Today, Tesla is at one of the most pivotal points in its history. While just a few years ago it was seen almost exclusively as a symbol of the electric car revolution, the current reality is significantly more complex and also significantly more problematic. Car sales in key markets are slowing, the price war is pushing margins down, and competition from China is turning from a regional threat into a global structural pressure. But this is precisely the point at which Tesla's entire strategy begins to break down. The company is gradually scaling back production of some models, rethinking expansion in the automotive segment, and communicating more openly that its long-term future does not lie primarily in selling cars.

This shift is neither accidental nor short-term. According to our team's analysis, the automotive industry is also entering a phase where electric mobility is becoming a highly competitive industry with declining margins, much like consumer electronics in past decades. This evolution is one of the main reasons why Tesla has been accepting lower margins in recent quarters in exchange for maintaining production and sales volumes while investing massively in areas that have little to do with traditional automotive. Meanwhile, research into industrial automation and humanoid robotics shows that this is where a new market worth hundreds of billions of dollars could take shape over the next ten years.

Software, artificial intelligence, and Tesla's ability to develop its own hardware and algorithms will play a crucial role in this transformation. That's an advantage that traditional car companies have virtually none of and that Chinese manufacturers are only just catching up to. But it's also why Tesla (as a stock) is so difficult for investors to grasp today. The short-term numbers from the automotive segment send warning signs, while the long-term vision (autonomous systems, robotics, AI) is still difficult to quantify and requires faith in the company's technological edge. It is this contradiction between the present and the future that is creating the extreme exchange of views on Tesla stock today.

Car manufacturing

The automotive part of Tesla today faces a combination of pressures that are fundamentally altering its near- and medium-term profile. Over the past two years, the electric car market has moved from a phase of structural scarcity to one of fierce price competition, where technological superiority is no longer the issue, but the ability to produce cars cheaply, quickly and in large numbers. Tesla, which has long been the segment's price maker, has itself become the initiator of a price war in this environment, only it is this move that is now most significantly affecting its profitability.

Source: Bulios - Tesla detail

The series of discounts across the main models had a clear objective: to maintain sales volumes and avoid losing share in key markets. In the short term, Tesla succeeded, but at the cost of a sharp decline in margins, which hit their lowest levels in several years. Analyst analysis points out that Tesla is now much closer to traditional car companies than its valuation would suggest. This disconnect between market valuation and automotive segment fundamentals is one of the main sources of the stock's current volatility. The Fair Price Index on Bulios also highlights this.

Competition

Increasing competition from China is also a major factor. Manufacturers such as BYD are now able to offer electric vehicles of comparable technological level at significantly lower prices, not only in their home market but increasingly in Europe and other regions. Studies tracking the global EV market repeatedly point out that Chinese manufacturers benefit from vertical integration, cheaper supply chains and strong government support. This creates a long-term pressure that cannot be addressed simply by further price cuts without negative impacts on profitability.

Added to this is the issue of product portfolio. Tesla today stands primarily on a relatively narrow range of models that have been on the market for several years. While this has not mattered in the past, the current environment requires faster innovation and more frequent model changes that consumers are used to from, for example, the Chinese market. The curtailment of production of some versions and a more cautious approach to expanding production capacity suggest that Tesla itself is aware of the limits to further growth purely through car sales.

2 main segments

Tesla's car business is thus reaching a stage where it is no longer the main driver of the company's business. It still generates sales and cash flow, but its ability to justify a long-term technology premium in the company's valuation is increasingly being questioned. Yet the stock is still near all-time highs. That's why it's increasingly important to watch where Tesla is shifting capital and strategic focus to see what role the automotive segment has to play in the broader transformation of the company.

Source.

Tesla is now openly profiling itself as an AI and robotics company whose goal is not to maximise car sales, but to develop systems that can be scaled across industry, logistics and services. In this context, cars are gradually changing from a final product to a platform for collecting data, training algorithms and testing autonomy.

Software and artificial intelligence play a crucial role here. Tesla has one of the largest proprietary real-world traffic datasets in the world, generated by millions of cars in daily operation. This data is a key input for the development of autonomous systems and machine learning algorithms. Studies on autonomy development repeatedly highlight that the critical competitive advantage is not the hardware itself, but the volume and quality of the data on which the models are trained. This is where Tesla has a head start that is difficult to replicate by traditional car companies and new players.

The company's increasingly ambitious robotics program builds on this foundation. The humanoid robot Optimus already serves as a product for industrial deployment. According to analyses of the industrial automation market, it is the shortage of labour and rising labour costs that could dramatically increase the demand for autonomous robots in the coming years. Here, Tesla is betting that its ability will allow it to make faster progress than its competitors and thereby capture the largest share of this market.

Changing the company's profile

But investors need to be wary of such a hard change in business model. Software and robotics carry the potential for significantly higher margins and global scalability, exactly the type of business that could justify the technology premium at which Tesla's shares trade. The problem, however, is the time horizon. While the investments the company is making in this segment today are not small, the commercial outcomes from these projects are still largely in the future and difficult to measure by traditional financial metrics. Thus, the automotive segment continues to serve as a major generator of cash, which the company is massively pouring into future developments, betting on its success.

Tesla is thus currently in a transition phase. It is focusing on 2 completely different business segments:

• The short-term cyclical automotive business.

• a long-term exponential technology vision.

This creates tension not only in the management of the company itself, but also in the expectations of the market. It is the ability to bridge these two worlds, which means financing technological transformation through car production while gradually reducing dependence on this segment, that will be crucial to the next chapter of Tesla's story.

Analysis

In the case of Tesla today, we run into one of the biggest analytical problems of the entire stock market...

How to value a company whose current fundamentals and long-term ambitions are each heading in a different direction.

Traditional financial metrics based on the auto business are sending signals of slowdown, margin pressure and increasing competition. But at the same time, Tesla's market valuation continues to imply that the company is transforming into something much bigger than a carmaker in the future.

From a purely analytical view of Tesla's results, the picture is fairly clear. The automotive segment, which still accounts for the vast majority of revenues, has reached a stage where volume growth is no longer offsetting price declines. Gross margins have shifted in recent quarters to levels that are historically close to the traditional automotive industry, not technology firms. This is crucial because high margins have been one of the key arguments for why Tesla has long been priced at a significant premium to other carmakers.

Our team's analyses, which cover the entire automotive segment and compare the performance of individual manufacturers, highlight that electromobility itself is entering a normalization phase. The technology is becoming standardised, batteries are gradually becoming a commodity for other players and the differences between manufacturers are narrowing.

In such an environment, it is extremely difficult to maintain above-average margins over the long term without a clear technological or software edge or customer loyalty.

This discrepancy is also evident in investor expectations. Short-term results are judged more harshly than in the past, and each additional downgrade or weaker outlook triggers a sharp stock market reaction. At the same time, the long-term investment story remains largely intact. Tesla continues to be valued as a company that has the potential to monetize autonomous driving, software and robotics on a scale that no other automaker has achieved. But everything is still based on promise. But to get it, the company must not go into debt at its current pace.

The automotive business generates cash flow, but its ability to finance ambitious technology projects without further pressure on margins is limited. At the same time, the longer the possibility of monetizing autonomous driving and robotics is delayed, the more sensitive Tesla's valuation is to any deterioration in near-term results. This is one of the main reasons why Tesla stock is in an extremely volatile range and why such a strong polarization of opinion has formed around it. Since the beginning of 2026, Tesla shares have been relatively stable by their standards so far, down 6.5%, but they still face high volatility, which is rather exceptional for companies of similar capitalization.

From an analytical perspective, Tesla is thus at a stage where the market has stopped blindly believing the story alone, but at the same time is not yet willing to abandon it. Investors and analysts alike are beginning to examine much more carefully whether individual technological advances and investments are actually moving towards profitability, or remain more of a vision without a clear timeframe.

For Tesla stock today, the market is not pricing in what the company is, but what it could become. This is key to understanding the entire debate surrounding this company. Current financial results, particularly from car sales, do not in themselves justify a technology premium in valuation. It is built almost entirely on future expectations.

The market today is therefore operating with a very asymmetric risk profile. If Tesla manages to translate its technology lead into a real, scalable, high-margin business, the automotive part of the company may in retrospect appear to be just a transitional phase. But if this transformation continues to be delayed, or hits regulatory, technological or competitive limits, Tesla will remain trapped between two worlds for the long term.

While the market is factoring all the good things into the share price today, it is not forgetting the side of the fact that everything might not go according to plan and that currently Tesla is just an expensive car company. This can be seen in the valuation of the stock itself. According to the Fair Price Index on Bulios, which is based on DCF and relative valuation, the price per share of Tesla today is high. It is as much as 27% above its fair value according to this calculation.

Conclusion

From a broader perspective, however, one thing is important: Tesla today stands at a strategic crossroads unprecedented in the auto industry. Few companies attempt to simultaneously serve a highly competitive, low-margin market while building an entirely new technology ecosystem. It is this ambition that makes Tesla one of the most watched and controversial stocks in the world.

The market response, however, is more complex than pure enthusiasm. With valuation and expectations now elevated, the margin for error has narrowed significantly. The results serve not only as confirmation of Palantir’s operating strength, but as an early test of whether its growth rate, margins, and operating leverage can be sustained beyond the initial surge of AI-driven demand.

How was the last quarter?

The fourth quarter of 2025 was exceptional from a Palantir $PLTR perspective on virtually every key metric. Revenue was $1.41 billion, representing 70% year-over-year growth and 19% quarter-over-quarter acceleration. This growth was driven not by a one-off order, but by broad-based demand, particularly in the US market, where Palantir is becoming the de facto standard for deploying AI in real-world operational processes.

US revenues grew 93% year-on-year to $1.08 billion, with the commercial side of the US business exploding at a 137% rate to reach $507 million. US government contracts grew more slowly but still very robustly, specifically up 66% to $570 million. Importantly, the growth is not just volumetric, but structural - Palantir awarded 180 contracts worth more than $1 million in the quarter, with 61 of those contracts exceeding $10 million. The total value of contracts closed reached a record $4.26 billion, an increase of 138% year-on-year.

The company's profitability literally shot up this quarter. GAAP operating profit was $575 million, equivalent to an operating margin of 41%. On an adjusted basis, operating profit was $798 million and operating margin was 57%, levels Palantir has never historically achieved. GAAP net income was $609 million, a 43% net margin, and adjusted earnings per share were $0.25.

The cash flow confirms that this is not an accounting illusion. Operating cash flow in the quarter was $777 million, a 55% margin, and adjusted free cash flow was $791 million. The company ended the year with $7.2 billion in cash and short-term U.S. Treasury bonds, no funding pressure, and significant room for further expansion.

• Full presentation with results.

CEO outlook and commentary

CEO Alex Karp did not hide his confidence in his comments and interpreted the results as a confirmation of the company's unique strategy. He emphasized that Palantir is consciously focused solely on monetizing the operational leverage enabled by rapid advances in AI models, and referred to this trend as "commodity cognition" - a state where AI capabilities are becoming widely available, but real value is only created by integrating them into real-world processes.

The outlook for 2026 is extremely aggressive. The company expects full-year revenues in the range of $7.18 billion to $7.20 billion, implying year-over-year growth of approximately 61%. U.S. commercial sales are expected to exceed $3.14 billion, implying growth of at least 115%. Adjusted operating profit is expected to be between $4.13 billion and $4.14 billion and free cash flow is expected to reach $3.9 billion to $4.1 billion. In addition, management expects GAAP operating profit and net income in every single quarter of 2026.

Long-term results and business development

A look at the long-term numbers shows that the current explosion is no accident. Palantir's revenue grew from $1.54 billion in 2021 to $1.91 billion in 2022, $2.23 billion in 2023, and $2.87 billion in 2024. While the rate of growth varied from year to year, the key turning point was in profitability.

While in 2021 and 2022 the company was generating significant operating losses and net profit was deep in the red, 2023 marked the first stabilization and 2024 has already brought a net profit of $462 million. Operating profit more than tripled between 2023 and 2024 and EBITDA moved into positive territory with strong growth momentum. This shift is the result of a combination of higher average contracts, recurring revenue and dramatic improvements in operating efficiency.

At the same time, it is important to mention the negative side of the long-term development - shareholder dilution. The average number of shares outstanding has grown at a rate of 4-7% per annum in recent years, partially dampening earnings per share growth. However, the current level of profitability is beginning to override this effect, with EPS increasing significantly faster than the number of shares in 2024 and 2025.

Shareholder structure

The shareholder structure remains strongly institutional, with institutions holding around 60% of the shares. The largest shareholders are Vanguard, BlackRock and State Street, followed by JPMorgan and several other large asset managers. Insider holdings exceed 3.5%, which for a technology firm of this size still represents a relatively significant alignment of management interests with shareholders.

Expectations of anayltics

• Analyst Consensus (overall sentiment): The average 12-month target price for Palantir stock is around $189-$192, implying roughly ~28-30% potential upside.

• Bank-specific recommendation: Bank of America raised PLTR's target price from $215 to $255 and maintained a Buy rating on the stock given strong segment growth and revenue outlook for 2026.

Fair price

Is $DIS still interesting to you, or is $NFLX simply a much better and more attractive company?

What Wall Street Expects in the Numbers

Heading into the report, analysts have penciled in strong growth metrics for Palantir. Consensus forecasts suggest revenue of approximately $1.34 billion for Q4 2025, representing about 62 percent year-over-year growth, while adjusted earnings per share are expected to land near $0.23, up about 64 percent from the same quarter last year. These expectations reflect continued expansion of Palantir’s business across both government and commercial segments, as well as rising demand for its AI-driven software platforms. The company has topped revenue estimates in several recent quarters, contributing to optimism that tonight’s results could again beat expectations.

Positive Momentum Meets Skepticism

Despite the strong expected growth, sentiment around Palantir’s stock has been mixed. The shares have pulled back roughly 30 percent from recent highs, and broader skepticism in the tech sector toward richly valued AI and software names has kept some investors cautious . At the same time, analysts remain divided: some firms have maintained sell ratings or cautious outlooks, while others, including William Blair, recently upgraded the stock to Outperform, citing improved valuation and sustained commercial momentum.

This split view is further illustrated by the variety of price targets on the stock, with some analysts pricing PLTR as high as the $230 range on the back of AI platform growth and expanding commercial adoption, while more conservative shops highlight valuation and demand durability concerns that could temper upside. The average analyst price target implies significant potential upside from current levels if the company delivers results that reinforce confidence.

What Investors Will Be Watching

When the earnings data hits the tape tonight after markets close, there will be a number of key items investors will scrutinize closely:

Revenue growth and segment performance: Does Palantir continue to expand its commercial footprint while maintaining strong government sales?
Earnings per share and margin trends: Are profits expanding alongside revenue, and is the company showing disciplined cost management?
Guidance and forward outlook: How will management frame expectations for the first quarter of 2026 and beyond?
Stock reaction and options volatility: How far will shares move based on post-earnings volatility pricing and whether results fall below, meet, or exceed forecasts?

Tonight’s report could serve as a litmus test for investor confidence in Palantir’s long-term narrative around artificial intelligence and enterprise analytics. Strong results and an upbeat outlook could quickly shift sentiment and draw renewed interest from growth investors, while a weaker than expected performance or cautious guidance could reinforce the caution that has built up in recent months.

Recent years have confirmed what seemed inevitable at the beginning of the decade. The demand for AI infrastructure has morphed into a trend with far-reaching implications for the technology sector and the global economy. While media attention has traditionally been directed towards companies like Nvidia $NVDA or Microsoft $MSFT, the data our team has studied in depth shows that the real driver of AI growth is not just computing power and better software alone. The components that enable the deployment of best-of-breed models and performance scaling play a key role, especially the memory modules and storage that power data centers and compute clusters around the world.

This shift is beautifully illustrated by the story of more than just SanDisk $SNDK, whose stock has experienced one of the most remarkable market moves since its spin-off (from an initial price of a few tens of dollars to a rise in the thousands of percent).

And why exactly? AI applications don't just require the raw computing power of a GPU. They need huge amounts of data that must be read, written and kept available quickly as the model is being trained. By some estimates, the global demand for AI computing power could consume tens of gigawatts of electricity and require infrastructure investments on the order of hundreds of billions of dollars, already flowing in this direction, over the next few years. These demands are fundamentally changing the consumption of memory and storage technologies and moving companies on the fringes of the traditional technology ladder into the middle of the mainstream market.

In addition, the overall cycle is behaving differently than in the past due to AI demand. While traditional consumer electronics is stabilizing production along relatively predictable trends, the AI-intensive data center means rapidly growing demand that far exceeds the traditional capabilities of memory manufacturers, both for DRAM (memory that devices use right now) and NAND (memory that is used for long-term data storage). This imbalance between demand and supply is one of the main reasons why the storage and memory segments of the market are showing such strong fundamentals today, and why investors are looking beyond GPU and processor manufacturing further into the infrastructure itself.

In the following sections, we look at three key players in the S&P 500 index and explain how they relate to this trend and why they may be relevant in the context of the AI boom. Remember, these are companies that have multiplied their stock value by tens and often hundreds of percent by 2025.

SanDisk $SNDK

The story of SanDisk is a prime example of how a fairly inconspicuous part of the technology chain can turn into a key structural trend winner in a new market environment. A brand that investors have long associated primarily with consumer storage is now re-emerging to the fore. This time, however, as an important supplier of NAND memory for the enterprise segment and data centers, where a major part of the AI revolution is taking place.

The key moment was the spin-off of SanDisk itself and its return to the stock market as a separate entity (hence the chart in the stock detail only starts at the beginning of 2025). The market here quickly revalued a business model that in the past was often seen through the cyclicality of consumer electronics. But the current reality is markedly different. AI models, cloud services and data centers are generating exponential growth in the volume of data that must not only be stored but also accessed extremely quickly. This is where NAND memory becomes an indispensable part of the infrastructure, and SanDisk is one of the most technologically well-positioned players in this segment.

