term sustainability of weight loss and safety.

• Amgen: potential partnerships or management comments on commercial strategy in obesity.

• Both: portfolio and pipeline development in IMID - so that obesity is not the only investment argument.

What to take away from the article

• Lilly is clearly leading in obesity today - it has approved products and tens of billions in sales in sight.

• But for that leadership, investors pay an extreme premium in multiples of profits and sales.

• Amgen is still a newcomer in obesity with MariTide, but the early data is very strong and suggests differentiation.

• Amgen's valuation is significantly more conservative, with obesity as an option rather than a certainty.

• In IMID, Lilly has more dynamic growth, Amgen has a more robust base but a slower pace.

• The choice between these two titles is, at its core, a question: pay a premium for the leader today (Lilly), or buy a cheaper title with the potential to catch the leader (Amgen).

Management is signalling that this is not a one‑off spike. For the second quarter, TSMC expects dollar revenue to climb again toward roughly 39–40.2 billion, with gross margin in the low‑to‑mid‑60s and operating margin in the mid‑50s, supported by orders from customers like Nvidia and Apple and by a product mix where advanced technologies account for well over 70% of wafer sales. To keep up, the company plans to lean toward the high end of an enormous 52–56 billion dollar capital‑expenditure budget in 2026, ploughing cash into N2 capacity and advanced packaging such as CoWoS – a reminder that even for the clear winner of the AI chip boom, sustaining those extraordinary margins requires writing some of the biggest capex cheques in the entire tech industry.

How Q1 2026 turned out

For Q1 2026, TSMC earned $TSM TWD1.13 billion, or roughly $35.9 billion. Year-over-year, revenue growth was 35.1% in TWD and 40.6% in USD, with quarter-over-quarter revenue growth of 8.4% in TWD and 6.4% in USD. Net income came in at TWD 572.5 billion, or about USD 18 billion, up 58.3% from a year ago and up 13.2% from Q4 2025.

Margins are also top-notch for the semiconductor sector. Q1 gross margin was 66.2%, operating margin was 58.1% and net margin was 50.5%. This means that for every dollar of sales, the company is left with roughly half a dollar of net profit after all costs. From a global foundry perspective, this is an almost unmatched level and confirmation that TSMC has tremendous pricing power in its most advanced processes.

The sales structure shows where the growth is coming from. 3nm processes accounted for 25% of sales, five nanometers 36% and seven nanometers 13%. Together, advanced technologies (7nm and better) accounted for 74% of wafer sales. This means that TSMC is now largely a "leading-edge" fab - and it is these nodes that are key to AI, datacenters, high-end smartphones and high-end GPU/CPUs.

Quarter-on-quarter sales grew despite a seasonally weaker period - Q1 is often quieter for semiconductors, but this time demand for 3nm and 5nm processes outweighed seasonality. This can be seen in the CFO's comments, who says Q1 growth was driven by "strong demand for our most advanced process technologies".

• Full presentation with results.

What management has to say

Commenting on the numbers, CFO Wendell Huang stressed that the business was driven by strong demand for its most advanced processes in Q1 and that the same engine would drive Q2. The company expects Q2 2026 revenue in the range of $39-40.2 billion, another quarter-on-quarter growth.

For Q2, TSMC also gives a gross margin outlook in the range of 65.5-67.5% and an operating margin between 56.5% and 58.5%. This means that even with high investments and capacity expansion, it does not expect any significant profitability loosening. Management is essentially saying "we will continue to invest massively, but you won't see it on margins".

In the broader TSMC commentary, they talk about:

• demand is driven primarily by AI and datacenter chips

• demand for chips in general is starting to outstrip supply

• customers are accelerating their capacity expansion plans for 2026 and beyond

• and TSMC has full order books at the 3nm and 5nm nodes while preparing for the next generation (2nm)

Long-term results

Revenues in 2022 were roughly TWD2.26 trillion, falling slightly to TWD2.16 trillion a year later (the company was then absorbing a drop in PC and smartphone demand after the covid boom). That was a "breather" year, when the market was wondering if TSMC was in for a prolonged downturn after extremely strong years. The answer came quickly: sales jumped to TWD 2.89 trillion (+34%) in 2024 and TWD 3.85 trillion (+33%) in 2025, driven mainly by the emergence of AI and datacenter chips.

