Apple $AAPL I’ve had on my watchlist for a while with an entry price of 245 USD. It’s currently trading slightly above that level, about 1–2% over my limit.

Reasons to enter now:

Strong momentum from AI integrations (like Apple Intelligence) and expected iPhone 17 sales, which—being close to my entry price—means a minimal premium to get into a stable, high-margin business.

Long-term growth in services revenue (services revenue over 100 billion USD annually) and strong customer loyalty, which supports continued steady growth without the risk of a major loss.

Reasons to wait for a further drop:

Possible market correction after the recent NASDAQ rally due to macroeconomic pressures such as higher interest rates or increased competition in AI. That could provide a better, lower price.

High valuation (P/E around 34) compared to the historical average—waiting for a dip would allow entering with lower risk while retaining long-term growth potential.

Overall, this stock fits my conservative approach focused on quality companies.

What do you think about $AAPL – enter now or wait? Share in the comments.

#AAPL #Watchlist #Investing #LongTerm

The sell-off tells a different story. The market reaction was not about the quarter itself, but about the path forward. A cautious outlook for early 2026, ongoing margin pressure, and continued GAAP losses reinforced the reality that Intel’s transformation is expensive, slow, and still fragile. The strategy may be credible—but patience is wearing thin.

How was the last quarter?

Intel $INTC ended 2025 with a quarter that looks like "stabilization after the storm" on a headline level, but beneath the surface you can see that the company is still teetering between restructuring, margin pressure, and transitioning to a new manufacturing and product cycle. In the fourth quarter, Intel posted revenue of $13.7 billion, down 4% year-over-year. But at the same time, management points out that internal expectations were better - according to CFO Zinsner, Intel beat its own expectations in revenue, gross margin and earnings per share, despite across-the-board outages and supply chain strains.

Profitability remains straddled between GAAP and adjusted numbers. GAAP EPS came in at $-0.12, while non-GAAP EPS came in at $-0.15, up 15% year-over-year on an adjusted basis from $-0.13. Non-GAAP net income attributable to Intel rose to $0.8 billion, up 35% year-over-year, but GAAP results were again a loss, with a net loss of $0.6 billion. Margin pressure was the key issue for the quarter: GAAP gross margin fell from 39.2% to 36.1%, non-GAAP even from 42.1% to 37.9%, a sharp drop of 4.2 percentage points. At the expense level, on the other hand, Intel continues to show discipline: R&D and MG&A fell 14% year-on-year to $4.4 billion (GAAP) and $4.0 billion (non-GAAP). While GAAP operating margin rose to 4.2% y-o-y from 2.9%, we see a slight deterioration in non-GAAP operating margin from 9.6% to 8.8%, showing that cost cuts cannot yet fully offset gross margin pressure.

From a cash perspective, the quarter was solid - Intel generated $4.3 billion of operating cash flow, which is important given that the company is in the midst of a massive investment cycle in factories and new process nodes. At the same time, however, it is important to perceive that the Q1 outlook suggests that supply availability will be the weakest link in the short term and may temporarily hamper demand monetization.

Segment-wise, the picture was significantly mixed and for investors this is one of the most important signals of the quarter. Client Computing Group (CCG), the traditional PC business, earned $8.2 billion, down 7% year-over-year, and $32.2 billion for the full year, down -3%. In contrast, Data Center and AI (DCAI) is growing: $4.7 billion in the quarter represents +9% YoY and the full year $16.9 billion represents +5%. This confirms that Intel may be losing momentum in the traditional PC segment, but datacenter demand and AI infrastructure are keeping the company afloat. In addition, Intel Foundry posted $4.5 billion in Q4 revenue (+4%) and $17.8 billion for the year (+3%), which is a positive signal for the "new Intel" strategy - just be reminded that Foundry revenue includes significant internal intersegment transactions that are subsequently eliminated, so the net impact on consolidated revenue should be read with caution.

• Full presentation with results.

CEO commentary

CEO Lip-Bu Tan builds Intel's investment story ever more clearly around a single thesis: in the AI era, CPUs are not losing relevance, on the contrary, their role in the ecosystem is getting stronger because AI computing is not just about GPUs, but about the entire compute stack, workload orchestration, edge inferencing and compatibility with the widely deployed x86 world. Tan called Q4 a solid end to the year and highlighted the progress of the company's transformation. He highlighted the first products on Intel 18A, the most advanced manufacturing process being developed and produced in the US, as a key milestone and said the company is aggressively ramping up capacity to meet strong demand. From a corporate governance perspective, Tan reiterated three priorities that investors will track as KPIs in their own right: improving execution, returning to engineering excellence, and monetizing AI opportunities across the business.

CFO David Zinsner added two important interpretations. First, he said Intel beat internal expectations in revenue, margin and EPS, which should be evidence that restructuring and cost discipline are starting to work. But secondly, he openly admitted that supply will be the lowest in Q1 and only from Q2 onwards the situation should visibly improve. This is relevant not only operationally, but also psychologically for the market: it tells investors that in the short term Intel may be losing opportunities even if demand fundamentally holds.

Outlook

The outlook for the first quarter of 2026 is the main reason why the results may appear ambivalent even if Q4 turned out "above expectations". Intel expects revenue of $11.7 billion to $12.7 billion, a sequential decline from Q4 ($13.7 billion), and that is always uncomfortable at the sentiment level, especially when the market wants to see a turnaround. Gross margins are expected to fall further: GAAP to 32.3% and non-GAAP to 34.5%, a clear signal that margin pressure continues early in the year. GAAP EPS is expected to be $-0.21, while non-GAAP EPS is expected to be $-0.00. Practically speaking, this means that while Intel is showing signs of stabilizing at the non-GAAP level, it cannot return to a sustainable profit mode in the short term, despite significant cuts in R&D and administrative expenses.

From an investment perspective, it is important that management frames Q1 as a "bottoming out of supply" - that is, not a collapse in demand, but a temporary curtailment of production. If this interpretation is correct, and Q2 brings a visible improvement in chip and product availability, then the outlook may quickly tip in subsequent quarters. However, if the supply problem drags on, it will be toxic for Intel, as margins are already bearing the cost of the investment cycle and a delay in monetization would negatively leverage the entire P&L.

Long-term results

The long-term numbers show how dramatically Intel has changed in recent years - and why the market continues to react sensitively to any indication of whether the turnaround is actually happening. Revenues fell from $79.0 billion in 2021 to $63.1 billion in 2022 and further to $54.2 billion in 2023. 2024 brought only a slight decline to $53.1 billion, or -2.1%, technically a stabilization but still at a level that is a third lower than four years ago. From a top-line perspective, this means that Intel has not yet shown a compelling growth engine to offset the structural loss in parts of its traditional segments.

Gross profit has fallen even more sharply. In 2021, Intel generated $43.8 billion in gross profit, in 2022 already $26.9 billion and in 2024 only $17.3 billion. This is a direct result of a combination of lower sales, a worse product mix and higher manufacturing costs during the investment cycle. In addition, the cost base has grown significantly in 2024: operating expenses jumped to USD 29.0 billion, up +34% YoY, and this is one of the main reasons for the giant GAAP loss. Operating profit stood at $19.5 billion in 2021, fell to $2.3 billion in 2022, and broke even to a giant loss of -$11.7 billion in 2024.

Net income and EPS are even more telling. Intel had net profit of $19.9 billion and EPS of $4.89 in 2021. In 2022, net profit fell to $8.0 billion and EPS to $1.95. In 2023, earnings fell further to $1.7 billion and EPS to $0.40. In 2024, Intel reported a net loss of -$18.8 billion and EPS of $4.38. This is an extreme break that reminds investors that even though the company is now presenting a "new Intel", a return to a sustainable profit profile is not yet confirmed.

The EBITDA trend is also interesting and shows how hard the operating economics have changed for the company. EBITDA has fallen from $33.9 billion in 2021 to $21.3 billion in 2022, then to $11.2 billion in 2023 and then to just $1.2 billion in 2024. In other words, Intel has nearly erased its historical "cash machine" profile in the last three years, which is why the market today needs to see not only technology milestones, but also evidence of a return of margins and operating leverage.

News

Among the most important news of the quarter is the launch of Intel Core Ultra Series 3, which Intel is showcasing as the first AI PC platform built on Intel 18A and manufactured in the US. The company expects more than 200 designs from manufacturers across the premium and mainstream segments, which should be a testament to the breadth of adoption. Another major announcement is a collaboration with Cisco on a platform for distributed AI workloads at the edge, built on the Xeon 6 SoC, reinforcing the narrative that AI will not just be in datacenters, but very much "near data." Intel has also centralized the datacenter and AI business under Kevork Kechichian to improve coordination of CPU, GPU and platform strategy.

On the foundry side, Intel is launching the 18A ramp into high-volume manufacturing in Arizona and Oregon, while highlighting a collaboration with ASML on High NA EUV to be the technology pathway to future nodes. On the corporate front, it's worth noting the strengthening of leadership (CIO, government affairs, marketing) as well as the completed sale of $5 billion of Intel stock to NVIDIA to strengthen balance sheet and strategic flexibility. The market will read this move in two ways: as a financial injection and strategic link, but also as a signal that Intel still needs to strengthen its capital position in the midst of a costly transformation.

Shareholding structure

Intel remains the quintessential institutional title: around 63.7% of shares are held by institutions, with BlackRock and Vanguard being the largest shareholders, both around 8.2%-8.3%, followed by State Street (4.25%) and Geode. Insider ownership is low (1.89%), which is not unusual for a firm of this size, but it also means the investment story is based more on execution and market confidence than "skin in the game" leadership.

Analyst expectations

Intel beat its own internal expectations in Q4 on revenue, margin and EPS, which usually helps short-term sentiment. But the key takeaway is that the company also offered weak Q1 guidance: revenue of $11.7-12.7 billion, non-GAAP EPS of $0.00 and non-GAAP gross margin of 34.5%. In practice, this means that analyst expectations for the first half of 2026 are likely to be cautious, with the main question being whether there will be a visible improvement in Q2 after the "supply bottom" in Q1 and whether operating leverage will start to return. For Intel, the market typically does not reward technology milestones on their own unless they are accompanied by margin improvement and a sustainable earnings trajectory.

Revenue held up and guidance was reaffirmed, yet the quality of growth is shifting. Pricing continues to do the heavy lifting while volumes soften, signaling that FY2026 may be less about expansion and more about protecting profitability in an increasingly constrained environment.

How was the last quarter?

P&G $PG -reported sales of $22.2 billion in the second fiscal quarter of 2026, up 1% year-over-year. However, organic sales were flat - a 1% price increase was fully offset by a 1% decline in volumes, while product mix had a neutral impact. This is a key signal, as the company has for several years been primarily based on the pricing power of its brands rather than demand growth.

At the profitability level, cost pressures and restructuring were evident. GAAP EPS declined to $1.78, down 5% YoY, primarily due to higher restructuring costs. Core EPS was $1.88 and remained unchanged year-over-year, meaning that even after adjusting, the company failed to grow profitably. Currency-adjusted core EPS even fell 2% to $1.85.

Margins were the weakest point of the results. Reported gross margin was down 120 basis points, core gross margin was down 50 basis points and on a currency-neutral basis it was down 30 basis points. Productive savings delivered a positive effect of 160 bps and price increases of a further 50 bps, but these benefits were outweighed by negative factors: unfavourable mix (120 bps), higher product reinvestment (60 bps) and, most notably, tariff-related costs (60 bps). Operating margin fell even more significantly - reported 200bps and core 70bps.

From a cash flow perspective, P&G remains very strong. Operating cash flow was US$5.0bn, net income was US$4.3bn and adjusted free cash flow productivity was 88%. The company also returned US$4.8bn to shareholders, US$2.5bn of which was in the form of dividends and US$2.3bn through share buybacks, confirming that return of capital remains a pillar of the investment thesis.

• Full presentation with results.

CEO commentary

In his comments, CEO Shailesh Jejurikar highlighted that the results kept the company within full year guidance despite the challenging consumer and geopolitical environment. He also expressed confidence in improved results in the second half of the fiscal. This tone is typical of P&G - calm, defensive and focused on long-term stability. For investors, however, it is an implicit admission that the first half of 2026 is burdened with pressures that the company has not yet been able to fully offset.

Outlook

P&G kept its revenue outlook for fiscal 2026 unchanged. Total revenue is expected to grow 1% to 5%, with organic growth in the range of "in-line" to +4%. The change came at the GAAP earnings level: the firm lowered its expected GAAP EPS growth to 1% to 6% from the previous range of 3% to 9%, due to higher-than-expected restructuring charges. Core EPS guidance remains unchanged at $6.83 to $7.09, with a midpoint of $6.96, corresponding to roughly 2% growth.

Macro assumptions show why the market is reacting cautiously. P&G expects commodities to be roughly neutral for the full year, currency rates should deliver a positive impact of around $200m after tax, but tariffs represent a negative impact of around $400m after tax. The company expects a further roughly USD 250 million after-tax impact from the combined pressure of higher interest costs and the effective tax rate. The total negative impact of these factors is approximately $0.19 per share, which explains why sentiment remains restrained even with the maintenance of guidance.

Long-term results

A look at the trend of the last four fiscal years shows a company that has maintained stability but is gradually losing momentum. Revenues grew from $80.2 billion in fiscal 2022 to $84.3 billion in 2025, a cumulative growth of roughly 5% over three years. However, the pace of growth is slowing - while revenues grew by around 2-2.5% in 2022 and 2023, they will only grow by 0.3% in 2025.

Gross profit has been around $43 billion for a long time, with gross margin stagnating in the last year. On the positive side, the company was able to significantly reduce operating expenses in 2025 - operating expenses fell by 8%, which helped boost operating profit by more than 10% to USD 20.5bn. However, this effect is rather one-off and does not address the structural problem of low volume growth.

Net profit and EPS grew only moderately over the long term. Diluted EPS increased from USD 5.81 in 2022 to USD 6.51 in 2025, corresponding to an average annual growth of around 4%. Moreover, this growth was partly driven by changes in share count and financial optimisation, rather than a significant improvement in operating performance. EBITDA fell by more than 9% in 2025, a warning sign that the company's operating leverage is starting to work in the opposite direction.

News

The most notable news this quarter is an update to GAAP EPS guidance due to higher restructuring costs that the company now expects throughout fiscal 2026. Additionally, P&G explicitly quantified the impact of tariffs at approximately $400 million after-tax, a significant pressure on gross margins in particular. Continued strong cash returns to shareholders remain positive news, with the company planning to pay out approximately $10 billion in dividends and repurchase approximately $5 billion in stock in 2026.

Shareholder structure

P&G's shareholder structure confirms its character as a typical institutional defensive. Approximately 70% of the shares are held by institutional investors, with Vanguard, BlackRock and State Street being the largest shareholders. This profile typically implies lower volatility, a high emphasis on dividend stability, and less tolerance for long-term deterioration in margins or growth trajectory. Insider ownership is minimal, further underscoring the institutional nature of the title.

Analyst expectations

The analyst consensus expects P&G to remain primarily a defensive title with low single-digit earnings growth in 2026. Maintaining core EPS guidance was received neutrally, while lowering GAAP EPS guidance due to restructuring and clearly naming the impact of tariffs contributed to a more cautious market tone. Analysts agree that the key theme for the next quarter will not be revenue growth, but the ability to stabilize margins and stem volume declines without further price increases.

Fair Price

This change stands in contrast to earlier regulatory cycles, when fintech firms often faced uncertainty around compliance and oversight. Financial technology is now increasingly framed as part of the solution to affordability challenges rather than a sector requiring tighter control.

Why Digital Lenders and Platforms Stand to Gain

Fintech companies focused on consumer lending, payments, and small business financial tools appear particularly well positioned in this environment. Firms such as Affirm, $SOFI , $XYZ , and $SHOP have been highlighted by market analysts, a theme also explored in broader coverage on Yahoo Finance. These companies offer simplified access to credit, lower operating costs, and mobile focused user experiences that align closely with policy goals centered on affordability and financial access.

If regulatory pressure on traditional banks increases, fintech firms could capture incremental market share by operating with greater flexibility and faster innovation cycles. For investors, this creates a potential growth narrative driven by both consumer demand and policy related tailwinds.

Regulatory Momentum Extends Into Digital Assets

Beyond lending and payments, optimism has also spread to fintech companies with exposure to digital assets and blockchain based services. Market sentiment surrounding crypto related firms has shown sensitivity to political narratives, as seen in recent Bitcoin market coverage on Yahoo Finance. A policy environment perceived as more supportive of innovation could reduce regulatory uncertainty and encourage greater institutional participation in digital finance.

Clearer frameworks around custody, settlement, and digital payments would benefit both crypto native firms and fintech platforms integrating blockchain technology into mainstream financial products.

Competitive Pressure on Traditional Financial Institutions

The evolving regulatory environment may intensify competition between fintech firms and established financial institutions. Ongoing analysis from Reuters Technology highlights how banks are responding through partnerships, acquisitions, and accelerated digital transformation efforts. At the same time, some fintech firms may pursue formal banking licenses, further narrowing the distinction between legacy institutions and technology driven challengers.

For investors, this convergence introduces both opportunity and execution risk as business models and competitive dynamics continue to evolve.

Investor Takeaway and Market Implications

From an investment perspective, fintech stands out for its combination of long term structural growth and policy driven optionality. If affordability, competition, and innovation remain central policy themes, fintech companies could benefit from improved earnings visibility and sustained adoption trends. However, outcomes will depend on legislative follow through and regulatory clarity.

For now, fintech occupies a strategic position at the intersection of technology, policy, and consumer demand. That positioning could translate into meaningful upside for investors who track not only earnings performance, but also the political and regulatory developments shaping the sector.

What makes the outlook compelling is its sequencing. J&J is not promising immediate acceleration. Instead, it outlines a methodical build—pipeline depth, MedTech innovation, and operational leverage—designed to allow growth to re-accelerate precisely when the revenue base becomes massive. That is a different kind of ambition, and a far harder one to execute.

What does the $100 billion threshold really mean for an investor

Getting above $100 billion in annual revenue is both a psychological and structural breakthrough. A company can grow to this size through a combination of successful products, acquisitions and a virtuous cycle. But beyond that, growth requires architecture, not individual interventions.

From an investor's perspective, it is important that Johnson & Johnson $JNJ sees this point not as a target, but as a starting point for the next phase. Management openly says that after 2026 - when revenues are expected to cross this threshold - the pace of growth should accelerate, not slow. This goes directly against the intuition of the market, which tends to automatically count on normalisation and deceleration for such large companies.

The investment case is fundamental: if a company with a turnover of over $100 billion can sustain or even accelerate growth, its valuation framework changes. Indeed, the market normally values giants as stable but slow-growing entities. Once this assumption starts to crumble, there is room for revaluation.

Why it's not a "one hit wonder" this time

A key difference from past growth waves is the structure of the portfolio. Johnson & Johnson today is not standing on one or two flagship products. It has dozens of brands and platforms, each generating billions of dollars in revenue, as well as a pipeline that is spread across multiple therapeutic areas.

Oncology and immunology are the main drivers today, but their importance is not just in growth alone. They are segments where several advantages are cumulative: high barriers to entry, long exclusivity periods, the possibility of expanding indications and relatively low price elasticity of demand. In other words, it is growth that is more resilient to both cyclical and political pressures.

From an investment point of view, it is significant that this growth is not isolated. It builds on a strong MedTech business that, while not growing double digits, is providing stable cash flow that is funding expansion in the pharmaceutical side. The result is not a company that puts everything on one card, but a balanced growth machine.

MedTech as a stabiliser, not a brake

A common mistake investors make is to view Johnson & Johnson's MedTech segment as "less interesting." In reality, it fulfills a strategic role that cannot be underestimated. Nearly a third of the company's revenues come from areas where demand is structurally stable, less dependent on patent cycles and less sensitive to regulatory intervention.

It is this part of the business that allows the firm to maintain a high investment intensity without risking financial instability. For shareholders, this means lower volatility of results and a higher probability that the long-term growth strategy will not be interrupted in the first bad year.

From a macro perspective, it is also important that MedTech is less exposed to biosimilar competition, which will intensify pressure on some established biologics in the coming years. This again increases the resilience of the overall investment story.

Capital strength as a hidden source of competitive advantage

Johnson & Johnson enters the next phase of the decade with a financial position that very few companies in the industry can afford. It generates nearly $20 billion of free cash flow annually, has a strong balance sheet, and maintains investment flexibility.

This has two key implications for investors. First, the company is not forced to choose between growth and return on capital - it can do both. Second, it has the ability to actively shape its portfolio, whether through acquisitions or targeted spin-offs of slower parts of the business, as the portfolio transformation of recent years has shown.

It is this discipline that is often underestimated. Growth on its own is not enough - what matters is how it is financed and whether it destroys returns on capital. So far, there is no indication that J&J is losing this balance.

Why the second half of the decade may be more interesting for investment than the first

The market today views Johnson & Johnson primarily as a quality, stable title. This is reflected in the valuation, which is rather conservative given the company's ambitions. But this is where the investment asymmetry arises.

If growth in 2026 and 2027 is indeed underpinned by new products and pipelines as management suggests, the narrative around the entire company may change in the years ahead. A defensive leader may become a company that is valued on a combination of stability and growth - a combination that the market typically rewards.

Importantly, this potential will not be realized in leaps and bounds. It will be a gradual validation of the thesis through numbers, margins and revenue mix. That's why this story may be attractive to long-term investors looking for more than just a short-term catalyst.

Where is the double-digit growth going to come from?

Double-digit growth ambitions for a company that is set to break the $100 billion revenue mark in 2026 cannot be built on a single engine. Johnson & Johnson's management implicitly builds it as a combination of four parallel growth streams, none of which is enough on its own, but together they give a meaningful trajectory.

The first source is the organic growth of existing blockbusters in oncology and immunology. Products like DARZALEX, CARVYKTI and TREMFYA are not at the end of their life cycle - instead, they are in the process of expanding indications, geographic coverage and combination therapies. This means that, even without "new names", this group can generate several percentage points of annual revenue growth, with above-average margins.

The second pillar is new launches and pipeline conversions. Management reiterates that the pipeline is not concentrated in one bet, but spread across oncology, neuroscience and cardiovascular. This reduces binary risk and allows for multiple accruals each year that are not blockbusters in themselves but cumulatively have a significant impact.

The third source of growth is the price and mix effect. Johnson & Johnson is selling an increasing portion of its portfolio in segments with higher value-added, longer treatment cycles and lower price elasticity. This means that even with relatively "ordinary" volume growth, the company can report above-average revenue and profit growth.

A fourth, often underestimated factor is MedTech, which is regaining its breath after years of stagnation. This is not explosive growth, but a steady, predictable pace that improves the quality of overall cash flow and dampens the volatility of the pharmaceutical side of the business. It is the combination of these four ingredients that explains why management talks about a "line of sight" to double-digit growth, not a wish.

The top 3 growth drivers to propel Johnson & Johnson to 2030

Oncology: DARZALEX + CARVYKTI as the backbone of growth

Oncology is the largest and fastest growing engine across the group today, and the most legible from an investment perspective. DARZALEX already generates more than $14 billion a year and continues to grow at double-digit rates, driven by expanding its use into earlier lines of treatment and combinations with other therapies. This is key - this is not a "commuter blockbuster" but a product that continues to push its addressable population.

CARVYKTI represents the second, more growth-aggressive leg of the oncology strategy. As a CAR-T therapy in multiple myeloma, it has lower absolute sales so far, but extremely high growth potential. Market estimates are working with the idea that CARVYKTI could move into the US$5-8 billion annual revenue range in the second half of the decade if capacity can be expanded, manufacturing times reduced and the therapy moved into earlier phases of treatment.