The demand structure is also crucial. While the traditional PC and smartphone markets remain relatively subdued, enterprise and hyperscale customers are significantly increasing investment in AI-optimized storage. Memory market analyses have long pointed out that AI servers consume many times more NAND capacity than conventional server solutions, fundamentally changing the economics of the entire segment. This is starting to impact both the pricing discipline of manufacturers and their margin outlook.

The result is a sharp change in investor perception of the company. SanDisk's stock has seen extreme growth in a short period of time, which at first glance may appear speculative. However, a deeper look reveals that the market is not just reacting to short-term sentiment, but to the firm's redirection towards a long-term, structurally growing market. The combination of a limited supply of NAND memory, growing demand from AI infrastructure, and increased bargaining power with customers is creating an environment that SanDisk simply did not have in the past. The numbers themselves speak to this, which you can analyze by their models right in the stock detail.

At the same time, it should be added that SanDisk is part of a broader memory ecosystem where developments in pricing, capacity and technology transitions (to more advanced NAND types, for example) are reflected across the entire sector. This is why its development is also an important indicator for other players who are benefiting from the AI boom, either directly or indirectly.

Micron $MU

While SanDisk benefits primarily from the growth in data storage volumes, Micron Technology stands even closer to the very core of AI infrastructure. Without DRAM, and especially High Bandwidth Memory (HBM), today's AI models simply could not operate at the scale at which they are deployed. And this is where Micron has moved into the position of a strategic player in recent years, with its products becoming one of the major limiting factors in the continued growth of computing power.

AI servers are in a completely different league from traditional data centres in terms of memory. According to our analysis, a single AI server consumes several times more memory capacity than a conventional server designed for cloud applications. Training large language models and their subsequent inference requires extremely fast data access, low latency, and high throughput. These are all features that classic storage architectures have not offered for a long time. This is why HBM memories have become one of the most valuable components of the entire AI boom.

Micron is in a unique position in this regard. As one of the few global DRAM and NAND manufacturers, it has direct exposure to both key memory segments that are driving the AI boom. Moreover, it has managed to significantly improve its technology level and manufacturing efficiency in recent years, which is starting to translate into margins just as the memory cycle is breaking from a supply glut into a structural capacity shortage. A number of studies from the semiconductor industry have warned that the supply of HBM memory is limited for at least the next few years, while demand is growing faster than manufacturers can meet it.

This fundamentally changes the dynamics of the entire memory cycle. While in the past memory companies were extremely sensitive to price wars and overcapacity, the current environment gives manufacturers significantly more bargaining power. Micron today is selling memory not as a commodity, but as critical infrastructure without which AI services cannot scale. This shift is also key from an investment perspective, as it suggests that the traditional cyclicality of the memory sector may be less pronounced in the AI era than in the past. And this also translates strongly into margins, which are now at record highs.

At the same time, Micron is becoming something of a barometer of the overall AI market. Any slowdown in data center investment would be felt very quickly, as would any further acceleration. That is why its development is being closely watched not only by investors, but also by competitors and customers across the technology sector.

However, there are currently no indications that demand will change in any way. Shares of $MU are already up 45% since the start of this year, but this meteoric rise has also put them in territory where many investors are starting to worry about valuations. Even according to the Fair Price Index on Bulios, which is based on DCF and relative valuations, Micron stock is currently above its fair value by more than 22%.

Western Digital $WDC

Western Digital has long been one of the companies that the market has viewed primarily through the prism of consumer electronics cyclicality and traditional hard drives. But its role has begun to change significantly in the AI boom. Today, Western Digital stands at the intersection of two worlds. On the one hand, consumer storage, and on the other, enterprise solutions for data centres, which are increasingly optimised to handle the huge volumes of data generated by AI.

While GPUs and HBM-type memories address compute speed and working with active data, AI infrastructure also requires massive capacities for long-term data storage, training and model results. This is where hard drives still have an indispensable role to play. Studies focused on AI data center architecture repeatedly point out that as AI computing grows, not only does the need for computing power increase, but so does the volume of data that must be archived, backed up, and analyzed retroactively. This trend favors companies that can offer high-capacity, energy-efficient storage, an area where Western Digital has long-standing expertise.

The restructuring of the business itself is also a key factor. The separation and greater focus on individual segments - particularly enterprise storage and data centers - is allowing the market to better appreciate parts of the business that have been "hidden" behind underperforming consumer electronics in the past. Combined with growing demand from hyperscalers for capacity solutions, this is changing the company's investment story: from a cyclical hardware manufacturer to a strategic AI infrastructure supplier.

In addition, Western Digital is benefiting from the same supply and demand dynamics seen in previous memory manufacturers. Limited investment in new capacity in previous years means a more disciplined market today, where manufacturers are better able to control pricing and margins. In addition, stability is increasing due to very strong demand for AI and long-term contracts to build new data centers that need both storage and memory.

Thus, Westren Digital is a company that is benefiting from the current trend and making a lot of money, but the stock's recent growth (126% since 2023) puts it in a zone where the Fair Price Index on Bulios is glowing red. And it has been for some time. In fact, at current levels, $WDC stock is 48% above its intrinsic value.

Conclusion

The market is now no longer just pricing in the mere existence of AI, but is increasingly discerning where in the value chain long-term demand and pricing power actually originates. While computing power remains important, the focus is shifting to the less visible but essential building blocks of the entire infrastructure, i.e. memory and storage.

The common denominator of the companies we looked at in this article is that their products are not optional add-ons to AI, but essential to its further development. Whether it's high-speed memory, high-capacity storage or solutions for dealing with massive amounts of data, without these technologies, AI systems cannot be scaled, streamlined or commercially deployed. And that in itself speaks volumes about the nature of these companies.

The market reaction reflects timing rather than direction. Elevated content and sports-rights costs, combined with residual pressure in linear media, weigh on near-term earnings momentum. This quarter looks less like a payoff and more like a consolidation step, as management openly points to a stronger second half. The tension lies in patience: whether investors are willing to wait for the operating leverage that is still ahead.

How was the last quarter?

Disney $DIS revenue in Q1 FY2026 grew 5% year-over-year to $26.0 billion. Growth was driven primarily by the Experiences segment and a solid Entertainment performance, while the Sports segment delivered only a modest increase in revenue. Pre-tax profit was $3.7 billion, remaining roughly in line with last year, but total segment operating profit fell 9% to $4.6 billion.

Earnings per share saw a slight deterioration. Diluted EPS came in at $1.34 compared to $1.40 in the prior year, while adjusted EPS fell to $1.63 from $1.76. This decline is an important signal that despite revenue growth, Disney is facing margin pressure in the short term.

A detailed look at the segments explains the structure of the results. Entertainment grew revenue by 7%, but segment operating profit fell 35% to $1.1 billion. The main reason was higher production and marketing costs, which outweighed the positive effect of higher subscription fees and strong theatrical performance of titles such as Zootopia 2 and Avatar: Fire and Ash.

Conversely, the streaming portion of SVOD is becoming one of the most positive elements of the results. SVOD revenue grew 11% and operating profit increased $189 million to $450 million, for an 8.4% margin. This clearly confirms that the transformation of Disney+ and Hulu towards a sustainable business is starting to bear fruit.

The Sports segment reported an operating profit of $191 million, down 23% year-on-year. The negative impact of the temporary suspension of distribution on YouTube TV, which reduced operating profit by approximately $110 million, as well as the increase in sports rights costs, was significant here.

Experiences remains the strongest pillar. The segment achieved record quarterly revenues of $10.0 billion and operating profit of $3.3 billion. Home Parks saw attendance growth of 1% and per capita spending increased 4%, confirming the pricing strength of the brand even in a more challenging macroeconomic environment.

• Full presentation with results.

CEO commentary

Robert A. Iger assessed the start of the fiscal year positively, highlighting in particular Disney's ability to generate value across its entire brand ecosystem. He pointed to an exceptionally strong box office in calendar year 2025, with several titles ranking among the billion-dollar hits, and the fact that these franchises are generating secondary revenue in parks, merchandising and streaming.

Iger also hinted that the last three years of restructuring and more disciplined cost management are starting to be seen, particularly in streaming. He said Disney is now better prepared to manage the business with a long-term horizon, although short-term fluctuations in some segments remain a reality.

Outlook

Management's outlook is considerably more optimistic than the first quarter results themselves. For Q2 FY2026, Disney expects segment operating profit in Entertainment to be comparable to last year, with SVOD expected to achieve an operating profit of approximately $500 million, an improvement of approximately $200 million year-over-year.

Sports is expected to face an operating profit decline of roughly $100 million in the second quarter due to higher rights costs, while Experiences should see modest profitability growth despite headwinds from lower international attendance and new project costs.

Full-year guidance for fiscal 2026 is built for acceleration in the second half. Disney expects double-digit segment operating profit growth in Entertainment, SVOD margin around 10%, low single-digit profitability growth in Sports and high single-digit growth in Experiences. Adjusted EPS is expected to grow at a double-digit rate year-over-year, and operating cash flow is expected to reach about $19 billion. Management is also confirming a $7 billion share buyback plan.

Long-term results

A look at the last four fiscal years shows a significant turnaround in the company's profitability. Revenues have grown from $82.7 billion in fiscal 2022 to $94.4 billion in 2025, with growth rates stabilizing around 3-7% annually.

Even more striking is the evolution of operating profit, which has increased from $6.8 billion in 2022 to $13.8 billion in 2025. Net income has seen a jump in growth, going from $3.1 billion in 2022 to $12.4 billion in 2025. EPS has increased from $1.73 to $6.88 over the same period, clearly showing the return of operating leverage after a pandemic period and restructuring.

The company has undergone significant volatility over the past few years, reflecting a combination of structural changes in the media business and cyclical factors associated with the return of physical entertainment. While revenue and profitability growth in 2022 and 2023 was dampened by high content cost pressures, restructuring of media activities and weaker monetization of streaming, key segments gradually began to show signs of stabilization. In particular, the gradual return of attendance and pricing power in theme parks was a significant positive factor, as they moved back from cyclical lows to above-average profitability and began to regain their role as a major cash generator. This shift allowed the company to partially offset the weaker performance of its traditional media businesses and set the stage for renewed operating profit growth.

On the other hand, however, the evolution of profitability remained uneven, as higher sales were not always accompanied by a corresponding improvement in margins. Increasing investment in content, marketing and technology, together with pressure on sports rights and a volatile advertising market, led to limited operating leverage in some years. As a result, net income and earnings per share fluctuated not only in response to operating performance, but also due to one-off items, tax effects and changes in capital structure. Overall, the long-term development can be characterised as a transition from a phase of restructuring and investment to a phase of gradual stabilisation, with the key question for the coming years being whether the growing sales and strong demand can be translated into sustainable growth in margins and free cash flow.

News

Key structural changes include the consolidation of Hulu Live TV with Fubo, where Disney holds a 70% stake, and the formation of an Indian joint venture with Reliance Group, where Disney has a 37% stake. These moves reduce capital intensity and volatility in lower-return regions and segments.

At the same time, the company continues to expand its theme parks, including investments in Disneyland Paris and the development of the cruise segment, which should strengthen Experiences as a key stabilizing element of the overall portfolio.

Shareholding structure

Disney shares are more than 75% held by institutional investors. The largest holdings are held by Vanguard, JPMorgan Chase, BlackRock and State Street, underscoring the company's character as a long-term institutional title with an emphasis on stability and return on capital.

Analyst expectations

Analysts view Q1 results as a temporary wobble rather than a change in the long-term story. Large investment houses in particular highlight the rapidly improving streaming economics and resilience of the Experiences segment. Consensus expects the key catalyst for the stock to be the second half of fiscal 2026, when double-digit earnings growth and strong cash generation should be evident.

Fair Price

Yet some of these firms continue to execute exactly as they always have. They operate essential infrastructure, generate cash across economic cycles, and increase dividends year after year without interruption. The tension lies in the disconnect between what the business delivers and how the market prices it. The question is not whether the model still works, but why its reliability commands so little attention in a market obsessed with growth narratives.

Top points of analysis

• More than 50 years of uninterrupted dividend growth regardless of the cycle

• Stable, contract-linked earnings across sectors of the economy

• Strong operating cash flow backing the dividend by a significant margin

• Conservative balance sheet and disciplined capital allocation

• Valuations that do not reflect the quality or stability of the business

Company performance: the unassuming backbone of the U.S. economy

ABM Industries $ABM is one of the largest providers of facility services in the United States. In other words, the company handles the day-to-day operations of buildings, airports, hospitals, universities, industrial campuses and commercial properties. Its services include housekeeping, facilities management, energy management, security, parking systems and critical infrastructure support.

The key is that these services are not optional luxuries. Whether the economy is growing or declining, buildings must be kept up and running, airports safe and hospitals functional. This gives ABM a business with low cyclicality and high levels of recurring revenue, often secured by long-term contracts.

A significant portion of revenue comes from the public sector and large corporations, which reduces credit risk. In addition, the company operates across regions and sectors, so it is not dependent on a single type of customer or segment of the economy.

Competition: Why ABM survives where others struggle

The competitive landscape in facility services is fragmented and brutally competitive. There are global players, regional firms and local providers who compete primarily on price. At first glance, it might seem that ABM has no "moat", but the reality is different.

ABM's greatest competitive advantage is its ability to service complex, multi-year contracts on a national and international scale. This is a barrier that smaller firms cannot overcome - not just because of capital, but because of processes, compliance, IT systems and human resource management. It is this capability that makes ABM the preferred partner for airports, hospitals and large corporations where service failure is not tolerable.

Unlike some of its competitors, ABM does not seek to expand aggressively at any cost. Instead, it is focusing on optimizing its contract portfolio, exiting low-margin contracts and gradually shifting to more technically demanding services (energy management, technical building management). While this hinders revenue growth in the short term, it improves the quality of revenue in the long term.

Financial stability is also an important difference compared to smaller competitors. ABM has access to capital, can survive periods of price pressure and can absorb short-term losses in individual segments. In a recession, this often leads to market consolidation, where weaker players drop out and strong players win their contracts - albeit at lower margins.

Management

Scott Salmirs is President and CEO of ABM, one of the world's largest providers of facility services and integrated building management solutions. He has led the company since 2015 and is seen as a leader who builds decision-making on clear values and a long-term vision. During his tenure, the company has undergone several major transformations aimed at streamlining operations, growing key segments and strengthening relationships with customers and employees. As a result, financial performance has improved significantly, with revenues increasing from approximately $4.9 billion to more than $8.1 billion, adjusted EBITDA more than doubling and operating margins increasing by more than 60%.

Prior to his appointment to the role of CEO, he served for more than a decade in various senior management roles within ABM where he was responsible for, among other things, the strategic management of the rapidly growing International and Aviation divisions. As the regional leader for the Northeast U.S., he was able to triple revenues and increase client retention rates to 96%. He also gained experience in finance and real estate at Goldman Sachs, Lehman Brothers and CBRE, where he managed large portfolios of owned, managed and leased properties. Today, he translates this experience into ABM's leadership with an emphasis on capital discipline, operational efficiency and sustainable growth.

Financial Performance

At first glance, ABM Industries appears to be a typical low-margin service provider - and the numbers bear this out. Gross margins of around 11.8% and operating margins of around 3.7% are among the lower figures across the market. That in itself would not be attractive unless the company compensated for low margins with volume, stability and operational discipline.

Revenues for fiscal 2025 were $8.75 billion, representing 4.6% year-over-year growth. This is not rapid growth, but it is consistent across years - the company has grown at a rate of 3-5% per year for several years in a row, without dramatic swings. This is exactly the type of growth that pairs well with a dividend strategy. Significantly, revenue growth is occurring even in an environment of higher labor costs and inflation, indicating an ability to pass costs on to customers.

However, the profitability trend is a turning point. Operating profit in 2025 has risen to €325 million. Profit in 2025 has nearly doubled to USD 162 million, a jump of more than 53% year-on-year. USD 162 BILLION. Earnings per share rose more than 100% to $2.61, with this growth driven not just by accounting items but by a combination of lower operating costs, contract portfolio optimization and share buybacks.

EBITDA has been steady at around 420-460 million. USD 420-420 million for several years. This confirms that the company is not cyclically volatile, but operates as a cash-flow machine with high predictability, albeit without a dramatic growth story.

Dividend

• Dividend growth over the years.

With ABM Industries, it's crucial to understand one thing right from the start: this is not a dividend stock built on high yield, but a title built on extreme continuity and sustainability. This is qualitatively in a completely different league than chasing a 6-8% yield.

The current dividend is $0.29 per share per quarter, which equates to an annual yield of approximately 2%. At first glance, this doesn't look attractive, but the key is dividend earnings and cash flow coverage. At earnings per share of $2.61 for fiscal 2025, the payout ratio is roughly 44%, which is a conservative level - especially for a company with low capital intensity.

Even more important is a look at free cash flow. The firm generates operating cash flow well in excess of dividend obligations, while capital expenditures are relatively low (typical for a service business). This means that the dividend is not financed by debt or one-time items, but by ongoing operations. In practice: even if earnings fell by tens of percent in the short term, the dividend would still be covered.

Historically, ABM is one of the so-called Dividend Kings - it has paid a dividend continuously for more than 50 years and increased it every year. That said, the company has maintained and increased the dividend through oil crises, stagflation, the dot-com bubble, global financial crises and pandemics. This fact isn't marketing - it's the toughest possible dividend stress-test there is.

The rate of dividend growth is also important. ABM doesn't raise it aggressively, but smoothly and predictably, typically by low units of percent per year. This is consistent with the nature of the business: stability > yield maximisation. For the long-term investor, this means that the dividend realistically protects the purchasing power of capital without increasing the risk of future reductions.

So the summary of the dividend part is clear: this is not a stock for high yield hunters, but a title for investors who want a dividend they can rely on in 10-20 years' time, without fear of recessionary cuts.

Valuation: why the market values the company as "boring", and why that can be an advantage

ABM's valuation is a textbook example of a situation where the market ignores the quality of a business because of the low attractiveness of the story. Let's look at the numbers without emotion.

The stock trades at roughly 16.5 times earnings (P/E). That's a valuation that is more common for cyclical industrial companies, not businesses with contracted earnings, low earnings volatility, and a 50+ year dividend history. In other words, the market pays no premium for stability.