The improvement in margins is even more pronounced. Gross margins in 2022 of around TWD 1.35 trillion shrink to TWD 1.18 trillion in 2023 due to weaker demand, but jump to TWD 1.62 trillion in 2024 and TWD 2.30 trillion in 2025 - up nearly 42% in a single year. Operating profit has followed a similar path: from TWD 1.12 trillion (2022) to TWD 0.92 trillion (2023) to TWD 1.32 trillion (2024) and TWD 1.96 trillion (2025). This shows two things at the same time - TSMC can cut back quickly in a bad year and, conversely, make the most of high margins in a better year.

Net profit dropped from roughly TWD 993 billion to TWD 852 billion in 2023 (-14%), but rose to TWD1.16 trillion in 2024 and TWD1.74 trillion in 2025, a further increase of almost 50%. Earnings per share tell the same story: 191 TWD in 2022, 164 TWD in 2023, 223 TWD in 2024 and 335 TWD in 2025, with the number of shares virtually unchanged. That said, EPS growth is purely about business, not financial gimmicks.

Shareholders

Insiders hold about 0.05% of the stock, institutions about 15.7% of the total number of shares and free float. This is significantly less than the typical US blue chip, where institutions often own over 70%. The rest is spread among the public sector, domestic investors and retail shareholders.

The largest institutional foreign shareholders include FMR (Fidelity) with about 1.2%, Sanders Capital with about 0.6%, Capital World Investors and Capital International Investors, each with a stake of under one percent. None of these players has a position comparable to, say, Vanguard or Berkshire at US banks - TSMC is a more "spread out" title from a global perspective.

News and strategic moves

• AI as the main driver: the company is clear that demand for 3nm and 5nm processes is mainly driven by AI and datacenter chips - GPUs, accelerators and advanced CPUs. Customers (large cloud players, design firms and traditional chipmakers) are pushing their orders forward to secure capacity.

• Upcoming 2nm generation ramp: TSMC is investing heavily in the 2nm node, which is expected to go into mass production in the second half of this decade. Q1 2026 shows that the company has the financial strength and margins to fund this ramp from its own cash flow.

• Geography and geopolitics: TSMC continues to build capacity outside Taiwan - factories in the US (Arizona), Europe (Germany) and Japan. These projects are expensive and margins on them will initially be lower, but the company sees them as a strategic necessity given the US and EU pressure to "onshoring" critical manufacturing.

• Export and security restrictions: like ASML, TSMC operates in an environment of increasing export and security restrictions against China. So far, it has been able to compensate for the shortfall in Chinese demand with Western customers, but the company has to take this into account in its production and investment planning.

• Strong position in the ecosystem: TSMC produced over 12,600 different products for more than 500 customers on 305 process technologies in 2025. This implies tremendous technological depth and customer stickiness to its ecosystem - switching to another foundry would be extremely costly for most.

The government is checking whether large industrial players could function as a backup manufacturing base when traditional defense contractors are pushed to their limits. For the automakers themselves it’s not that they’d immediately start assembling tanks instead of pickups, but that it opens up the possibility of military contracts for vehicles, parts, platforms and other hardware if the conflict were to be prolonged and expand. From an investor’s perspective, it’s a clear signal that the U.S. expects permanently higher defense spending and is looking for ways to quickly raise capacity — which could be a long-term tailwind not only for traditional defense titles but also potentially for selected industrial firms that become part of that ecosystem.

Spotify Technology $SPOT is one of the most interesting stories in the current stock market. The company, which as recently as June 2025 was trading at an all-time high of around $785 per share, is trading significantly lower today. The decline has exceeded 32% (down from ATH's 48% in early February) and the stock is currently trading around $530.