Oncology as a whole can generate +$8bn to +$10bn in additional annual revenues by 2030, and this is high-margin growth. This is where Johnson & Johnson gains the most operating leverage and the reason why EPS can grow faster than revenue.

Immunology: TREMFYA as a replacement for STELARA - but more ambitious

Immunology has long been synonymous with STELARA, whose patent decline is now a reality. The key point, however, is that Johnson & Johnson is not going on the defensive, but is actively rebuilding its entire portfolio. In this sense, TREMFYA is a strategic successor, not just a replacement.

TREMFYA has already crossed the USD 5 billion mark in annual sales and has shown exceptionally strong growth in recent quarters, particularly in the US. Importantly, it is gradually expanding beyond dermatology into gastroenterology (Crohn's disease, ulcerative colitis), thus significantly increasing its addressable market.

Conservative scenarios envisage that TREMFYA could reach USD 8-10 billion in annual revenues within a few years, with part of the growth coming not only from volume but also from a better patient mix and longer treatment duration.

Thus, immunology can not only offset the decline in STELARA, but add net growth in the order of units of billions of USD, which is essential to maintain company-wide momentum.

MedTech: an inconspicuous but steady accelerator

MedTech doesn't make headlines, but from an investment perspective it plays a critical stabilising role. The segment generates nearly $34 billion annually and is growing at around 5-6%, which is not explosive per se, but is highly predictable and less cyclical than pharma.

Three areas are key: cardiovascular solutions (including Shockwave), surgery (new staplers and robotic assistance) and eye care. In these segments, Johnson & Johnson benefits from a combination of technological innovation and an aging population, creating long-term structural growth without the need for aggressive price warfare.

A realistic estimate is that MedTech can add +$6bn to +$8bn in annual sales by 2030, with the main value lying not in absolute growth but in cash flow stability and dampening volatility across the group.

For the investor, MedTech is the reason why Johnson & Johnson is not purely a bet on the success of individual drugs, but a comprehensive healthcare ecosystem.

Capital allocation: the silent engine of long-term returns

At a company the size of Johnson & Johnson, capital allocation is not a technical detail, but a strategic tool for value creation. In an environment where the company has nearly $20 billion of free cash flow annually, how that capital is allocated is the key difference between average and above-average stock performance.

Management has long signaled that reinvesting in growth remains the priority, not maximizing short-term EPS. This is evident in both the high R&D spending and the willingness to make targeted acquisitions in areas where the internal pipeline makes sense to expand externally. Importantly, these are not "transformational megadeals" but complementary acquisitions that fit into existing platforms and enhance their returns.

At the same time, the firm maintains a disciplined approach to the balance sheet. Net debt remains at a level that does not constrain strategic flexibility, and the dividend policy remains stable. This creates an asymmetric situation for investors: the downside is limited by the conservative financial structure, while the upside comes from reinvestment in growth areas.

It is this combination - strong cash flow, disciplined debt, and a willingness to reinvest - that makes Johnson & Johnson more of a capital machine than a mere pharmaceutical manufacturer. In an environment of slowing index growth, it's a quality that has value in its own right.

Risks: what can disrupt the growth story

Any ambition for double-digit growth in a company this large must pass a realistic risk test. The first real risk is the pressure of biosimilars on selected products. However, this is largely known, has been priced in over time, and management is actively working to address it through innovation, reformulation and portfolio shifting.

The second risk is pipeline execution. Even a broad pipeline means that some projects will fail or be delayed. But the key point is that Johnson & Johnson is not dependent on one regulatory decision or one clinical milestone. Risk is spread, not concentrated.

Conversely, some of the oft-mentioned risks appear to be overstated. Litigation is a typical example. Although it resonates in the media, its financial impact is manageable in the context of the size of the company and does not change long-term strategy or investment capacity.

Similarly, political pressure on drug prices is a marginal drag on growth rather than a structural threat. The firm has a sufficiently diversified portfolio and geography to absorb these impacts.

Timeline: when to turn ambition into reality

It is crucial for an investor to understand that Johnson & Johnson's growth story is not linear. The year 2026 should serve as a validation of the trajectory - i.e., reaching $100+ billion in revenue and maintaining solid EPS growth despite a higher base.

Between 2027 and 2028, the pipeline acceleration effect should kick in, as new products and expanded indications begin to have a visible impact on sales and margins. At the same time, the margin profile is expected to gradually improve due to the removal of inefficiencies and a better mix.

The years 2029-2030 then represent the true test of double-digit growth. If rates close to 10% can be sustained over this period, this will be an exceptional performance within the global megacaps and a strong case for long-term outperformance against the index.

Investment scenarios to 2030

Optimistic scenario: double-digit growth actually materialises

In this scenario, management's ambition is realised and Johnson & Johnson is able to maintain close to double-digit growth even with a base of over USD 100bn in revenues. Oncology and immunology remain the main drivers, with DARZALEX, CARVYKTI and TREMFYA not only growing in volume but also increasing the share of high-margin indications. Pipeline delivers several mid-sized successes that cumulatively accelerate growth, while MedTech starts to grow faster than the market after years of stagnation thanks to innovations in cardiovascular and surgical solutions.

Revenues in this scenario grow at a rate of 8-10% per year, reaching the $130-140bn range by 2030, with EPS growing faster than revenues due to margin expansion and operating leverage. The market begins to value the company less as a defensive title and more as a quality growth megacap, leading to a slight re-rating of valuation. For the investor, this is a scenario in which Johnson & Johnson outperforms the S&P 500 over the long term with relatively low volatility.

Baseline scenario: strong growth but no "surprises"

The base case scenario assumes that most of the strategic moves work, but without the full development of double-digit momentum. Oncology and immunology remain growth, but momentum gradually normalizes as the size of the base increases. Pipeline is delivering new products, but some projects are delayed or not meeting initial commercial expectations. MedTech acts primarily as a stabiliser with moderate but reliable growth.

In this scenario, revenue grows at a rate of 6-7% p.a. and reaches around USD 120-125bn by 2030. EPS grows solidly but without significant margin expansion, and valuation remains relatively stable. For an investor, this represents an attractive combination of stability and reasonable growth that is likely to lead to near-market or modestly outperformance, but not significant alpha.

Conservative scenario: size becomes a drag

In the conservative scenario, it appears that Johnson & Johnson's size is beginning to constrain its growth rate. Key products remain profitable, but momentum is waning faster than expected and the pipeline cannot fully compensate for the shortfalls. MedTech, while remaining stable, is unable to significantly accelerate the entire group, while regulatory pressure and biosimilars are gradually reducing the growth profile of the pharmaceutical division.

Revenues in this scenario grow only 4-5% per annum and are around $110-115bn by 2030, with EPS growing only modestly and valuations remaining defensive. Equities in this case serve as a capital preservation and stable portfolio component rather than as a market outperformance tool. The investor is rewarded with lower volatility but must accept limited growth potential.

What to take away from the article

• Crossing the $100 billion revenue mark is the beginning of a new phase, not the end of growth.

• Double-digit growth for a company of this size would imply a structural change in the investment profile.

• Growth is built on platforms and pipelines, not a single product.

• The MedTech business stabilizes cash flow and reduces pharmaceutical cycle risk.

• A strong balance sheet enables growth without destroying return on capital.

• Most investment value lies in the second half of the decade, not the next quarter.

Uncertainty and trade tariffs have once again come to the fore after US President Donald Trump stepped up pressure on European countries last week over the issue of the takeover of Greenland. The Trump administration has threatened to impose new tariffs on imports from eight European countries unless they are willing to negotiate on US strategic interests in the Arctic, sparking a sharp sell-off in stocks and increased volatility in global markets. Fear indicators such as the CBOE Volatility Index (which measures the expected volatility of the US stock market for the next 30 days and is calculated by the Chicago Board of Trade based on the prices of options on the S&P 500 index) rose sharply and investors diverted capital to the safety of gold, which is again at record highs, and the Swiss franc, while the major indices on both sides of the Atlantic lost heavily.

But yesterday, everything changed.

On Wednesday, Jan. 21, 2026, at the World Economic Forum in Davos, Donald Trump significantly softened his approach to the threats of tariffs and escalating conflict over Greenland. Trump announced that planned tariffs would not be imposed on European countries that reject his demands on Greenland and unveiled a plan for a future Arctic deal with the NATO alliance, temporarily calming geopolitical tensions.

This evasive manoeuvre had a direct impact on global financial markets. After a sharp fall earlier in the week, when the S&P 500, Dow Jones and Nasdaq fell in response to the tariff threats, resulting in the biggest sell-off in months, there was a significant positive reaction. US stock indices closed significantly higher on Wednesday, with the Dow Jones adding nearly 600 points and both the S&P 500 and Nasdaq gaining more than 1%. The positive sentiment spread to Asia, where most major bourses followed Wall Street's rally. For example, Tokyo's Nikkei 225 index added more than 1.7%.

Still, analysts warned that easing tensions may not mean the end of risks. Trump's Davos speech continued to contain controversial points and unclear details on Greenland and tariffs, leaving room for further potential market swings. Still, the market is expected to be sensitive to any additional move or ambiguity in policy targeting strategic areas and trade ties, which is also relevant for titles with exposure to strategic sectors and commodities. And just one such company has profited significantly from the current situation in 2026.

Critical Material $CRML

The company focuses on the exploration, development and future production of critical metals, primarily rare earths, which are key to the defense industry, energy transformation, electromobility, semiconductors, robotics and advanced electronics. It is in this segment that one of the biggest shifts has taken place in recent years, as Western economies seek to move away from heavy reliance on a few suppliers and build their own, more politically secure resources.

$CRML is based on its flagship Tanbreez project in southern Greenland. This project is one of the largest known rare earth deposits in the world and is distinctive in its composition. It is not a classic mix of elements, but a deposit rich in so-called heavy rare earths, which are both the most desirable and the least accessible. These elements are essential for the production of high-performance magnets, radar systems, guidance technology, wind turbines and electric motors.

Another important aspect is that Tanbreez is not just an early-stage exploration project. CRML already has extensive historical data, geological studies and defined resources on which to base its long-term development. This allows the company to focus on an industrial project that is relevant not only to the commodity market, but also to the strategic planning of governments and large industrial customers.

The company's long-term strategy is not only to depend on the sale of raw material, but also to be involved in the downstream parts of the value chain. A key step in this direction is the announced partnership to build rare earth processing capacity. It is processing that is one of the Achilles' heels of the industry today, as the vast majority of the world's separation and refining capacity is concentrated in Asia. If CRML succeeds in building its own or partner processing facilities, it fundamentally changes its economic potential and strategic value.

In terms of business model, CRML is a typical company that stands at the intersection of mining, strategic raw materials and geopolitical relevance. Its value is not determined by its current revenues, but primarily by the quality and location of its assets, the composition of its deposits, the potential for future production and its ability to participate in emerging supply chains. This naturally entails higher volatility and a longer investment horizon. However, the company's shares are already 119% higher this year, even after a more than 11% drop in price from yesterday's trading day.

This is not a company that offers stable cash flow or a quality dividend today. It is an asymmetric investment that is betting on a future shortage of strategic materials. If rare earths and critical metals continue to experience increased demand, and all indications so far are that they will, companies that control high-quality deposits in geopolitically sensitive regions will be in a very different bargaining position than ordinary commodity miners.

This is why CRML has been in the market's crosshairs recently. Not because of short-term economic performance, but because its assets lie at the very centre of a trend that links energy, defence, technology and industrial policy. And in an environment where strategic raw materials are becoming a national security issue, such companies take on a whole new dimension of value.

This company is publicly traded on the stock exchange and is therefore accessible to the general public. But there are companies that cannot be invested in this way.

Jeff Bezos (founder of Amazon $AMZN) and Bill Gates (founder of Microsoft $MSFT) first invested in KoBold in early 2019 when the company closed its Series A funding round, just months after Trump began considering buying Greenland in his first term. The investment was made through the Breakthrough Energy Fund, led by Bill Gates, which aims to accelerate green energy innovation and build the industries of the future.

Then in 2022, Sam Altman (CEO of OpenAI) got involved through his Apollo Projects fund and contributed to a Series B funding round that totaled $192.5 million. Documents filed with the SEC last week show that KoBold is in the process of raising additional funding, which means it could turn to billionaires again now that Greenland is in the spotlight.

The fund also participated in KoBold's Series C investment round in December 2024. KoBold raised $537 million in that round.

• KoBold Metals is a US company focused on the discovery and exploration of strategic minerals, particularly metals key to EVs, batteries and energy and technology transformation such as nickel, cobalt and other elements under consideration for EVs and clean energy.

Greenland as a strategic element in world politics

Greenland's geopolitical value goes far beyond its small population. The island lies in the heart of the Arctic, where new shipping routes are opening up due to melting ice and where there are significant reserves of raw materials of strategic importance, including precious metals and potential energy resources. This makes it an important element in global security strategies and energy-resource chains, which are now playing an increasing role in macroeconomic forecasts and strategic military plans.

Moreover, since the end of World War II, Greenland has been part of the US-Danish defence agreements, which included the presence of US military bases and permission for the US to operate bases in the Arctic region within NATO. In recent years, however, these activities have been reinforced by European action. Denmark and its northern allies are conducting large-scale military exercises in the Arctic and increasing their defence presence there.

What is unique about the current situation is that Trump has combined the territorial and strategic issue with trade policy, that is, the threat of tariffs as a lever to achieve a political goal. This could have far-reaching implications for international trade regimes and global supply chains. According to expert commentary, the use of tariffs as a means to achieve such a change is highly unusual and could trigger a broader trade conflict affecting consumers and businesses in the US and Europe.

Different scenarios and long-term impacts

Strategists distinguish between several possible scenarios for future developments. The first is de-escalation and a diplomatic solution where the US backs down from tariffs and pressures, thereby preserving transatlantic ties and market stability. Trump leaned more towards this scenario yesterday.

The second is a prolonged trade conflict, which would lead to higher volatility, a reassessment of annual GDP projections and the creation of a security premium on geopolitical risk-sensitive investments.

The third involves escalation completely beyond tariffs, but Trump ruled that out in his Davos speech yesterday.

Conclusion

But Trump's speech yesterday did not change the factual underpinnings of the conflict. The strategic importance of Greenland, the availability of raw materials and the control of Arctic routes opened up by climate change remain at the centre of attention.

Yesterday's shift in statements, however, helped to calm markets in the short term and dampen price fluctuations in commodities that had previously reacted with sharp increases (e.g. gold or precious metals prices). While the risk of a broader escalation of the trade conflict has diminished, there is still the potential for renewed high volatility unless there are concrete agreements or clear assurances on future cooperation between the US and Europe.

Cohen's moves, however, are not just a technical detail from a regulatory filing. In an environment where insider purchases are viewed as one of the strongest signals of confidence, further stake increases send a clear message: management is willing to risk equity. The question for investors, therefore, is not whether Cohen trusts GameStop - but why now, and what may (or may not) come of it for shareholders in the months ahead.

What exactly did Cohen buy?

According to the Schedule 13D/A filing, Cohen (via investment entity RC Ventures) increased his position by another 500,000 shares, with the document listing the purchase price as a weighted average of $21.60 per share. Combined with previous purchases, his "beneficial ownership" moves to roughly 42.1 million shares, which translates to roughly 9.3% of the company (the specific percentage may vary depending on the number of shares outstanding used).

An important detail for investors is that this is an open market purchase financed with personal funds - the type of transaction that investors typically read as "skin in the game". Moreover, Cohen explicitly builds the argument that top management of publicly traded companies should buy stock with their own money to align with shareholder interests.

Why the market is reacting even though the fundamentals remain complex

GameStop $GME is still a company that is structurally grappling with changing consumer behavior: physical media and brick-and-mortar stores are under pressure from digital downloads, subscriptions, and Xbox/PlayStation-type ecosystems. Reuters has repeatedly described in recent quarters that the transformation towards a more "digital" form of business is hitting limits and revenue numbers remain volatile.

But that doesn't mean Cohen's purchase is irrelevant. For this title, the market has also long traded the "narrative" and expectations around capital allocation, potential strategic moves and whether management will find a path to a more sustainable business model. Thus, insider buying often acts as a sentiment catalyst at GameStop - even if it does not in itself guarantee a change in management trend.

What may be the "real" investor significance of this move

From an investor's perspective, it is key to distinguish two things: (1) Cohen is buying because he believes in the long-term plan, and (2) Cohen is buying because he knows the market will react in the short-term. Filing doesn't tell you the motivation, but it helps frame the likely interpretations:

• A signal of confidence in the strategy: buying may support the thesis that management sees specific levers for improvement (cost, sales structure, community outreach, new revenue streams).

• Support at a price sensitive point: the weighted average of $21.60 is also a "public anchor" - part of the market will read it as the level where Cohen finds the price attractive.

• Pressure on the management standard: Cohen's comment about CEOs who don't buy stock with their own "shouldn't be in office" is clearly directed inward to the corporate world and may reinforce expectations of a tougher performance regime.

Context: where GameStop stands business-wise

Regardless of the stock's reaction, the bottom line remains that GameStop still bears the character of a "turnaround in progress" with an uncertain outcome. Reuters recently pointed out that the company had disappointed on revenue in a recent report and is still looking for a workable response to the gaming industry's shift to digital distribution, streaming and subscription models, where it is inherently weaker than platform players.

What to watch next as an investor

• Another insider transaction: will Cohen (or other insiders) keep on buying, or was this a one-off "statement"?

• The pace of revenue decline (or stabilization): whether the company is approaching the point where "retail decline" stops getting worse.

• Specific steps in capital allocation and strategy: the market will want a clearer answer as to what GameStop's new "core" is in the digital distribution era.

• Volatility and positioning: for GME, it pays to watch technical factors (flow, retail activity) as they often trump short-term fundamental data.

Will you buy shares of $NFLX today after the drop?

What the Market Will Be Watching Closely

Revenue trends and margin performance will be front and center, particularly any evidence that declines are stabilizing in Intel’s core PC and data center segments. Investors will also scrutinize capital expenditure discipline and cash flow trends, as Intel’s aggressive investment cycle has weighed heavily on profitability. Even modest improvements in gross margins or reduced cash burn could materially shift sentiment, especially given how low expectations have been set going into the release.

Guidance Could Matter More Than the Numbers

Perhaps more than the headline figures, Intel’s outlook will carry significant weight. Commentary around AI-related demand, foundry customer engagement, and the timing of new process nodes will shape how investors assess Intel’s earnings power beyond the current year. Clear milestones, realistic timelines, and transparent communication could help rebuild credibility, while vague or overly optimistic projections may do the opposite. In a market that has become less forgiving, guidance clarity may prove to be the most valuable asset Intel can offer.

A Potential Inflection Point for the Stock

From an investment perspective, Intel’s valuation continues to reflect skepticism rather than optimism. That dynamic creates both risk and opportunity. A constructive earnings report paired with confident but disciplined guidance could attract value-oriented and turnaround-focused investors searching for asymmetrical upside. On the other hand, another quarter of uncertainty or delayed execution would likely reinforce the view that recovery remains distant.

As Intel prepares to report, the stakes extend well beyond a single quarter. This release could help determine whether the stock begins to reprice toward a recovery narrative or remains anchored by doubt and execution risk.

That same stability, however, raises the bar. The fourth-quarter results did not point to any fundamental deterioration, but higher costs, margin pressure, and one-off effects shifted investor attention away from the headline outlook. The market reaction reflects not fear of a broken business, but heightened sensitivity to risks that could temper performance in 2026.

How was the last quarter?

In the fourth quarter of 2025, Johnson & Johnson $JNJ continued its solid operating performance across segments, but results were impacted by several external and internal factors. Management has previously noted the fading effects of the return of rights to SIMPONI, SIMPONI ARIA and REMICADE, which were fully realized in the fourth quarter of 2024, but the comparative base remains challenging.

The macroeconomic environment remained mixed. Higher interest rates increased the cost of funding short-term debt instruments, while the benefit from higher interest income on cash was not sufficient to fully offset them. Customs duties also remain a significant factor, where the company has previously indicated a negative impact of approximately $200 million per year, solely within the MedTech segment. This pressure is further reflected in the cost structure in the results.

Johnson & Johnson | Q4 2025 - key numbers

• Revenue: $24.6 billion (above expectations; consensus ~$24.16 billion; +9% YoY)

• Adjusted EPS: $2.46 (in line with expectations; not beating consensus)

• Innovative Medicine: $15.8 billion (above expectations; consensus estimate ~$15.45 billion; YoY ~+6%)

• MedTech: $8.8 billion (above expectations; estimate ~$8.67 billion; YoY ~+6%)

• Full presentation with results.

Outlook

Johnson & Johnson unveiled a 2026 outlook that, on the face of it, is significantly better than what Wall Street was counting on. Management expects operating sales in the range of $99.5 billion to $100.5 billion, above market consensus, and adjusted earnings per share of $11.43 to $11.63, in line with most analysts' expectations. This is all the more significant as the company has already factored into its forecast the negative impact of hundreds of millions of dollars arising from the deal it struck with the Donald Trump administration to lower US drug prices in exchange for tariff exemptions.

Still, the stock weakened after the results. Indeed, the market did not just focus on the outlook numbers themselves, but also on several risks that remain in play. The biggest attention was drawn by another significant drop in sales of the key drug Stelara, which fell more than analysts expected, due to the emergence of biosimilar competition. While management emphasizes that the rest of the pharmaceutical portfolio is growing at double-digit rates and can more than offset this shortfall, investors view the accelerating erosion of Stelara as a structural change that increases pressure to maintain growth rates in the years ahead.

Management Commentary

During the quarter, management repeatedly emphasized that the company's core strategy remains unchanged - a focus on innovation, disciplined capital allocation and sustainable growth. At the same time, management acknowledged that 2026 will be a transition period, particularly due to a combination of higher investment, regulatory processes and acquisition costs.

There was also a clear message that short-term margin pressures are not structural in nature, but a combination of temporary factors - from tariffs to higher clinical development costs to one-off impacts related to M&A activity. Yet it was this uncertainty about the pace of cost base normalisation that was perceived negatively by the market.

CEO Joaquín Duato described 2025 as a watershed year, likening it to a "catapult" that would propel Johnson & Johnson into a new phase of accelerated growth. This shift, he said, is being driven by the strongest portfolio and research pipeline in the company's history and, above all, by medical innovations that are having a real impact on patients' lives. Duato emphasized that in all six of the company's core business areas - oncology, immunology, neuroscience, cardiovascular medicine, surgery and vision care - the company is strengthening its leadership position. This development, he said, is the result of breakthrough science and technology that is creating a solid foundation for continued growth in the years ahead.

Long-term results

Looking at the long-term trend, Johnson & Johnson remains a company with relatively stable revenues but a significantly fluctuating profit profile. Revenues grow from $78.7 billion in 2021 to $88.8 billion in 2024, representing cumulative growth but not an accelerating trend. Growth rates were mostly in the low single-digit percent range, with a peak in 2023.

Gross profit has been growing over the long term, but momentum is slowing. Gross margin has remained relatively stable, confirming the strength of the portfolio and pricing policy, but also suggesting limited scope for further expansion without structural changes. Operating costs have risen significantly, by more than 11% in 2024, leading to a year-on-year decline in operating profit of more than 5%. It is this mismatch between revenue growth and faster cost growth that is one of the main signals of concern to investors.

Net profit showed a significant decline in 2024, down almost 60% from an exceptionally strong 2023, driven by one-off factors. EPS is therefore fluctuating sharply, reducing the predictability of returns for shareholders. On the positive side, the number of shares outstanding has been declining over the long term, confirming the continued return of capital to shareholders and partially cushioning the impact of weaker profitability.