Even more interesting is a look at Price to Sales around 0.3. That means an investor is buying one dollar of sales for thirty cents today. Such a low multiple implies that the market expects no long-term growth and views the company almost as a "utility service." Yet the reality shows steady revenue growth of around 3-5% per year and significant swings in profitability due to costs rather than demand.

Price to Free Cash Flow at around 17x is already a more realistic benchmark. This is not an extremely cheap stock, but it is a valuation appropriate for a company that generates predictable cash flow without the need for massive reinvestment.

A P/B of 1.5× is not as telling here because service companies don't generate value through assets, but through contracts, people and processes. More important is the return on capital, which is around 6% ROIC - not a stellar number, but a stable number for a low-risk business.

Risks: where the investment thesis can fail

ABM's biggest structural risk is not demand, but the low margins of the business as a whole. Operating margins of around 3-4% mean that even a relatively small increase in costs - wages, benefits, insurance or energy - can be disproportionately reflected in profits. While the company may be working with long-term contracts, it is not always able to pass on cost pressures immediately to customers, especially in the public sector and large corporations with fixed budgets.

The second key risk relates to labour. ABM employs around 100,000 people, mostly in low- to medium-skilled occupations. This makes the company vulnerable to minimum wage increases, union pressure and changes in labour legislation. In an environment of structural labour shortages, wage cost growth may exceed the rate of revenue growth in the long term, which would lead to margin compression even without an economic recession.

Another less discussed risk is the contractual concentration by sector. A significant portion of revenue comes from airports, medical facilities, schools, and government. These segments are stable but also extremely sensitive to political decisions, budget cuts and changes in government procurement. This is not a cyclical risk in the classical sense, but a regulatory and budgetary risk that can lead to price pressure when contracts are renewed.

Investment scenarios

Optimistic scenario: overestimation of stability

In a positive scenario, the market starts to appreciate more the defensive nature of the business in an environment of higher macroeconomic uncertainty. If ABM can sustain revenue growth of around 4-5% p.a. while stabilizing operating margin above 4%, EPS could grow at a rate of 8-10% p.a. due to operating leverage and buybacks.

In that case, it would not be unrealistic for valuations to move from today's ~16× earnings towards the 18-20× that is common for quality dividend companies. This would imply a double-digit annual total return, combining share price growth and dividend. This scenario requires no revolution - just consistent execution.

Base case: a slow compounder

The most likely scenario assumes the company remains what it is today: a stable service provider with low margins but high predictability. Revenues will grow around the rate of inflation, profitability will remain relatively flat, and the main source of income will be the dividend, supplemented by modest EPS growth.

In this scenario, it is realistic to expect a total return of around 6-8% per annum, which is consistent with the stock's defensive profile. This is not a title that will outperform the market in euphoria, but it can steadily beat it in periods of volatility.

Negative scenario: pressure on margins with no breakout

The negative scenario occurs when there is a combination of rising labour costs, political pressure on public sector prices and a lack of pricing power. If operating margins fall below 3% and earnings stagnate, the market could reprice the stock towards 13-14x earnings.

This would mean a fall in the share price, although the dividend would likely be maintained. In this scenario, ABM becomes a pure "income" title with no growth story and the investment would only make sense for very conservative investors.

What to take away from the article

• ABM Industries is a defensive dividend title with an exceptionally long history of payout growth

• The business is based on essential services with a high level of recurring revenue

• The dividend is backed by operating cash flow with a significant reserve

• The market values the company conservatively, which increases the margin of safety

• It is a title suitable for long-term, income-oriented investors

That dynamic becomes even more visible in cross-border activity. International spending, typically the most profitable part of the business, accelerated meaningfully and amplified operating leverage. Combined with disciplined cost control, this translated into margin expansion and faster EPS growth. For investors, the appeal lies in consistency: revenue growth, margin improvement, and earnings acceleration reinforcing each other rather than competing for attention.

How was the last quarter?

In Q4 2025, Mastercard $MA reported net sales of $8.8 billion, up 18% year-over-year, or 15% on a currency-neutral basis. Operating profit rose to $4.9 billion, up 25%, clear evidence that growth was not "bought" by costs, but that the company was able to leverage its operating leverage. Operating margin rose to 55.8% from 52.6% a year ago, up 3.2 percentage points. Net income came in at $4.1 billion, up +22% year-over-year, and diluted earnings per share increased to $4.52, up +24% year-over-year. On an adjusted basis (after adjusting for selected effects), the company reported adjusted net income of $4.3 billion and adjusted EPS of $4.76, up +25% year-over-year.

The key is that growth was driven by real transaction activity, not a one-time effect. Gross dollar transaction volume grew 7% in local currency terms to $2.8 trillion. Purchase volumes grew even faster, +9%, and the number of "switched transactions" increased by 10%. But the cross-border segment is the most important for monetisation: cross-border volumes grew by 14% in local currency. This is an area that typically generates above-average revenue per unit volume and therefore has a disproportionate impact on both revenue and margins. In other words, even relatively 'normal' growth rates in domestic payments can be offset by a higher proportion of cross-border activity.

The revenue structure has again shown why Mastercard is not just a pure "payment network". Payment network revenues grew 12% (currency neutral 9%), while value-added services and solutions grew 26% (currency neutral 22%). Here is the strategic point: these services typically carry higher margins, better repeatability and greater cycle resilience as banks and merchants address security, identity, fraud management, authentication or data analytics without regard to short-term fluctuations in consumption. But at the same time, the firm acknowledges competitive pressure in the form of partner incentives: rebates and incentives in the payments network grew 20% (17% currency neutral), which is consistent with an environment where programs are negotiated harder and renewals have a higher price. On the positive side, Mastercard has so far offset this pressure with revenue and margin growth.

On the expense side, operating expenses grew 10%, slower than revenue, which explains the expansion in operating margin. On an adjusted basis, expenses grew 14% (12% currency neutral), partly due to acquisitions, and the rest went mainly to higher general and administrative expenses. The tax rate in the quarter rose to 16.7% from 14.1%, and the adjusted rate also moved to 17.0% from 14.9%, which the company attributed primarily to the effect of the global minimum tax and geographic mix of earnings. In practice, this means that net income and EPS may be partially "dragged" by taxes going forward, even as operating performance remains strong.

• Full presentation with results.

CEO commentary

CEO Michael Miebach described 2025 as another strong year, with net sales up 16% year-on-year (15% currency neutral) and the company, he said, "winning" through a combination of technology confidence, innovation and partnerships. He specifically mentions programs like Apple Card, which illustrate Mastercard's ability to win large and strategically important contracts. At the same time, he builds an investment thesis on the growth of value-added services and solutions, which grew 23% in 2025 (21% currency neutral), confirming the firm's strategic shift away from a pure transaction network and toward a platform over payments.

The key takeaway from his comments is that management sees the results not just as a product of "good macro" but as a result of diversification and the ability to monetise new layers of value - security, digital and authentication solutions, data, engagement and services for merchants and businesses. He also says the company is "agile and diversified" and therefore well positioned to take advantage of opportunities in 2026, which is usually a signal that management expects continued healthy consumption and that it sees investments in products and partnerships as well-timed.

Outlook

Management enters 2026 with expectations of continued double-digit growth, despite less favourable currency effects and a higher tax burden. For the full year 2026, Mastercard is targeting net sales growth at the high end of the "low double digits," approximately around 10-12%, and this outlook is consistent across GAAP and non-GAAP metrics. Adjusted for currency effects and acquisitions, organic, currency-neutral revenue growth should also remain at the high end of low double digits, confirming that the core of the expansion remains the payments business itself and higher value-added services, not one-off effects.

On the cost side, Mastercard expects operating expenses to grow faster than revenue, specifically at the upper end of high single digits, around 7-9%, reflecting continued investment in technology, security, data solutions and value-added services. The outlook also includes a restructuring charge of approximately $200 million in the first quarter of 2026, which is not intended to reduce costs in the short term, but to free up space for reinvestment in long-term growth initiatives. Management also emphasizes that these costs should not disrupt the long-term trajectory of margins.

Profitability should remain robust despite the higher cost base. Mastercard also expects non-GAAP operating profit to grow in the low double-digit range, with operating margin expected to remain above 57%, although the pace of expansion will be more moderate than in 2025. N

Long-term results

The long-term numbers for 2022 to 2025 show a consistent "compounding" pattern: revenue growth, earnings growth and even faster EPS growth through a combination of margins and share buybacks. Revenues have grown four years in a row: reaching $22.237 billion in 2022, rising to $25.098 billion in 2023, $28.167 billion in 2024, and $32.791 billion in 2025. The growth rate was double-digit in all years, accelerating to +16.4% in 2025, reflecting a strong mix of cross-border and value-added segment growth, which the company itself describes as a key driver.

Operating profit rose from $12.264 billion in 2022 to $14.008 billion in 2023, then to $15.582 billion in 2024 and $19.401 billion in 2025. Here we see the typical operating leverage: in 2025, operating profit grew faster than sales (+24.5%), which also explains why the market often pays a premium for quality and margin stability at Mastercard. Net profit grew at a similarly consistent rate: $9.93 billion (2022), $11.195 billion (2023), $12.874 billion (2024) and $14.968 billion (2025). Net profit growth in 2025 was +16.3%, broadly similar to sales growth but achieved despite a higher tax burden.

However, the trend in EPS is the most convincing, as it combines profitability growth and the buyback effect. Diluted EPS rose from $10.23 in 2022 to $11.83 in 2023, $13.89 in 2024 and $16.52 in 2025. That's a cumulatively very strong shift that's not just about business growth, but also about the share count declining over the long term. The diluted average share count has declined from 971 million in 2022 to 946 million in 2023, 927 million in 2024 and 906 million in 2025. It is this combination - volume growth, service growth, high margins and a systematic reduction in share count - that has long been at the heart of the investment thesis.

News

The results and commentary show that Mastercard continues to accelerate in areas beyond net transaction fees. Most notable is the growth in value-added services and solutions, where the company is benefiting from demand for digital security, authentication, fraud prevention and data services. At the same time, management signals that it is closing and renewing key programs even at the cost of higher incentives, which is typical in the current competitive environment. In practical terms, it's a battle for distribution and long-term relationships with banks, fintechs and large partners - and if Mastercard can grow faster than payment network volumes, it means it's succeeding in expanding monetization "beyond" transactions.

Shareholding structure

Mastercard's shares are typically very heavily owned by institutions: institutions hold around 91% of the shares and the free float is around 92% institutionally owned. The largest shareholders include Vanguard, BlackRock, Mastercard Foundation Asset Management and JPMorgan. This typically implies a stable ownership base, but also sensitivity to institutional rebalancing during periods of changing macro expectations, particularly around consumption, travel and global growth.

Analyst expectations

From an analyst perspective, the outlook for Mastercard remains positive, even after very strong results. For example, Reuters pointed out after the numbers were released that Mastercard is benefiting from resilient consumer and corporate demand, strong cross-border payments growth and high operating leverage, with analysts expecting the company to be able to maintain double-digit revenue growth in the "low-teens" range and continued earnings per share growth in 2026, despite modest pressure from higher costs and restructuring expenses. At the same time, Reuters points out that it is the combination of a payments network and fast-growing value-added services that makes Mastercard one of the best-performing titles in global fintech.

Fair Price

No one can say with certainty today which direction the cryptocurrency market will take after the recent very turbulent days. Volatility is extreme, sentiment shifts day to day, and emotions again play a huge role.

In my USD portfolio I have long-term holdings of $BTCUSD, $ETHUSD and $ADAUSD. Bitcoin holds the dominant position, making up roughly 8% of the portfolio, while ETH and ADA each account for about 1%.

In mid-November 2025 I decided that for one year I would regularly buy additional BTC—always on Wednesdays, always for the same amount. At the time I didn’t know this approach had an official name: DCA (Dollar Cost Averaging). It simply made sense to me for an asset I believe in and for which I want to systematically build a long-term position, without trying to time the market.

After the recent significant drops in ETH and ADA I decided to apply the same strategy to these two cryptocurrencies. So from now on I will buy BTC, ETH and ADA every Wednesday, with the following conditions:

- I will top up ETH and ADA each time for approximately 0.15% of the portfolio value,

- these purchases are not time-limited, as is the case with BTC,

- I will continue them only under the condition that:

ADA is below the level of 0.55 USD,

ETH is below the level of 2,800 USD.

The goal is not to catch the bottom, but to, in a disciplined way, use weaker prices to build positions in assets I trust for the long term, while keeping the crypto allocation in the portfolio under control.

God save the king, my investments, and cryptocurrencies.

What is your opinion on cryptocurrencies and the DCA strategy? Do you use it, or do you approach buying differently?

Market Reaction and Price Action

Bitcoin’s drop under $80,000 triggered not only short-term liquidations but also renewed questions about whether the previous uptrend will regain momentum. According to recent market data, total crypto market capitalization shed significant value as traders exited positions and speculative long bets were unwound. Liquidations in futures markets reportedly totaled billions in recent sessions, further reinforcing downward pressure on prices.

The price action reflects a broader risk-off attitude in markets, where tightening liquidity conditions and shifting expectations around monetary policy have dampened appetite for risk assets, including cryptocurrencies.

Macro and Policy Drivers

Investors have pointed to a combination of macroeconomic uncertainty and hawkish central bank expectations as key factors in Bitcoin’s recent decline. In particular, speculation around future Federal Reserve policy following the nomination of Kevin Warsh as Fed chair has reinforced views that liquidity may tighten, reducing support for speculative assets like Bitcoin.

Additionally, broader trade tensions and tariff concerns, along with geopolitical risks, have encouraged traders to shift toward traditional safe havens such as gold, which has recently rallied to record levels. This dynamic contrasts with earlier narratives that bitcoin could function as “digital gold” in times of stress, highlighting the evolving nature of how investors view the asset.

Volatility and Liquidity Challenges

The current decline has also exposed lingering structural market vulnerabilities, including thin liquidity and limited buying support around key levels. Analysts note that Bitcoin’s inability to hold above key support zones has prompted technical traders to reduce exposure, contributing to price accelerations on the downside. On several major exchanges, BTC prices dropped as much as 10 percent in peak sell-off conditions, reflecting the scale of recent volatility.

Liquidity challenges in crypto markets can amplify price moves, especially when ETF outflows and capital shifts push institutional participants to the sidelines. With speculative flows exiting digital asset funds and spot trading volumes softening, Bitcoin’s price has become increasingly sensitive to short-term sentiment shifts.

New Participation Despite Weakness

Despite the drop below $80,000, some data points suggest that new investor interest and accumulation may be emerging at lower levels. Wallet metrics show an increase in active addresses and new Bitcoin wallets created as prices declined, suggesting that some buyers view the weakness as an entry opportunity. This contrast rising adoption activity amid price slumps could point to a divergence between short-term trading flows and longer-term network engagement.

What Investors Should Watch Next

As Bitcoin navigates this critical support zone, investors will be focused on several key indicators that could shape near-term direction:

Support and Resistance Behavior: How BTC trades around the $80,000 mark and whether it can reclaim this level will be crucial for bullish conviction.

Liquidity and Volatility Metrics: Changes in trading volume and funding rates in futures markets may signal whether selling pressure is abating or intensifying.

Macro Signals: Central bank guidance and liquidity conditions remain dominant drivers for risk assets. Investors will look for clearer cues on monetary policy trajectory and inflation dynamics.

Market Participation Trends: Inflows into spot Bitcoin funds, wallet growth metrics, and on-chain activity can offer insight into whether the current dip is short-lived or part of a deeper market cycle adjustment.

Overall, Bitcoin’s fall below $80,000 has underscored the growing influence of macroeconomic and liquidity forces on the crypto market. While the traditional narrative of Bitcoin as a hedge remains debated, the current price action highlights the importance of market sentiment and broader financial conditions in driving digital asset valuation. Recent weak price support at key levels has amplified volatility and prompted renewed focus on the interplay between speculative flows and longer-term adoption trends.

Despite exceeding expectations, KLA’s stock fell significantly following the announcement a response that highlights how nuanced investor sentiment has become for capital-intensive tech and semiconductor equipment firms.

Market Focus Shifts to Outlook and Guidance

Investors appear less concerned with the headline strength in earnings and more focused on what comes next. After the earnings release, KLA’s share price dropped nearly double digits on broad market trading, with midday declines ranging from about 9 percent to 13 percent in some sessions. Even when the company’s earnings were initially announced, the stock pulled back shortly after rising in after-hours trading.

This reaction stems from guidance concerns around future capital spending by semiconductor manufacturers and wafer-fab equipment (“WFE”) demand, which is considered a key driver of KLA’s growth. Analysts and traders have highlighted that while KLA’s recent quarter was solid, its forward guidance on WFE spending was more modest than competitor outlooks and may reflect uneven demand timing in the AI-related chip cycle.

Technical and Demand Dynamics

Part of the pressure on KLA’s stock also reflects broader semiconductor equipment sector dynamics. Buyer sentiment around tools used for advanced logic, memory and AI chip production has oscillated as industry participants weigh inventory cycles, lead times, and regional demand shifts. Some investors expected stronger cues on the near-term outlook, especially given recent all-time highs in KLA’s share price earlier this year.

Further complicating sentiment, reports show that although revenue and earnings were healthy year-over-year, free cash flow metrics fell slightly short of some expectations a factor that can influence valuation, particularly for a capital-heavy business. Even with strong profit generation, deviation from forecast free cash flow figures adds a layer of caution for risk-aware investors.

Analyst Views and Diverging Opinions

Market watchers have been quick to adjust their views in light of the mixed reaction. On one hand, some research firms have raised price targets on KLA, citing long-term growth driven by AI and advanced semiconductor investments. Cantor Fitzgerald, for example, increased its target while underscoring strong demand and extended equipment lead times a signal that orders remain robust even if timing shifts occur.

On the other hand, concerns about near-term outlook and supply chain constraints have led some analysts to temper expectations or highlight volatility risk, particularly in the cyclical wafer fabrication equipment market.