This development is surprising to many investors as the company's fundamentals have improved significantly over the past year. Spotify has seen a record number of monthly active users, strong revenue growth, and the popular streaming platform has entered a phase of stable operating profitability for the first time in its history.

The question many investors are asking today is an obvious one: does the current stock decline represent a hidden buying opportunity, or are there too many risks that make this investment unattractive?

Spotify $SPOT

Record sales and profitability

Spotify's 2025 financial results are among the strongest in the company's history. Total annual revenue reached approximately $19.4 billion, representing 13% year-over-year growth. The premium segment, which generates the vast majority of revenue, saw growth driven by a combination of higher subscriber numbers and recurring subscription price increases. It is Spotify' s pricing strategy that has changed fundamentally over the past two years. The company has already made three price increases since 2023, with the latest coming in January 2026, when the price of an individual Premium plan in the US increased to $12.99 per month.

However, the key milestone is mainly operational profitability. Spotify generated an operating profit in excess of $2.5 billion in 2025, representing an operating margin of around 13%. Yet, as recently as 2023, the company was operating with a negative operating margin. This turnaround is the result of a combination of higher subscription revenues, content cost optimization, and a significant reduction in personnel expenses following layoffs during 2024. The company's gross margin reached a record 33.1% in the final quarter of 2025, up more than 6 percentage points from two years ago.

Free cash flow(free cash flow) also reached an all-time high of $3.27 billion for the full year 2025, an increase of approximately $700 million from the prior year. The company also has significant cash reserves in excess of $11.1 billion in cash and short-term investments. This financial strength gives the company room for share buybacks, acquisitions, or further investment in product development.

Comparison of key Q4 2024 vs. Q4 2025 metrics

User base growth

In terms of user metrics, Spotify continues its robust growth. The number of monthly active users (MAUs) reached 751 million at the end of Q4 2025, representing 11% year-over-year growth. This was also the highest quarterly growth in the company's history, with the base expanding by 38 million users in a single quarter. The number of paid premium subscribers grew 10% year-on-year to 290 million.

For Q1 2026, the firm expects further growth to 759 million MAUs and 293 million Premium subscribers. Importantly, subscriber churn following the latest price increase remains in line with management expectations, suggesting that users are seeing increasing value from the platform despite the higher price.

Expansion strategy: podcasts, audiobooks and AI

Spotify has been systematically shifting from a pure music streaming service towards a universal audio platform in recent years.

• A key element of this transformation has been the expansion into podcasts, which has attracted more than 390 million users to video podcasts (up 54% year-on-year). The company has also launched the Spotify Partner Program, which allows creators to monetise their content, and expanded its audiobook offering to more than 500,000 titles.

• Another strategic direction is the integration of artificial intelligence. Spotify has introduced several AI features in recent months, including AI DJ, which personalizes the music experience, and Prompted Playlist, where users can textually describe what playlist they want. The company also launched a partnership with ChatGPT for music and podcast recommendations. This so-called ubiquity strategy aims to enable Spotify to be everywhere, from phones to TVs to cars, with a long-term goal of reaching 1 billion paying users.

Competitive landscape and market position

Spotify maintains a dominant position in the global music streaming market with a share of approximately 31-32% of paid subscribers. The second largest player is Tencent Music $TCEHY with a share of around 14%, followed by Apple Music $AAPL (12.6%), Amazon Music $AMZN (11.1%) and YouTube Music $GOOG (9.7%). Together, these three major Western platforms control over 90% of the US market.

A key difference from competing platforms is that Spotify is not part of any hardware ecosystem. Apple Music benefits from integration with iPhones and other Apple devices, Amazon Music is tied to Prime membership and the Alexa ecosystem. Spotify has to convince users purely through product quality and personalization. This is both a strength and a potential vulnerability. In an environment where the transition between platforms is becoming increasingly easier thanks to playlist streaming services, Spotify must constantly innovate to retain its user base.