News and key themes of the quarter

Highlights included the acquisition of Halda Therapeutics. The transaction is strategically important in terms of the long-term pipeline, but in the short-term will deliver earnings dilution of approximately $0.15 per share in 2026. This information was one of the factors that investors factored in negatively after the results.

Regulatory and legal issues surrounding baby powder remain in the background, but continue to pose reputational and financial risk. In the area of innovative medicine, the company has presented a number of positive clinical data, but most of these have an impact in the medium term rather than immediately on results.

Shareholding structure

Johnson & Johnson's shareholder structure is a typical example of institutional stability. More than three-quarters of the shares are held by institutional investors, giving the company a conservative ownership base over the long term. The Vanguard Group and BlackRock play a dominant role, which reduces the risk of sudden capital swings but increases sensitivity to changes in index weights and macro sentiment.

Analyst expectations

Analysts have mostly made subtle adjustments to their outlooks following the results, rather than dramatic changes to their recommendations. Consensus continues to expect modest revenue growth in 2026, but with margin pressure and lower earnings per share growth. It was this shift in expectations - rather than the Q4 numbers themselves - that was the main reason for the stock's post-earnings decline.

Summary: why the stock fell

Johnson & Johnson stock fell after earnings not because of weak business, but because of a combination of higher costs, EPS dilution in 2026, uncertainty around the macro, and the lack of a clear catalyst for growth acceleration. For long-term investors, the title remains a stable pillar of the portfolio, but in the short term the market is making it clear that it expects more than just stability.

Other reasons for the decline:

1. Stelara (an immunologicalbiologic) is falling faster than expected
   - and this is a structural problem, not a one-off thing.

2. Legal risks (talc) came back on the table on the day of the results.

3. Regulatory and political uncertainty (pricing agreements, tariffs, margin pressure).

4. Stocks were relatively high ahead of results → typical "good news, sell the fact".

Recent quarters reveal a rare combination. Earnings growth above 100%, record order intake, strong margins, and virtually no financial leverage point to a company executing at an exceptional level. That profile explains why many Wall Street analysts continue to view the stock as a buy, even after a substantial run-up in its share price.

Top points of analysis

• The company is benefiting from massive investments in data centers, industry and infrastructure.

• 3Q earnings per share rose 102% year-over-year, with revenue up more than 35%.

• Backlog surpassed the $9 billion mark for the first time in history.

• Extremely strong return on capital and minimal debt.

• Analysts expect continued above-average growth in the years ahead.

Company introduction and business fundamentals

Comfort Systems USA $FIX is one of the largest providers of mechanical, HVAC (air conditioning and heating) and electrical solutions for commercial, industrial and institutional buildings in the US. The company does not operate as a traditional equipment manufacturer, but as a systems integrator and implementer of complex projects, combining design, installation, service and long-term maintenance. It is this combination of services that is the key difference from smaller regional players and the reason why Comfort Systems is able to participate in even the largest and most technologically challenging contracts.

A major part of the business consists of large turnkey projects, especially in the areas of data centres, semiconductor factories, medical facilities, production halls and logistics centres. These projects are capital intensive, technically complex and require an experienced team of engineers and project managers. The barriers to entry are high here - not only for technical know-how, but also for reputation, safety standards and the ability to deliver the project on time and without operational errors.

A decentralised structure is an important element of the business model. The company operates through dozens of local units, which have strong links to regional customers, but also benefit from the central capital, know-how and bargaining power of the entire group. This model allows the flexibility of smaller companies to be combined with the stability and scale of a large player.

Key growth engine: data centres and industrial infrastructure

Comfort Systems' growth is neither random nor a one-off. The company is in the midst of a structural investment cycle, driven by massive spending in data centers, AI infrastructure, industrial electrification, and the modernization of U.S. manufacturing capabilities. Meanwhile, data centers are extremely demanding in terms of HVAC solutions - requiring high redundancy, precise temperature control, continuous operation and advanced cooling technologies.

This is where the company has a distinct competitive advantage. It's not just the installation of air conditioning, but integrated cooling and environmental control systems that have a direct impact on the energy efficiency and operational reliability of the data centre. Each failure means potentially millions of dollars in losses for the customer, which increases the willingness to pay for quality and experience - and therefore the contractor's margins.

In addition to data centres, industrial and healthcare infrastructure also plays a significant role. Building new chip, battery or pharmaceutical factories requires sophisticated ventilation and environmental control systems. This mix of contracts ensures that the company is not dependent on a single segment, but benefits from the broader trend of reindustrialization and technological modernization of the US.

Backlog as a key indicator of future performance

One of the most important indicators at Comfort Systems is thebacklog. This exceeded the $9 billion mark for the first time ever in the last quarter, an increase of more than $3.4 billion since the beginning of the year. Such a strong backlog is not just a marketing number, but a very concrete indicator of future sales and profits.

Moreover, the backlog at this company is of high quality. These are not low-margin projects with uncertain execution, but long-term, technically complex contracts from creditworthy clients. Backlog-to-revenue conversion is historically high and relatively easy to predict, which significantly reduces the volatility of results.

The timing of orders is also important. Backlog provides visibility several quarters in advance, enabling efficient capacity planning, recruitment and cost management. In an environment where many industrial companies struggle with demand uncertainty, this visibility represents a significant competitive advantage.

Management

The company is led by Brian E. Lane, who leads the company with an emphasis on long-term return on capital, operational discipline and decentralized management. Management is one of the main reasons Comfort Systems has been able to grow significantly faster than the rest of the sector in recent years without sacrificing margins or balance sheet. The strategy is not based on aggressive debt or the pursuit of order volumes at any cost, but on the selective choice of projects with high added value.

The decentralised management model means that individual regional units have considerable autonomy in winning contracts, managing customer relationships and recruiting staff. Headquarters focuses on capital allocation, sharing know-how and setting standards. This approach enhances the motivation of local teams while allowing rapid adaptation to regional market specificities. The result is greater efficiency than centrally managed competitors.

Management also demonstrates a long-term ability to scale the company without losing control. Rapid growth in backlog, margins and profits has not led to operational problems or increased risks. This is particularly key at a time when many companies in the sector are facing capacity constraints, labour issues or overstretched supply chains.

Financial performance: growth that has quality

Comfort Systems' financial performance is among the absolute best in the industrial sector. Revenues have grown at a rate of more than 30% per year in recent years and will exceed $7 billion in 2024. This growth is not driven by a one-off order, but by a broad portfolio of projects across data centres, industrial, healthcare and commercial construction. More important than the revenue itself, however, is the structure of the growth - the company is increasing both the volume of orders and their average margin.

Operating profit and EBITDA are growing even faster than revenue, confirming strong operating leverage. Operating margins are gradually improving and the company is able to spread fixed costs efficiently over a higher volume of orders. The result is explosive earnings per share growth - the 102% year-over-year EPS increase in Q3 is not an anomaly, but the culmination of a multi-year trend of accelerating profitability.

The fundamental competitive advantage is the financial structure. The company operates with virtually no net debt, high interest coverage and strong liquidity. This gives it the flexibility not only to survive any slowdown, but also to actively invest in growth, take on large orders and selectively acquire smaller players. In an environment where many competitors operate with significantly higher leverage, this position represents a strategic advantage.

Valuation: premium price for premium quality

At first glance, Comfort Systems' valuation may appear high. A P/E in excess of 40, a P/S of around 4 and a P/B well above the sector may deter investors focused purely on low multiples. However, without context, these metrics do not tell the whole story. The market is not just pricing in current earnings here, but more importantly the visibility of future growth and the quality of capital generated.

The company is achieving an exceptionally high return on capital, ROIC of over 30% and ROE of over 40%, which combined with lower debt is exceptional. In other words, Comfort Systems is able to translate every dollar of invested capital into profit significantly more efficiently than most competitors. It is this ability that justifies the higher valuation.

Valuation is therefore sensitive primarily to the rate of EPS growth. If the company can sustain double-digit to high double-digit earnings growth, the current price may make sense in the long run. Conversely, a slowdown in growth would lead to a rapid compression of multiples. Investing in this stock is therefore less about looking for a "cheap title" and more about believing in a continued structural trend.

Why analysts believe in the company even after the stock's strong growth

Despite the strong growth in the share price in recent years, the analyst consensus remains largely positive. Most recommendations are in the "Buy" to "Strong Buy" range, with analysts repeatedly highlighting the combination of record backlog, structural demand and exceptional financial position. EPS growth for the full year is expected to be close to 80%, which is extraordinary in the context of an industrial company.

At the same time, analysts note that demand for Comfort Systems' services is not a short-term cyclical blip, but part of a long-term infrastructure transformation. Investments in data centers, electrification and industrial modernization have a horizon of several years, not quarters. This increases the likelihood that the company will be able to sustain above-average growth in future periods.

The quality of execution is also an important confidence factor. The firm repeatedly exceeds market expectations and meets or raises outlooks. This consistency is key for analysts because it reduces the risk of unpleasant surprises.

Business risks

Capital expenditure cyclicality remains a major risk. If there is a significant reduction in investment in data centres or industrial infrastructure, the pace of growth could slow. Although the company has a diversified order book, data centres now form a significant part of the backlog and any slowdown in this segment would have an impact on results.

Another risk is the pressure on the workforce. HVAC and electrical projects require skilled technicians, the lack of which can increase labor costs and limit the ability to complete jobs at the required pace. The company has so far managed this problem better than its competitors, but in the long term it is a structural challenge for the entire sector.

Valuation cannot be overlooked. Even a quality company can undergo a significant correction if market expectations prove too optimistic. Investors must expect higher volatility in the event of macroeconomic shocks or a slowdown in investment activity.

Investment scenarios and likely share price development

Optimistic scenario: structural winner of the investment supercycle

In the optimistic scenario, the massive investment wave in data centres, electrical infrastructure and industrial projects continues for at least the next two to three years. Demand for capacity remains higher than supply and Comfort Systems is able to monetise this situation thanks to its strong position in HVAC and electrical solutions. Backlog will not only remain above the $9 billion mark, but will continue to grow, giving the market high visibility of future revenues.

The company's profitability in this scenario continues to benefit from operating leverage. Revenues grow at a rate of around 20% per year, while earnings per share grow faster, for example in the 25-30% range. Margins remain stable or grow slightly due to selective order picking and a strong bargaining position vis-à-vis customers. At the same time, the company does not need to raise debt, which further increases investor confidence in the quality of growth.

In this scenario, the market accepts that Comfort Systems is not a cyclical construction contractor but an infrastructure growth company with a high return on capital. Valuation multiples remain elevated or decline only slightly. The share price can continue to rise in this environment despite an already high base, with total returns driven by a combination of earnings growth and a relatively stable valuation. The stock is becoming a "core holding" for investors betting on a long-term infrastructure trend.

Realistic scenario: normalising growth but maintaining quality

In the realistic scenario, growth rates gradually normalise. Data centre investment continues, but the pace of new projects stabilises. Backlog remains at a high level but its year-on-year growth slows down. The company is still showing strong demand, but is no longer achieving the extreme year-on-year jumps in profitability seen in recent quarters.

Revenues are growing more in the 10-15% annual range and EPS growth is around 15-20%. Margins are stabilising and operating leverage is no longer delivering as much improvement as before. However, Comfort Systems remains a highly profitable company with above average return on capital and a strong balance sheet, which allows it to smoothly navigate through any demand fluctuations.

In this scenario, the market gradually lowers valuations towards more sustainable levels over the long term. The share price may move sideways or show modest growth over a period of time. The total return to the investor is primarily driven by earnings growth, not multiple expansion. The stock in this scenario functions as a quality growth stock with less risk than typical cyclical companies, but without the extreme short-term returns.

Negative scenario: valuation compression despite a solid business

In the negative scenario, there is a more pronounced slowdown in investment activity. Macroeconomic conditions worsen, firms postpone capital expenditures and some data centre projects are put on hold or staggered in time. Comfort Systems' backlog begins to stagnate or decline slightly, reducing the visibility of future revenues.

Revenue growth slows to single digits in this scenario and EPS growth is significantly muted. The company remains profitable and financially healthy, but the market begins to reassess how much it is willing to pay for its future potential. It is valuation that becomes the main problem - not the existence of the business itself, but the gap between expectations and reality.

The share price may undergo a major correction even if there is no dramatic deterioration in fundamentals. Compression of multiples combined with a slowdown in growth can lead to a multi-year period of underperformance. In this scenario, it appears that even a top company can be a bad investment if bought at the wrong time.

The long-term view: betting on infrastructure, not one cycle

In the long term, Comfort Systems represents a bet on the structural trend of infrastructure modernisation rather than a short-term business story. Data centres, electrification and energy efficiency are not a one-off issue, but a process spread over many years. The company has a strong position, quality management and financial stability that allows it to take advantage of this trend.

The key question for an investor is not whether the company will survive any slowdown, but what price it is willing to pay for this quality and growth potential. Returns over the next few years will depend heavily on the entry valuation and the ability of the company to maintain its earnings growth rate. Comfort Systems remains an attractive title but requires patience and realistic expectations.

What to take away from the article

• The firm is one of the biggest hidden winners of the data center, industrial and infrastructure investment wave, although it does not operate in the technology sector in the narrow sense.

• Earnings growth of over 100%, year-on-year revenue growth of over 35% and a record backlog of over $9bn confirm that demand for its services is structural, not a one-off.

• A key competitive advantage is the combination of operating leverage, strong margins and minimal debt, which allows the company to grow without pressure on its balance sheet even in the event of an economic slowdown.

• Management has long demonstrated capital discipline and the ability to selectively take orders, which enhances the quality of growth and protects returns on capital.

• The market values the firm as a premium infrastructure title, which means that future returns will largely depend on maintaining the pace of earnings growth rather than valuation expansion.

• Analyst consensus remains positive even after the stock's strong growth, reflecting exceptional visibility of future earnings and confidence in the long-term story.

• The biggest risk is not the business itself, but the combination of high expectations and the potential normalisation of investment activity that could lead to a compression of multiples.

• From an investment perspective, this is a title particularly suited to investors who are betting on the long-term infrastructure trend and are willing to accept shorter periods of volatility in exchange for quality fundamentals.

The defense sector is in a state not seen in the markets since the Cold War. Global military spending is growing at a record pace and governments are reassessing their priorities in favor of security. According to available estimates, the global defence market will reach around US$2.75 trillion in 2026, with further growth expected towards more than US$4 trillion by 2035. This trend is driven by geopolitical tensions, increased investment in advanced systems, sensors and cyber infrastructure.

Geopolitical drivers are also reflected in specific budgets. Many NATO member states have already exceeded the required 2% of GDP for defence, and the alliance has adopted an ambitious plan to increase spending to 5% of GDP by 2035 in order to counter ongoing security threats and reduce dependence on a single major power (the US). Rising defence spending is not limited to the North Atlantic Alliance. Countries such as Turkey have approved defence budgets with a year-on-year increase of over 30%, demonstrating that the trend of increasing funding is global.

Source: NATO

In macroeconomic terms, this means that the defence sector is moving from a short-term cyclical affair to a long-term spending and innovation structure. The EU budget includes billions of euros to support defence R&D and joint procurement, increasing the technological and industrial base in Europe. Growth is therefore not limited to US equities, but European titles are also coming to the fore. Many of them have even managed to outperform their rivals across the Atlantic in recent years.

Lockheed Martin $LMT

Lockheed Martin is a very different company today than it used to be. While it was once known primarily as a manufacturer of major weapons systems for the U.S. military, today its portfolio ranges from space systems to advanced aerospace technology to advanced combat systems and cybersecurity. With such a strong product portfolio, Lockheed Martin is uniquely positioned in the marketplace. It has:

• Stable revenues from major government programs and long-standing contracts

• the ability to generate high margins

• long revenue visibility through record contracts over many years

One of the key programs behind the current growth is the F-35 Lightning II program, which is now the largest defense contract in the history of the U.S. and allied defense industry. According to current data from the Pentagon and the Joint Strike Fighter Office, the program is scheduled for production and delivery through the mid-30s, with more than 3,000 machines planned for the U.S. and dozens more for NATO and Pacific partners. This long-term demand translates directly into Lockheed Martin's revenues, giving the company a "backlog" of orders in the hundreds of billions of dollars. According to official data, by the end of 2025, the company has approved orders in excess of $150 billion, representing more than three years of production coverage without the need for new contracts. Such revenue visibility is unique in the industry and significantly reduces the risk of cyclical fluctuations.

The company's revenues have grown even in periods of macroeconomic uncertainty. The company is also significantly expanding its space and cyber systems businesses, which have higher margins and growing strategic importance. Combined with the high efficiency of its manufacturing processes, this gives the company a competitive advantage, which the market reflects not only in revenues but also in its ability to generate strong free cash flow, which the company uses to invest in research and development.

Diversification in terms of geopolitics is also an important factor. While the majority of revenue still comes from the US Pentagon, an increasingly significant share is from foreign government contracts and partner programs. This gives Lockheed Martin access not only to the US market but also to alliances where defence spending is also increasing. Studies by the International Institute for Strategic Studies (IISS) or the Stockholm International Peace Research Institute (SIPRI), which our team has reviewed extensively, confirm that defense spending in Europe and Asia is growing faster than the global average over the long term and that the growing demand for technology will continue over the next decade.

Thanks to giant contracts, long revenue visibility and the technological impact on the strategic capabilities of armed forces, the $LMT model is now structurally growth-oriented. This is reflected in valuations. While the valuation is not extreme compared to technology companies, it provides investors with a combination of steady growth, robust cash flow, and a dividend profile (dividend yield is 2.33%) that is one of the most attractive in the arms sector.

Source: SIPRI

Yet some risk factors cannot be overlooked. While national defence budgets are growing, they are also subject to political changes, fiscal pressures and long approval processes. In addition, high-visibility programmes also tend to be highly demanding in terms of budget and schedule adherence, which can weigh on short-term results in certain periods. Even so, the company's position from a fundamental perspective remains robust. However, investors should approach $LMT stock responsibly, as it is already up 19.14% after this year's run-up, when its price is already at its fair value, according to the Fair Price Index.

RTX $RTX

RTX is one of the most complex players in the global defense market today. The former United Technologies and Raytheon Company, which merged in 2020, represent a traditional defense industry powerhouse with advanced technologies increasingly intertwined with civilian applications. The result is a company that not only benefits from higher defense budgets, but is also able to capitalize on the transition to modernized, networked, high-performance systems that today's militaries deem necessary.

RTX is built on two major pillars, the defense and aerospace divisions, which include Pratt & Whitney and Collins Aerospace.

The defense division generates revenue from key programs such as Patriot anti-missile systems, radar systems, sensors, and integrated air and missile defense (IAMD) systems. These programs are typically more modular and often funded by both U.S. government agencies and foreign partners. According to the U.S. Department of Defense (DoD), significant increases in spending are planned for the coming fiscal years specifically in advanced missile defense and integrated defense systems, which directly increases demand for the technologies that RTX produces and develops.

Pratt & Whitney 's Aviation segment supplies engines for some of today's most important combat and transport aircraft, including the F-35 Lightning II, F-15EX and C-130. The performance of these engines and their reliability are critical to the capabilities of militaries around the world. In addition, this segment is less vulnerable to short-term fluctuations in defense budgets because civilian demand and long-term service contracts account for a significant portion of revenue. This provides RTX with a level of resilience even in an environment that could be subject to uncertainty, while also increasing the stability of cash flow, which, while positive in recent years, has fluctuated quite a bit.

Modern defence systems are no longer about standalone hardware, but ecosystems of interconnected sensors, networks and digital solutions that enable rapid detection, data processing and coordination between platforms. In this area, the company is investing heavily in software, data and analytics technologies, which are an increasingly important part of its contracts with defence ministries. In our analysis, this is one of the key areas where the defense industry will be significantly transformed over the next decade and where companies like RTX can gain a competitive advantage.

From an investment perspective, RTX is attractive precisely because it combines growth in the defense segment with exposure to the civil aerospace market, which broadens the revenue base beyond pure government contracts. Service contracts for aircraft engines represent a stable and long-term source of cash flow that often helps smooth out cyclical fluctuations in defense contracts.

RTX also has a strong ability to generate cash flow, which gives it room to invest in research and development. In an industry where technological superiority often determines contract awards, investment in new technologies is more than needed. Studies such as the RAND Corporation's Defense R&D Priorities confirm that future defense strategies will increasingly rely on innovations in sensors, autonomous systems, and cyber technology. And $RTX, with its size and technology background, can track, implement and sell these trends.

Of course, RTX is not entirely without risks either. The company is exposed to geopolitical fluctuations, changes in budget priorities, and potential regulatory pressure in the civilian segment. However, its revenue structure, which is based on a combination of stable government contracts and long-term service contracts, gives RTX a position in the global market that makes the company very well positioned for the years ahead.

But its stock is well above its fair value thanks to the high investor interest of recent months and years, according to the Fair Price Index, which is based on a DCF and relative value calculation, so watch out for that.

Leonardo $LDO.MI

Leonardo is a typical example of how the European defence sector has been structurally changing in recent years. Whereas a decade ago most European arms companies were seen as rather slow-growing, politically tied companies with limited investment potential, today the situation is diametrically opposed. Rising defence budgets, pressure on Europe's strategic autonomy and the drive to modernise armies have created an environment in which companies such as Italy's Leonardo are becoming key technology partners for states.

Leonardo is one of Europe's largest defence concerns. Its portfolio includes military aircraft, helicopters, radar systems, electronics, sensors, cyber security and space technologies. Today, European militaries are increasingly moving towards integrated systems dominated by aerial platforms, drones, radars, communications infrastructure and software solutions. This is where Leonardo has one of its strongest positions, profiling itself as a supplier of entire defence ecosystems.

A key growth driver is the growth of the European defence budget. According to official documents from the European Commission, NATO and individual defence ministries, Europe is in the midst of a massive renewal of capabilities that have been systematically underfunded for decades. Programmes focusing on air defence, air force modernisation, unmanned systems, cyber protection and satellite infrastructure are gradually being turned into concrete contracts. For Leonardo, this means not only a higher volume of orders, but also a shift towards more technologically demanding projects with higher added value.

The European Union's increasing drive to strengthen its own defence base is also a significant factor. Programmes such as the European Defence Fund (EDF) or joint projects in aeronautics and space technology are aiming to make European countries less reliant on imports from manufacturers outside the continent. Leonardo, thanks to its position in Italy and its strong links with European institutions, is a natural beneficiary of this trend. In practice, this means access to long-term funded programmes that aim not just to supply the required equipment immediately, but to build up an entire industrial infrastructure.

This is also very clearly reflected in the structure of the contracts. In recent years, Leonardo has systematically increased its backlog (Backlog is the value of all confirmed contracts that the company has contracted but has not yet managed to deliver and book to revenue. It is therefore confirmed future revenue) and expanded contracts in the areas of radar systems and defence electronics. These segments are among the fastest growing parts of the defense market, as confirmed by NATO studies that have long pointed to a shift in military investment from "brute force" to data-driven capabilities, and systems interconnectivity. Palantir $PLTR, a company you've surely heard of, is also riding this trend.

While US defence companies are already widely accepted in the markets as structural growth titles, European companies are only just completing this transformation in the eyes of investors. Rising profitability, improved capital discipline and improving contract visibility are gradually changing the market's view of the European defence sector as a whole. Leonardo is benefiting from this transformation not only through the results themselves, but also through the gradual expansion of the valuation framework in which the company is valued. Even so, its shares are currently above their fair price.

Of course, the political nature of European defence programmes, their sometimes slower implementation and more complex bureaucratic environment remain a risk.

Rheinmetall AG $RHM.DE

Germany's Rheinmetall is one of the most prominent faces of the European defence boom today. While the investment story of the US giants is based on global projects and technological dominance, Rheinmetall stands at the very epicentre of the European security transformation. Germany and other European states have entered a phase where it is no longer just about modernisation, but about a systematic renewal of the capabilities, stocks and production capacities of the arms industry. And it is in this process that Rheinmetall plays a key role.