What Investors Should Watch Next

Looking ahead, several key areas will influence how KLA’s stock performs:

Guidance and Forecasts: Investors will scrutinize whether management can offer clearer signals about wafer fab equipment demand and spending across major regions, especially as AI computing investment evolves.

Capital Allocation and Operating Efficiency: With strong free cash flow generation in recent quarters, how KLA balances research and development, dividends and share repurchases may affect confidence in execution.

Macro and Supply Dynamics: Broader semiconductor industry trends, including trade policies, lead times and customer ordering patterns, will be key to interpreting future performance.

Technical Indicators: After a period of strong gains early in 2026, the stock’s recent volatility highlights the importance of support and resistance levels on pricing charts for traders.

In summary, KLA’s recent sell-off underscores how investor priorities have shifted from simply celebrating earnings beats to demanding clarity on forward demand trends. For long-term holders who view the semiconductor equipment cycle as secularly favorable due to AI and advanced computing, the fundamentals of KLA remain compelling. However, the near-term stock pricing now appears to hinge heavily on guidance, supply chain context, and shifting demand signals.

SanDisk’s recent quarterly results showed massive earnings and revenue beats, driven by extraordinary demand for its flash memory and SSD products in AI and data center applications. According to reporting on the company’s fiscal performance, the memory chip maker’s adjusted earnings and top-line results blew past analyst expectations, reinforcing confidence that SanDisk’s products are central to the rapid growth of artificial intelligence infrastructure.

AI and Data Center Demand Fuel Pricing Power

The core catalyst behind SanDisk’s rally is the explosive growth in demand for high-performance storage driven by AI and enterprise data center buildouts. Analysts have highlighted that storage and memory are becoming critical bottlenecks in modern AI systems, where massive datasets must be stored, accessed, and processed with high speed and reliability needs that SanDisk’s NAND flash and SSD solutions are uniquely positioned to meet .

This narrative gained significant traction after comments from industry leaders at major technology events underscored the strategic importance of storage in the AI ecosystem. As a result, demand for NAND flash memory has tightened, allowing SanDisk which was spun off from Western Digital in early 2025 to benefit from price increases and improved margins that accompany constrained supply and robust enterprise interest.

Short Squeeze and Momentum Dynamics

Adding to the bullish technical setup, SanDisk’s price action reflects signs of an intense short squeeze in recent trading. Market commentators have noted that elevated short interest and rising option open interest have amplified volatility and helped drive extreme short covering, further propelling the stock higher. This dynamic, combined with strong fundamental results, creates a compelling narrative for traders looking to capitalize on momentum.

Analyst Confidence and Price Target Upside

Wall Street’s bullishness on $SNDK has also been reflected in analyst commentary and revised price targets. Several brokerage firms have maintained Buy ratings and significantly raised price targets, citing both the structural transformation of the memory market and SanDisk’s leadership position within it. In some cases, price targets have climbed to levels suggesting considerable upside relative to current prices, emphasizing SanDisk’s potential to extend gains as fundamental trends play out.

These firm upgrades are rooted in optimism about SanDisk’s product mix strength, data center traction, and pricing power amid a constrained NAND memory supply environment that supports stronger revenue and margin growth.

What Investors Should Watch Going Forward

Despite its stunning run, SanDisk’s rally raises important questions that investors will be watching closely in the months ahead:

Sustainability of AI-Driven Growth: Continued strength in enterprise and AI-related storage demand is central to SanDisk’s valuation case. Future earnings reports and guidance will hinge on whether this demand trend sustains or accelerates.
Memory Pricing and Supply Dynamics: A tight NAND flash market can support pricing power, but changes in supply conditions or consumer hardware demand could alter the landscape.
Valuation and Risk Appetite: With a steep rally underway, valuation multiples have expanded rapidly. Investors should weigh whether current prices factor in all potential risks or if additional growth drivers remain.
Sector Interplay: SanDisk’s performance is part of a broader memory and storage sector trend that includes companies like Micron, Western Digital and Seagate, all seeing notable moves as AI infrastructure spending rises.

The convergence of fundamental strength, structural demand for storage, and a dynamic technical picture has made SanDisk one of the most intriguing stories in the semiconductor and AI hardware space. Investors who can evaluate both the opportunities and risks tied to valuation will be well positioned to assess SanDisk’s next steps as the rally progresses.

The strategic focus now lies beyond quarterly earnings. Integration progress, project ramp-ups, and reserve replacement are reshaping the long-term profile of the business. Investors are watching whether this combination of volume growth and capital discipline can persist through different price regimes. The underlying question is not how Chevron performs in a strong oil market, but how durable its cash engine remains when conditions are less forgiving.

How was the last quarter?

Chevron reported net income of $2.8 billion in the fourth quarter of 2025, which equates to earnings of $1.39 per share. Adjusted earnings were $3.0 billion, or $1.52 per share, down year-over-year primarily due to lower realized oil prices, negative currency effects and one-time costs associated with pension settlements. However, operating numbers remained very strong.

Operating cash flow was $10.8 billion, while adjusted free cash flow was $4.2 billion. Even with weaker commodity prices, Chevron is generating cash that allows it to fund investments, reduce debt and return capital to shareholders. ROCE was 5.4% in the quarter, reflecting cyclical price pressure rather than a structural efficiency issue.

In terms of segments, upstream remains the key driver. Total production reached 4.0 million barrels of oil equivalent per day, up more than 20% year-on-year, with the Hess acquisition and projects in the Permian Basin and Gulf of Mexico contributing a significant portion of the growth. Downstream was stable, with improved refining margins partially offsetting upstream pressure.

• Full presentation with results.

CEO commentary

CEO Mike Wirth called 2025 one of the most significant years in the company's history. He emphasized that Chevron was able to successfully integrate Hess, launch key projects and reorganize the company to be more resilient to commodity price fluctuations. He said the combination of record production, structural savings and discipline in capital spending led to the highest operating cash flow ever at comparable oil prices.

Outlook

For 2026, Chevron expects continued strong production and further efficiency gains. The company is targeting further structural cost reductions, with a savings program to reach $3-4 billion annually by the end of 2026. Capital expenditures remain under control, although they will be increased due to investments in new projects and energy infrastructure.

From a shareholder perspective, the confirmation of the dividend policy is key. Chevron raised its quarterly dividend by 4% to $1.78 per share and is heading for its 39th consecutive year of dividend growth. At the same time, the company is continuing its extensive share repurchases, which supports long-term earnings per share growth even with fluctuating oil prices.

Long-term results

A look at 2021-2024 clearly shows the cyclical nature of Chevron's business, but also its ability to adapt quickly. The company's revenues peaked at more than $235 billion in 2022 due to extremely high energy prices, while 2023 and 2024 saw a normalisation towards around $195 billion. However, this decline has not been accompanied by a collapse in profitability.

Net income in 2024 was $17.7 billion, down from a record year in 2022 but still well above the long-term average before the energy crisis. EPS was around $9.7 in 2024, showing that even with lower oil prices, Chevron remains a highly profitable company. Another important factor is the declining share count due to buybacks, which has supported EPS over the long term.

Operationally, Chevron has significantly improved reserve replacement. It has achieved a 158% reserve replacement ratio in 2025, which means the company can not only produce but also successfully recover its reserves, thanks largely to the Hess acquisition and new discoveries in the Permian Basin, Guyana, and Australia. EBITDA has remained at very high levels over the long term, although it is sensitive to the price cycle.

News

The year 2025 was an exceptionally busy one for Chevron with strategic milestones. The company completed the acquisition of Hess and achieved projected synergies of $1 billion. The Future Growth Project was launched in Kazakhstan, while several deepwater fields reached first production in the Gulf of Mexico. There was also a major breakthrough in Guyana, where Chevron started production from the Yellowtail field and approved further investments.

In addition to traditional energy, Chevron has entered the US lithium sector, investing in renewable fuels and announcing projects to support the energy needs of US data centres. These moves demonstrate an effort to diversify future sources of cash flow without abandoning the core oil and gas business.

Shareholding structure

Chevron has a very stable institutional base. Approximately 68% of the shares are held by institutions, with Vanguard, State Street, BlackRock and Berkshire Hathaway among the largest shareholders. The presence of Berkshire Hathaway has long reinforced the perception of Chevron as a quality dividend title with disciplined capital management.

Analyst expectations

Analysts view Chevron as one of the highest quality "large-cap" energy companies. In the short term, they note the sensitivity of earnings to oil prices, but in the long term they appreciate the combination of a strong balance sheet, record production, high reserve replacement and consistent dividend growth. The investment thesis thus rests less on oil price speculation and more on a steady ability to generate cash across the cycle.

Fair Price

But it's with SoFi that the narrative often breaks down after such a significant sprint: investors want to see clearly how record growth translates into steadily higher margins, what the pace of monetization of the one-stop shop will be outside of credit, and what the latest move toward crypto and blockchain realistically means in the context of regulation, costs, and risk management. Therefore, even with strong numbers, the market's reaction may be "mixed" - not because of what has happened, but because of what should be sustainable from it.

What was the last quarter like?

The quarter ended with record revenue and operating performance for SoFi $SOFI. Total GAAP net revenue came in at $1.025 billion, up 40% year-over-year from $734 million. USD. On an "adjusted" basis, the firm reported adjusted net revenue of $1.013 billion, up +37% year-over-year. This is important not only symbolically because of the billion-dollar mark, but mainly because growth is not built on one leg alone: the firm explicitly mentions strengthening the fee-based component and scaling the product ecosystem.

Profitability, meanwhile, has moved into a different league. Adjusted EBITDA (Adjusted EBITDA) jumped to a record $318 million. GAAP net income was $174 million, up +60% year-over-year, corresponding to an Adjusted EBITDA margin of 31%. The company also points out that this is the ninth consecutive quarter of GAAP profitability, a key signal of stabilizing unit economics and cost discipline in a business that until recently "bought growth."

The "engine" of net interest income and financing is also strong. Net interest income was $617 million. The net interest income was USD 617 million (+31% year-on-year). Net interest margin was 5.72% (-19 bps y/y from 5.91%), which SoFi explains mainly by mix - relatively more volume is shifting from high-yield personal loans towards mortgages and student loans. At the same time, the firm describes a significant improvement on the funding cost side: the average rate paid on deposits was 181 bps lower than on warehouse funding, which management translates into c. $680mn of funding. The company has seen USD 680 million in annualized interest cost savings. In practice, this means that the bank balance sheet and deposit base are starting to act as a real competitive advantage, not just a "regulatory costume".

Operationally, SoFi added a record 1.027 million new members in a single quarter to get to 13.7 million members (+35% YoY). More importantly, product depth: 1.6 million products were added in the quarter, bringing the total to 20.2 million (+37% YoY). In addition, management emphasizes the quality of cross-sell: 40% of new product openings came from existing members, with a year-over-year improvement of nearly 7 percentage points. This is exactly the mechanism to turn a one-stop shop into a long-term efficient growth machine - cheaper acquisitions, higher LTV and better margins.

• Full presentation with results.

CEO commentary

Anthony Noto builds the results story on three pillars: scaling the platform, accelerating the product ecosystem, and moving to the "next phase" of financial services. In his interpretation, the quarter is groundbreaking mainly because SoFi exceeded $1 billion in quarterly revenue for the first time, while adding 1 million members for the quarter and growing its product base by a record 1.6 million. These are the metrics that are supposed to prove that the one-stop shop model really works - people don't just come for one thing, but gradually pick up other products within the ecosystem.

The second level of his comment is more strategic: Noto explicitly emphasizes "crypto and blockchain innovation," noting that SoFi wants to be a "bank-grade" player in crypto and tokenized flows - that is, combining innovation with the security and stability of a national banking license. The CEO frames this as an effort to "lead the next phase of financial services," which is an ambitious narrative, but it also automatically opens up questions for investors: what will be the regulatory and compliance costs, what is the return on investment, and how quickly will these initiatives translate into fee-based returns.

Outlook

What is fairly clear from the quarter and management commentary are the key variables that the market will be pricing in 2026. First, the growth rate of fee-based revenue: in 4Q it reached 443 million. The company presents it as a structural driver of diversification beyond the pure credit cycle. Second, NIM stability and order quality: SoFi says credit performance is within expectations and charge-offs on personal loans improved 57bp y-o-y. Third, capitalization and return on capital: the firm said equity rose $1.7bn in the quarter to $10.5bn and that this includes $1.5bn of new capital - and this is often viewed sensitively by the market as higher capital improves safety but also raises the bar on ROE and can mean dilution.

Long-term results

Looking at recent years, SoFi has followed the classic trajectory of "growth at a loss → operational stabilization → first profitability". Revenues have grown very rapidly between 2021 and 2024: from $1.088bn in 2021 to $1.763bn in 2022, then to $2.898bn in 2023 and $3.704bn in 2024. This is an expansion that would mean nothing in itself if it went purely through marketing and acquisition subsidies, only that at the same time the cost profile and especially the ability to monetise has gradually changed.

The gross profit grew from 977 million euro to 977 million euro. USD 1.519 billion (2021) to USD 1.519 billion (2022), USD 2.053 billion (2023) and USD 2.581 billion (2024). Interestingly, OPEX has virtually stabilized in 2024: operating expense was $2.347 billion, -0.3% year-over-year versus $2.354 billion in 2023. This stabilization of OPEX is often the point at which growth companies begin to "tip" into profitability - because the next dollar of revenue no longer needs the same portion of fixed costs.

And that tipping point is visible on the bottom line. Operating income was negative in 2021 (-$481 million), also negative in 2022 (-319 million), remained negative in 2023 (-$301 million), but turned positive in 2024 to $233 million. Net profit in 2024 was USD 499 million. USD 499 million compared to a loss of USD -301 million in 2024. USD -320 million in 2023 and USD -320 million in 2023. EPS therefore went from negative (e.g. -0.36 in 2023) to positive (0.46 in 2024), which is a major change for valuation and the investor "universe" as it opens up completely different types of models and investors.

The 2025 picture fits in as well: for the full year, the company reported GAAP total net revenue of $3.613 billion (+35% YoY) and adjusted net revenue of $3.591 billion (+38% YoY), with adjusted EBITDA for the year of $1.054 billion (+58% YoY). In other words, SoFi is no longer just a growth story, but a growth story that is starting to "pay" for itself while growing faster in operating profit than in revenue - and that is exactly the return of operating leverage that the market is looking for in digital finance.

News

The most important "news" of the quarter is not a one-off event, but a strategic shift: in 4Q, SoFi announced that it became the first national bank (within its charter structure) to launch crypto trading for consumers, while simultaneously launching its own stablecoin, SoFiUSD, on a public permissionless blockchain. It added blockchain-powered international remittances to more than 30 countries. Management frames this as an effort to combine modern crypto products with banking security and stability.

From an investment perspective, however, this is not just an extra "feature". It's a bet that further growth in fee-based revenue and engagement will come not just from lending, but from the infrastructure around payments, remittances, investing and new types of financial flows. If successful, this could improve diversification and margins. If it fails, it can increase the cost base and regulatory friction without adequate monetization. So the market will want to see concrete metrics on adoption, profitability and compliance costs, ideally during 2026.

Shareholder structure

SoFi has a relatively "classic" structure for a growth financial technology: insider holdings are at 3.0%, institutional holdings at 52.64% (float 54.27%). This means the title is largely in institutional hands, but still has a significant retail market share, which may increase sensitivity to quarterly surprises and narrative changes around guidance.

The largest institutional holders include Vanguard with about 111 million shares (as of December 31, 2025), followed by JPMorgan (93.6 million), BlackRock (62.4 million) and Shaw (35.0 million). For investors, it's practical to watch mainly to see if the trend changes for the largest holders in subsequent quarters - SoFi is the type of stock where "positioning" often follows confidence in the long-term profitability model.

Fair Price

This is where perspective matters. A temporary revenue shortfall does little to change the durability of cash flows or the discipline behind capital returns. The real question is not whether the company can absorb a weaker quarter, but whether the recent price action has altered the long-term risk–reward profile. For patient investors, that distinction is often where opportunity begins.

Top points of the analysis

• The market overreacted to the slight disappointment in sales, while profitability remained strong

• Abbott expects organic growth to accelerate in 2026

• Short-term pressure is coming primarily from the nutrition segment, not the core business

• Company has extremely stable cash flow, low debt and high return on capital

• The pending acquisition of Exact Sciences may open up a new long-term growth pillar

• Dividend remains safe and growing over the long term, even after the stock selloff

Why Abbott shares fell sharply after earnings

The drop in Abbott Laboratories shares following the release of its fourth quarter 2025 results (more than 10%) was significant at first glance, but on closer analysis looks more like a reaction to a combination of several short-term factors than a signal of a structural problem in the business. In particular, the market reacted to a slight disappointment at the revenue level, with the company reporting $11.5 billion versus expectations of roughly $11.8 billion. In absolute terms, this is a relatively small difference, but in the context of high valuations for healthcare titles, even a minor miss often triggers an overreaction.

A key source of weaker sales was the nutrition segment, which has faced a combination of higher production costs, pricing pressure and changing consumer behavior in recent quarters. Management has openly admitted that higher prices have led to subdued demand, particularly from more price-sensitive customers. But this problem is not unique to Abbott - similar pressures can be seen across the consumer side of the healthcare industry. However, the market has reacted as if this were a permanent disruption to the growth profile of the entire company.

Another factor has been a change in investor expectations, who in previous years were used to strong growth impulses from diagnostics and pandemic products. As this effect gradually faded, investors began to place more emphasis on consistent organic growth and immediately penalize any faltering. Although fourth-quarter adjusted earnings per share rose 12% year-over-year and met expectations, the market focused almost exclusively on earnings.

How the nutrition issue fits into the big picture

It's important to emphasize that the nutrition segment is not the main driver of Abbott's long-term investment thesis $ABT. While it is a significant part of the portfolio, it is also the area most exposed to pricing pressures and consumer behavior. Management has already clearly communicated during the earnings call that changes are underway in this division to optimize costs, adjust pricing strategy and return to growth in the second half of 2026.