On the other hand, the breadth of Spotify's $SPOT offerings (music, podcasts, audiobooks, video podcasts, lossless audio) today exceeds what most competitors offer. It is this strategy of content diversification that allows the company to justify higher subscription prices while reducing reliance on a single type of content.

Valuation and valuation view

Spotify shares are currently trading with a trailing P/E of around 48 and a forward P/E of around 32. The company's market capitalization is around $110 billion. Looking at the valuation in the context of recent years, it can be seen that at the time of last year's high of around USD 785, the P/S (price-to-sales) ratio had reached a record high of 9.2, which was more than double the historical average. Thus, the stock's current decline largely reflects a normalization of valuation, not a deterioration in fundamentals.

The consensus of 50 Wall Street analysts points to a so-called Strong Buy rating with a median target price of around $668, implying a potential upside of around 30-45% from current levels. The highest target price is nearly USD 800, while the lowest is around USD 420. It is important to note, however, that some analysts have lowered target prices in recent weeks. For example, Barclays $BCS lowered its target from $650 to $600 and Morgan Stanley $MS refined its outlook to $630.

Reasons for the drop from the highs

Several factors are behind the stock's decline from last year's highs. The primary driver was weaker ad revenue growth in Q2 2025, which raised concerns about the pace of growth outside the premium segment. Then in September 2025, the company announced a change in leadership, with founder Daniel Ek moving from the CEO position to the role of executive chairman. Goldman Sachs $GS subsequently downgraded the firm, further weakening sentiment. Last but not least, massive insider selling of shares, including significant divestitures by Ek himself, also had a negative impact.

More broadly, Spotify's decline also reflects the general weakening of the technology sector in early 2026 and the rotation of capital towards defensive and value stocks. Investors are also concerned about growing competition from AI-generated music and a question mark around the long-term sustainability of further subscription price increases.

Strategic and investment view

Spotify $SPOT is at an interesting point in its evolution today. On the one hand, the company is delivering its best financial results ever, has robust user base growth and is successfully diversifying its business model. On the other hand, the market is valuing the stock well below peak levels, reflecting concerns about sustaining growth, competitive pressure and sensitivity to the macroeconomic environment.

Positive view

• Management has identified 2026 as a year of increased ambition and is planning an Investor Day in May to present medium-term targets. Gross margins and operating margins are set to continue to grow, with pricing adjustments expected to contribute to revenue growth outpacing content cost growth, according to management. Free cash flow is expected to significantly exceed 2025 levels in 2026.

Negative view

• Repeated price increases have their limits. In the US, Spotify already costs more than Apple Music on an individual plan and three times more on a family plan. The risk of churn increases is not zero and switching to another platform is technically easy today. Further, it is unclear how quickly the advertising segment, which has lagged expectations in recent quarters, will be able to monetize. Lastly, the change in leadership and insider selling are creating some uncertainty around the near-term trajectory of the stock.

What to watch next

• Q1 2026 results (28 April) - a key test of user reaction to the latest price hikes and ad revenue trends.

• Investor Day in May 2026 - expected to unveil medium-term targets and strategic outlook.

• Churn development after price adjustments - whether subscriber retention will remain at historically low levels.

• Ad segment growth - management expects improvement in the second half of 2026 due to new tools such as Spotify Ad Exchange.

• Competitive response from Apple Music and Amazon Music - potential pricing offensive or product innovation from these players.

Spotify $SPOT is in an interesting situation today. The company is posting the strongest financial results in its history, has a dominant market position, and is successfully transforming from a pure music service to a comprehensive audio platform. At the same time, however, the stock has depreciated more than 35% since the high, reflecting both the normalization of the overinflated valuation and specific market concerns about competitive pressure, management changes, and questions around the sustainability of the pricing strategy.

For a long-term investor with a horizon of several years, current levels may represent an interesting entry opportunity, assuming continued growth in margins and user base is confirmed.