Historically, Rheinmetall has been seen primarily as a manufacturer of ground combat equipment, munitions and weapon systems. Today, however, it is a comprehensive defence concern covering armoured vehicles, artillery systems, ammunition, air defence, sensors and electronic systems. This breadth is extremely valuable in today's environment. European armies face not only technological modernisation but also a very practical problem: empty depots, insufficient production capacity and the long-term neglect of conventional capabilities. This is where Rheinmetall becomes an irreplaceable link in the chain.

One of the biggest structural growth drivers at Rheinmetall is munitions. The conflict in Ukraine and the increase in tensions have shown that modern warfare is not only technological but also extremely material-intensive. Consumption of artillery ammunition, spare parts and basic equipment has far exceeded estimates. European states have therefore launched programmes for massive increases in production capacity and long-term contracts for the supply of ammunition. In this context, Rheinmetall has become one of the key suppliers not only for Germany but also for a wide range of NATO countries.

Alongside ammunition, the other key pillar is ground equipment and armoured vehicles. The modernisation of European armies is largely taking place here. New platforms, upgrades of older systems, integration of active protection, sensors and digital systems are gradually changing the nature of ground forces. Rheinmetall is involved in a number of these programmes thanks to its technological base and industrial capacity. The result is a rapidly growing backlog and significantly improved visibility of future revenues.

What sets Rheinmetall apart from many other European armourers is the pace of expansion. In recent years, the company has invested aggressively in production capacity expansions, acquisitions and joint ventures(a joint venture is a form of cooperation in which two or more companies form a joint venture to which they contribute capital, know-how, technology or market access - and share control, profits and risks) across Europe.

But at the same time, Rheinmetall is also the company most closely linked to European security policy on this list. Its performance is strongly tied to the decisions of governments, the speed of contract execution and the ability to scale production without significant pressure on margins. But that is precisely why it is so interesting to investors: it offers direct exposure to a trend that is only just beginning to fully translate into Europe's industrial reality.

And that's not the only reason why $RHM.DE shares are still in high demand and their price is being pushed ever higher. They've already gained over 21.5% in 2026, and investors don't seem to care about the company currently overpaying a significant premium for the stock, which you can find in the Fair Price Index on Bulios.

Conclusion

The defense sector is at a point in 2026 where a traditionally defensive sector is becoming one of the most significant growth stories in global markets. Rising geopolitical tensions, the long-term underfunding of militaries, and the technological transformation of modern conflict have created an environment where security is becoming the number one priority. Defence budgets are no longer cyclical and increasingly resemble giant investments, designed not to respond to a single crisis but to systematically build capabilities for decades to come. This is fundamentally changing the investment profile of the entire sector and moving it closer to long-term growth sectors.

At the same time, the defence industry is in the midst of a technological shift that extends its relevance far beyond conventional arms production. Battlefield digitisation, air defence, space projects, electronic warfare and data integration are becoming key pillars of modern defence. This creates an environment in which the volume of orders is combined with increasing added value. The result is a sector with high revenue visibility, growing technological sophistication and an increasingly strong link to national strategic planning. It is this combination that gives the arms industry a unique position within global equity markets in 2026, and these stocks stand to benefit the most.

The market reaction tells a different story. Investors looked past the quarterly beat and focused on strategy—specifically the proposed acquisition of Warner Bros. Discovery. The sell-off reflects concern that a bold strategic pivot could dilute execution quality and introduce balance-sheet risk at a time when Netflix’s standalone model was already delivering.

How was the last quarter?

The fourth quarter of 2025 confirmed that Netflix's core $NFLX business remains in very good shape. Revenue grew 18% year-over-year to $12.1 billion, which was slightly above the company's original guidance. The main driver was the combined effect of growth in paid memberships, pricing adjustments in key regions and rapidly growing advertising revenue. Netflix broke through the 325 million paid accounts mark during the quarter, confirming its global scale as well as its still-solid acquisition capability.

Operating profit in the fourth quarter was approximately $3.25 billion, up 30% year-over-year. The operating margin moved to around 25%, higher than the company itself had originally anticipated. Net income was about $2.4 billion and diluted earnings per share were $0.56, up over 30% year-over-year. Operating cash flow was also a positive surprise, with free cash flow for the quarter reaching nearly $1.9 billion.

In the second half of 2025, while total hours watched grew just 2%, viewership of owned original titles grew 9%. This confirms that Netflix is still able to create content that generates a deeper user relationship with the platform and has higher long-term value than the licensed catalog.

• Full presentation with results.

Full Year 2025 Results

Full year numbers show a very consistent picture. Revenues for 2025 reached $45.2 billion, representing year-over-year growth of 16% and 17%, respectively, when adjusted for currency effects. Operating margin rose to 29.5%, up nearly three percentage points from 2024. Netflix has thus clearly confirmed that it can combine growth with profitability expansion.

The development of the advertising segment was a significant positive. Advertising revenues grew more than 2.5-fold and exceeded $1.5 billion. While still a smaller portion of total revenues, the momentum of this segment is critical to the long-term investment story as it allows for further monetization of the user base without the need for aggressive price increases.

For the full year, Netflix generated free cash flow of $9.5 billion, a significant year-over-year increase. The company also continued to repurchase its own shares, buying back $2.1 billion worth of stock in the fourth quarter alone.

Outlook for 2026

The outlook for 2026 remains very solid in terms of operating metrics. Management expects revenue in the range of $50.7 billion to $51.7 billion, implying year-over-year growth of 12% to 14%. Operating margin should further increase to approximately 31.5%, despite the inclusion of approximately $275 million of acquisition-related costs associated with Warner Bros.

The advertising business is expected to roughly double revenues in 2026, making it one of the fastest growing segments of the entire company. Free cash flow should approach the $11 billion mark, confirming Netflix's strong ability to fund both content investments and potential strategic acquisitions.

The acquisition of Warner Bros. Discovery - a key turning point

This is where we get to the main reason for the negative market reaction. Netflix announced that the acquisition of Warner Bros. Discovery will be executed as an all-cash transaction with a price of $27.75 per WBD share. The overall size of the transaction is extraordinary and requires massive financing, including bridge loans of over $40 billion.

From a strategy perspective, the merger makes sense - Netflix would acquire a vast catalog of IP, movie and series studios, and HBO Max as a strong brand. But from an investor perspective, there is a growing risk of debt, short-term cash flow pressure and potential deterioration in capital discipline. Thus, at any given time, the market has begun to discount risk more than it has priced in the strategic potential itself.

Long-term results: model change over time

Looking at the last four years, Netflix's evolution has been markedly uneven but strategically very consistent. Between 2021 and 2024, revenues grew from approximately $29.7 billion to nearly $39 billion. However, the key difference between the years was not growth per se, but profitability.

2022 was a weaker period, with growth slowing and operating profit declining due to heavy investment in content and pressure on margins. In 2023, the company stabilized, but it was not until 2024 that the company made a significant breakthrough - operating profit grew by more than 20% and net profit increased by around 60%. Then in 2025, Netflix accelerated the trend further, with operating profit up nearly 50% and net profit up more than 60%.

A fundamental change is the revenue structure. Netflix has shifted from a "growth at any cost" model to a highly profitable media platform that can generate stable and growing cash flow. It is this change that makes the market today more sensitive to any decision that could disrupt this discipline - including large acquisitions.

Shareholder structure

Netflix's shareholder structure remains distinctly institutional. Approximately 80% of the shares are held by institutional investors, which increases the sensitivity of the share price to changes in the firm's strategy and risk profile. The largest shareholders are Vanguard, BlackRock, Fidelity, JPMorgan, and State Street, long-term oriented investors that emphasize capital discipline and return on investment.

Analyst expectations

The analyst consensus shifted to a more cautious plane following the results. While most analysts are positive on operating performance, margin expansion and cash flow strength, they caution about the increased financial risk associated with the Warner Bros. acquisition. Target prices have begun to diverge more widely, with more optimistic scenarios working with significant long-term synergies from the acquisition, but more conservative analysts discounting higher debt and integration uncertainty.

Fair Price

The CSG listing on the stock exchange, which Michal Strnad announced on 14 January, now has a date. It will take place this Friday 23.1. This is one of the most significant moments in the history of the Czech capital market.

The group is targeting a valuation of around 25 billion EUR, with the price per share set at 25 EUR. The offering is expected to bring the company between 3.3 and 3.8 billion EUR, which will be used primarily for further global expansion and to strengthen positions in both the defence and civilian industries. Large institutional players, including funds such as BlackRock and Artisan Partners, have shown massive interest in the shares, which confirms high confidence in the holding’s future growth.

For retail investors

The primary subscription is mainly aimed at large financial institutions, but the shares will begin trading freely immediately after the market opens on Friday (9:00). In addition to Amsterdam, a listing on the Prague Stock Exchange is also expected within the Free Market.

We can also expect listings on platforms XTB, Trading 212 or IBKR. It will likely be available on IBKR first, as it is the only one with a direct connection to Euronext Amsterdam, so if you don’t have IBKR and want to own CSG among the first, I would consider opening an account. CSG will probably be listed on XTB and Trading 212 during Friday.

Price Pressure Meets Strategic Accumulation

As Bitcoin’s market value dipped from multi-month highs, anxiety grew over the sustainability of the recent rally. Traders noted increased selling pressure as the cryptocurrency struggled to hold above critical support levels, contributing to a broader sense of discomfort among risk assets. Market indicators confirmed that Bitcoin’s price had retreated into lower trading bands, reflecting profit-taking and reduced enthusiasm among short-term holders. Amid this backdrop, $MSTR, the publicly traded company known for using Bitcoin as its primary Treasury reserve, announced it spent over $2.1 billion acquiring additional BTC, marking one of its most substantial purchases in recent months. This move comes as Bitcoin’s price sees downward pressure, underscoring a deliberate long-term strategy rather than reactive trading.

A Bold Stance in a Choppy Market

The decision by Strategy to increase its holdings while the broader market is underperforming reflects a notably contrarian approach. Rather than trimming exposure or pausing acquisitions amid heightened volatility, the company has leaned into weakness and expanded its position when prices were comparatively softer. This accumulation was financed in part through previously arranged capital structures, and the firm’s total Bitcoin stash now places it among the largest corporate holders globally. This strategy contrasts sharply with other market participants who have reduced exposure or adopted a defensive stance as prices declined. The larger narrative in crypto circles has been one of caution, with many traders scaling back risk as Bitcoin slipped from levels near six-month highs.

What This Means for Investors

For traditional and crypto investors alike, Strategy’s actions offer a glimpse into how institutional actors with long time horizons are navigating the current environment. Their willingness to buy during a downturn suggests they view recent price dips not as alarm bells but as opportunities to lower average cost and reinforce their balance sheets with additional BTC.

At the same time, Bitcoin’s short-term dynamics remain complex. Broader market pressure, influenced by macroeconomic sentiment and risk-off trading, continues to weigh on the digital asset. But when a major corporate holder increases its allocation in the face of weakness, it can signal confidence in the long-term narrative — even as sentiment swings and technical challenges persist.This juxtaposition of institutional conviction and market nervousness highlights an important tension in the current crypto cycle. Investors are watching closely to see whether price levels stabilize, which could reignite risk appetite, or if ongoing headwinds will prolong the subdued phase.

Are these lower valuations a buying opportunity based on Adobe’s strong margins, recurring revenue, and AI roadmap, or is the market right to be cautious about growth and competitive threats? What’s your take on Adobe’s risk-reward setup today?

The fourth quarter delivered an important signal. Earnings growth and margin expansion suggest that restructuring efforts are beginning to translate into day-to-day execution. Just as importantly, the numbers offer early evidence that the company’s reset under new leadership may be creating a path toward consistent value creation beyond a single cycle.

How was the last quarter?

In the fourth quarter of 2025, 3M $MMM reported solid operating performance, which at first blush hides a significant difference between GAAP and adjusted numbers, but it is the adjusted metric that better illustrates the true state of the business. GAAP revenue was $6.1 billion, which represented 2.1% year-over-year growth, while adjusted revenue was $6.0 billion and, when adjusted for PFAS products, delivered 2.2% organic growth. This is particularly important in the context of an increasingly weak industrial macro where 3M managed to grow faster than the market.

The fundamental shift was in margin structure. While GAAP operating margin fell to 13.0% due to exceptional items, adjusted operating margin rose to 21.1%, a 140 basis point improvement year-over-year. This shift confirms the return of operating leverage - a combination of disciplined cost control, price execution and improved product mix.

Earnings per share showed the same story. GAAP EPS was $1.07, down 20% year-over-year, but adjusted EPS was $1.83, up 9% year-over-year. This clearly shows that the core business is generating growing profits while the pressure is coming primarily from one-time and transformation costs.

Cash flow was also a strength in the quarter. Operating cash flow was $1.6 billion and adjusted free cash flow was $1.3 billion, allowing 3M to return approximately $0.9 billion to shareholders through dividends and buybacks. It is the combination of growing profitability and solid cash flow that confirms that the transformation is not just an accounting exercise, but is having a real impact on the company's financial stability.

• Full presentation with results.

CEO commentary

Bill Brown identified 2025 as a key "foundation-building" year, laying the foundations for long-term sustainable growth. In his comments, he repeatedly emphasized that 3M was able to grow above macro levels, significantly improve margins, and achieve solid cash conversion, the very metrics that have been the company's weakness in recent years.

Strategically, Brown is moving 3M toward areas with higher structural momentum, such as data centers, electrification and energy infrastructure, including nuclear power. At the same time, he is emphasizing accelerating innovation, commercial execution and operational discipline, which is already starting to translate into improved margins. His rhetoric towards 2026 is confident but underpinned by concrete operational improvements, not just cyclical recovery.

Outlook for 2026

The outlook for 2026 is one of the strongest points in the entire report. Management expects adjusted revenue growth of around 4%, with organic growth of around 3%. This implies a continued ability to grow faster than the wider industry environment.

Further margin expansion is a key element. Adjusted operating margin should increase by 70 to 80 basis points, confirming the continued return of operating leverage. Adjusted earnings per share are projected in the range of $8.50 to $8.70, representing further year-over-year growth from an already strong 2025 base.

From a cash perspective, 3M expects adjusted operating cash flow to be between $5.6 billion and $5.8 billion and more than 100% conversion to free cash flow. This creates room for both continued return of capital to shareholders and investment in growth areas without increasing financial risk.

Long-term results and structural developments

A long-term view of 3M's results shows that 2022 to 2024 was a period of significant volatility and cleansing. Revenues declined from levels of over $35 billion in 2021 to approximately $24.6 billion in 2024, with 2023 heavily impacted by restructuring, legal reserves and extraordinary write-downs. The result was even a deep loss and negative EPS.

However, 2024 and especially 2025 represent a clear turning point. Operating profit increased by more than 20% in 2024 and net income returned to more than $4 billion. EPS jumped to $7.58, marking more than 160% year-over-year growth, and EBITDA was back above $7 billion. This turnaround wasn't driven by a one-off cycle, but by a combination of a lower cost base, a stabilized portfolio, and better pricing discipline.

Over the long term, the key is that 3M has significantly reduced operating cost volatility, stabilized margins, and restored its ability to generate consistent EBIT and EBITDA. This sets the stage for the company to return to gradual earnings growth in the years ahead without being dependent on aggressive financial engineering.

Shareholding structure

The shareholder structure remains highly institutional, with approximately 74% of the shares held by institutions. JPMorgan Chase is the largest shareholder with over 17%, followed by Vanguard, BlackRock and State Street. The low insider stake of around 0.1% underscores the fact that capital discipline and return on capital at 3M are primarily driven by institutional investor expectations.

Analyst expectations

Analyst consensus has shifted towards cautious optimism following the Q4 2025 results. The key arguments in favor of the stock are the return of margin expansion, stable cash flow, and a clearly communicated 2026 outlook. Analysts continue to monitor legal risks and growth rates in the industrial segments, but improving operating metrics and the ability to meet guidance reduce the discount that has been applied to the stock in recent years.

Fair price

For shareholders, the payoff hinges on familiar fault lines in the memory business. Returns are shaped by Micron’s position in high-value segments such as AI and data centers, and by how tightly capacity expansion is managed. The megafab has the potential to cement a durable competitive edge—but only if timing, cost curves, and market discipline align with the memory cycle.

Top points of the analysis

• Micron is ramping up construction of a campus that will have up to 4 factories and an investment of up to $100 billion over 20+ years.

• The first big investment wave is expected to be about $20 billion by the end of the decade, which is more important to investors than the "headline" $100 billion.

• The profit story is based on AI increasing the memory intensity of systems and thus the value of "leading-edge memory".

• The biggest risks are not technological, but project and cyclical: timing, capex inflation, labor, infrastructure and memory cycle.

• For investors, it's a combination of strategic optionality (AI memory + geopolitics) and long accounting "overhead"(depreciation, fixed costs) that can pressure short-term return on capital.

What Micron will realistically "get out of it": the megafab economy without illusions

The most important thing is to separate "national strategy" from "shareholder return". From Micron's $MU perspective, New York brings three very concrete benefits. First, there is the geographic and geopolitical diversification of production - i.e., less sensitivity to regional shocks and better positioning in the event that the trade or security environment in Asia deteriorates. Second, domestic U.S. manufacturing typically means access to incentives, easier political support, and a higher likelihood of "priority status" with strategic customers in datacenter and AI infrastructure. And third, the new campus gives Micron the ability to build greenfield capacity with modern processes and layout, which is important in memory manufacturing for yield and cost curve over time.

At the same time, however, a megafactory does not make a profit "by existing" but only when three conditions meet: (1) demand for leading-edge memory grows, (2) Micron maintains pricing discipline and contract quality, and (3) construction and ramp-up of production occur without major slippage, because slippage extends the time that costs run without adequate production. And slippage is precisely the structural risk in U.S. megaprojects - indeed, public materials and reporting have indicated timing shifts from earlier expectations.

Timing and "what will happen": why $100 billion is not a one-time shock

Investors often make the mistake of envisioning $100 billion as a shock capex that immediately destroys cash flow. In reality, the project is stretched out over two decades and the first phase is expected to have roughly US$20bn by the end of the decade, with more fabs added over time. This changes the optics: this is not a "one-card bet" but a long build-out that can be adjusted according to cycle and demand - at least in theory.

At the same time, it's fair to say that some public sources are working with the idea that full completion of the four-fab campus may be heading into the early 40s, and the ramp-up may stretch out even longer. That's the key takeaway for shareholders: the biggest financial effect won't be in 2026, but in how this project will impact Micron's ability to deliver in the AI memory era over the next 5-15 years.

The biggest potential "alpha" is in turning AI memory from a commodity into a "performance component". High-speed memory and memory bandwidth are growing in importance in AI servers and accelerator configurations, increasing customers' willingness to pay for a combination of performance, availability and delivery certainty. Megafab in the U.S. can help Micron enter into longer-term contracts, strengthen relationships with hyperscalers and reduce supply tail risk - which can translate into lower margin volatility compared to historical memory cycles.

But for investors, the second thing is just as important: capacity discipline. If Micron, through long-range planning and incentives, can ramp up capacity in a way that doesn't create oversupply and price collapse, then the megafab becomes a tool for more stable returns on capital. If it fails to do so, the megafab may in turn amplify the cyclicality - because fixed costs and depreciation will be the "leverage" that hurts in a bad cycle.

Risks: where the investment thesis can go wrong

The biggest risks are not "that it won't get built" but that it will get built more expensively, later and into a worse cycle than the market expects today. For a project of this scale, the risk of labour, permitting and infrastructure - especially energy - is fundamental. Indeed, New York State has addressed and approved the specific energy infrastructure to connect the site. The next layer is purely industrial: memory is an industry where even a little excess capacity can translate into dramatic price pressure. Finally, there is strategic uncertainty: if the AI investment cycle overheats and hyperscalers start to put the brakes on capex, memory demand may be more volatile than the consensus sounds today.

Practically, I would summarize the risks to the investor as follows:

• Project and timing risk: slippage in construction and ramp-up of production extends the period of cost without revenue.

• Capex inflation: rising construction and technology prices worsen the return on investment.

• Infrastructure and energy: availability and cost of electricity, connectivity, environmental requirements.

• Memory cycle: risk of overbuild and subsequent price pressure.

• Competitive pressure: especially in high-end memories and in the speed of generational transition.

Memory as a bottleneck in the AI revolution

For many years, the memory sector was doomed to cyclicality. Each technology generation brought efficiency improvements, followed by overcapacity, price drops and margin pressure. Micron, Samsung and SK Hynix have all played endless ping-pong in this model.

But AI is starting to disrupt this model. Both training and inference of large language models are dramatically increasing the demands on throughput, latency, and memory per unit of computing power. In other words, it's not enough to just have a powerful accelerator; the bottleneck becomes the memory subsystem.

This is where New York's strategic logic first emerges. Micron is not building capacity to flood the market with cheap DRAM. It is building it with the ambition to be a key supplier of memory solutions to datacenters, AI infrastructure and strategic customers in the US. If this shift succeeds, memory will cease to be an anonymous commodity and become a higher value-added performance component.

Why New York - and why now

The timing of the project is no coincidence. Micron knows that the biggest investments in AI infrastructure will happen in the U.S., and that large customers - hyperscalers, cloud platforms and the government sector - are beginning to emphasize supply chain security and geographic diversification of production.

The New York megafactory gives Micron three strategic advantages that cannot be easily replicated in Asia.

• First, political and regulatory support that reduces the long-term risk of interference in the business.

• Second, proximity to customers who may prefer domestic production even at the cost of higher costs.

• And third, the ability to build production from scratch with future generations of memory in mind, rather than just optimising older factories.

But from an investor's perspective, one thing is important: this is not a short-term catalyst for the stock price. The first fab won't generate significant cash flow for quarters, but rather years. Micron is telling investors that it is playing the long game - and that it believes the memory market will look fundamentally different in 10-15 years than it does today.

What's in it for Micron - and what's in it for the investor

For Micron, this project is primarily a bet on a more stable margin profile. If it can secure longer-term contracts with AI customers, it can reduce the extreme price and profitability swings that have historically deterred investors from memory titles.

For the investor, the added value lies elsewhere. It's not that the megafab will automatically boost EPS. It's that it changes the nature of the company. From a purely cyclical memory manufacturer, Micron can move closer to an infrastructure supplier of critical components.

That's a fundamental difference. Infrastructure suppliers tend to be valued at higher multiples because their cash flow is more predictable and less dependent on spot prices.

But this is also where the biggest investment question lies: Is the market willing to believe Micron in this shift - and pay for it before it is fully reflected in the numbers?

What this means for the company's numbers: when and how the megafactory will show up in the bottom line

From an equity investor's perspective, it is crucial to separate the media dimension of the project from its real financial impact. Megafab in New York is not an acquisition with an immediate effect on revenue or profitability. It is a long-term capital project whose benefits will begin to trickle down into the bottom line over time and in multiple phases.

Timeline: when to expect the first real impact

The first thing to be clear about is time. The construction and commissioning of a modern memory factory typically takes 4-5 years from the start of earthworks to full production. This means:

• 2026-2027: the project is a pure capex burden, with no direct contribution to revenue

• 2028: first pilot production, low capacity utilization

• 2029-2030: gradual ramp-up, first measurable revenue impact

• after 2030: potential for full engagement in results

Importantly for the investor, the project tends to exacerbate short-term metrics (higher capex, lower FCF) until 2027, but from the end of the decade it can fundamentally change the structure of the business.

Impact on revenues: how much money can fab generate

A single full-stage modern DRAM fab today typically generates $5-10 billion in annual revenue, depending on product mix and pricing environment.