From an investment perspective, it is significant that the weakness in nutrition is not undermining the financial stability of the company. Abbott continues to generate strong cash flow, maintains high margins in other segments and has the flexibility to absorb temporary fluctuations. It is this ability to separate the short-term problems of one segment from the long-term performance of the whole that is the hallmark of quality healthcare companies.

Growth prospects: why 2026 should bring acceleration

Despite the short-term jitters, Abbott management expects 2026 to bring an acceleration in organic revenue growth to 6.5%-7.5%, which would mark a return to a more robust pace. This outlook is not based on a single product or segment, but a combination of several long-term trends that play into the company's hands.

Medical technology and diagnostics remains a fundamental pillar. The aging population, the rising prevalence of chronic diseases and the pressure for early diagnosis are creating structural demand that is relatively independent of the economic cycle. Abbott has a strong position, broad portfolio and global reach in these areas, enabling it to grow even in a less favourable macro environment.

The second important factor is the return of operating leverage. Data over the past few years shows that revenue growth is again translating into faster operating profit growth. Gross profit grew by more than 15% in 2025, while sales grew by around 6%. This suggests an improving margin structure and more efficient use of the cost base, which is key to long-term earnings and dividend growth.

The pending acquisition of Exact Sciences should also play a significant role. This would allow Abbott to enter the early cancer detection and preventive diagnostics business, a segment with high long-term growth potential. This is not a short-term catalyst for results, but a strategic portfolio expansion that can gradually raise the growth profile of the entire company.

Why the current sell-off may not be a turning point in the story

Looking at the situation in a broader time frame, the current share price decline reflects re-pricing expectations rather than a deterioration in fundamentals. Abbott remains a highly profitable company with low debt, a strong balance sheet and a long history of dividend growth. Valuation post-downturn is more moderate, reducing risk for long-term investors.

Growth prospects for 2026 and beyond are built on structural trends in healthcare, not one-off effects. If management is able to stabilize the nutrition segment and successfully integrate Exact Sciences, Abbott could return to being perceived as a combination of defensive stability and moderate growth, a profile the market has valued over the long term.

Valuation: defensive quality at a moderate price

After a sharp selloff, Abbott Laboratories is trading at levels that look considerably more reasonable than in previous years, especially if the title is viewed through the lens of a long-term, dividend-oriented investor. With a market capitalization of roughly $216 billion and an enterprise value of around $222 billion, the price-to-earnings ratio comes out to about 15.6 times, which is rather at the lower end of the historical range for a quality healthcare blue chip.

What is important from a relative valuation perspective is that Abbott is not a classic high-growth title, but a combination of defensive stability and moderate growth. The price to earnings ratio of around 4.9 times and price to book value of 4.2 times reflect the company's high asset quality, strong brands and above-average return on capital over the long term. ROE of over 28% and ROIC of nearly 19% confirm that the company can operate efficiently with capital without becoming over-leveraged.

Financial stability is also an important element of valuation. The debt-to-equity ratio of 0.25, net debt to EBITDA well below 1 and Altman Z-score of 5.2 clearly show that the balance sheet is very conservative. This is key not only for dividend protection, but also for the ability to execute strategic acquisitions without jeopardizing financial health. With a beta of around 0.7, Abbott then acts as a lower volatility title, an important portfolio stabilizer for long-term investors.

From a cash flow perspective, the valuation is more challenging - a price to operating cash flow ratio of over 30 times is not low. However, it should be read in the context of high quality and repeatability of cash flow, long-term dividend growth and very low equity risk. In other words: Abbott is not a cheap stock, but after the selloff it no longer looks expensive relative to its quality.

Dividend: 54 years of growth, high sustainability and room for the future

The dividend is one of the strongest arguments for why Abbott Laboratories has long been a sought-after stock among conservative and income investors. The company is a member of the elite Dividend Kings group and raised its dividend for the 54th consecutive year in 2026, placing it among the narrowest group of companies with exceptionally consistent capital discipline. Such a long track record is not the result of one strong product, but a testament to the resilience of the entire business model across cycles, crises and regulatory change.

The current annual dividend is approximately $2.52 per share, which at the current price equates to a dividend yield of around 2%. On the face of it, this is not a high yield, but that has never been the essence of Abbott's dividend thesis. It's about a combination of stability, annual growth and very low downside risk, not maximizing immediate cash yield. That's why Abbott is often seen as a "core dividend title," not a high-yield bet.

From a sustainability perspective, it is key to monitor the payout ratio. On an adjusted earnings per share basis, the payout ratio is roughly in the mid-40% range, which is a very conservative level. Thus, the company pays out less than half of its earnings and leaves the rest for reinvestment, research, acquisitions, and strengthening the balance sheet. This creates a sizable cushion even for periods of weaker growth or short-term fluctuations, such as the recent problems in the nutrition segment.

A look at cash flow offers an even stronger picture. Abbott generates stable operating cash flow and the dividend is fully covered by free cash flow, and by a significant margin. Even in years when earnings have been impacted by one-time tax or accounting items, the ability to pay and grow the dividend has remained intact. This is a crucial difference from companies that, while posting accounting profits, have weaker cash flow dynamics.

Debt poses no structural risk to the dividend. A debt-to-equity ratio of around 0.25, net debt to EBITDA well below 1, and high interest coverage mean that Abbott is not forced to choose between paying down debt and paying shareholders. On the contrary, the strong balance sheet allows the company to combine dividend growth with its acquisition strategy, which is particularly important in the context of the planned acquisition of Exact Sciences.

Growth catalysts in a market context: how big are the opportunities

Medical devices and medtech: structural growth in the low double digits

The medical devices segment, where Abbott is one of the global leaders, has long benefited from an aging population, a higher prevalence of cardiovascular and metabolic diseases and rising healthcare spending. The global medtech device market is growing at a rate of around 6-8% per year by most estimates, with some specialist areas such as cardiology and continuous monitoring growing even faster.

Abbott has a significant but not dominant share in these segments, which is an investment-positive combination. The company is not large enough to be constrained by regulators, but it also has enough scale to benefit from global market growth. Its market share is more in the single digits to low teens of percentages in key regions, meaning that market growth translates relatively directly into revenue growth.

Diagnostics and screening: a return to the long-term trend

The diagnostics market, which was extremely volatile during the pandemic, is gradually returning to a normal growth profile. Long-term estimates speak of 5-7% annual growth, driven by a greater emphasis on preventive care, early diagnosis and personalised medicine. Abbott is one of the biggest global players here, particularly in laboratory and point-of-care diagnostics.

Crucially, diagnostics generates recurring revenue from consumables and tests, which increases cash flow predictability. Abbott does not have extreme dominance here, but its broad portfolio and global distribution allows it to grow steadily with the market without the need for aggressive price wars.

Nutrition: a cyclical pressure but a long-term growing market

The clinical and consumer nutrition market is growing at a long-term rate of 4-6% per annum and is more sensitive to price and consumer behaviour. This is where Abbott has run into a short-term problem in recent quarters. However, what is important for investment purposes is that this is a temporary cyclical pressure, not a structural market decline.

Abbott has strong brands and significant global share in clinical nutrition, particularly in hospital care. If pricing strategy and costs can be stabilised, this segment can return to growth and once again contribute to the stability of the overall portfolio, although it is unlikely to be a major growth driver.

Exact Sciences and cancer screening: a new long-term growth vertical

The acquisition of Exact Sciences opens up Abbott's access to the early cancer detection market, which is one of the fastest growing areas of healthcare. This segment has the potential to grow at a double-digit rate (10-15% per year) over the next decade, according to available estimates, thanks to a combination of technological advances, an aging population and pressure to reduce costs through prevention.

Abbott has virtually no significant stake here today, which is exactly what makes this acquisition a strategic opportunity. If the integration is successful, cancer screening could become a new growth pillar that improves the long-term growth profile of the entire company without compromising its defensive nature.

Investment scenarios: how the Abbott story may evolve

Optimistic scenario: return of confidence and new growth pillar

In the optimistic scenario, it turns out that the post-earnings sell-off was indeed an overreaction by the market to a short-term problem in the nutrition segment. Management measures will start to work sooner than currently expected, prices will stabilise and demand will gradually return. At the same time, strong performance will continue in the key medical devices and diagnostics segments, which are benefiting from structural trends such as an aging population and pressure on preventive care.

Key to this scenario is the successful closing and integration of the Exact Sciences acquisition, which will open up new long-term growth potential in early cancer detection. If this area begins to gradually translate into revenue and investors can grasp the story as a strategic portfolio expansion, the overall perception of the company may change - from a purely defensive dividend title towards a "quality growth" healthcare company. In that case, the stock would benefit not only from earnings growth, but also from a valuation return closer to historical averages.

Realistic scenario: stable growth and dividend as the main pillar

The realistic scenario assumes that the weakness in the nutrition segment will persist for a few more quarters, but without further escalation. Other parts of the business - notably medical devices and diagnostics - will continue to grow and compensate for the weaker performance of this division. Organic revenue growth will be around 6-7%, in line with management's current outlook for 2026.

In this scenario, Abbott Laboratories will remain primarily a very stable dividend play with high cash flow visibility. Earnings growth of around 8-10% annually, along with continued dividend increases, will provide investors with a solid but less dynamic yield. Valuations are unlikely to change significantly, meaning total return will be driven primarily by fundamental growth and the dividend, not multiple expansion.

Pessimistic scenario: prolonged weakness and acquisition disappointment

The pessimistic scenario is based on the assumption that the problems in the nutrition segment will prove more structural than management now suggests. Demand will remain subdued for longer, pressure on prices and margins will persist, and overall revenue growth will slow below 5%. At the same time, the integration of Exact Sciences could be more difficult, expensive and slower than expected, undermining market confidence in the company's long-term growth potential.

In such an environment, Abbott would likely remain profitable and financially stable, but investors would come to view it purely as a defensive title with no significant growth ambitions. Valuations could be depressed further, which would imply weaker stock performance despite the continued dividend payout. This scenario is not an existential risk, but rather a risk of lower than expected returns for shareholders.

What to take away from the article

• The sharp drop in the stock was a reaction to a short-term disappointment in earnings, not a collapse in the business

• Weaker spot is the nutrition segment, which does not form the core of the long-term investment thesis

• Other parts of the business remain strong and support stable cash flow

• 2026 should bring an acceleration in organic growth

• Acquisition of Exact Sciences may create a new long-term growth pillar, but carries integration risks

• Abbott is one of the most stable dividend titles in the market and the dividend remains safe

• The current sell-off has reduced entry risk rather than changing the long-term investment story

The performance of the S&P 500 is often presented in the media as a single number. But 2025 was a textbook example of just how misleading it can be to focus only on aggregate returns. According to the official statistics, the S&P 500 ended 2025 with a return of 16.39%. You can read in the media that the return was as high as around 18%, which is a distortion created by the performance measurement methodology.

The market went through a significant drop in April and then an even more significant rise. The S&P 500 Index was able to bounce back from the spring decline and grow roughly 45% from the April lows of 2025, which is important to understand the psychology of the market: much of the year's performance was generated in relatively short periods of time when the market was appreciating strongly.

But capital concentration was also crucial for 2025. According to this study, at the end of the year the 10 largest companies accounted for almost 41% of the weight of the entire index, an extremely high number even historically, and it means one simple thing: the index has long been an average of the US economy, but largely a bet on a relatively narrow basket of the largest companies. That's why the S&P 500 can look strong even when the bulk of companies may be moving sideways or even weakening slightly (if technology is gaining ground).

Source: Novelinvestor

But capital rotation has also started to play heavily into performance. In terms of sectors, it turned out that despite the index as a whole rising, only three sectors outperformed the index, while the rest either rose more slowly or only averaged.

Moreover, our team's analysis shows that the largest contributions to the index's overall performance came from a narrow group of stocks, again underscoring that the index's performance was largely driven unevenly. So who were the winners and losers?

The top 3 sectors of the S&P 500 in 2025

The year 2025 once again brought strong market results for US equity markets. Still, the growth rate was not uniform across sectors. Analyses consistently show that only three sectors have managed to outperform the overall index, with clear structural and thematic trends behind their success in the form of technology adoption, communications innovation and industrialization coupled with new infrastructure investments.

Communication Services

Performance: 33.6% in 2025
Communication Services was the best growing sector in 2025, driven by the return of investors in companies generating strong growth in advertising revenues, subscriptions and higher user engagement in the digital environment.

Key growth drivers:

• Alphabet (Google $GOOG) - growth driven by a shift into AI-oriented products and a strengthening advertising economy

• Meta Platforms $METAstabilizing user metrics and video monetization

• Netflix $NFLX - subscriber base expansion and pricing adjustments.

The communications sector benefited from the continued shift of advertising budgets to the online space, strong consumer engagement with video content and the growing monetization potential of platforms. This, combined with relatively lower weightings in strategic portfolios, gave the sector growth momentum above the index average.

Information Technology (Technology)

Performance: 24% in 2025
Technology as a whole remained a core bull market in 2025. AI-driven demand for hardware and software solutions pulled the sector forward, despite volatility between sub-sectors (e.g. software vs. hardware).

Strongest growth for individual titles:

• Western Digital$WDC +283%) - excellent year with extreme gains thanks to the data center and AI storage boom

• Micron Technology$MU +239%) - shifting manufacturing strategy towards memory and AI-oriented products

• Seagate Technology$STX +219%) - data center components benefited from growing infrastructure investments

Western Digital was one of the top 3 fastest growing stocks in the S&P 500 in 2025

According to reports, titles like Western Digital and Micron were among the top gainers in the entire index, significantly outperforming even the traditional "Magnificent Seven." The sector's growth has been driven not only by big names, but also by smaller, fast-adopting companies that have been able to capitalise on the strong preponderance of demand for AI-oriented technologies.

Industry (Industrials)

Performance: 19.4% in 2025
The third sector to outperform the index was Industrials. While industrials do not receive as much media attention as technology or communications services, their performance in 2025 was notable, often supported by significant new investments in manufacturing, transportation, and infrastructure.

Examples of major players:

• GE Aerospace $GE and other aerospace component manufacturers - growing demand for aircraft components and fleet upgrades

• Logistics firms$FDX) - benefited from the resurgence of global supply chains

The 2025 Industrials sector has shown that diversification of growth sources away from clean technology can be important to index performance. In an environment where infrastructure spending and capital investment have risen to higher levels, industrials have gained investor attention.

The 2 weakest S&P 500 sectors in 2025

While a portion of the S&P 500 benefited from thematic growth trends and the concentration of capital in a few winning segments, another portion of the market lagged significantly. In 2025, it became apparent that defensive or interest rate sensitive sectors may not automatically act as a portfolio stabilizer if macroeconomic conditions and investor expectations change.

Our team analyzed all sectors and the following sectors earned investors the lowest appreciation last year.

Consumer Staples

Performance: 3.9% in 2025

The Essential Consumer Staples sector, which includes food, beverage, and household goods manufacturers, was a significant laggard in 2025. Although demand for these products has remained steady even in worse economic times, it is the lack of a growth catalyst that has proven to be a key issue.

Margin pressures have been another negative factor. Inflation, rising input and logistics costs have been passed on to consumers only to a limited extent, leading to stagnant profit margins for many large players.

Specific examples of weaker performance:

• Procter & Gamble $PG (-14% in 2025) - margin growth, revenue stagnation

• Coca-Cola $KO (+12%) - stable cash flow but low profit growth

• PepsiCo $PEP (-6%) - margin pressure due to cost and consumer price elasticity

Consumer Staples thus served as a stable haven for capital in 2025 rather than a driver of index performance.

Real Estate

Performance: +3.2% in 2025

Real estate was the weakest sector in the index, remaining under pressure for the third consecutive year. The Real Estate sector is extremely sensitive to interest rates - and it is the combination of higher government bond yields, more expensive financing and weaker demand for commercial real estate that has created a very unfavorable environment.(nareit.com)

Struggling companies:

• Vornado Realty Trust $VNO (-22%) - Weak demand for urban office space.

• Simon Property Group $SPG (+7%) - still under rate pressure.

The real estate sector has become a structural loser in 2025, not just a cyclically weak segment. Investors here have made it clear that they see no reason to return capital without a change in the interest rate environment or new demand dynamics.

Vornado Realty Trust's shares are trading at the same levels as they did in August 2024, but the company pays a dividend of 2.44%, which is paid in the form of one dividend per year. Its value has more than doubled from 2024 and is now 74 cents per share.

What the weakest sectors have in common

The common denominator for Consumer Staples and Real Estate was not weak demand, but the lack of a growth story in an environment of high rates and strong competition from growth segments. While these sectors offered stability, they failed to keep pace with a market that was heavily focused on growth, innovation, technology and capital efficiency in 2025.

Which sectors may pick up the baton in 2026 if macroeconomic conditions begin to change?

Outlook for 2026: Where the S&P 500 sector dynamics may shift

We enter 2026 in a different starting position than a year ago. While 2025 was all about concentration of performance, dominance of a few sectors and a very narrow group of leaders, this year is marked by the question of whether this pattern can continue unchanged. Indeed, history shows that periods of extreme concentration often herald a gradual sectoral rotation, but not necessarily an across-the-board correction.

The macroeconomic environment remains a key factor for this year, particularly the evolution of interest rates, inflation and the pace of economic growth in the US. If the scenario of gradual monetary easing is confirmed (rates were not cut at the Fed's first meeting of the year this week), segments that were disadvantaged in 2025 precisely by high rates and expensive capital may come to the fore.

Top sectors for 2026:

• Technology - The technology sector and its share of the S&P 500 remains one of the strongest market movers, with AI at its core. This week, the index even reached an all-time high above 7,000 points, with the fundamental impetus being the optimistic expectations around the development of artificial intelligence and earnings growth for technology companies.

• Financials - The financial sector, with the increasing likelihood of interest rate cuts and a resurgence in lending activity, is often one of the sectors that benefits from monetary policy easing or rate stabilisation. According to professional outlooks for 2026, financial stocks may be relatively cheap relative to other sectors, which could create room for upside as the market shifts away from megacap technology titles and toward cyclical values. This includes banks, insurance companies and other financial service providers.