In the short term, however, there remain a number of risks around the company that may keep share volatility elevated. It is the Q1 2026 results (28 April) and the May Investor Day that will be the key moments that may determine whether the stock starts to return to last year's peak or whether the ambitions presented will not be enough to convince the market.

UBS analyst Joseph Spak argued that after a more than 20% year‑to‑date drop the current price “more evenly” reflects weak near‑term EV demand and heavy capex against Tesla’s long‑run potential in so‑called physical AI – robotaxis, autonomous driving and the Optimus humanoid robot – even as the bank openly notes that the stock trades more on sentiment and momentum than fundamentals.

AI5: a new chip as the backbone of the physical AI strategy

Elon Musk followed up the upgrade by posting a picture of the new AI5 chip being developed by Tesla AI on the social network X. This is the next generation of proprietary hardware to gradually replace today's AI4 chips in controllers for fully autonomous driving and robotics.

Musk has previously said that the AI5 design is "almost done" and that the company is also working on the first version of the successor AI6 in parallel, with the goal of getting on a roughly nine-month cycle for new generations of chips. The AI5 is said to have up to 50 times the performance of the current AI4 generation - combining roughly ten times the raw computing power, nine times the memory capacity and several times the speedup in key operations for neural networks.

Technical details leaked to the media suggest that an entire AI5 computer could be in the range of roughly 2,000-2,500 TOPS, while today's AI4 offers approximately 300-500 TOPS. In doing so, Musk is comparing a single AI5 chip with the performance of Nvidia's $NVDA H100 GPU for Tesla's specific tasks, and a pair of chips with the next-generation Blackwell - with Tesla targeting a significantly lower price and power consumption.

Musk also claims that AI5 could become "one of the most produced AI chips in the world", and thanks partners in the form of TSMC $TSM and Samsung $SSNLF to produce the chip for Tesla. The first limited quantities are expected to arrive in 2026, he says, but mass production is not expected until after 2027, when AI5 should appear in more cars and in the infrastructure for training and inferencing models.

What exactly has the upgrade from UBS changed

The UBS rating is sensitive for Tesla precisely because the bank has long been one of the more skeptical houses. The change from "Sell" to "Neutral" relies on several points:

• after a more than 10% decline in 2026, UBS says part of the downside scenario (weaker EV demand, margin pressure, high capex) is priced in

• the bank assumes a relatively conservative scenario: around 1.6 million vehicles delivered in 2026 and only around 2 million by 2030, i.e. growth of around 7% per year

• For robotaxis and the Optimus robot, UBS does not adopt Musk's aggressive estimates, but assumes a slower ramp-up - on the order of thousands of robot units in the second half of the decade, not hundreds of thousands

Crucially, UBS openly says that Tesla is trading more on sentiment and momentum than on traditional fundamentals, and that current levels no longer justify a "Sell," though the $352 price target is still below where the stock was trading intraday during Wednesday's trading. It was that combination - the removal from the "Sell" category plus the news around AI5 - that was enough to get retail and some institutional investors to add to their short-term buying.

The market is waiting for concrete numbers and milestones

Despite the sharp overnight growth, Tesla remains in the red since the start of the year and its performance has lagged the broader technology sector. The company is set to release its first quarter results on April 22, and investors will be particularly interested in a trio of themes:

• how margins are trending in the automotive division after a series of discounts and intense competition in China and Europe.

• whether Tesla will offer a more concrete plan for deploying fully autonomous driving and robotaxis in each region

• what the timeline and financial framework will be for AI5, AI6 and other AI projects, including capex estimates and cash flow impact

So far, the overnight rally following the release of the UBS photo of the chip and upgrade mainly reflects a change in mood and renewed interest in Tesla's "AI story". Only the results and a more concrete roadmap around AI5, Robotaxis and the Optimus robot will tell if the current enthusiasm will gain a firmer footing or if this will just be another brief episode in an otherwise very volatile year for Tesla stock.