The New York project is designed as a multi-phase campus, not a single fab. If Micron were to actually realize the bulk of its planned capacity over a 10-15 year timeframe, we are talking about potentially:

• tens of percent of Micron's current revenues.

• not a marginal contribution

But the key is what kind of revenue. It's not low-end DRAM for consumer electronics, it's memory for:

• datacenters

• AI accelerators

• HPC systems

• strategic customers in the U.S.

These segments historically carry higher ASP (average selling price) and longer contracts.

Margins: here lies the real investment thesis

Increasing revenues alone would not be a reason to reassess valuations. The turning point comes in margins.

Micron's memory business has long been characterized by:

• high operating leverage

• extreme volatility of gross margin

• cycles of deep downturns

The megafactory's strategic logic is to shift some production to segments where:

• prices are not purely spot

• there are long-term customer relationships

• customers pay for performance, not per gigabyte

If Micron manages to increase the structural gross margin by even 3-5 percentage points in part of the portfolio with this project, it has a disproportionately large impact on the profitability of the entire company.

For a company with Micron's operating leverage, every margin point means hundreds of millions of dollars per year in EBIT on a normalized cycle.

Cash flow and returns: when a project makes economic sense

From a return on capital perspective, you need to be realistic. This project:

• not a quick return

• no buyback alternative

• is a bet on long-term ROIC above WACC

If one phase of the project costs in the order of US$20-30bn and generates US$1.5-2bn of operating profit per annum in the steady state, the return is in the range of:

• 8-10% ROIC in a good scenario

• close to the cost of capital in an average

This is not an excellent number - but it is significantly better than the alternatives in cyclical memory if cash flow can be stabilized.

What will really improve in Micron's business

This investment alone won't turn Micron around overnight. But it does change three key things that are critical to an investor:

1. Revenue quality - More contracts, fewer spot prices, higher visibility.

2. The strategic relevance of the company - Micron is moving from being a "memory vendor" to a critical infrastructure role for AI.

3. Valuation story - If the market believes that part of the business is structurally less cyclical, discount multiples can change, even without explosive EPS growth.

Investment scenarios: projections of the impact on the business and share price

(time horizon: 2026-2031, taking into account the phased commissioning of the New York megafactory)

🟢 Scenario A: Structural shift (bull case)

Assumptions

• Megafab is launched without major delays, ramp-up proceeds as planned

• A high proportion of production goes into AI, datacenters and HPC

• Memory cycle is less volatile than historically

• Part of production is covered by long-term contracts

Impact on business

• Annual revenue (2030+): +$8-12 billion vs. today's base

• Gross margin: +4-6 p.p. in the structural mix

• Net profit (normalised cycle): USD 6-8 billion per annum

• Free cash flow: steadily positive beyond the peak of the cycle

Valuation implications

• EPS (normalized): $8-10

• Market grants higher multiple due to quality of cash flow: P/E 18-20x

➡ Share price projection

• $145-200 at the end of the decade

Investment Interpretation

• Micron is transforming from a cyclical commodity firm to a strategic AI infrastructure company

• Megafab is retrospectively seen as a key turning point

🟡 Scenario B: Controlled growth (base case)

Assumptions

• The project is implemented but the ramp-up is gradual

• AI segment grows but some price volatility remains

• Margins improve, but not dramatically

Impact on business

• Annual revenue (2030+): +$5-7 billion

• Gross margin: +2-3 p.p.

• Net profit (cyclical average): USD 4-5 billion

• Cash flow fluctuates but remains manageable

Valuation implications

• EPS (normalized): $5-6

• More conservative multiple: P/E 14-16×

➡ Share price projection

• $80-100

Investment Interpretation

• Megafab fills the role of a stabilizer, not a revolution

• Company beats historical average, but doesn't change the whole story

🔴 Scenario C: Expensive insurance (bear case)

Assumptions

• Construction delays, pressure on capex

• Overcapacity in the memory industry

• AI demand does not meet expectations in full

Impact on business

• Revenue: only +2-3 billion USD

• Margins: minimal structural improvement

• Net profit: strongly cyclical, USD 2-3 billion

• FCF under pressure due to high capex

Valuation implications

• EPS (normalized): $3-4

• Market applies discount: P/E 10-12×

➡ Share price projection

• $40-55

Investment Interpretation

• The project is seen as a necessary but overpriced defense

• Micron remains a "cyclical memory play"

What to take away from the article

• Megafab in New York is not a short-term catalyst, but a long-term strategic investment with a 5-10 year horizon.

• The project is not just increasing capacity, but has the ambition to change the quality of Micron' s revenue towards AI, datacenters and high-performance memory.

• The greatest value lies not in production volume, but in the potential for structurally higher margins and less cash flow cyclicality.

• In the short term, the project weighs on free cash flow and capex, which can hinder the stock's performance in the early stages.

• Long-term upside is asymmetric: a successful ramp-up can significantly improve normalized EPS and valuation.

• The risk lies not in the technology itself, but in the timing, discipline of execution and the evolution of the memory cycle.

• For investors, this is an option to transform the business, not a bet on the next memory cycle.

• The investment sense of the project will only fully emerge at the end of the decade, not in the next few years.

However, I wanted to ask your opinion on $RACE. We all know it — a beaten-down stock, with a moat, basically what every investor looks for. At what price would you start a position? I'll probably wait a bit, but even now it could be quite interesting.

The start of the year has brought significant asymmetry to global markets. While the US indices have entered the new year rather cautiously and parts of the Asian markets remain under pressure from weaker growth, the German DAX is making a surprisingly sharp start. During the first few weeks, it has managed to repeatedly push historical highs higher and is currently hovering close to the 25,000-point mark.

This development is all the more interesting as it comes in an environment where Germany is still struggling with weaker economic growth, pressure on industry and structural challenges related to energy, demographics and competition from Asia. However, the stock market is once again proving to be a mechanism that is ahead of reality - it is not reacting to the current state of the economy, but to expectations, the flow of capital and a change in investor thinking.

In reality, it is a combination of several layers: global capital rotation, sectoral index composition, specific winners within the German market and a broader reassessment of the role of Europe in institutional investors' portfolios. It is these factors that are behind the German bourse's rise to the forefront of the developed markets, and which are beginning to set the tone once again for the whole of the European equity world.

Chapter 1: Macroeconomic environment and capital flows

One of the key drivers of the DAX's growth this year is not the domestic economy itself, but a change in the behaviour of global capital. After several years in which the vast majority of investment was directed primarily into US technology stocks, a rotation towards markets that combine the following three characteristics is becoming increasingly visible:

• lower relative valuations

• a strong sector base

• high sensitivity to the global cycle.

Europe, and Germany in particular, ticks all the boxes. The German stock market is strongly export-oriented, tied to global investment, industrial production and capital expenditure. This makes it a natural candidate for a market phase where investors are starting to focus more on the real economy, infrastructure, defence, energy and industry, rather than purely on digital growth. But the German stock market can offer that too.

The interest rate environment also plays an important role. The market is increasingly working with the idea of a gradual normalisation of monetary conditions in the eurozone over the coming quarters. This supports stock valuations in two ways:

• it reduces the discount rate on future earnings

• improves conditions for credit activity, investment and industrial projects

The result is an environment in which European, and more specifically German, equities are beginning to reappear in the portfolios of large funds, where they were very under-represented in previous years.

Chapter 2: The sectoral structure of the DAX: why Germany has an advantage at this stage

The German market is markedly different from the US indices. It is not dominated by a few technology giants, but rather by a broad spectrum of companies in areas that are key to the current phase of the cycle.

Among the most important pillars are:

Industrials and Infrastructure
Companies focused on industrial technology, automation, energy and building materials have a strong presence. These are the segments that benefit from long-term trends such as the modernisation of production capacities, investments in networks, the transition to new energy sources and the rebuilding of European infrastructure.

Defence and security
Europe is moving towards higher spending on defence, logistics and security. In this respect, Germany has become one of the key centres of the European defence industry, which is strongly reflected in the stock market performance of this segment.

Banks and the financial sector
Financial houses are benefiting from higher capital market activity, interest margins and a gradual recovery in credit demand. In an environment where a return to extremely low rates is not foreseen, the sector remains structurally interesting as companies earn more on higher rates.

Health Care, Chemicals & Pharmaceuticals
This more defensive component of the index helps stabilize its performance while providing exposure to long-term trends such as aging populations and biotechnology.

Chapter 3: Who exactly is driving performance or the companies at the heart of the German rally

The current strength of the DAX is not evenly spread across the index. A significant portion of this year's performance is concentrated in a few key titles that very accurately reflect the themes dominating the European investment landscape, namely defence, industrial transformation, infrastructure, finance and corporate digitalisation.

Rheinmetall $RHM.DE

Rheinmetall has become one of the most visible representatives of the structural change in the European approach to defence in recent years. The company has benefited significantly from the growth in the military budgets of European states, the rearmament of armies, and efforts to build domestic production capabilities in munitions, armour and defence systems. This shift is not a short-term geopolitical impulse, but rather a transition to a multi-year investment cycle that translates into record orders and visibility of future revenues.

Rheinmetall shares have thus become one of the main magnets for capital seeking exposure to the European security architecture. In addition, the company combines defense manufacturing with civilian technologies and automotive components, giving it a broader industrial base. It is precisely the high volume of contracts awarded and the ability to increase production capacity that makes Rheinmetall one of the DAX's biggest growth drivers. This year, the company's shares have already gained 21.8%.

Siemens $SIE.DE

Siemens Group has long been the backbone of the German industrial index and is regaining importance in the current environment. At the heart of its story is automation, digitalization of production, smart factories and industrial software. It is these areas that are benefiting from the pressure to increase efficiency, relocate some production closer to Europe and modernise industrial chains.

Siemens Energy then adds an energy dimension to this framework - transmission networks, gas and hydrogen technologies, turbine servicing and the infrastructure needed to stabilise power systems. In an environment where Europe is investing massively in security of supply, renewables and grid modernisation, the Group's energy division is becoming one of the key structural pillars of the DAX. The combination of industry and energy thus forms a strong axis on which this year's growth in the German market is strongly based. Siemens shares are up nearly 5% in 2026 after starting to weaken in recent days.

Heidelberg Materials $HEI.DE

Heidelberg Materials represents a sector that is often overlooked in the early stages of an economic recovery, yet it is crucial. The company is benefiting from European investment in construction, the renewal of transport networks, the residential sector and industrial projects. Public budgets and funds aimed at economic modernisation and climate transformation also play an important role.

From a stock market perspective, Heidelberg Materials is interesting because it combines cyclical exposure to economic growth with long-term structural projects. It is this combination that is providing it with increased investor interest in the current environment. The company's shares are already up 2.52% this year.

SAP $SAP

Although the DAX is not a technology index in the NASDAU sense, SAP plays an extremely important role in it. The company is a bridge between traditional industry and the modern digital economy. Its focus on enterprise software, cloud solutions, data analytics and process management positions it as a key infrastructure provider for European and global corporations.

SAP's growth is driven primarily by the continued migration of companies to the cloud, the expansion of subscription models and the integration of artificial intelligence into enterprise systems. Within the DAX, SAP thus fulfills a dual role: it brings technology exposure while stabilizing the index through high quality earnings and global diversification.

Chapter 4: What DAX growth says about Europe as a whole

The development of the German market is key in the European context. Germany is the backbone of the European stock market. When capital returns here, it usually signals a broader change in the view of the entire region.

The current rally can thus be seen as an early indication of a reassessment of Europe's role in the portfolios of investors around the world. Europe is no longer seen as just a slow-growing, regulated and demographically weakened region, and is beginning to be re-associated with themes of global significance.

If the DAX can maintain its new price range and growth is not limited to a narrow range of titles, Germany could become a reference point for the broader European market. This is similar to the role played by US technology indices in recent years.

Conclusion

The DAX's rise to new all-time highs is not just a technical success for one index, but rather a reflection of a broader change in European markets. Germany today concentrates the themes that are coming to the forefront of the global investment narrative - defence, industrial transformation, energy infrastructure and the return of capital to the real economy.

German market developments thus suggest that Europe is gradually moving from its role as a passive region to a more active one, where it is beginning to reignite its own growth engines. If this shift is confirmed, it is the DAX that could become the main reference point for the new phase of the European equity cycle.

Tesla fits that profile almost perfectly. With manufacturing flexibility, established logistics, and an existing sales infrastructure in Canada, the company is positioned to benefit from the policy change faster than most competitors. The move is less about long-term disruption and more about near-term execution, where Tesla’s scale and operational readiness become decisive advantages.

Why Tesla has a head start

Tesla's $TSLA has a key edge over its Chinese competitors in preparation. It already adapted its Shanghai factory to produce a Canadian version of the Model Y and began exporting those cars to Canada in 2023. At that time, car imports from China to the Canadian port of Vancouver rose 460% year-over-year, to about 44,000 vehicles.

Although this flow was interrupted by the introduction of a 100% tariff in 2024, it may now quickly resume. In addition, Tesla has 39 brick-and-mortar stores in Canada, a major difference from most Chinese manufacturers, which do not yet have a direct presence in the local market.

Another advantage is a simple product portfolio. Tesla works with only a few models, which allows it to quickly shift production between regions based on cost and customs conditions. Meanwhile, the cheaper variants of the Model 3 are mainly produced in China, so this is where the new release of imports makes the most sense.

What this means for Chinese manufacturers

Of course, the easing of the rules is not exclusive to Tesla. For Chinese automakers, this is the first real chance to test the Canadian market on a larger scale. Names like BYD $BY6.F or Nio $NIO are the most frequently mentioned, and they have long been looking for ways to establish themselves outside the domestic market.

Canada is attractive to them not only because of its purchasing power, but also because of its strong Chinese diaspora and more open regulatory environment than in the United States, where imports of Chinese EVs remain virtually blocked. Still, Chinese brands will face higher hurdles - they lack the service network, branding and experience with local consumers.

Established European brands manufacturing in China, such as Volvo $VLVLY or Polestar $PSNY, which already have at least a basic distribution base in Canada, may also benefit to some extent from the relaxation.

The investment view: winners and risks

From an investor perspective, this is a change that puts upward pressure on EV prices, but also rewards manufacturers with global production and strong cost management. Tesla meets all the key conditions here: flexible production, ready infrastructure and the ability to react quickly.

On the other hand, greater competition in the lower price segments may gradually put pressure on margins. If Canada does indeed allow Chinese manufacturers to expand their quotas while encouraging joint projects or local production, Tesla's current advantage may thin within a few years.

In the short term, however, the simple conclusion is that changing the rules favours those who are ready - and Tesla is ready. For Chinese manufacturers, this is more of a first test than an immediate breakthrough, while for Tesla it is an opportunity to reopen a cheaper production channel and strengthen its position in the North American market.

Possible scenarios: how Tesla's story in Canada could unfold

Further developments around the Canadian market opening for EVs from China will not be linear, and it is key for investors to think in several realistic scenarios. The first and most likely scenario in the short term is one where Tesla resumes exports from Shanghai relatively quickly. With the Canadian homologation of Model Y versions already in place and logistics in place, the company could reduce its unit production costs within months, stabilizing margins in the region while maintaining price flexibility relative to competitors. In this scenario, Canada would act as a "relief valve" for Tesla's global overcapacity in China.

The second scenario assumes that the main winners of the new deal will be Chinese manufacturers of cheaper EVs that fit under a price cap of roughly $25,000. If brands like BYD or Geely can build up a sales and service network relatively quickly, the Canadian market could face a price war in the lower end. That wouldn't push Tesla out of the market in volume, but it could force it to discount, or accelerate the development of a cheaper model designed specifically for North American markets.

The third, riskier scenario is political. Canada may come under more pressure from the United States, especially if the geopolitical balance or Washington's trade priorities change. In that case, a revision of quotas, tighter rules or even a return of restrictions cannot be ruled out. For Tesla, this would mean another sudden redirection of production and increased uncertainty about long-term planning in the region.

What investors should watch in the coming months

For investors, it will not be the announcement of the deal itself that is critical, but the specific steps that follow. A key signal will be when Tesla's Shanghai-built cars reappear in Canadian ports. This would confirm that Tesla is able to take advantage of the new conditions faster than its competitors. Equally important will be any changes to Tesla's Canadian pricing - any room for discounts or new model variants may indicate the company's strategy towards cheaper Chinese rivals.

Another factor is the behaviour of Chinese brands. Investors should keep an eye on new brand registrations, plans to build dealerships and initial marketing campaigns targeting Canadian customers. If these steps are delayed, Tesla's advantage will be extended. Last but not least, it will be important to heed political signals from Ottawa and Washington - especially any hint that the deal could be subject to revision or a broader trade debate between the U.S., Canada and China.

Overall, Canada is thus ceasing to be a marginal market for Tesla and becoming a testing ground where it can show how flexible its global manufacturing model is in an environment of increasing geopolitical uncertainty and price competition.

In the long term I don’t trust most European stocks due to weak economic growth, strict regulation, and lower upside compared with the USA. Therefore, in my dollar portfolio I focus mainly on American stocks, where I see better returns and more opportunities to benefit from innovation.

Today, after the drop (around -1.8% to 19.83 EUR) my stop-loss on $NESTE.HE (Neste Oyj) was executed, which is in line with my risk strategy. I also hold $VOW3.DE (Volkswagen) and $BAYN.DE (Bayer), but I plan to sell them once they reach my target prices — for VOW3 around 115 EUR (currently 101 EUR) and BAYN around 53 EUR (currently 41 EUR), as I expect some upside thanks to relatively good results and riding the positive sentiment in pharma stocks. In the long run, however, I think it’s a dead end.

Of European stocks I see long-term holding potential only in $ADYEN.AS (payment services with revenue growth above 20% and EBITDA >50%) and $ASML (leader in EUV for AI chips, with target prices above 1400 EUR and an absolutely unique position among key suppliers to chipmakers).

What do you think about European stocks vs. the USA? Do you hold most of them long-term?

As geopolitical tensions increasingly spill into financial markets, investors are being forced to rethink long-held assumptions about global capital flows. The deep financial interdependence between the United States and Europe, once viewed primarily as a stabilizing force, is now drawing attention as a potential source of leverage in an era of rising trade disputes and political friction. At the center of that discussion is Europe’s massive exposure to U.S. financial assets.

A New Dimension in Transatlantic Tensions

As trade tensions between the United States and the European Union intensify, a seldom-discussed form of economic leverage is coming into focus. Beyond conventional tariffs and political posturing, European governments and institutional investors collectively hold an estimated $8 trillion in U.S. bonds and equities, giving the continent a substantial stake in the health of American financial markets and a potential strategic tool if relations deteriorate further. This vast portfolio of U.S. assets reflects decades of cross-Atlantic capital flows in which European savings have helped finance U.S. budget deficits and support the global dominance of dollar-denominated securities. In the current political climate, however, that interdependence is increasingly being examined through a strategic lens.

From Passive Holdings to Strategic Leverage

The idea now gaining traction among market strategists is that Europe’s holdings could evolve from passive investments into implicit negotiating power. A slowdown in purchases of U.S. Treasuries or a gradual reduction in dollar exposure could, in theory, place upward pressure on U.S. borrowing costs and influence broader financial conditions. Analysts emphasize that such actions would not need to be dramatic to have an impact. Even subtle shifts in capital allocation or signaling could affect sentiment, currencies, and long-term interest rate expectations, especially in already volatile markets.

Market Implications on Both Sides of the Atlantic

For global investors, this dynamic introduces a new layer of uncertainty. Any sustained change in European demand for U.S. assets could ripple through equity markets, bond yields, and foreign exchange rates. At the same time, European markets could see increased capital retention or redirection, reshaping regional asset performance. While large-scale asset sales remain unlikely under current conditions, the mere discussion of financial leverage underscores how markets are becoming more sensitive to political risk embedded within capital flows.

Investors Reassess Financial Interdependence

The evolving narrative highlights a broader shift in global finance, where capital allocation is no longer purely driven by yield and risk, but also by strategic and geopolitical considerations. For portfolio managers, understanding the implications of Europe’s financial position is becoming an essential part of assessing long-term exposure to U.S. assets. As global alliances grow more complex, the role of financial interdependence may prove just as influential as traditional trade policy in shaping market outcomes.

What looks like a marginal one-dollar increase is, in reality, a strategic pivot. Premium subscriptions are the economic backbone of Spotify, and even small pricing adjustments can materially reshape revenue growth, margins, and free cash flow. At a time when user growth across major platforms is slowing, Spotify is making it clear that the next phase is about extracting more value per user rather than expanding the base.

Why now: monetisation is catching up with growth

Spotify $SPOT has long faced criticism for having huge reach but relatively weak monetization compared to other global platforms. Despite hundreds of millions of users, the company has struggled for years with weak margins, high licensing costs and pressure from music labels and artists themselves. But the last two years have shown a clear turnaround.

Premium pricing is part of a broader strategy to:

• Increase average revenue per user

• improve operating margins

• and stabilize long-term cash flow

In doing so, management relies on the fact that Spotify has an extremely strong position in users' daily habits. Music, podcasts and audiobooks are for many people a "sticky" service that is not disturbed by even a slight increase in price. It is this psychological barrier that is key - Spotify is betting that most subscribers will accept the extra dollar without significant churn.

What analysts and the market are saying

Analyst reaction suggests that Wall Street views the move as a positive rather than a risk. Investment bank Jefferies, while slightly lowering its target price on the stock, maintained a Buy recommendation and calls Spotify one of the most attractive titles in its sector. A key argument is the expected acceleration in revenue growth in 2026, driven by just the combination of higher prices and steady subscriber growth.

Moreover, Jefferies refers to Spotify as an "under-monetized asset". In other words, according to their models, the company is still not realizing the full economic potential of its platform. In addition to premium pricing, the analysts see additional growth space in, for example:

• packages for the most loyal fans

• additional paid features

• and gradually improving the monetization of the non-paid, ad-supported version of the service

Investment view: a signal of business maturity

From an investor perspective, the current price increase is important mainly as a signal. Spotify is moving from a phase of aggressive user base growth to a phase of revenue optimization. This is a typical transition that often precedes a more stable and profitable long-term period for digital platforms.

In the short term, the market may be watching primarily to see if price increases translate into growth in subscriber churn. In the long term, however, a different question is more important: how many more times can Spotify raise the price without encountering resistance from users. If the pricing power of the platform turns out to be higher than previously thought, this could significantly change the valuation of the entire company.

Spotify is thus not just a "music app" today. It is becoming a test case for how far a global digital service can go in monetising its position - and how much users are willing to pay to remain an indispensable part of their daily lives.

What may follow: growth, or initial subscriber resistance?

The next evolution after the price increase to $12.99 won't be black and white. Spotify is reaching a stage where it is no longer testing whether it can get more expensive, but how often and how far it can go without disrupting the stability of its user base. Past experience shows that most subscribers accept the price, but each additional increase pushes the service closer to the psychological threshold where users begin to consider alternatives or return to the free version.

From a growth perspective, the key point is that Spotify still has several levers it can use. Higher price automatically increases revenue per user and improves operating margins, which is exactly what the market is pricing in today. If analysts' estimates of a further acceleration in free cash flow are confirmed, the price hike could be seen as a move that definitely moves the company from a "growth at any cost" story into the role of a stable digital business with predictable returns.

On the other hand, however, there is a growing risk that some users will become more price-sensitive, especially outside the US and Western Europe. It is the developing and smaller markets that are now a source of subscriber growth for Spotify, but also a place where price tolerance is significantly lower. If further price increases lead to more customer churn, the company could find itself in a situation where higher prices are offset by slower growth or stagnation in user numbers.