• Energy - The energy sector is coming to the fore in the current 2026 due to technical breakouts, geopolitical tensions and increasing demand for energy and raw materials. Trading strategies and technical indicators suggest that the sector may be subject to a new upward momentum, especially if commodity prices and earnings expectations for energy stocks remain high.

Other candidates for a change in momentum are the more cyclical parts of the market, particularly selected industrial subsectors and segments tied to corporate investment activity. If earnings begin to grow outside of a narrow range of technology leaders, market breadth may gradually improve, which would imply a healthier growth pattern for the index as a whole. A similar environment has historically favored sectors that have benefited from renewed capital spending, infrastructure upgrades, and more stable global trade.

The second important theme is the normalisation of growth expectations. Sectors that significantly outperformed the index in 2025 enter 2026 with high expectations for future performance. The market is no longer pricing in not just growth, but near-perfect execution of scenarios. This in itself does not mean the end of their dominance, but it does increase their sensitivity to any slowdown or disappointment. We saw this this week in Microsoft's $MSFT stock, which weakened 10% after the results were released, losing tens of billions of dollars of market capitalization.

The third level is the change in investor behavior. This creates room for selective return of capital to segments that were seen as more passive or defensive in 2025, but which may regain relevance in a different macro environment. These sectors have been overlooked by investors in recent years and may currently appear to be uninteresting. But this is where the S&P 500 Index as a whole may see faster growth.

Conclusion

The year 2025 has reaffirmed that the S&P 500 Index cannot be read through just one aggregate number. Behind the solid overall return was a significant internal imbalance, with only a limited number of sectors and companies carrying the bulk of the growth while the bulk of the index was left out. The gap between the strongest and weakest segments, exceeding 30 percentage points, was one of the widest in recent years and clearly showed how selective the flow of capital was.

This pattern of growth has created an environment that is on the one hand resilient but at the same time fragile. Resilient because it is underpinned by the strong fundamentals of the market leaders. Fragile because it depends on the continuation of very specific stories and expectations. That's why 2026 will be less about whether the market grows as a whole and more about how growth will regroup within the index.

What stands out for investors is the ecosystem effect. Hardware demand translated into higher services revenue, a growing active installed base, and operating leverage that reinforced margins rather than diluted them. This combination reframes the quarter from a one-off peak to a potential reset point. The implicit question is not whether Apple can repeat such results every quarter, but whether this breadth of performance restores long-term confidence in the growth engine itself.

What was the last quarter like?

Apple $AAPL reported fiscal Q1 2026 revenue of $143.8 billion, up 16% year-over-year. This is an all-time record quarterly revenue for the company. Products were the main driver, with sales growing from $98.0 billion to $113.7 billion, up more than 16% YoY, while the services segment continued its steady double-digit growth rate, reaching $30.0 billion, up +14% YoY.

Profitability remained exceptionally strong. Gross profit rose to USD 69.2bn compared to USD 58.3bn a year ago, while gross margin remained at a very high level despite rising manufacturing and development costs. Operating profit reached USD 50.9 billion, up almost 19%, and net profit rose to USD 42.1 billion, up 16% year-on-year.

Earnings per share underlined the quality of these results. Diluted EPS came in at $2.84, up 19% year-over-year, despite an already very high comparative base from last year. The positive impact was not only from the growth in operating profit, but also from the continued reduction in the number of shares outstanding as a result of massive share buybacks.

Looking at the individual product categories in more detail, iPhone in particular stands out, with sales jumping from USD 69.1 billion to USD 85.3 billion, up more than 23% YoY. iPhone had its best quarter ever, across all geographic segments. At the same time, services maintained its role as a stable pillar with high margins and increasing revenue predictability.

• Full presentation with results.

CEO commentary

CEO Tim Cook called the quarter a record one and highlighted that results significantly exceeded internal expectations. He said iPhone's growth was driven by unprecedented demand across all regions, while also seeing another all-time high in services. Also of critical note was that Apple's installed base now exceeds 2.5 billion active devices, further reinforcing the long-term monetization potential of the ecosystem.

CFO Kevan Parekh added that the combination of record revenue and high margins led to an all-time high EPS for a single quarter. He said Apple generated nearly $54 billion of operating cash flow during the quarter, which allowed it to return nearly $32 billion to shareholders through dividends and buybacks.

Long-term results

A look at Apple' s long-term results shows that the company has regained a path to sustainable growth after a weaker 2022-2023 period, thanks largely to a combination of pricing power, service expansion and disciplined cost management. Revenues in fiscal 2025 reached $416.2 billion, up 6.4% year-over-year after a virtually flat 2024. This return to growth came in an environment where global demand for consumer electronics remained subdued, underscoring Apple's relative resilience to cyclical market swings.

2022 was still a reverberation of the exceptionally strong demand for electronics from the pandemic years. Revenues reached $394.3 billion, but even then there was a noticeable slowdown - particularly for iPhone and Mac. Operating profit was USD 119.4 billion and net profit was USD 99.8 billion. Margins remained high, but Apple faced pressure from rising costs, disrupted supply chains and a strong dollar. EPS was around $6.15, with the positive effect of buybacks no longer able to fully offset slowing revenue growth.

2023 marked the first full year of decline. Revenues fell 2.8% to USD 383.3 billion, operating profit declined to USD 114.3 billion and net profit to USD 97.0 billion. This was not due to a loss of market position, but to normalising consumer demand, weaker Mac and iPad sales and more conservative consumer behaviour in a high interest rate environment. However, Apple maintained an exceptionally high operating margin and continued to aggressively repurchase shares, which kept EPS virtually stable around $6.16. This was a key signal that the business was structurally resilient.

The year 2024 brought stability. Revenue increased slightly to USD 391.0bn (+2.0%), operating profit rose to USD 123.2bn and net profit reached USD 93.7bn. Growth was driven primarily by the services segment, which increased its share of total revenue and improved margin quality. Cost discipline improved and Apple began to benefit from operating leverage again. EPS may have stagnated around $6.11 year-over-year, but looking at the structure of the results, it was clear that the company was setting the stage for a return to more dynamic growth.

News

The most significant operating news is the crossing of the 2.5 billion active devices mark, further increasing the value of the Apple ecosystem. This milestone reinforces the long-term story of services benefiting from high user loyalty. At the same time, the company announced another dividend payout and continued massive returns on capital that make Apple one of the most attractive companies in terms of the combination of growth and stability.

Apple's results come at a time when the company is significantly accelerating its strides in artificial intelligence. Shortly before the earnings release, news emerged that Apple was buying the startup Q.AI for about $2 billion. The company's technology focuses on reading the subtle micro-movements of facial expressions, which may pave the way for Apple to create a new type of interaction between the user and the AI assistant. In practice, this is a move towards "non-verbal communication", where the device could respond not only to voice or text but also to subtle visual cues, which fits into Apple's long-term strategy of combining hardware, software and user experience.

Even more fundamental from an investment perspective is the strategic collaboration with Google. Apple and Google have jointly confirmed that Apple will leverage Gemini models and Google's cloud infrastructure to bolster its AI capabilities, including a heavily personalized version of Siri that is due to arrive later this year. The move shows Apple's pragmatic approach: instead of trying to develop the entire AI stack entirely in-house, the company is combining its own ecosystem with the best available third-party technology. This can significantly shorten the time it takes to bring competitive AI features to market and reduce the risk of Apple falling behind competitors in this area.

Shareholding structure

Apple's shares are heavily represented by institutional investors, who hold approximately 65% of the outstanding shares. The largest shareholders include Vanguard Group, BlackRock and State Street, confirming the perception of Apple as a key long-term pillar of the portfolios of large global asset managers.

Analyst expectations

The analyst consensus continues to improve following these results. In particular, the market is pricing in a return to double-digit revenue growth, record iPhone performance and exceptionally strong cash generation. Apple continues to be viewed as a combination growth and defensive stock that can generate stable earnings, high cash flow and attractive returns on capital at various stages of the cycle.

Fair Price

The reaction highlights a familiar tension for mature compounders. With expectations already set at an unusually high level, the market is no longer rewarding consistency alone. Investors are scanning for signs of renewed acceleration, either through faster volume growth or incremental margin expansion. The quarter delivered strength, but not surprise, and that distinction matters when valuation reflects near-perfection.

What was the last quarter like?

Visa $V reported net sales of $10.9 billion in Q1 FY2026, up 15% year-on-year, or 13% after adjusting for currency effects. Growth was primarily driven by higher payment volumes, continued recovery in cross-border transactions and solid processed payments momentum.

GAAP net income was $5.9 billion, up 14% year-over-year, while GAAP earnings per share increased 17% to $3.03. Adjusted for one-time items, non-GAAP earnings were $6.1 billion and EPS was $3.17, up 15% year-over-year. Even on a constant currency basis, the EPS growth rate remains around 14-16%, which is still a very robust performance for a company of this size.

At the operating level, the numbers were also consistent. Payment volume was up 8%, total cross-border volume up 12% and cross-border volume outside Europe up 11%, confirming that international travel and online transactions remain strong structural drivers of growth. The number of transactions processed reached 69.4 billion, an increase of 9% year-on-year.

The revenue structure shows a healthy mix. Service revenue grew by 13% to $4.8 billion, data processing revenue by 17% to $5.5 billion and other revenue by an even 33% to $1.2 billion. The weakest point remains the relatively slower growth in international transaction revenues, which added "only" 6%, one area where the market was expecting more acceleration.

On the expense side, there was a visible increase. GAAP operating expenses were up 27%, primarily due to higher legal reserves related to ongoing litigation. Adjusted for these items, cost growth was 16%, still faster than revenue growth. This is one of the factors that have cooled investors in the short term.

• Full presentation with results.

CEO commentary

CEO Ryan McInerney called the quarter very strong and highlighted that Visa benefited from a combination of resilient consumer demand, a strong holiday season and continued expansion in value-added services, commercial payments and money movement solutions. A key strategic message is that Visa is systematically shifting from a pure transaction infrastructure to a broader payments hyperscaler platform that can serve increasingly complex client needs.

It is clear from his comments that the company has long been betting on scalability, technological depth and extending services beyond just payment processing. It is this strategy that is set to be a major source of sustainable growth in an environment where the core payments business is gradually approaching maturity.

Long-term results

A look at recent years confirms the extraordinary consistency of the business. Visa's revenues have grown from approximately $29.3 billion in 2022 to $40 billion in 2025, an average annual growth rate of more than 11%. Each year has delivered double-digit revenue growth, even in a slowing global economy.

Net income has increased from just under $15 billion to over $20 billion over the same period, while EPS has grown from around $7 to over $10. Not only did earnings growth play a significant role, but the systematic decline in share count through aggressive buybacks also boosted earnings per share even in an environment of slightly lower sales growth.

Operating profit and EBITDA have also shown steady growth, although the pace has slowed over the past year. This suggests that Visa is entering a phase where growth will be more dependent on monetization of added services than on transaction volume alone. Fundamentals remain extremely strong, but the scope for margin expansion is less than a few years ago.

News

Legal disputes around interchange fees remain a significant theme of the quarter, with Visa entering into an updated settlement agreement in November, but this is still subject to court approval. The company also deposited $500 million into an escrow account, de facto reducing the number of shares in a similar fashion to the buyback.

Continued discipline is evident in the capital allocation. During the quarter, Visa repurchased approximately 11 million shares for $3.8 billion and still has more than $21 billion authorized for additional buybacks. At the same time, regular dividend growth was confirmed.

Analysts' expectations

The market reaction suggests that analysts and investors were very well prepared for this quarter. The consensus had already anticipated double-digit growth in sales and earnings, and therefore meeting or slightly beating expectations was not enough on its own to positively revalue the stock. The main question for the coming quarters remains whether Visa will be able to re-accelerate its cross-border revenue growth while maintaining cost discipline.

Fair Price

The first of these points is the cloud backlog metric — the value of already-signed cloud contracts — which grew 25% to roughly €21 billion, but remained below market expectations and the company's target. SAP had previously signaled 26% growth, so while this is a robust pace, the market perceived it as a slowdown in the momentum that had been a main driver of the valuation. In addition, the outlook for cloud revenue for 2026 (around 23–25% growth) was technically in line with analyst consensus but indicates a deceleration compared with the prior year. This largely outweighed the positive elements of the results, such as a rising total backlog or the announcement of a new €10 billion share buyback program, which would normally support the share price.

The second factor is the broader market sentiment toward software names generally — investors are now sensitive to any hints that traditional enterprise ERP software models may not benefit from digital transformation and AI as much as some pure cloud and AI-native companies. In recent weeks this sector has already seen sell-offs in similar names, which amplified the decline in SAP as well.

The drop is therefore not just about one quarter's numbers, but about a change in how the market values the growth potential of existing ERP and cloud giants. SAP still generates strong cash flow and has an extensive customer base, but investors now demand clearer evidence that its cloud business can keep pace in a world where AI and new platforms are reshaping IT spending. That could mean the current price is attractive for long-term investors who believe in the company's transformation, but in the short term sentiment is clearly negative.

Microsoft is one of the biggest beneficiaries of the AI boom thanks to its early investments in ChatGPT developer OpenAI — in July that helped push Microsoft’s market capitalization above $4 trillion.

Microsoft beat Wall Street estimates on both the top and bottom lines, with cloud revenue topping $50 billion for the first time. Fundamentally nothing wrong — the market just wants more.

AI Spending and Cloud Growth Disappoint Investors

At the center of the sell-off are investor worries over Microsoft’s record capital expenditures to support AI expansion and data center capacity. Even as total revenue climbed and cloud units delivered solid results, the intensity of capital spending raised questions about near-term margins and return on investment. Azure, Microsoft’s flagship cloud platform, was a key driver of growth, but its pace of expansion slightly lagged expectations, underlining a narrative that even durable demand for cloud services may not be enough to offset investor impatience with rising costs.

These concerns were heightened by the sheer scale of Microsoft’s AI and cloud investments, which in the latest quarter reached record levels. While strategic in building future capacity, these commitments have also made near-term profit forecasts harder to model and have accentuated market sensitivity to cost discipline amidst slowing growth rates.

Broader Market Reaction and Mixed Tech Leadership

Microsoft’s weakness did not occur in isolation. Shares of the company have experienced pressure globally, with declines recorded in both U.S. and Frankfurt trading as investors digest the implications of slower cloud growth and aggressive AI spending. The stock’s decline contributed to broader weakness in major indices as markets weighed Big Tech earnings results and spending strategies across the sector. In contrast, other tech firms with more upbeat forecasts or clearer near-term profitability such as Meta saw their shares rally, highlighting diverging investor appetites within the industry.

Market participants have also pointed to increased competition in the AI and cloud landscape as a pressure point. Rivals such as Google and Amazon have made notable gains in cloud services and AI development, intensifying questions about whether Microsoft’s heavy investment will translate into market share growth and long-term returns.

Sentiment Shifts and Valuation Sensitivity

The reaction to Microsoft’s earnings illustrates how valuation sensitivity has intensified, particularly for companies associated with AI leadership. Investors are no longer content with earnings beats if those results are accompanied by rising costs or mixed signals about future growth trajectories. Analysts have noted that even slight miss on cloud momentum or larger-than-expected capital expenditure plans can trigger disproportionate stock reactions in the current market environment.

This emphasis on cost efficiency and growth quality reflects broader investor sentiment that has become increasingly selective after years of premium valuations in the technology sector. Microsoft’s stock, trading below recent highs, now faces technical and psychological hurdles, with renewed focus on whether future earnings and cloud expansion can justify historic multiples.

What Investors Should Watch Next

Looking ahead, investors will be monitoring several key variables that could shape Microsoft’s near-term trajectory:

Cloud and AI monetization: Sustained or accelerated growth in Azure revenue and artificial intelligence services could reassure markets that Microsoft’s investment strategy is achieving traction.
Capital expenditure trends: Guidance on future spending levels and margin impact will be critical, as investors seek clarity on when AI-related costs will stabilize or generate returns.
Competitive dynamics: Performance relative to peers in cloud services and AI innovation particularly against fast-growing rivals will be scrutinized as a barometer of Microsoft’s market positioning.
Macro and sector trends: Broader shifts in tech valuation, interest rates, and investor risk appetite will influence how Microsoft’s stock is priced relative to growth expectations.

Ultimately, Microsoft’s recent slide reflects a broader recalibration of how the market values growth, execution and cost efficiency in a world increasingly shaped by AI innovation. For long-term investors, the company’s strategic investments position it well for future opportunities, but in the near term, the stock’s performance will hinge on demonstrating tangible returns from those investments in an environment that demands both growth and profitability.

But at the same time, the results and outlook for 2026 show the limits of this model. Profitability growth remains in the low single-digit percentages, quarterly sales figures are rather weaker, and the main positive impulses come from cost optimisation, tax factors and share buybacks, not from business expansion. The market thus sees Altria primarily as a defensive dividend title, not a growth stock.

How was the last quarter?

The fourth quarter of 2025 presented a mixed picture. Net sales came in at $5.85 billion, down 2.1% year-over-year. Adjusted for excise taxes, revenue net of excise taxes was $5.08 billion, -0.5% YoY. Thus, revenues continue the long-term trend of slight decline, which is the structural nature of the US tobacco market.

GAAP profitability was impacted by the comparative base. Reported diluted EPS in Q4 was $0.66, down 63% YoY, but this decline is primarily due to one-time items in the prior year. More relevant from an operating performance perspective is adjusted diluted EPS, which came in at $1.30, indicating year-over-year stability.

The tax rate declined significantly in the quarter. The adjusted tax rate was 22.8%, compared to a significantly higher rate in Q4 2024, which positively supported net income. Again, however, it should be stressed that this is a factor that cannot be automatically extrapolated into the future.

Q4 2025 summary in points:

• Net revenues: USD 5.85 billion(-2.1% YoY)

• Revenues net of excise taxes: USD 5.08 billion(-0.5% YoY)

• Adjusted diluted EPS: USD 1.30 (stable YoY)

• Reported diluted EPS: USD 0.66(-63% YoY, impact of one-off items)

• Adjusted tax rate: 22.8%

Thus, the quarter reaffirmed that short-term fluctuations in GAAP earnings levels are not key for Altria $MO; the ability to steadily generate adjusted earnings and cash is critical.