This leaves open a fundamental question for investors: is Spotify able to continue to increase price without losing user loyalty? The next few quarters will provide the answer. It is the evolution of subscriber numbers and revenue per user after this increase that will show whether Spotify still has room for further price increases or whether it is approaching the point where it will have to look for other avenues of growth.

Recent developments:

• 2009 - Spotify Premium launches at approximately $9.99 per month

• 2011-2023 - price unchanged in the long term, Spotify built user base and market share

• June 2024 - first significant price increase to $11.99 per month

• January 2026 - further price increase to $12.99 per month

For context:

• In over 14 years, Spotify has only raised its price twice

• Total price increase since launch is roughly +30%, spread over a very long period

• Current pace suggests a shift in strategy from user growth to maximizing revenue per subscriber

While parts of the technology sector grapple with margin pressure and post-hype normalization, this business follows a different trajectory. Incremental optimization, improving profitability, robust cash generation, and disciplined capital allocation form the backbone of the investment case. It is this combination that leads analysts to believe the stock still fails to reflect the full economic value of the platform that has been built.

Top points of analysis

• Analysts see significant price upside even after strong earnings growth.

• A key player in digital infrastructure for small and medium-sized businesses.

• High recurring revenue and strong customer retention.

• Rapid earnings growth driven by margins and buybacks.

• Valuation built on cash flow, not hype.

Digital foundation for millions of businesses

GoDaddy $GDDY is a global digital services provider that primarily targets small and medium-sized businesses, freelancers, startups and individuals doing business online. The company stands at the very beginning of a customer's digital journey - the moment they set up a domain, create a web presence or build an online brand.

The core pillar of the business is the registration and management of internet domains, where it is one of the world's leading companies. This segment is extremely stable, with a high renewal rate and low sensitivity to the economic cycle. Domains are then followed by other services: web hosting, email solutions, website security, SSL certificates, web development tools and increasingly important e-commerce functions.

Strategically important is the company's shift towards an integrated platform for online business. GoDaddy is no longer just a "domain reseller", but an ecosystem that allows customers to run their entire online business in one place. This significantly increases the customer's lifetime value as their dependence on the platform grows with each additional product and the likelihood of leaving for a competitor decreases.

Customer base and competitive advantages

The company serves tens of millions of customers globally, none of which account for a significant percentage of revenue. This reduces concentration risk and makes revenue extremely stable. Customers are typically less tech-savvy, which increases their loyalty to simple, all-in-one solutions.

A key competitive advantage is the combination of brand, scale and transition costs. Once a customer has a domain, email, website, hosting and security with one company, the incentive to move elsewhere is minimal. It is this effect that allows a firm to raise prices and expand offerings without a significant increase in marketing costs.

Which segments really create value: margin, growth and monetization potential

GoDaddy' s business is homogeneous at first glance, but from an investment perspective it is essential to distinguish between the different layers of revenue. While domains form the stable foundation of the entire ecosystem, the real value growth is created elsewhere - in downstream services with significantly higher margin and monetization potential.

The domain registration and management segment is characterised by extremely high stability, low variable costs and extremely strong retention. Margins are high but growth is limited - the market is mature and the rate of new domain additions is relatively low. This segment should therefore not be seen as a growth engine but as a 'cash-generating core' that finances the expansion of more profitable areas. Its key value is not dynamism but predictability and low cyclicality.

The segment of web services, hosting, email solutions, security and web development tools is significantly more attractive. It is here that higher growth rates are combined with significantly better unit economics. These services not only have higher gross margins but also generate strong transition costs. Once a customer is using web, email, certificates and domain management with one provider, the incentive to leave drops dramatically. This effect translates directly into ARPU growth and increased customer lifetime value.

However, the greatest long-term monetization potential lies in e-commerce tools, online payments, marketing services and premium packages. These products are a smaller portion of revenue today, but are growing faster than the company average and are well above average in terms of margin. The key is that growth is not driven by new client acquisition, but by deeper monetization of the existing customer base. From an investment perspective, this is an ideal combination - growth without exponential cost increases.

Competitive environment: Why GoDaddy maintains a strong position

The competitive landscape in digital services for SMEs is fragmented, but less dangerous from an investment perspective than it might seem. GoDaddy does not operate in a direct price war with design- or e-commerce-focused technology platforms, but serves a different type of customer - less tech-savvy, pragmatic and simplicity-oriented.

Platforms like Wix $WIX or Squarespace are strong in visual presentation and simple web design, but their weakness is their limited range of services. Customers often see them as a tool, not an infrastructure. In contrast, Shopify $SHOP dominates e-commerce, but targets more ambitious merchants and smaller businesses with growth ambitions, rather than the broad mass of small business owners.

What sets GoDaddy apart is the breadth of its offerings and its role as a gateway to online business. The company often acquires a customer at the moment of domain registration and gradually guides them through the entire digital cycle - from a simple presentation to more complex online activities. This model creates high transition costs that are difficult for competitors to disrupt.

Scale and branding are also crucial competitive advantages. For many small business owners, GoDaddy is synonymous with "taking the first step online". It reduces marketing costs for customer acquisition and allows the company to effectively monetize long-term relationships. In an environment where competitors often fight for attention through discounts and aggressive marketing, this factor is a key margin stabilizer.

Management

The company is led by Aman Bhutani, who stepped into the CEO role with a clear vision of transforming the company from a volume player to a highly profitable digital business. His previous experience in consumer technology and digital services has figured prominently in the strategic changes of recent years.

As CEO of GoDaddy, Aman brings more than 20 years of experience in technical, managerial and leadership roles leading brands into new periods of innovation and global growth.

Prior to joining GoDaddy in 2019, Aman spent nearly a decade at Expedia Inc. where he served as president of the Brand Expedia group from 2015 to 2019, and held leadership positions on the global engineering team, culminating as CTO from 2010 to 2015. Prior to joining Expedia, Aman held several technology positions at JPMorgan Chase and Co. and Washington Mutual, Inc.

Under his leadership, Aman fundamentally rethought cost structure, marketing spend and capital allocation. The firm reduced inefficient investments, focused on core products, and began systematically working with margins. The result has been a dramatic increase in operating profitability and free cash flow.

From a shareholder's perspective, it is key that management has long favored share buybacks over expansionary acquisitions. This demonstrates a high level of confidence in their own business and a discipline that is not commonplace in the technology market.

Financial performance: several years of systematic improvement

The company's revenues have grown at a steady, single-digit rate in recent years. It will reach approximately USD 4.57 billion in 2024, up from USD 3.82 billion in 2021. Growth is not explosive, but it is consistent and predictable, which is key in a mature digital business.

The more significant change has been at the profitability level. Operating profit has more than doubled between 2021 and 2024, with operating income alone growing by more than 60% year-on-year in 2024. EBITDA has crossed the US$1bn mark, representing a significant shift in the company's operating strength.

Earnings per share has long benefited not only from earnings growth but also from a reduction in the number of shares outstanding. The company has aggressively used buybacks in recent years, significantly increasing value for existing shareholders.

Cash flow as a key argument of the investment thesis

Free cash flow is the strongest pillar of the investment story. FCF margins of over 30% mean that the company can turn a significant portion of revenue into cash. This is a fundamental difference from firms that report accounting profits but do not generate cash.

Operating cash flow is stable and relatively insensitive to the economic cycle. Customers pay up front, costs are spread over time, and negative working capital structurally supports liquidity. As a result, the firm has sufficient funds to service debt, repurchase shares and invest in product development.

Valuation: Why the numbers don't look as expensive as they seem

At first glance, valuations can look strained. However, a P/E of around 20, a P/S of 3.4 and an extremely high P/B (180) must be read in context. The book value of equity is significantly reduced by years of buybacks, making the P/B a virtually useless indicator.

More relevant is a look at cash flow. A Price to Cash Flow of around 10-11 is a relatively moderate valuation for a company with this level of margins, stability and return on capital. The market is not yet assigning a significant growth premium, even though earnings per share are growing at a double-digit rate.

• Gross Margin 61.52%

• Operating Margin22.00%

• Net Margin17.01%

Thus, the valuation does not look like a bet on euphoria, but rather a valuation of a quality, highly profitable business with limited risk.

Why analysts still believe in the company today

Above all, analysts emphasize the combination of earnings growth, margin expansion and a disciplined capital policy. The expected EPS growth of over 40% is not based on optimistic scenarios, but on structural changes already implemented.

Another reason for optimism is the untapped potential to monetise the existing customer base. Average revenue per customer still has room to grow, especially in premium services, e-commerce tools and digital marketing.

It is this combination that leads analysts to conclude that even after the share price rise, the title remains attractive from a risk/reward perspective.

Business risks: where an investment thesis may stumble

The biggest structural risk with GoDaddy is not a collapse in demand, but a gradual erosion of the growth story. The company operates in a segment that is inherently mature, and therefore cannot rely on new customer acquisition as the main driver of expansion in the long term. If the scope for monetization of the existing base turns out to be less than management and analysts expect, the entire investment story could "run out of steam" relatively quickly. In such a scenario, GoDaddy would remain a profitable company, but without the ability to justify current valuations.

The second significant risk relates to competitive pressures in overhead services. While domains are highly stable and at low risk, areas such as web tools, e-commerce solutions, marketing services or email solutions are much more exposed competitively. Players such as Wix, Squarespace, Shopify or new AI-driven tools may put pressure on pricing or force GoDaddy to invest more in product development in certain segments. If the company had to choose between maintaining margins and defending market share, an investment thesis based on profitability growth would weaken.

A specific but important risk is the structure of the balance sheet. GoDaddy has long operated with very low equity, a direct result of aggressive buybacks. This in itself is not a problem - on the contrary, it enhances shareholder returns - but it does make the company more sensitive to changes in market sentiment. In a higher rate environment or a temporary drop in cash flow, investors could start to penalize a high debt-to-book ratio even if the economic reality of the firm remains stable. This "optics" problem can significantly increase stock volatility in the short term.

Acquisition Consideration: Can GoDaddy become a target for a larger player?

For GoDaddy, the question of a potential acquisition comes up regularly, not because of speculative news, but because of the very nature of its business. GoDaddy is highly established, generates stable and predictable cash flow, has a global brand and serves tens of millions of small and medium-sized businesses. This is exactly the type of asset that is attractive to strategic buyers and financial investors over the long term - not because of growth euphoria, but because of its infrastructural role in the digital economy.

From the perspective of strategic buyers, GoDaddy could make sense especially for technology or platform players looking to expand their ecosystem towards small businesses. In theory, this would include cloud services, e-commerce or digital marketing companies that already serve the SMB segment but don't have as strong an "entry point" in the form of domains and a basic online identity. GoDaddy stands at the very beginning of the digital customer journey, a strategic position that cannot be easily replicated through organic growth.

More realistic than a tech giant, however, is the scenario of interest from private equity. GoDaddy has several key characteristics for this type of investor: high and stable free cash flow, relatively low capital intensity, room for further cost optimization, and strong pricing power. Moreover, historically, this is not foreign territory - GoDaddy has been owned by private equity funds in the past and has successfully undergone a transformation and subsequent return to the stock market. This means that financial investors understand the company very well and can appreciate its model.

On the other hand, there are also strong arguments against the acquisition scenario. The current management clearly profiles itself as a long-term owner and allocator of capital, not as a team preparing the company for sale. Aggressive share buybacks, an emphasis on EPS growth and margin optimization suggest that management believes in its ability to create value even without a strategic buyer. Moreover, a sale of the entire company would require a significant premium over the current market price, which at a market capitalization of around $17 billion is not a trivial transaction even for the big players.

What to watch next: operational and financial signals for the investor

For an investor, it is essential to have a clear framework against which to continuously verify that the investment thesis is being fulfilled. At GoDaddy, there are several key metrics that provide quick and reliable feedback.

The first signal is the evolution of average revenue per customer. ARPU growth confirms the success of the monetization strategy and the ability to sell additional services to customers without having to significantly increase marketing spend. If ARPU stagnates, it means that the company is hitting the limits of cross-selling.

The second key indicator is free cash flow and its utilization. Investors should monitor not only the absolute amount of FCF, but also how much is being returned to shareholders in the form of buybacks. A consistent decline in the number of shares outstanding is evidence of disciplined capital allocation and management's long-term confidence in its own business.

It is also important to monitor margins, particularly operating and FCF margin. Their stability or continued growth confirms that the company can scale the business without cost pressures. Conversely, a decline would signal increasing competition or inefficient investments.

Last but not least, the pace of revenue growth needs to be seen in the context of the macroeconomic environment. GoDaddy is sensitive to the health of small and medium-sized enterprises, so a slowdown in growth per se may not be a negative signal as long as profitability and cash flow are maintained.

Investment scenarios

Optimistic scenario: monetisation of the platform + return of capital

In the optimistic scenario, GoDaddy manages to fully leverage its transformation from a mere domain registrar to a comprehensive platform for SMEs. Growth is no longer driven primarily by new customers, but by increased monetisation of the existing base, which now numbers over 20 million clients. Products such as web hosting, email, e-commerce tools, payment solutions and marketing services increase ARPU, and are a significantly more attractive business in terms of margin than domains alone.

Revenues could accelerate from the current ~7-8% per annum towards 10-12% in this scenario, with operating margins moving further above 23-25% due to operating leverage and economies of scale. Free cash flow would grow faster than revenues - comfortably at double-digit rates, allowing management to continue aggressive share buybacks. These already significantly reduce the number of shares outstanding and artificially boost EPS.

At the same time, if the analyst consensus is met and the market is willing to accept a multiple of around 22-24x forward P/E, a target price of around $170-180 over a 12-18 month horizon is not unrealistic. This corresponds to the ~50-55% upside mentioned in the S&P Global Market Intelligence data. In this scenario, GoDaddy becomes a quality compounder, not a cyclical bet.

Realistic scenario: steady growth, cost control, gradual revaluation

The baseline scenario assumes that the company maintains its current momentum, but without dramatic acceleration. Revenues grow at a 7-9% annual rate, EPS is driven by a combination of modest operating profit growth and continued buybacks. Margins are stabilising around current levels and the main source of value remains the strong ability to generate cash.

In this scenario, the market still views GoDaddy as a quality but relatively "boring" digital business. Valuation remains near current levels - approximately 19-21x earnings, which is consistent with the company's and sector's history. As such, the share price could gradually move into the $140-155 range, or 15-30% growth over a one-year horizon, primarily driven by earnings growth and share count reduction.

This scenario is attractive to investors looking for a combination of defensive stability and reasonable growth, not an explosive story. Here, GoDaddy functions as a "cash-flow machine" with relatively low macro sensitivity.

Negative scenario: pressure on the SMB segment and loss of investment patience

The negative scenario is based on the risk that SMBs, which form the core of the customer base, start to cut back significantly. This would translate into slower growth in ancillary services, lower willingness to upgrade packages and higher churn rates. In this case, revenues would slow to 4-5% per annum and operating leverage would cease to work in favour of margins.

At the same time, the market could start to penalise high debt-to-equity ratios and weaker liquidity more. If investors stop believing the long-term monetization story, valuations could shrink to 15-16x earnings, which would see the share price return to the $100-115 range.

In this scenario, GoDaddy would not be existentially threatened - the company has strong cash flow and the ability to survive worse times - but the stock would become capital-unattractive for an extended period of time, serving more as a wait for better times than an active investment.

What to take away from the article

• GoDaddy is an infrastructure digital business with high stability.

• The real strength lies in the cash flow, not the media story.

• Valuation is reasonable given the quality and return on capital.

• This is a title suitable for long-term investors looking for a combination of growth and stability.

The financial sector has been one of the best-performing segments of the U.S. market over the past year. Banks, investment houses and other companies tied to executing financial transactions have benefited from a combination of higher interest rates and continued strong economic activity in the US. Investors gradually increased the valuations of these companies over the course of the year. However, for many titles, multiples have reached levels that historically have been more consistent with technology growth companies than traditional financial institutions. This is an important change.

The fundamental problem is that the rise in stock prices has in many cases been significantly faster than the rise in fundamentals themselves. While earnings for much of the financial sector are at solid levels, their growth rates tend to be in the single digits, cyclical and heavily dependent on the macro environment. Yet today, for some, even prominent names, we see P/Es over 30, high P/B multiples, and valuations that assume ideal long-term conditions: a stable economy, falling rates, and sustained high capital markets activity.

Meanwhile, the financial sector has historically been one of the most sensitive to changes in the economic cycle. This contrasts somewhat with those expectations. A slowdown in growth, a rise in delinquencies, a fall in transaction volumes or pressure on margins will have a very rapid impact on the performance of banks and financial institutions. If expectations start to diverge even slightly from reality, it is the overpriced financial stocks that tend to react disproportionately sharply. And this is exactly where part of the market may be today, and these are the stocks that may be at risk.

Visa $V

The company is built on a global payments infrastructure, has a huge network effect, extremely high margins, and generates stable cash flow without carrying traditional bank credit risk. It doesn't deal with defaulted mortgages, it doesn't worry about credit losses in a recession in the way that banks do, and its model is built largely on the fact that the world simply pays by card, mobile or online all the time. That's why Visa has long traded at a premium to the rest of the financial sector. The problem is that this premium has started to stretch in recent quarters to the point where it resembles the valuations of growth technology companies, rather than a payments infrastructure that, while great, is increasingly mature.

Looking at valuations, current multiples already suggest that the market is pricing in a near-flawless scenario. The trailing P/E is around 32, the forward P/E is around 26. These are numbers that are high even within quality companies and especially so for a company in the financial sector. In practice, this means that investors today are not just paying for stability, but also for growth to remain brisk over the long term, margins to be maintained, and none of the unpleasant variables (regulation, merchant pressure, alternative payment competition) to materialize.

It's just that Visa is already a huge company, and for such companies, the key question is what happens when growth "just" normalizes. Yes, the card payment trend is still positive and the shift from cash to digital payments continues. But at the same time, much of future growth today is more about maintaining the current pace than accelerating it. And as soon as there is a signal that momentum is waning, the market in a dearly valued stock often reacts not with a drop in earnings, but with a drop in the multiple. This is exactly the scenario that can very easily turn into reality with the Visa. There doesn't have to be a company crisis, just that investors stop willingly jockeying for premium valuations. And in recent years, the stock has shown this tension several times, with shares writing off several percent in a matter of hours or days. The stock's performance in 2025 has also lagged that of the overall market.

Adding to this is a detail that is often underestimated with Visa: its sensitivity to global economic activity. While Visa is not cyclical like banks, it is directly tied to consumption and transaction volume. The most important part of the business is also the most profitable: cross-border payments and travel. And here everything has not been rosy lately. Visa grew on cross-border volumes in one of its last reports, but the pace has also slowed slightly , according to Reuters - in fiscal Q4 2025 it was 12% growth, which is still a solid number, it just shows that the pace can slow. And that alone may cause some investors to worry about a reassessment of valuations and, consequently, the share price.

Another layer of risk is the regulatory and legal pressure around fees. In the US and Europe, merchants' card transaction costs have long been an issue and there is a growing drive to squeeze them. In November 2025, news emerged of a modified Visa and Mastercard agreement with merchants that would reduce fees by around 0.1 percentage points on average over several years, while addressing some of the practicalities of card acceptance. But the very fact that a topic like this needs to be addressed is a signal that the push to monetize the payments ecosystem is not over.

Moreover, in January 2026, Visa $V lost (along with Mastercard $MA and Revolut) a case in the UK where the court recognised the regulator's power to limit cross-border fees, further concrete evidence that the regulatory environment may be gradually tightening.

It is also important to keep an eye on developments around President Trump, who is also addressing this issue. The Trump administration is also trying to reinforce its pro-consumer and populist image in the financial services sector, leading to specific proposals that directly threaten banks and credit card issuers. This is most evident in the proposal he is pushing to cap credit card interest at 10% per annum, which is intended to be a temporary measure for one year, and which the President insists on enforcing even without a clear legislative mechanism.

Putting the two together, we get a picture of a company that is fundamentally very sound, but whose risk is shifting towards the expectation of a further slowdown. And that is the most important thing about overpriced stocks. Visa doesn't have to do anything wrong for the stock to fall. All it needs is for the market to stop paying the premium multiple. For example, if the P/E were to return from around 32 to a more conservative range of 24-25 (which would still be a premium valuation to the financial sector) the company could be given room to grow the business, which the stock could then follow.

The fair price, which is calculated based on DCF and the relative valuation of the stock and can be found not only in the Fair Price Index but also in the detail of the stock itself, for Visa today is at $253.1. That's a value that is down nearly 23% from the current price. The current valuation of Visa and its distance from intrinsic value has an impact on the stock's swings that are much more intense.

Morgan Stanley $MS

Morgan Stanley has long been one of the most respected investment banks in the world. It has undergone a significant transformation over the past decade, from a classic, highly volatile trading and investment banking house towards a much more stable model built on wealth management. It is this change in profile that is one of the main reasons why the market has been significantly more bullish on the stock in recent years than previously. Wealth management, asset management and more stable fee income have reduced earnings volatility and Morgan Stanley has gradually begun to present itself as a financial platform rather than a traditional investment bank. But along with this came a fundamental shift in valuation.

Morgan Stanley's shares have appreciated significantly over the past year (gaining 43% in 2025) and valuations have moved into a range that has historically been unusual for investment banks. The market now values the firm as if its business is almost immune to the economic cycle. This is where the disconnect between the reality of the business and what is priced in begins to emerge.

On the face of it, everything looks very good. Morgan Stanley now has a massive wealth management division that manages several trillion dollars in assets, generates recurring revenue based on regular fees, and gives the entire group a much more stable character than in the past. Added to this are investment banking, securities trading, asset management and global corporate clients. In an environment of strong markets, high investor activity and rising asset valuations, this mix has proved ideal. Fees were rising, assets under management were growing, returns on capital were improving and equities were logically attracting capital.

But here is the crux of the problem. Much of Morgan Stanley's current profitability is directly or indirectly tied to the condition of the financial markets. The volume of IPOs, mergers and acquisitions, trading activity, investor appetite for risk, the value of assets under management and the flow of new money into funds. These are all variables that can change direction very quickly over the course of a cycle. And yet, today, stocks trade at valuations that assume that the more stable nature of the business also means stable results in any environment.

The transformation towards wealth management has undoubtedly reduced volatility, but it has not eliminated cyclicality. If markets enter a prolonged phase of underperformance, it will not manifest itself at Morgan Stanley in one dramatic shock, but in the gradual drying up of several sources of income simultaneously: lower transaction activity, weaker investment banking fees, slower growth in assets under management and pressure on margins.

Current valuations, however, do not allow much for this scenario. Morgan Stanley is trading at multiples that have historically corresponded to the peaks of the cycle rather than its middle or late stages. In other words, the market today is valuing the firm based on results generated in an environment of strong capital markets, high liquidity and relatively good economic activity. As this mix begins to change, not only the earnings outlook, but also the very willingness to pay a premium multiple for the bank, will begin to change.

Another factor is that much of the optimism around Morgan Stanley is based on the notion of growing client wealth over the long term. But wealth management, while more stable than trading, is still extremely sensitive to asset values. A downturn in the markets does not just mean temporarily worse investor sentiment, but a directly lower fee base.

Add to this the fact that Morgan Stanley remains significantly exposed to the capital markets as a whole, and you have a rather unpleasant combination: a cyclical business priced as if it were structurally defensive. In such a situation, it no longer takes a dramatic collapse of the banking system to put the stock under pressure. All it takes is a period of weaker activity, falling volumes and a return to caution by investors.

According to the Fair Price Index on Bulios, Morgan Stanley shares are now overvalued by 24.92% and could fall very significantly if they return to their fair/real value. This is something to be reckoned with. But it doesn't mean it will happen this year or in the years to come. Rather, it should be a signal to investors that stocks are expensive and dips or swings may start to appear more frequently and more sharply on the $MS chart.

Bank of Nova Scotia $BNS

At first glance, Bank of Nova Scotia looks like an odd choice on this list of "overpriced" financial stocks. For one thing, it's not a US company, but a Canadian one, and for another, it doesn't trade at an extreme P/E like Visa, or at premium multiples like Morgan Stanley. On the contrary, within the North American banking sector, it has long been one of the titles that attracts investors primarily with its high dividend yield (4.31%) and seemingly conservative valuation (P/E of 18.17). But therein lies its specific problem. The risk with $BNS is not that the market is paying an exorbitant multiple for a perfect business. The risk is that the share price may look reasonable while the fundamental environment gradually deteriorates. And in that case, even a cheap-looking bank may actually be overpriced.

The company is one of Canada's five largest banks and has long profiled itself as the "most international" of Canada's large financial institutions. In addition to its strong domestic position, it has significant exposure to Latin America, with operations in Mexico, Peru, Chile and Colombia, among others. This strategy has historically allowed it to grow faster than its purely domestic competitors. At the same time, it brings higher macroeconomic, monetary and political sensitivity. And this is what has proved to be a much greater burden in recent years than investors have acknowledged until recently.

The Canadian banking sector as a whole is entering a very sensitive phase. Households in Canada are among the most indebted in the modern world, and a significant portion of mortgages are gradually being refinanced into an environment of substantially higher interest rates. This is putting pressure on consumers, increasing the risk of delinquency and limiting the scope for further credit expansion. While banks have enjoyed higher interest margins in the short term, this effect has a natural ceiling. As soon as the economy starts to slow down, the focus shifts from margins to the quality of the loan portfolio.

This is where Bank of Nova Scotia finds itself in a difficult position. Unlike some domestic competitors, it has a higher proportion of exposure to regions where economic stability is lower, the environment less predictable and currency risk more pronounced. Latin America offers long-term growth potential, but in the short term it is an environment that tends to amplify problems during a global slowdown. Thus, the combination of the Canadian real estate market, highly indebted households and emerging economies creates a mix that is more sensitive than investors often acknowledge. This is beautifully evident in the long-term declining margins.

Still, BNS stock has held relatively high over the long term, thanks largely to the dividend. A yield above 4% looks attractive and creates a perception in the eyes of many investors that protects the share price from larger declines. However, the history of the banking sector has repeatedly shown that a high dividend yield is no protection against a deterioration in fundamentals. On the contrary, it is very often its consequence. Once earnings pressure, provision growth or regulatory constraints kick in, the market quickly begins to perceive how safe a given dividend really is. And in such an environment, it no longer matters whether the P/E is 10 or 18. It's whether the current earnings profile is sustainable over the long term. And even though the stock has risen 56% since 2024 to today's prices, it still hasn't hit new highs like the previous companies analyzed. That alone is saying something.

For Bank of Nova Scotia, there is the added factor of weaker relative performance. Compared to other large Canadian banks, it has not been able to generate the same quality return on capital or as consistent growth in recent years. This raises the risk that if the environment for banks does indeed deteriorate, it will be one of the titles on which the market will shift more of its skepticism.

And even if, for example, the portion of the market that is pulling up the $BNS stock price is overlooking the structural issues and caveats, Bulios Black members need only take a quick look at the Fair Price Index to see that a thorough analysis of this stock is needed, as its price is currently down nearly 49% from the intrinsic one.

Conclusion

The financial sector is entering a period where stock prices and the nature of the business itself are becoming increasingly divergent. With Visa $V, we see an extremely high-quality company where valuations have fallen into a range where even a small disappointment can mean a noticeable correction. With Morgan Stanley $MS, the cyclical business has become valued as if it were almost insensitive to the capital markets. And at Bank of Nova Scotia $BNS, an attractive dividend story meets macroeconomic and structural risks that may come to the fore in the next phase of the cycle.

The common denominator across all three titles is not that they are bad companies. The common denominator is that their current valuations, in their various forms, assume too good a future environment that is highly stressed and unforgiving of even small mistakes.

Scale is a decisive advantage in this environment. While fee pressure remains a structural headwind across asset management, BlackRock’s breadth, distribution power, and technology stack allow it to grow both assets and absolute earnings. Fourth-quarter results reinforce the view that the company is not entering 2026 as a mature giant, but as a platform still expanding its economic reach.

How was the last quarter?

• BlackRock's fourth-quarter EPS of $13.16 beat forecasts by 5.79%.

• Revenue rose to $7 billion, up 23% year-over-year.

• Record $527 billion in net inflows into the iShares ETF.

• Dividend rose 10%, with $1.8 billion in share repurchases planned for 2026.

The fourth quarter of 2025 was strong for BlackRock $BLK, primarily in terms of capital inflows and organic fee growth. Assets under management grew to approximately $14 trillion, driven by net inflows of approximately $342 billion during the quarter alone. This confirms the firm's ability to attract capital across market cycles and regions.

At the operating level, the quarter was characterized by very strong growth in core fees, which grew 12% year-over-year in annualized terms. iShares ETFs, systematic active strategies, private markets and outsourcing services were the main drivers. The results also show that growth is not dependent on any one segment but is broadly spread across products and client groups.

On a GAAP basis, earnings were dampened by higher non-cash costs associated with acquisitions and a one-time charitable contribution, resulting in a year-over-year decline in reported EPS. However, after adjustments, operating performance remained very strong, with adjusted earnings per share of $13.16, confirming the company's robust internal earnings power.

• Full presentation with results.

CEO commentary

Larry Fink was clear in his comments that 2025 was the strongest year ever in terms of net capital inflows. He emphasized that BlackRock enters 2026 as a unified platform following the integration of GIP, HPS and Preqin, which significantly expands the firm's capabilities in private markets, data and alternative strategies.

Management also openly talks about long-term growth pillars - private markets, wealth management, active ETFs, digital assets and tokenization. The 10% dividend increase and the expansion of the buyback program are then a clear signal of confidence in medium-term growth in margins and profitability.

Long-term results

BlackRock's long-term development confirms that the firm is gradually moving from a traditional asset manager to a global investment and technology platform. Between 2022 and 2023, revenues remained more or less flat, reflecting weaker capital markets and lower asset valuations. From 2024, however, the company re-entered a phase of accelerated growth.

In 2025, total revenues grew nearly 19% to more than $24 billion, with gross profit growing even faster than revenues. This points to improving operating leverage and higher contribution from higher-than-average margin products, particularly in alternatives, technology and data services.

Net income on a GAAP basis was lower in 2025 than in 2024 due to one-time costs, but adjusted results clearly show increasing profitability. Both EBITDA and EBIT have been growing over the long term, confirming that BlackRock can monetize growth in assets under management even in an environment of fee pressures. From a long-term perspective, this is a high-quality, capital-efficient business with very stable cash flows.

Shareholding structure

BlackRock's shareholder structure is typical of a high-quality institutional title. Over 80% of the shares are held by institutional investors, with Vanguard, State Street and other large asset managers being the dominant shareholders. The high level of institutional ownership contributes to the stock's low volatility and long-term stable investment profile.

Outlook

BlackRock enters 2026 with exceptionally strong momentum. Management expects continued double-digit organic base fee growth, further growth in assets under management and a gradual increase in margins due to higher private markets and technology services. The ambition to raise up to $400 billion in private markets by 2030 suggests that the firm's growth story is still at an earlier stage than its size would suggest.

Analyst expectations

Analyst consensus views BlackRock as one of the best-performing titles in the financial services sector. Expectations for 2026 work with continued earnings per share growth, supported by a combination of higher market valuations, strong net capital inflows and continued share buybacks. Analysts also highlight that BlackRock is one of the few players that can grow over the long term even in an environment of fee pressures, thanks to scale, technology and product diversification.

Fair Price

Global markets were jolted after the United States announced a new round of tariffs targeting several European countries, linking trade pressure to stalled negotiations over Greenland. The decision signals a sharp return to hardline trade tactics and immediately raised concerns about renewed transatlantic friction at a time when economic cooperation remains critical. The announcement framed tariffs not as a conventional trade dispute but as leverage in a broader geopolitical negotiation. That framing has unsettled investors, who are now recalibrating risk around policy unpredictability rather than economic fundamentals alone.

Europe Pushes Back Against Economic Pressure

European leaders responded swiftly and firmly, rejecting the use of tariffs as a negotiating tool and emphasizing that sovereignty and political decisions are not subject to economic coercion. Denmark, supported by multiple EU partners, made clear that Greenland’s status is not a bargaining chip, while broader European institutions signaled unity in their response.

The unusually coordinated tone from European capitals suggests that retaliation, while not yet confirmed, remains a real possibility should tariffs move from threat to reality.

Markets Weigh the Risk of Escalation

From an investment perspective, the situation introduces fresh uncertainty into global trade flows. Key sectors with deep U.S.-Europe integration, including industrials, autos, luxury goods, and advanced manufacturing, could face renewed cost pressures if tariffs are implemented and countermeasures follow.

Currency markets and equities have already shown signs of sensitivity, reflecting investor concern that political brinkmanship could disrupt supply chains just as global growth expectations begin to stabilize.

Greenland Becomes a Strategic Flashpoint

At the center of the dispute lies Greenland’s growing strategic importance. As Arctic routes, rare earth resources, and geopolitical positioning gain prominence, interest in the region has intensified. The U.S. administration has framed its approach as a national security imperative, while European leaders insist that any future decisions must respect existing governance structures and international norms.

This clash highlights how economic policy is increasingly intertwined with security considerations, complicating traditional diplomatic channels.

Investor Outlook Remains Cautious

For investors, the key issue is not the tariffs themselves but the precedent they set. Linking trade access to political objectives raises the risk of sudden policy shifts and increases volatility across global markets. While negotiations could still defuse the situation, the episode serves as a reminder that geopolitical risk remains a material factor in portfolio strategy.

Personally, I feel the sector is very strong in the long term thanks to AI, data-center chips, and the overall trend of increasing digitization. At the same time, it seems to me that many stocks are already highly valued, and entering at this stage can be risky without a clear strategy.

How do you see it — is it better to wait for a correction now, or does it make sense to start entering gradually already?

For investors, the dispute matters less for its legal merits and more for what it signals. Large banks operate at the intersection of regulation, compliance, and public scrutiny, where client decisions are rarely neutral. As political pressure intensifies, the risk is not a single lawsuit, but a broader shift toward the politicisation of banking relationships and regulatory exposure.

"Debanking" as a political weapon

The issue of debanking has gradually become a political symbol in the US. The conservative part of the political spectrum uses it as evidence of alleged discrimination by financial institutions, while banks argue for compliance with anti-money laundering rules, sanctions regimes and reputational risks.

JPMorgan $JPM finds itself in a delicate position in this context. As the largest U.S. bank with over $4 trillion in assets, it is under constant scrutiny by regulators, and any decision on client relationships has the potential to escalate into a political issue. The bank has therefore been at pains to publicly stress that it does not support closing accounts based on political or religious views, but at the same time it must respond to regulatory risks that could otherwise lead to much harsher sanctions.

What does Debanking actually mean?

Debanking refers to a situation in which a bank cancels or refuses to provide banking services to an individual or business without a traditional default type problem. Typically, it involves closing accounts, terminating a relationship with a client or refusing to open an account for reasons that are related to the risk to the bank, not the financial creditworthiness of the client.

The most common reasons for debanking tend to be:

• Regulatory and legal risk (concerns about violation of laws, sanctions or money laundering)

• Reputational risk (client is politically, socially or media controversial)

• political or ideological sensitivity (e.g. extremist groups, controversial public figures)

Jamie Dimon between the Fed and the White House

Tensions increased further after Trump responded to media speculation that Dimon was informally being considered as a possible head of the Federal Reserve. Dimon firmly rejected this and publicly stated that he would not accept the position under any circumstances. He also took the liberty of criticising efforts to weaken the Fed's independence, which he said could lead to higher inflation and interest rates in the long run.

These are the key words. Dimon has clearly come down on the side of institutional stability, which is a positive signal from the point of view of investors, but it also puts him in direct conflict with the President, who has repeatedly attacked the central bank and its leadership.

Legal risk: reality versus rhetoric

From a purely legal perspective, Trump's threat of legal action does not yet pose an immediate financial threat to JPMorgan. To be successful, a lawsuit would have to show that the bank violated the law or contractual obligations, not just that it chose to terminate a client relationship that posed an elevated risk.

For investors, however, something else is important: it is not the amount of the potential fine that matters, but precedent and reputation. If "debanking" becomes the subject of litigation or new legislation, it could:

• limit banks' ability to manage reputational and regulatory risks

• increase compliance costs

• and create pressure to change client policies across the sector

What this means for investors

In the short term, JPMorgan remains extremely strong financially and any legal tussles would not in themselves have a material impact on profitability. Longer term, however, the dispute raises several issues that investors should not overlook:

• The politicization of banking: pressure from the government may gradually change the way banks manage risk.

• Regulatory uncertainty: the debanking debate may lead to new rules that will increase costs for the whole sector.

• Trump-Dimon personal conflict: this makes JPMorgan a symbolic target, not just one of many banks.

Conclusion: it's not just about Trump and JPMorgan

This dispute is not an isolated episode. It is part of a broader trend of financial institutions being at the centre of political battles. For investors, the key to watch is whether it remains just a strident rhetoric or whether the "debanking" actually turns into a legal and regulatory issue with real implications for the banking business.

At the moment, JPMorgan is still more of an observer than a victim, but the risk premium associated with the political pressure on the big banks from this litigation is certainly not diminishing.

Novo Nordisk ($NVO) is my largest equity position, making up 11.5% of the portfolio value with an unrealized gain of 31.29%. As a leader in diabetes and obesity treatment (e.g., Ozempic and Wegovy) it’s on an upward trend – it rose 9.12% on January 16, 2026, closing at $62.33. I plan to hold it long term because of its growth potential.

Strategy: Target price $65. If it exceeds $71.50, I’ll set a trailing stop loss starting at $65 to lock in gains and benefit from further upside.

Is it wise? Yes, it fits a trend-following approach with risk management.

Alternatives: Partial sales to rebalance the portfolio.

Positives:

High demand for GLP-1 drugs and for an oral form of Wegovy. Strong EPS and ROE growth creates real company value. Resilient healthcare sector.

Negatives:

High profits attract competition from generics manufacturers. Regulatory/legal issues can significantly increase volatility.

Your thoughts on $NVO – hold with a TSL or sell some off?

The Shift From Ownership to Long Term Contracts

As demand accelerated, financing models became central to the industry’s expansion. Instead of encouraging homeowners to purchase systems outright, many installers pushed long term solar leases and power purchase agreements. This model proved especially important for $RUN , whose business relies heavily on third party ownership of residential solar assets. From an investor perspective, these contracts created predictable recurring revenue streams, helping support higher valuations. For homeowners, however, the shift quietly transferred financial complexity and long term risk away from installers and onto consumers.

The Illusion of Early Savings

At the start of these contracts, monthly payments often appeared lower than utility bills, reinforcing the idea of immediate savings. This structure helped drive strong installation growth, which investors tracked closely in quarterly earnings. However, annual escalator clauses embedded in many leases meant payments increased every year. While this benefited companies with large installed bases and long duration contracts, it reduced the long term financial advantage for homeowners compared with owning systems using hardware from $ENPH or $SEDG.

The Problem Emerges When Homeowners Try to Sell

The weaknesses of leased solar systems became visible when homeowners attempted to sell their properties. Unlike owned panels, leased systems introduced contractual obligations that complicated transactions. Buyers were often required to assume the remaining lease, making homes harder to sell and narrowing the pool of qualified buyers. This issue rarely appeared in installer revenue reports but represented a growing structural risk for business models centered on long term lease transfers.

When Solar Contracts Interfere With Mortgage Approval

Mortgage lenders added another layer of friction. In many cases, solar lease payments were treated as debt, reducing buyers’ borrowing capacity. This brought solar contracts into conflict with mortgage underwriting standards used by lenders and platforms such as RKT and large banking institutions. Failed mortgage approvals exposed a hidden vulnerability in lease heavy solar models, particularly in higher interest rate environments.

Deals Stall and Sellers Pay the Price

As stalled transactions became more common, sellers were often forced to buy out solar leases to complete sales. These buyouts could cost tens of thousands of dollars, effectively erasing years of expected savings. While companies like $RUN continued to report stable contracted revenue, the growing consumer backlash introduced long term reputational and regulatory risks that investors increasingly began to factor into valuation discussions.

A Growing Issue as Solar Adoption Expands

The problem intensified as residential solar penetration increased. A rising share of new installations relied on leases, meaning more homes carried embedded financial obligations. This created a widening gap between the bullish growth narrative surrounding clean energy stocks and the real world experience of homeowners. Analysts increasingly questioned whether lease driven growth would remain sustainable as awareness of resale friction spread.

Financing, Not Technology, Becomes the Deciding Factor

Over time, it became clear that technology was rarely the limiting factor. Solar efficiency and reliability continued to improve, supporting component suppliers such as ENPH and SEDG. Instead, financing structures emerged as the primary determinant of whether solar added or subtracted value at resale. For investors, this distinction became critical when evaluating long term risk across the residential solar sector.

Ownership Versus Leasing Determines the Outcome

Ultimately, the divide between ownership and leasing shaped both homeowner outcomes and investor exposure. Owned systems generally enhanced property value and provided transparent savings, aligning more closely with hardware focused companies. Lease based systems, while attractive for installers in the short term, revealed structural weaknesses when homes changed hands. As the industry matures, investors may increasingly favor solar companies whose growth depends less on complex long term contracts and more on straightforward ownership economics.

A Rally Built on Structural Change

Micron’s momentum is being driven by forces that go far beyond a typical industry rebound. Demand for advanced memory solutions has accelerated sharply as data centers scale up to support generative AI workloads. These systems require dramatically higher memory capacity and speed, turning products like high bandwidth memory into mission-critical components rather than interchangeable commodities.

As a result, Micron is benefiting from stronger pricing power, improved utilization, and a level of forward visibility that memory producers rarely enjoy. Investors are increasingly recognizing that the current upcycle is rooted in long-term infrastructure investment rather than short-term inventory swings.

Why This Cycle Looks Different

What makes the current environment stand out is the nature of demand. AI servers consume multiple times more memory than traditional systems, and leading cloud providers are racing to secure supply. This has tightened the market and shifted negotiating leverage toward suppliers with the right technology and scale.

Micron’s positioning allows it to participate directly in this shift. With much of its advanced memory capacity effectively allocated well ahead of delivery, the company has gained confidence in its revenue outlook and margin trajectory. That confidence has begun to show up in analyst revisions and investor sentiment.

Micron's performance this year

Valuation Debate Is Heating Up

As Micron’s stock climbs, debate naturally turns to valuation. Skeptics point to the sector’s history of boom-and-bust cycles, while supporters argue that applying old valuation models misses the point. If memory demand is increasingly tied to AI infrastructure growth, then earnings durability could be far stronger than in past cycles.

For now, the market appears willing to assign a premium to that possibility. Continued execution, disciplined supply management, and sustained AI investment will be key factors in determining whether Micron can justify even higher levels.

The Bigger Picture for Investors

Micron’s story highlights a broader shift underway in the semiconductor industry. Memory is no longer simply a supporting component but a strategic pillar of modern computing. As AI adoption expands, companies that control critical parts of the hardware stack stand to benefit disproportionately.

While volatility remains part of the equation, Micron’s evolution suggests that its recent rally may be less about speculation and more about a reassessment of its long-term role in the AI era. For investors looking beyond short-term price swings, Micron is increasingly difficult to ignore.

That narrative is now evolving. With key restrictions lifted and governance normalized, the bank is gradually shifting from fixing legacy issues to actively deploying capital. The fourth quarter of 2025 should therefore be read less as a standalone earnings report and more as confirmation that Wells Fargo is re-entering the cycle as a fully functioning growth-oriented institution.

How was the last quarter?

Wells Fargo $WFC reported net income of $5.4 billion for the fourth quarter of 2025, which equates to earnings per share of $1.62. This is a year-over-year improvement from $5.1 billion and $1.43 per share in Q4 2024. Adjusted for a one-time severance item of $612 million, earnings would have been $5.8 billion and $1.76 per share, respectively, confirming the bank's solid operating performance.

Total revenues increased 4% year-on-year to USD 21.3 billion. Net interest income reached USD 12.3 billion, up 4% year-on-year, mainly due to loan growth, improved trading performance and the revaluation of fixed interest assets. Non-interest income increased 5%, with positive contributions primarily from higher asset management fees, card fees and mortgage banking income. In contrast, venture capital and investment results were weaker than in the previous year.

On the cost side, discipline is evident. Non-interest expenses declined 1% year-on-year to $13.7 billion, reflecting lower regulatory costs and ongoing efficiency measures. The bank's efficiency ratio improved, with the efficiency ratio falling to 64% from 68% in Q4 2024. The provision for loan losses was $1.04 billion, slightly lower than a year ago, with the quality of the loan portfolio remaining stable.

The bank's balance sheet also confirms a return to growth. Average lending reached USD 956 billion, up 5% year-on-year. Deposits rose to USD 1.38 trillion, up 2% year-on-year. CET1's capital adequacy ratio reached 10.6%, which, while a slight decline from the previous year, still provides ample scope for returning capital to shareholders.

• Full presentation with results.

CEO commentary

CEO Charlie Scharf called 2025 a watershed year, largely due to the Fed's removal of the long-term cap on balance sheet size and the completion of several key regulatory actions. He said that Wells Fargo has managed to achieve its ROTCE target return on tangible equity of 15% and the bank has now set a more ambitious medium-term target of 17-18%.

Scharf highlighted that year-on-year earnings per share grew 17%, fee income grew 5% and net loan losses fell 16%. At the same time, the bank returned $23 billion to shareholders in 2025, including $18 billion in buybacks, and increased the dividend by 13%. Management said it was able to fund significant infrastructure investment and growth by reducing its cost base over the long term, which has fallen by $15 billion cumulatively over the past five years.

Outlook

The outlook to 2026 is openly growth-oriented for the first time in a long time. Bank management expects that the removal of regulatory restrictions will enable more dynamic credit expansion, particularly in commercial and investment banking. Growth is also expected to continue in consumer lending, where higher credit card activity and a return to growth in auto financing are positive signs.

At the same time, the Bank expects further efficiency improvements, although the pace of cost reduction will not be as strong as in previous years. A key objective remains to move ROE towards the levels of the largest US banks, with management openly communicating an ambition to get to a ROTCE in the 17-18% range within a few years.

Long-term results

The long-term numbers show that Wells Fargo has had a very volatile period, but one from which it is gradually stabilizing. Total revenue in 2024 is $125.4 billion, up 8.7% year-over-year. A year earlier, they grew by as much as 38%, but this was partly driven by one-off factors and the return of interest margins after a sharp rise in rates.

Operating profit in 2024 was $23.4 billion, up 8% year-on-year, while net profit reached $19.7 billion. Profitability is therefore improving more slowly than revenues, reflecting both cost pressures and conservative provisioning. Still, there is a clear trend towards normalisation - after a significant fall in 2022, EPS has gradually returned to US$5.43 in 2024, up from US$3.17 in 2022.

An important structural factor is the long-term reduction in share count. The average number of shares has fallen from over 4 billion in 2021 to around 3.43 billion in 2024, significantly supporting earnings per share growth and return on capital. EBITDA is nearly $31 billion in 2024, confirming the bank's solid ability to generate cash even in more challenging periods.

Shareholding structure

Wells Fargo's shareholder structure remains highly institutional. Approximately 79% of shares are held by institutional investors, while the share of insiders is negligible. The largest shareholder is Vanguard Group with 9.5%, followed by JPMorgan Chase with 9.3% and BlackRock with 8.1%. Fidelity also holds a significant stake through FMR. This structure confirms that the title is seen as a long-term position for large institutional investors rather than a speculative bet.