Full year 2025: stability despite earnings pressure

For the full year 2025, Altria reported net revenues of $23.28 billion, down 3.1% year-over-year. Adjusted for excise taxes, revenue net of excise taxes was USD 20.14bn, -1.5% YoY. Thus, the decline in volumes of traditional tobacco products continues but is partly offset by price increases and product mix.

Profitability remained very strong. Adjusted diluted EPS for 2025 was $5.42, up 4.4% YoY. This is the key number of the entire report, as it shows that Altria is able to grow earnings per share even in a declining revenue environment thanks to pricing power, cost discipline, and share repurchases.

• Full presentation with results.

CEO commentary

CEO Billy Gifford called 2025 a year of continued momentum. His comments highlighted a combination of strong financial performance, advances in smokeless products and strong returns of capital to shareholders. Management openly asserts that near-term growth will not be driven by volumes, but by efficiency and strategic portfolio realignment.

The comments indicate that Altria's management is focused on the long-term transition to "smoke-free" products, particularly in the oral nicotine space, while being cognizant of the regulatory and competitive risks in the e-vaping segment. Management's tone is realistic and conservative, which is key for this type of company.

Outlook for 2026

The outlook for 2026 is one of the most important points of the entire report. Altria expects adjusted diluted EPS in the range of $5.56-$5.72, which corresponds to 2.5%-5.5% year-over-year growth from a base of $5.42 in 2025. Management also notes that earnings growth will be weighted more heavily into the second half of the year due to, among other things, a gradual increase in cigarette import and export activity.

Guidance further assumes:

• Adjusted effective tax rate: 22.5-23.5%

• Capex: EUR 300-375 million. USD 30000

• Depreciation and amortisation: approximately USD 225 million. USD 250 USD

Outlook assumes continued investment in contract manufacturing, smokeless product development and regulatory preparation. It also explicitly includes the assumption that NJOY ACE will not return to the market in 2026, limiting the potential for faster expansion in e-vaping.

Long-term performance

The long-term numbers illustrate the essence of Altria's investment story very well. Revenue declined slightly between 2021 and 2024, from US$21.1bn to US$20.4bn, confirming the structural pressure on volumes. At the same time, however, gross profit remained stable at around US$14.3bn, reflecting the firm's exceptional pricing power.

Operating income stood at USD 11.2 billion in 2024, only slightly below the previous years. In contrast, net income grew significantly, from US$2.5bn in 2021 to US$11.3bn in 2024, driven by a combination of cost optimisation, tax factors and financial structure.

EPS grew from US$1.34 in 2021 to US$6.54 in 2024, with a significant role played by a decline in the number of shares outstanding as a result of systematic share buybacks. EBITDA also grew over the long term, reaching US$15.1bn in 2024, confirming an exceptionally high operating margin.

Cash flow and return on capital

Return of capital to shareholders remains a key pillar of the strategy. In 2025 Altria:

• paid dividends of USD 7.0 billion

• Repurchased shares for USD 1.0 billion

• In total, it returned approximately USD 8 billion to shareholders

In Q4, the company repurchased 4.8 million shares at an average price of USD 59.56. It still has USD 1bn available until the end of 2026 under the approved buyback program.

Shareholder structure

The shareholder structure is predominantly institutional, with the institution holding approximately 63% of the shares. The largest shareholders are Vanguard (9.5%), BlackRock (7.5%), and State Street (4.3%). Insider ownership is minimal, which has been the long-term standard for Altria.

Analyst expectations

Analyst consensus remains moderately positive. Altria is viewed as a highly predictable dividend title with low growth but very strong cash flow. Analysts appreciate the company's ability to grow adjusted EPS even in an environment of declining revenues, but also note regulatory risks, uncertainty around e-vaping, and limited long-term growth potential.

Fair Price

What do you expect from the results of $SOFI?

What matters now is not whether expectations were exceeded last quarter, but how the next phase is constructed. Investors are parsing guidance for signals on AI monetization, pricing power, and the balance between organic momentum and acquisition-led acceleration. The underlying tension is subtle but decisive: is the current ambition an incremental extension of an already mature platform, or the early stage of a longer structural expansion where AI meaningfully raises the ceiling?

Top points of the analysis

• ServiceNow is targeting sustainable ~20% subscription revenue growth, an above-normal pace given its size

• Key growth driver is not acquisition, but expanding the platform with existing customers

• AI here is not a standalone product, but an accelerator for monetizing existing workflows

• High RPO and nearly 98% renewal rate confirm the long-term visibility of the business

• Partnerships with Microsoft, NVIDIA and global consultants support the platform nature of the business

• If ServiceNow establishes itself as an enterprise AI control layer, 20% growth may not be the peak, but an intermediate step

What is ServiceNow and what does it do?

ServiceNow $NOW is an American software company focused on automating business processes and managing work in organizations. The company was founded in 2004 and has gradually evolved from an IT requirements management tool to one of the most important platforms used by large enterprises worldwide. Its goal is not to replace individual applications, but to connect people, data and processes across the enterprise into a single management system.

The core product is the ServiceNow platform, which runs a number of modules designed for different areas of operation. Initially, the company focused on IT Service Management - that is, the management of IT incidents, requests and changes. Over time, however, it has significantly expanded its offering to include areas such as enterprise workflow management, HR processes, customer support, security, asset management, facility services and internal reporting. Everything operates on the principle of a single platform, which means that data and processes are not enclosed in separate systems, but interconnected.

Typical ServiceNow customers are large and highly complex organizations - multinational corporations, financial institutions, technology companies, industrial enterprises and government. Tens of thousands of organizations use the platform, including a significant portion of Fortune 500 companies. For these customers, ServiceNow is critical infrastructure because it runs key internal processes whose failure would directly impact the entire organization. This is why the company has a very high long-term contract renewal rate.

20% in 2026 is not just a number, but a test of the quality of growth

Guidance of $15.53-15.57 billion in subscription revenue for 2026 is important, mainly because it comes at a time when ServiceNow $NOW has long since ceased to be a "smaller SaaS growth company". For large enterprise platforms, growth rates usually break down over time - not because the product deteriorates in quality, but because it's harder to continue to accelerate on a high base. In this report, ServiceNow tries to convince the market that this point hasn't yet arrived and that growth remains underpinned by real demand, not one-off effects.

Crucially, the company also maintains ambitious parameters for profitable growth. For 2026, management is talking about a subscription gross margin of around 82%, an operating margin of around 32% and an FCF margin of around 36%. In other words, the message is "growth + return of operating leverage", not "growth at any cost". This is crucial in an investment story, because it is the combination of pace and quality of margins that usually determines whether the market will grant a company a premium valuation even in a more challenging macro.

And one more detail that often gets lost in the headlines but is important in investment terms: a $5bn buyback with an immediate $2bn ASR is not just a "reward to shareholders". In the context of high cash flow, it's also a signal that management wants to show conviction in the long-term story while dampening any concerns about acquisition momentum.

Where specifically the company can grow next

Now Assist is the first of the visible AI monetization engines because it can already be measured in money. When the company talks about an ACV (annual contract value) of over $600 million, it's talking about a $600 million ACV (annual contract value). USD, it is saying that AI is no longer a powerpoint, but a product that can sell within an existing platform. Importantly, this type of AI functionality is not sold into the void - it sticks to workflows that customers are already using. And that typically means higher conversion, a shorter sales cycle, and a greater chance of AI becoming a "normal part of the contract."

The second engine is the AI Control Tower and generally the governance layer for agent AI. In practice, it's not just about "having AI agents" but managing them: who has what permissions, how decisions are audited, how exceptions are handled, how unwanted actions are shut down. This is exactly the area where enterprise clients often hit the brakes - and where a platform that is already sitting on processes anyway can naturally expand its role.

The third element is the Workflow Data Fabric, and in general the data layer for workflow across the organization. What this means substantively is that the company is pushing to unify data silos and events so that workflow can be automated across departments, not just in one isolated domain.

Why it's not just "AI hype": signals from contracts and RPOs

There are a few indicators in the results that investors typically watch as a reality check. RPOs and current RPOs are one of them, as they reflect contracted future work (contracted and committed). ServiceNow puts RPO at around $28.2 billion and Current RPO at $12.85 billion, with year-over-year increases in the low to mid-20s. This is important because it suggests that pipeline and contract visibility are keeping pace with growth ambitions through 2026.

Another signal is the mix of large deals and expansion with existing customers. When management talks about high renewal rates and strong large contracts at the same time, it is typically a sign that the platform is not a nice-to-have, but an infrastructure. Even if the macro gets worse, companies are more likely to cut peripheral tools than the central workflow layer.

And the third signal is cash flow. The $4.6 billion FCF for 2025 isn't just a nice number - it's a reason why a company can invest aggressively in AI while funding a buyback without breaking the balance sheet.

Why there's any room at all for continued double-digit momentum

It's important to set the story in the macro of IT spending. Global IT spending is expected to exceed $6 trillion in 2026 and grow nearly 10% year-over-year. This is an environment in which enterprise platforms typically sell better, especially if they can defend ROI through automation and productivity improvements.

When we look at the segments directly related to ServiceNow, we get several growth areas:

• Workflow automation tends to be described in estimates as a high-growth market (in some projections up to around low 20 percent CAGR by the end of the decade).

• Intelligent process automation (combination of automation + AI) is cited in some reports with a CAGR of around ~22% to 2030.

• IT service management as a core domain is slower growing than AI/automation, but still has a double-digit CAGR to 2030 according to some sources.

It's not that ServiceNow "owns" the entire market. The bottom line is that the company sits at the intersection of multiple trends: process automation, governance, AI orchestration, security and enterprise productivity. That increases the chances that it can grow even when some sub-pockets temporarily slow down.

Strategic partnerships: why Aston Martin?

At first glance,the partnership between ServiceNow and the Aston Martin Formula One Team may seem like a classic branding collaboration from the world of Formula One. But on closer inspection, it is a practical demonstration of where ServiceNow is looking for further growth and how it wants to monetise its platform.

The deal is not just about the brand's visibility on the monoposts from the Las Vegas Grand Prix, but more importantly the deployment of the ServiceNow platform in real-world, highly complex operations. Aston Martin F1 plans to use ServiceNow to automate IT and facility requirements, unify the employee experience on a single platform and improve reporting and dashboards across the team's technology campus. In other words, the very areas where ServiceNow has long claimed it can act as a central workflow layer.

Why the F1 environment is an ideal reference for enterprise customers

Formula 1 is an extremely demanding operating environment. Teams operate under constant pressure for speed, accuracy and coordination across hundreds of employees, technology systems and external suppliers. Every delay, poorly escalated request or inconsistent data has a direct impact on performance - and therefore on results on the track.

That's why deploying ServiceNow in such an environment is a powerful reference for large enterprise customers. If the platform can handle the complexity of an F1 team, it's exactly the type of story that management can use when dealing with corporations in industry, finance, energy or the public sector. It's not about the media effect, it's a testament to the scalability of the platform.

Other strategic partnerships

Microsoft $MSFT

One of the most important ServiceNow partnerships ever. Integrations with Azure, Microsoft Teams and Copilot make it possible to embed workflow and AI assistance directly into the tools enterprise customers use every day.

This brings ServiceNow closer to the user without having to "replace" the Microsoft ecosystem. Instead, it becomes an extension of it, significantly lowering barriers to adoption and encouraging expansion with existing customers.

NVIDIA $NVDA

Partnerships in generative AI and inference, particularly around AI workflow optimization and model deployment in enterprise environments. Collaboration with NVIDIA reinforces the thesis that the company wants to be a control layer on top of AI infrastructure, not a competitor to hyperscalers.

Google Cloud $GOOG

Integration of ServiceNow platform with Google Cloud, including data and AI services. Expands addressable market and validates "cloud-agnostic" platform strategy. This is important for large enterprise clients who don't want vendor lock-in.

Accenture $ACN

Accenture is one of ServiceNow's largest global implementation partners.
Investment Significance: Enables ServiceNow to scale large enterprise projects without massive growth of its own headcount. It also increases the likelihood that ServiceNow will be recommended as the standard platform in digital transformations.

Investment scenarios

Optimistic scenario: enterprise AI platform becomes the standard

In the optimistic scenario, ServiceNow will indeed establish itself as the central control layer for enterprise AI. AI products like Now Assist, AI Control Tower, and a security and governance layer around AI agents will become a natural part of most new and renewal contracts. Attach rate of AI modules will grow faster than management suggests today, and the consumer component of revenue will begin to make up a more significant portion of growth.

Subscription sales in this scenario would not only deliver the projected 19.5-20% in 2026, but the pace would remain near the upper end of the range in 2027-2028, despite the high absolute base. RPO and current RPO would continue to grow at rates above 20%, confirming the long-term visibility of the business. With operating leverage and cost discipline, operating margin could surpass the target 32% and free cash flow margin would move towards the upper 30s.

In this case, the market would be willing to sustain a premium valuation as ServiceNow would cease to be perceived as "just another SaaS leader" and become a long-life infrastructure platform. The stock would benefit not only from earnings growth, but also from continued buybacks that would support EPS growth.

Realistic scenario: 20% as a peak, but still very high quality growth

The realistic scenario assumes ServiceNow meets 2026 guidance, but the growth rate gradually starts to normalize. Subscription revenues will grow around 19-20% in 2026 and then more towards the mid to high teens in the following years. AI products will remain a significant driver, but monetization will be more gradual and more tied to contract renewals than aggressive new upsells.

RPO and current RPO will continue to grow, but the pace may slow slightly as expansion slows for some customers in a more conservative macro environment. Margins will remain strong, although gross margins may face near-term pressure due to greater hyperscaler and AI infrastructure involvement. However, operating margins of around 32% and FCF margins of around 35-36% would confirm that the company is still generating exceptionally good cash flow.

In this scenario, the stock would likely not see a dramatic expansion in valuation, but would remain an attractive combination of growth and stability. The return to the investor would be driven primarily by earnings growth and buybacks, not a significant revaluation of the multiple.

Pessimistic scenario: AI hype crashes into the reality of enterprise budgets

The pessimistic scenario is based on the assumption that AI adoption in the enterprise environment will be slower and more cautious than management and the market expect today. Customers may defer greater adoption of AI modules, the consumer component of revenue will not meet expectations, and subscription revenue growth will gradually slide below 18%.

At the same time, gross margin pressures could intensify if cloud infrastructure and AI inference costs grow faster than revenue. The integration of the Veza and Armis acquisitions could be more challenging than expected and weigh on operating margins and management focus in the short term. RPO would remain high, but its growth rate would signal deteriorating visibility.

In such an environment, the market would likely reassess the premium valuation that ServiceNow has long held. The stock could come under pressure even though the company would remain profitable and cash flow positive. Thus, a negative scenario would not be about the collapse of the business, but a transition to a phase of slower, less attractive growth from a valuation perspective.

What to take away from the article

• ServiceNow today is not addressing the question of whether it can grow, but how long it can sustain a pace of around 20%

• The key to the investment thesis is the company's shift to a role as a central platform for enterprise AI, not quarterly results alone

• AI products are already generating measurable business and expanding the addressable market beyond IT workflow

• Strong RPO, high renewal rates and robust cash flow support visibility of growth and return on capital

• Margin pressure, pace of AI adoption and integration complexity of acquisitions remain the biggest risks

• If platform strategy proves out, 20% growth in 2026 may not be the end-station, but just the next phase of a long-term story

For years, the U.S. healthcare sector has been seen as a defensive anchor for many portfolios. It has been defined by stable demand, demographic trends, high levels of regulation (which, ironically, often protect established players) and relatively predictable cash flow. But regulation is also the biggest systemic risk of the industry, as it can change the economics of entire business models in a matter of weeks. And that is exactly what is happening now. The plunge in healthcare stocks is not just a reaction to sentiment, but to a particular set of political and regulatory signals in the US that have lit a warning light. Margins may tighten, growth may slow, and some profits may shift away from middlemen and toward consumers or the government. What's to blame?

For insurers (and the conglomerates that own them), the key driver of growth today is the Medicare Advantage program (private plans for seniors funded with public money). Therefore, each year, the so-called rate notice from the Centers for Medicare & Medicaid Services (CMS), which determines the expected payment dynamics and calculation methodology, is extremely important. In recent days, the markets reacted strongly to the 2027 proposal, which was significantly weaker than Wall Street expected, triggering a sell-off in the stock markets.

Source.

For giant portfolios and the plans of large corporations, even a small shift in outlook means billions of dollars in expected revenue, and more importantly, may change whether companies can grow at the same pace as they have been. In addition, CMS is simultaneously addressing methodological interventions that may limit the ability of insurers to extract higher payments from patient databases.

Another issue involves PBMs (pharmacy benefit managers) - the middlemen who negotiate drug prices, manage formularies and the flow of money between manufacturers, insurers and pharmacies.

Federal authorities and some policymakers argue that this structure can drive up costs (incentivizing intermediaries to charge higher prices that increase their profits).

And here we come right down to the two companies that experienced the biggest declines this week:

• CVS, through Caremark (the PBM part of the company), is one of the largest PBM players and also owns a pharmacy chain and insurer Aetna

• UnitedHealth has huge exposure through Optum (the same division as Caremark at CVS) and is also the largest player in insurance

In other words, if the pressure is on for middlemen and vertically integrated models, CVS and UNH are right at the epicenter.

The Medicare segment is gaining the ability to negotiate prices for select high-cost drugs (called Maximum Fair Price), and the first negotiated prices are scheduled to begin in 2026, with extensions for subsequent years.
For the sector, this means several things at once:

• The pressure on drug manufacturers is obvious, but the impacts spill over to insurers and PBMs as they change the negotiating dynamics and price ranges in the system.

• The market is starting to realize that the U.S. healthcare industry is entering a period where the government is more actively intervening in pricing and rules - and that's exactly the type of uncertainty that stocks are pricing in at a lower multiple.