Analyst expectations

Analysts agree that 2026 should be the first full year of growth for Wells Fargo after a long period of retrenchment. Earnings per share growth is expected to continue, driven by a combination of credit expansion, stable interest margins and aggressive share buybacks. The consensus expects further improvement in return on capital and a gradual convergence to the performance of the largest US banks.

Analysts' price targets are currently mostly above current market prices, with more optimistic scenarios assuming that the market will begin to value Wells Fargo as a growth bank rather than a restructuring story. The macroeconomic slowdown and credit quality developments remain key risks, but the baseline scenario assumes a relatively stable environment and continued improvement in fundamentals.

Fair Price

This business operates far from technology hype and headline sectors. Its activities may appear unglamorous, but they sit at the core of food supply chains, animal nutrition, and renewable fuels. The real investment question is not whether the company is cyclical, but whether it is emerging from a trough just as favourable long-term dynamics begin to reassert themselves.

Top points of analysis

• The company operates a globally unique business based on bio-waste recycling with high barriers to entry.

• Core segments provide stable cash flow, while renewable fuels represent a growth opportunity.

• Current results reflect cyclical pressures, not a breakdown of the business model.

• 2026 may mark a turning point for earnings, sentiment and valuation.

Company performance

Darling Ingredients $DAR is a global processor of biological by-products generated by the food, agriculture and meat industries. Its core business is the collection, logistics and processing of materials that would otherwise pose an environmental and hygiene burden. It then transforms these inputs into raw materials for use in the feed, food, pharmaceutical and energy industries.

• 15% global market share

• 1.2B gallons of renewable fuel

• Company returns 11 billion gallons of water back to the environment annually

Darling's fundamental competitive advantage is scale and physical infrastructure. The company operates the largest rendering network in the world, with thousands of collection routes, dozens of processing plants and long-term contractual relationships with waste suppliers. Building a similar system would require huge amounts of capital, regulatory approvals and years of enforcement, creating very strong barriers to entry.

Importantly, Darling is not a pure commodity company. Although input and output prices fluctuate, the company controls a key point in the supply chain and benefits from the fact that biowaste is generated regardless of the economic cycle. This differentiates Darling from traditional industrial or energy companies whose business is significantly more sensitive to demand shocks.

Products and services: the three pillars of the business

Darling's business is divided into three main segments. The first is Feed Ingredients, the production of proteins and fats used in livestock and pet food. This segment is the most stable, generates predictable cash flow and acts as the mainstay of the entire group.

The second segment is Food Ingredients, where Darling is one of the world leaders in the production of collagens and gelatins. These products have a wide range of applications in the food, pharmaceutical and health and wellness sectors. Compared to the feed segment, the company achieves higher margins and greater differentiation here, which reduces price sensitivity.

The third and most investment-worthy pillar is Fuel Ingredients. Here Darling processes used oils, fats and bio-waste into inputs for the production of renewable diesel, biogas and SAF fuels. This segment is more cyclical but also offers the greatest growth potential, especially if regulatory incentives remain in place.

How the company makes money

From an investment perspective, it is key to understand that Darling combines defensive and growth characteristics. The feed and food segments provide relatively stable margins and cash flow that allow the company to weather weaker periods without materially disrupting the balance sheet.

The fuel segment acts as an option element. In an environment of favourable regulations and high prices, it can significantly increase EBITDA for the entire group. Conversely, in periods of uncertainty and low margins, it can drag down results in the short term, as has been reflected in recent years.

This structure means that Darling is not betting on one scenario. The investor is not buying a pure green energy play, but a business that has the underlying cash flow backed by physical infrastructure, plus exposure to the long-term decarbonisation trend.

Structural opportunities

While much of the investment debate around Darling Ingredients revolves around the cyclical bottom and the return of margins, less attention has been paid to the fact that the firm has several structural opportunities that are not dependent on short-term macro or a one-off regulatory push. It is these opportunities that are key to long-term shareholder returns.

The first fundamental opportunity is Darling's position at the top of the value chain. The firm does not compete primarily at the end-product level, but controls access to scarce feedstocks that are difficult to substitute. In an environment where demand for sustainable raw materials is growing faster than supply, this position tends to increase bargaining power and margin stability over the long term. This is not a cyclical effect, but a structural change in the functioning of the market.

The second opportunity is a gradual shift in the mix towards higher value added. Darling has historically operated as an efficient industrial processor with relatively low margins. Today, however, an increasing amount of value is created in segments where price is not determined by the commodity market but by product functionality, quality and long-term contracts. This shift is not immediate, but over time it can significantly change the profile of the entire company - from a cyclical processor to a more stable supplier of specialty ingredients.

A third, often underestimated opportunity is the combination of regulation and physical market limits. In many of the areas where Darling operates, capacity simply cannot be increased without long-term investment, permits and infrastructure. This creates an environment where growth in demand does not automatically lead to pressure on prices, but can instead favour existing players. If the regulatory framework stabilises, Darling may become one of the main beneficiaries of this imbalance.

Markets in which Darling operates: Expectations of growth

Processing of animal by-products (rendering, feed)

• Expected market growth: approx. 2-4% CAGR over the long term

• Role of the segment: stable cash flow, high barriers to entry, low volatility

• Investment significance: finances expansion into growth segments, buffers cyclical risks

Functional food ingredients (collagen, gelatin)

• Expected market growth: approx. 7-10% CAGR (nutraceuticals up to 10-12% CAGR)

• Key driver: health, aging population, premium nutrition

• Investment case: higher margins, better ROIC, profit growth faster than revenue growth

Renewable fuels and SAF

• Expected market growth: approx. 15-25% CAGR over the next decade

• Structural constraints: lack of feedstock, not demand

• Investment relevance: largest upside, potential for leapfrog EBITDA growth, higher volatility

Management

The company is led by longtime CEO Randall C. Stuewe, who has led the company for more than two decades. That in itself is a significant factor: Darling is run by a leader who has been behind key strategic decisions, incremental expansion and the building of today's global infrastructure. From an investor perspective, this increases continuity of strategy and reduces the risk of sudden, incoherent changes of direction.

Stuewe's management style can be characterized as long-term infrastructural and counter-cyclical. The firm has repeatedly invested during periods of weaker margins when competitors were cutting capacity, and in turn benefited from a better position in the subsequent recovery cycle. This is an approach that has historically worked in a business with high barriers to entry, but also places high demands on balance sheet and cash flow management.

It is here, however, where the main question mark for the equity investor lies. Expansion into the fuel segment and associated capital investment has led to higher debt and lower financial flexibility. Management is thus entering the next phase of the cycle with less room to manoeuvre than in the past. It is therefore crucial for investors to monitor whether management can switch from expansion mode to optimisation mode.

Risks to the future of the business

The company's investment thesis is based on the return of margins and structural growth in selected segments. The main risks therefore lie not in the business itself, but in the speed with which these assumptions come to fruition and in external factors not fully under the company's control.

Key risks

• Regulatory uncertainty (fuels, SAF) - Changes in tax credits, quotas or time delays in support can delay the return of margins and keep profitability under pressure longer than the market expects.

• Margin volatility - Dependence on feedstock and commodity prices means fluctuations in EBITDA and EPS, increasing short-term share price uncertainty.

• Debt and capital intensity - Higher debt limits flexibility, increases interest rate sensitivity and reduces room for capital allocation errors.

• Risk of unmet expectations - If improved results come more slowly than the market has priced in, the stock may stagnate even as fundamentals gradually improve.

• Slowing the shift to higher value-added - If growth in high-value segments does not replace weaker parts of the portfolio, the company will remain in a low-margin profile longer.

Financial performance

On the face of it, recent years look weak for Darling. Revenues have fallen from US$6.8bn in 2023 to US$5.7bn in 2024, operating profit has fallen by more than 50% and net profit by almost 57%. EBITDA has fallen from US$1.48bn to around US$1.0bn. Such numbers are naturally interpreted by the market as a deterioration in fundamentals.

However, on deeper analysis, it is crucial to distinguish cyclical pressure from structural change. The decline in profitability was not due to a loss of customers, a collapse in demand or technological obsolescence of the business. The main factors were lower fat and protein prices, pressure on margins in the fuel segment and regulatory uncertainty, which temporarily reduced the economic attractiveness of renewable fuels.

Meanwhile, historical data shows that Darling is able to generate EBITDA steadily above US$1.3-1.5 billion in more favourable conditions. That said, the current level of profitability is below the company's normalized potential. It is therefore important for investors to view the current numbers as a point in the cycle, not a new long-term standard.

Valuation

Darling's current valuation, with an enterprise value of around US$10bn and multiples of around 12-13× EV/EBITDA, does not look extremely cheap at first glance. However, the key point is that these multiples are calculated on cyclically muted earnings. The market implicitly assumes that a return to higher profitability will be slow or uncertain.

If EBITDA in 2026 is close to the historical average, say $1.4bn, the current enterprise value multiple would be closer to 7-8x EV/EBITDA. This would already look significantly more attractive for an infrastructure business with a long-term growth trend. In other words, valuations today reflect skepticism, not normalization.

From an equity investor's perspective, there is an asymmetry. The downside is partially constrained by existing cash flow and physical infrastructure, while the upside comes from relatively little change in margin expectations and regulation. This change in expectations is often what allows titles to outperform the market later in the cycle, even if the absolute earnings growth is not dramatic.

Why Darling in a slowing market environment

The underlying investment framework for 2026 is fundamentally different from previous years, according to Raymond James (investment bank). After three consecutive years of double-digit returns, the S&P 500 index is entering a phase where room for further expansion in valuations is running out. As Raymond James CIO Larry Adam points out, the index's valuations are around the 95th percentile of its historical range, meaning that future returns will no longer be driven by higher multiples, but solely by earnings growth.

This has major implications for stock investors. If the market as a whole delivers more single-digit returns in 2026, as Raymond James expects, then the importance of picking individual titles increases dramatically. The index ceases to function as an "automatic return generator" and investment success shifts to the ability to identify companies that can grow faster than the aggregate market gains, or for which there will be a change in expectations for future profitability.

This is where Darling Ingredientscomes into play. Raymond James presents Darling not as a defensive haven, but as a title that is fundamentally at the bottom of the cycle while the broader market is near a valuation peak. This creates an asymmetric situation: the index is reliant on "pure" earnings growth without the support of multiples, while Darling can benefit from both earnings normalization and valuation reassessment.

Another key point in the Raymond James argument is the distinction between sources of growth. While for the S&P 500, growth in 2026 is driven primarily by macroeconomic factors - the pace of economic growth, Fed policy, and overall corporate profitability - for Darling, firm-specific catalysts play a primary role. These include regulatory developments in renewable fuels, the return of margins in the fuel segment, and the stability of upstream operations that generate cash even in a weaker environment.

Moreover, Raymond James specifically points out that Darling is near both fundamental and sentiment lows. This is a fundamental difference from most index titles where expectations are still relatively high. If the slowing market scenario plays out in 2026, then it is companies with low expectations and clearly defined catalysts that historically have the best chance of significantly outperforming the index, even if absolute market growth remains limited.

From an investment perspective, then, Darling is interesting not because it is "safer than the index" but because its return profile is decoupled from the index. While the S&P 500 will likely be dependent on corporate earnings actually delivering the expected double-digit growth in 2026, Darling can generate outperformance even in an environment where the index is stagnant - purely due to a return to normalized margins and a change in the market narrative.

That's why it makes sense to frame this investment thesis not as a "Darling will grow" bet, but as a relative bet against the market. If Raymond James is right, and index returns flatten in 2026, then it will not be a matter of whether stocks grow, but which ones grow more than the market. And in that context, Darling Ingredients fits the exact profile of a title that has the structural prerequisites for such outperformance.

Investment scenarios

Optimistic scenario

The optimistic scenario assumes that the regulatory framework for renewable fuels stabilises, credit prices improve and margins in the fuel segment normalise. EBITDA returns above US$1.3bn, debt gradually declines and the market reassesses valuations towards historical averages. In such an environment, Darling can significantly outperform the index, not only by earnings growth but also by multiple expansion.

• Earnings growth: + 5-7% CAGR (mix effect + fuel segment stabilization)

• EBITDA growth: + 12-15% CAGR (return of margins + higher share of high-value segments)

• EPS (normalized): growth from approx. $1.7 → $3.5-4.0 by 2026-27

Baseline scenario

The baseline scenario assumes gradual improvement. The fuel segment remains volatile but does not deteriorate further, the feed and food segments provide stable cash flow and the company gradually optimises its capital structure. The stock is likely to deliver a solid but not spectacular return in this scenario, slightly above the market.

• Revenue growth: +3-4% CAGR

• EBITDA growth: +6-8% CAGR

• EPS: growth to c. $2.5-3.0

Negative scenario

Negative scenario occurs in the event of further regulatory deterioration or sustained low margins in the fuel segment. EBITDA remains under pressure, debt becomes a more significant risk and the market begins to discount the possibility of limited financial flexibility. Again, however, this is not an existential scenario, but a situation where Darling lags the market, not a business collapse.

• Revenue growth: 0-2% CAGR

• EBITDA: stagnation or slight decline

• EPS: remains around $1.5-2.0

What to take away from the article

• Darling Ingredients is a cyclical title with structurally strong business fundamentals, not a speculative bet.

• The current weakness in results says more about the phase of the cycle than the quality of the company.

• Management has experience and continuity but is entering a period where capital discipline is key.

• Valuations today reflect market skepticism, creating room for positive surprises.

• 2026 may be a test for Darling to see if cyclical weakness turns into investment opportunity - and this is where the potential to outperform the market lies.

The year 2026 opens in markets in an environment vastly different from previous years. After a period of extreme concentration of capital into a narrow group of technology and artificial intelligence titles, it is becoming increasingly clear that markets are beginning to re-differentiate between pure hype and fundamentals. While valuations in parts of the technology sector remain historically stretched and vulnerable to any disappointment, capital is gradually moving into areas where long-term trends are meeting tangible results. Investors are returning to sectors whose growth is supported by demographics, geopolitics and real demand.

This shift is evident across global markets.

• Healthcare is benefiting from an ageing population, pressure on healthcare efficiency and the rapid emergence of new therapies.

• The defence industry is coming under the spotlight due to the long-term rearmament of Western economies, the growth of military budgets and the changing security architecture of the world.

• The energy sector is being profiled as a key element of economic stability, geopolitical influence and transformation towards new types of infrastructure.

It is the combination of these three areas that is creating a market area that is experiencing high demand, investment inflows and investor optimism for the years ahead.

For many investors, however, sector choice is not necessarily the source of the problem. Rather, it tends to be the selection of the individual representatives of these sectors. Stockpicking requires hours of time studying individual companies and their businesses. Certainly, if an investor gets it right, his portfolio can deliver above-average profits. But all the members at Bulios know this, because tools like the Fair Price Index help them do it. Even so, it's not the ideal choice for everyone. A large group of investors prefer diversification and a broader scope in the sector they might be focusing on.

After reading this article, you'll know exactly what that means and how to have a broad range in several market sectors in your portfolio with significantly less risk than you would take when picking individual stocks.

At the end of the article, you'll find a table with a summary of all the ETFs from the article that you can copy and save.

iShares Global Healthcare ETF $IXJ

While the healthcare sector experienced pressure through most of 2025 due to regulatory uncertainty and concerns over drug prices, the end of the year brought a positive turn in sentiment and significant capital inflows into ETFs tracking the segment. In November 2025, global healthcare ETFs saw the largest monthly capital inflows in five years at approximately $6.8 billion.

The healthcare sector has long been viewed by markets as one of the pillars of stable investments. Populations in developed economies are aging, chronic diseases are proliferating, and the pressure to innovate is unprecedented, especially with breakthroughs in pharmaceuticals and technologies such as personalized medicine, advanced diagnostic tools, and AI-powered research platforms. Demographic changes alone represent the long-term potential for stable and well-estimated revenues. These factors give the sector, and therefore the ETF that tracks it, fundamental strength.

TheiShares Global Healthcare ETF $IXJ is an ETF managed by BlackRock $BLK that tracks the performance of the S&P Global 1200 Healthcare Sector Index, whose components include global pharmaceutical and biotechnology companies, medical equipment and services. The fund provides investors with broad exposure to the healthcare sector worldwide in a single vehicle.

Despite pressures in 2025, the sector managed to close the year strongly. Between September and December 2025, the ETF tracking the global healthcare index returned roughly 13%, well above its long-term historical average of 6% per year. The total return for 2025 after that, which was reduced by the dip in April, was 13.86%. Since last year's lows, the ETF is up nearly 21% through the end of 2025.

The health care sector has historically shown a lower correlation to technology cycles and serves as a defensive volatility damper in the portfolio.

Source: nabtrade.com

Key Features of the IXJ ETF

• Global diversification: IXJ holds stocks of pharmaceutical, biotechnology and healthcare companies from multiple regions, adding to risk diversification

• Defensive nature: historically, healthcare titles tend to be less sensitive to economic cycles, which helps them better withstand market downturns

• Growth drivers: demographic changes and innovation in healthcare are driving growth in the sector independent of cyclical markets

• ETF liquidity and transparency: as an exchange-traded fund, IXJ allows for easy tradability and transparent portfolio composition without the need to manually select individual titles

VanEck Defense ETF $DFNS.MI

The defense sector has undergone a fundamental transformation over the past five years. What was still perceived as a cyclical and politically sensitive segment at the beginning of the decade is gradually turning into a pillar of economic policy for developed nations. The war in Ukraine, the escalation of tensions in the Middle East, the growing rivalry between the US and China and the accelerated militarisation of the Indo-Pacific region have led to an unprecedented increase in military budgets. According to NATO data, which our team has analyzed extensively, the alliance's member states are heading towards a long-term anchoring of defense spending above 2% of GDP, with many countries still increasing their defensive budgets beyond the 2% threshold. However, there are still some countries that continue to fall short of this alliance requirement.

Source: atlanticcouncil.org

From a macroeconomic perspective, it is important that defence spending stops acting as a one-off response to crises and increasingly resembles longer-term investment. These are not just weapons purchases, but large-scale programmes to modernise armies, digitisation, cyber capability development, space systems, unmanned technologies and air defence. These programmes have an investment horizon of often decades. This makes the predictability of cash flows in this sector easy to read.

In this context, the defence sector finds itself in a similar position to that of the energy and health sectors in the past. It is becoming a long-term beneficiary of government budgets. This changes its investment profile significantly. Whereas defence stocks used to be sensitive to political cycles and budget cuts, today they are increasingly based on multi-year contracts, high barriers to entry and strategic irreplaceability.

The VanEck Defense ETF ($DFNS) is designed to capture just that transformation. The fund focuses on companies whose core business is directly tied to defense contracts, military technology, cybersecurity, space systems and advanced infrastructure. It is therefore not just about traditional arms manufacturers, but a broader ecosystem of companies that benefit from the modernisation of the security apparatus.

Unlike more general industry ETFs, $DFNS focuses on a segment where demand is largely decoupled from the traditional business cycle. This creates relative earnings stability even during periods of economic slowdown. At the same time, the technology component such as software, sensors, data systems, artificial intelligence, and satellite communications are gaining ground. Defence is thus gradually changing from a heavy industry to a high-tech sector.

A combination of several factors is evident in the defence companies associated with this type of ETF:

• a growing backlog of contracts

• high visibility of future revenues

• a gradual improvement in margins due to more sophisticated products.

From a financial perspective, these are firms with relatively stable cash flows, long-term contracts and often significant bargaining power with states as key customers. This reduces the risk of sudden drops in sales, but also creates an environment where long-term value accumulation can occur.

Examples of companies in ETFs:

Source: stockanalysis.com

Another element is the changing nature of conflicts. Modern defence is not just built on physical systems, but increasingly on data, connected networks, autonomous technologies and space platforms. This broadens the sector's investment base and allows defence companies to participate in civilian contracts, for example in the field of cybersecurity or satellite navigation. This intersection of defence and technology is one of the reasons why the sector is on the radar of longer-term investors in 2026.

Key Features of the $DFNS ETF

• Tied to government budgets: multi-year defense programs and long-term contracts create high visibility into the future earnings of the underlying companies and reduce sensitivity to short-term fluctuations in the economy.

• Exposure to long-term geopolitical trends: the Fund offers direct exposure to the rearmament of Western economies, the modernisation of armies and the growth of military budgets, which are projected many years ahead according to NATO data and national budget frameworks.

• Defense Modernization: a significant portion of the companies in $DFNS are focused on cybersecurity, sensors, space systems, software and autonomous technologies.

Vanguard Energy ETF $VDE

The energy sector enters 2026 in a very different position than at the beginning of this decade. After years of being seen as either cyclical or outperforming in the eyes of investors due to the push to decarbonize, energy has once again become a major global theme. Not just economic, but also geopolitical. Wars, sanctions, the fragmentation of global trade, and rising electricity consumption due to digitisation and the development of AI infrastructure have returned energy to its role as one of the key pillars of the global economy.

From a macroeconomic perspective, the energy sector today is underpinned by several concurrent trends:

• Long-term high global demand for oil and gas, which continues to grow despite the development of renewables, particularly in Asia, Latin America and Africa

• Limited supply: after years of being under-invested, oil and gas companies are entering a period where new projects are not enough to fully compensate for the natural decline of old fields.

• Technological transformation of the economy: data centres, artificial intelligence, electro-mobility and the digitisation of industry are dramatically increasing the demands on stable energy supplies.

Electricity consumption in data centres is growing at a rate that is multiples of the rest of the economy, putting the energy infrastructure under pressure.

Today, large energy companies are generating high free cash flow, reducing debt, returning capital to shareholders, and at the same time investing in the transformation of their portfolio, as they are the only ones that can supply the energy needed to run today's highly demanding AI technologies. And large companies are willing to pay often large sums for this energy, otherwise they would not be competitive.

The Vanguard Energy ETF $VDE is constructed as a broad exposure to this entire ecosystem. It tracks the U.S. energy sector and includes oil and gas producers, refining companies, transportation infrastructure and energy services. The result is an ETF that covers the entire energy value chain, from production to distribution.

Importantly from a sector behaviour perspective, energy companies have changed their capital discipline significantly in recent years. After a period of aggressive production growth, most major players now prioritise return on capital, cost optimisation and cash flow stability. This is reflected in lower debt, more stable margins and greater resilience to commodity price fluctuations.

Another important level is the gradual integration of traditional energy with new sources and technologies. Today, large energy companies are investing not only in oil and gas projects, but also in LNG infrastructure, hydrogen technologies, carbon capture and grid upgrades. This is creating a hybrid sector that is less vulnerable to political pressures to decarbonise while retaining a high capacity to generate cash.

Key features of $VDE

• Exposure to the entire energy chain: $VDE includes oil and gas producers, transmission companies, refiners and energy service providers

• Strong link to cash flow and return on capital: energy companies are among the largest generators of free cash flow today.

• Strategic role in the economy: the growth of data centres, the electrification of transport and the digitisation of industry are increasing structural demand for energy

Full table with ETF overview

You can view the full table here.

Conclusion

Markets are returning to more realistic pricing of risk and value as capital shifts. After years of dominance by a narrow set of technology themes, investment focus is broadening towards sectors whose importance is embedded deep in the structure of the global economy. Healthcare, defence and energy are now not marginal market segments, but areas where demographic pressures, geopolitical priorities and the infrastructure needs of modern society intersect.

The current shift reflects a deeper change in what markets consider valuable. Cash flow stability, strategic indispensability and the ability to operate across economic cycles are now taking the reins of growth. And while AI and technology may still have more to offer, these sectors may be able to overtake them.