When you add it all up, it creates an environment where investors stop seeing the sector as completely risk-free and start to value it as a sector with higher regulatory risk. And because $CVS and $UNH have exposure to all segments of this cycle, they are more sensitive to such changes than firms that focus only on, say, drug manufacturing.

CVS Health $CVS

CVS Health is a typical example of a vertically integrated (that is, it doesn't just buy key parts of its business from outside firms, but owns and controls multiple steps of the entire chain itself) healthcare giant. The company does not stand on one leg alone, but links an insurance company, a pharmacy benefit management (PBM) and its own distribution network (pharmacies, clinics). In practice, this means that CVS capitalizes on several layers of the system simultaneously:

• Health Care Benefits (Aetna) - health insurance, including significant exposure to Medicare Advantage

• Health Services (CVS Caremark + Health Services) - PBM business (drug plan administration, negotiations with manufacturers), specialty drug distribution and related services

• Pharmacy & Consumer Wellness - network of brick-and-mortar pharmacies, ancillary services, and the consumer portion. CVS details these segments in its annual report (10-K)

One thing is important for investors to understand: CVS is not just a pharmacy or just an insurance company. It's a complex infrastructure that links care, medical reimbursement and drug sales in the U.S.

CVS vs. the current situation

In this report, CMS (Centers for Medicare & Medicaid Services) outlines a setup to improve payment accuracy and sustainability of the system, which the market typically reads as a higher likelihood of pressure on insurers' margins.

CVS Caremark is one of the largest players, and the PBM segment has long been criticized for the opacity of cash flow, profitability, and incentives in the system. The FTC has published multiple interim reports in recent years warning that the practices of dominant PBMs may be driving up costs for select (even life-saving) drugs and harming competition in the pharmacy market.

Why this is so critical for CVS: if regulation forces the PBM model to move toward greater transparency (e.g., limiting certain types of rebates, adjusting spreads, etc.), it could change the distribution of margins in a part of the business that has historically been among the most profitable.

From a fundamental perspective, CVS has long stood on extremely high turnover (typically hundreds of billions of USD per year) and relatively stable cash flow, but the market today is looking mainly at the profitability of the health insurance segment (Aetna) and sensitivity to public programs. In Q3 2025, management commented on, among other things, the evolution of the Medical Benefit Ratio (MBR) - a key metric that shows how much of the premium is spent on healthcare.

In response to all of this recent news and concern, $CVS stock has fallen nearly 16% this past Tuesday. As a result, the price per share is back to where it was trading in early September. You can still buy one share of CVS on the market for under $75. That's not a bad level, according to the Fair Price Index, as the stock is currently 23.8% below its fair intrinsic value.

UnitedHealth $UNH

UnitedHealth Group is the largest and most influential player in the health insurance and services space in the U.S. i.e. a company that combines health insurance with a large ecosystem of health services and medication management. For an investor, it is crucial to understand that $UNH is not just an insurance company: the group today stands on two pillars that reinforce each other, but can also carry cumulative risk in an environment of legislative intervention:

• UnitedHealthcare - the insurance business itself

• Optum - the healthcare platform comprising care delivery and clinics, IT and administrative services (Optum Insight) and pharmacy benefits management (Optum Rx, i.e. PBM). An overview of the segments is explained in detail here.

This structure is why the market has long valued UNH at a premium: the company is not dependent on a single source of growth, but can offer a broader package of services to insurers. But it's also why UNH is twice as sensitive to the current regulatory situation today. Through both Medicare Advantage (UnitedHealthcare) and a PBM (Optum Rx).

In terms of size and financial performance, UnitedHealth is in a completely different league than most of its competitors. The company has crossed the $370 billion revenue mark in 2024 and has a long track record of double-digit earnings per share growth. Crucially, much of this growth has been coming not just from insurance for several years, but from Optum, which has structurally higher margins and is less cyclical. The shift in weight towards services and data infrastructure is one of the reasons why UnitedHealth has historically been valued by the market at a premium multiple to the rest of the sector. The company also generates very strong operating cash flow, which allows it to fund acquisitions, increase its dividend and steadily repurchase its own stock.

But the stock's performance over the past year shows that even such a colossus is not immune to changes in the environment. After a strong period when the title hovered near all-time highs, the stock began to gradually lose ground during 2025. Over the course of 2025, UnitedHealth stock fell 35%. The market gradually overestimated expectations for the pace of earnings growth and the long-term sustainability of margins in the insurance business. The result was a sharp decline from highs that at one stage took the stock to its lowest levels in more than 5 years. From a valuation perspective, this meant a significant squeeze on the multiples at which UnitedHealth has historically traded, showing how sensitive the market is today even for the biggest and most stable names. As a result, however, it is trading today, according to the Fair Price Index on Bulios, which is based on DCF and a relative valuation of 44.7% below its intrinsic value.

How is the current situation affecting UNH?

The immediate trigger for the sell-off in $UNH stock this week is the proposed Medicare Advantage payments for 2027 from CMS. The market has reacted sharply as the proposal implies significantly weaker than expected payment growth for a program that is a major driver of volume growth for large insurers. Shares wrote down as much as 20.13% on Tuesday and closed the day down 19.55%.

[For investors who don't move in this segment as much: the key to Medicare Advantage isn't just how much percentage the government adds to it. What matters is whether the combination of payment methodology, risk models and bonuses will allow companies to remain profitable, or whether they will have to:

• cut benefits,

• increase co-payments,

• or accept lower margins to sustain customer growth].

And this is what the market has begun to re-price.

UnitedHealth's Optum Rx is one of the Big Three PBMs in the U.S. and one of the reasons UNH is more than just an insurance company.

The Federal Trade Commission (FTC) has repeatedly argued in recent reports that the practices of dominant models of this type can drive up costs for a wide range of drugs, squeeze independent pharmacies, and create opaque incentives in the system.

Additionally, UnitedHealth has seen another level of scrutiny in recent months in the form of an expanded investigation by the Department of Justice (DoJ ) into Optum Rx.

Conclusion

The current sell-off in healthcare stocks is a signal that the entire US healthcare industry is moving into a new phase. The combination of pressure on public budgets, the drive to reduce the cost of care and drugs, and a growing political willingness to interfere with the system is gradually changing the environment in which the sector has operated for the past decade. What has long been perceived as a stable, defensive and relatively predictable industry is now starting to behave more like a regulated, policy-dependent sector, where valuations and expectations increasingly depend on congressional decisions.

More broadly, this is not just one particular bill or methodology, but a longer-term trend. The US state is seeking greater control over the flow of money in healthcare, over pricing and over the role of intermediaries in the system. This brings increased volatility, greater uncertainty about margins and the need to reassess existing investment theses. Nevertheless, there are interesting opportunities to be found. You can filter them out for yourself right now on Bulios.

The focus has moved decisively from earnings generation to capital allocation. Meta’s ambition to build the next phase of AI-driven platforms introduces a new layer of uncertainty, not about execution capability, but about cost and timing. With infrastructure spending set to rise sharply, the central tension is whether profitability growth can keep pace with the scale of investment. The business looks strong, but the valuation debate increasingly lives in the future rather than the present.

How was the last quarter?

Meta $META ended 2025 with a very strong quarter. Q4 revenue reached $59.9 billion, up 24% year-over-year, confirming the continued recovery of the advertising market as well as Meta's ability to increase the monetization of its platform. The growth was not only driven by volumes, but also by price - ad impressions grew 18% YoY, while average cost per ad increased by 6%, which together creates a very healthy mix.

On an operating level, the company reported operating income of $24.7 billion, up +24% YoY, and an operating margin of 41%, among the highest in the technology sector. Net income came in at $22.8 billion, +30% YoY, and EPS rose to $8.88 (+9% YoY). The lower EPS growth rate versus net income is related to tax items and the comparative base.

For clarity, the key Q4 highlights can be summarized as follows:

• Revenue: USD 59.9 billion, +24% YoY

• Operating income: USD 24.7 billion, +24% YoY

• Operating margin: 41%

• Net profit: USD 22.8 billion, +30% YoY

• EPS: USD 8.88, +9% YoY

• Ad impressions: +18% YoY

• Average price per ad: +6% YoY

• Family DAP: $3.58 billion, +7% YoY

From a cash flow perspective, the quarter was also very strong. Operating cash flow was USD 36.2bn, while free cash flow was USD 14.1bn, despite high investments. Capex in Q4 was USD 22.1 billion, which clearly shows that Meta is already in the full phase of a massive AI infrastructure build-out.

• Full presentation with results.

CEO commentary

In his comments, Mark Zuckerberg called 2025 a very strong year in terms of performance, while openly defining the next strategic shift towards "personal superintelligence". It is clear from his words that Meta is no longer content with optimizing its advertising business, but wants to become one of the major global players in advanced AI.

Zuckerberg also hinted that 2026 will be a year of intense investment, not maximizing short-term profit. This tone is key to understanding the market's reaction - investors hear a clear vision, but they also know that the path to fulfilling it will be capital intensive.

Outlook

The outlook for 2026 is a major point of investor debate. Meta expects Q1 2026 revenues in the range of US$53.5-56.5bn, with currency rates expected to be roughly 4% positive for year-on-year growth. At the same time, however, the firm is announcing total costs for the full year 2026 of US$162-169bn, a significant increase from 2025.

More importantly, the capex outlook of USD 115-135bn signals a massive acceleration in investments in AI infrastructure, data centres and Meta Superintelligence Labs. While management expects operating profit in 2026 to be higher than in 2025, the market is concerned that the pace of profitability growth may not match the pace of investment growth in the short term.

Long-term results

A long-term view of Meta's results shows an exceptionally strong transformation of the company over the past four years. Revenues have grown from US$116.6bn in 2022 to US$201.0bn in 2025, equivalent to more than 70% cumulative growth. Meanwhile, the growth rate remains steadily above 20% even for a company this large, which is exceptional in the advertising business.

Gross profit grew at a similar rate, reaching USD 164.8 billion, while cost of sales increased in a relatively controlled manner. However, the key factor was operating expenses, which jumped 25% YoY to US$81.5bn in 2025. This increase is largely driven by investments in AI, R&D and infrastructure and represents a fundamental change from the extremely disciplined post-2022 period.

Despite this, operating income grew to US$83.3bn (+20% YoY) and EBITDA reached US$104.5bn, confirming that the core advertising business is generating huge amounts of cash. However, there is a notable break at the net income level - net income is down slightly by 3% in 2025, and EPS is also down by around 2%, although operating performance remains strong. This is mainly due to tax changes and high investment, not a deterioration in the core business.

The long-term numbers thus show a company that is extremely profitable, but also entering a new investment phase where some short-term profitability is being sacrificed in favor of a strategic position in AI.

News

Meta continued to expand AI capabilities across its platforms during the quarter and is preparing to launch additional versions of less personalised advertising in Europe in response to regulatory pressure. At the same time, the firm highlighted ongoing legal and regulatory risks in the EU and US, including litigation relating to the protection of minors, which may have extreme financial implications.

Shareholding structure

The shareholding structure remains strongly institutional, with the institution holding approximately 79% of the shares. The largest shareholders include Vanguard (8.9%), BlackRock (7.7%), FMR (6.0%) and JPMorgan (5.0%). A low insider stake has been the long-standing standard at Meta, offset by the founder's controlling role.

Analyst expectations

Analyst reaction following the results has been mixed. Most appreciate the continued strength of the advertising business, the growth of the user base and the high operating margin. At the same time, however, there is growing caution due to the extremely high capex in 2026 and the uncertain return on investment in superintelligence. So consensus remains positive in the long term, but in the short term the market is reacting nervously - not because of what Meta has earned, but because of how much it will have to invest to maintain that position.

Fair Price

The market today is not looking to Microsoft for confirmation that AI works - that is already taken as a given. Investors want to see clear signals of further growth acceleration or at least a concrete improvement in the outlook to justify the current valuation. Thus, the quarter confirmed a stable, high-quality growth story rather than taking it to a new level, and it is this lack of "new positive momentum" that explains the stock's cool reaction despite solid results.

How was the last quarter?

Microsoft $MSFT reported $81.3 billion in revenue in its fiscal second quarter, up 17% year-over-year (15% at constant currency). Not only is the growth rate well above the megacap tech sector average, but it is accelerating in the highest value-added segments. The development was even stronger at the operating profit level - operating income reached USD 38.3 billion, +21% YoY, a clear return of operating leverage.

On the bottom line, the quarter was also exceptionally strong thanks to the impact of the OpenAI investment. GAAP net income rose to USD 38.5bn (+60% YoY) and GAAP EPS reached USD 5.16 (+60% YoY). Adjusted for this impact, non-GAAP net income was USD 30.9 billion (+23% YoY) and non-GAAP EPS was USD 4.14 (+24% YoY), still very robust growth and a clear outperformance of last year.

To make the picture clear, the highlights of the quarter can be summarized as follows:

• Revenue: USD 81.3 billion, +17% YoY

• Operating income: USD 38.3 billion, +21% YoY

• GAAP EPS: $5.16, +60% YoY

• Non-GAAP EPS: $4.14, +24% YoY

• Microsoft Cloud revenue: $51.5 billion, +26% YoY

• Commercial RPO: $625 billion, +110% YoY

Segmentally, the quarter was clearly driven by cloud and AI. Intelligent Cloud achieved revenues of USD 32.9bn (+29% YoY), with Azure and other cloud services accelerating to +39% YoY, confirming that demand for AI infrastructure remains extremely strong. Productivity and Business Processes grew to $34.1 billion (+16% YoY), with Microsoft 365, Dynamics and LinkedIn all posting solid double-digit growth. The only weak spot remains More Personal Computing, where revenues were down 3% YoY, mainly due to Xbox, but this does not have a material impact on the overall picture.

• Full presentation with results.

CEO commentary

In his comments,Satya Nadella highlighted that Microsoft is still only at the beginning of the AI adoption curve. According to him, Microsoft's AI business is already reaching a size that would be equivalent to one of the company's traditional core segments on its own. He emphasized that Microsoft controls the entire AI stack - from data centers to its own software to the application layer - allowing it to scale faster than competitors.

Nadella's words make clear that the strategy is clearly long-term: the goal is not short-term margin maximization, but building a platform that will become the standard for enterprise AI. It is this tone - a combination of confidence and discipline - that the market has long appreciated.

Outlook

Microsoft traditionally does not provide a detailed numerical outlook in a press release, but several signals are very strong. The most prominent is the commercial remaining performance obligation of $625 billion, which represents 110% year-over-year growth and gives high predictability of future revenues. This is a key figure for investors as it confirms that the current growth is not a one-off.

The firm also suggests that cloud and AI will continue to grow significantly faster than the rest of the portfolio, while more traditional segments remain stable. Investment in data center and AI infrastructure will continue, but management reiterates its emphasis on return on capital and maintaining high operating margins.

Long-term results

Microsoft's long-term evolution confirms that the company has transformed in recent years from a high-quality software conglomerate into a global digital infrastructure company whose growth is now increasingly driven by cloud and AI. Between fiscal years 2022 and 2025, total revenue grew from $198.3 billion to $281.7 billion, corresponding to average annual growth of around the mid-teens percent. Crucially, the growth rate has not only slowed in the last two years, but has instead stabilized in the high double digits, which is exceptional for a company of this size.

In terms of revenue structure, there is a marked shift towards recurring and highly visible revenue. Cloud services, particularly Azure, are gradually increasing their share of total sales while improving the predictability of future results. This is reflected in the sharp growth in the commercial residual performance obligation, which reached USD 625 billion at the end of Q2 FY2026, creating a strong 'backlog' of future revenues and reducing the cyclical volatility of the business.

At the profitability level, Microsoft has maintained exceptionally strong operating leverage over the long term. Gross profit grew from US$135.6bn to US$193.9bn between FY2022 and FY2025, while cost of sales grew faster than in the past, mainly due to massive investments in data centres and AI infrastructure. Despite this, the company has managed to maintain very high gross margins, which is a testament to the strength of its pricing and scalability of its software model.

Operating costs are one of the key issues in the current investor debate. Operating expenses rose to $65.4 billion, an increase of more than $13 billion from FY2022. This growth is deliberate and reflects investments in developing AI models, expanding cloud infrastructure, and strengthening security and enterprise solutions. At the same time, it is clear that the rate of cost growth is now significantly lower than the rate of revenue growth, allowing for further expansion in operating margin.

As a result, operating income has been steady and gradually increasing, reaching $128.5 billion, nearly $45 billion more than in 2022. Operating margin has been at exceptionally high levels for a long time, confirming that Microsoft can generate huge profits even with massive investments in future growth. This effect is also evident at EBIT and EBITDA levels, which remain robust and provide the company with considerable financial flexibility.

Net income and earnings per share have followed this trend over the long term. Net income rose from US$72.7bn in 2022 to US$101.8bn in FY2025, while EPS increased from US$9.70 to US$13.70. The key factor here is the virtually stable number of shares outstanding, which means that earnings growth is being passed on to shareholders very effectively. This is one of the main reasons why Microsoft has long been seen as a high-quality compounder.

News

During the quarter, Microsoft continued to expand its AI feature offerings across Azure, Microsoft 365 and Dynamics, with an emphasis on enterprise deployment and security. The company also continued to integrate Copilot into key products and expanded collaboration with strategic customers across industries. These moves reinforce Microsoft's long-term position as a leading provider of AI infrastructure for the enterprise sector.

Shareholder Structure

The shareholder structure remains strongly institutional. Institutions hold approximately 76% of the shares, with Vanguard (9.4%), BlackRock (8.0%), JPMorgan (4.3%) and State Street (4.0%) being the largest shareholders. Low insider ownership is a long-standing standard at Microsoft and does not imply poor alignment of interests, as management stock compensation plays a key role.

Analyst expectations

The analyst consensus after earnings remains strongly positive. Wall Street particularly appreciates Azure's acceleration, record contract levels and the return of operating leverage. Although Microsoft's valuation is well above the historical average, analysts defend it with a combination of visible growth, strong cash flow and a dominant position in the AI ecosystem. Thus, for many investors, Microsoft continues to represent a "safe way" to participate in the AI megatrend without extreme risk.

Fair Price

Why Microsoft stock is down after earnings:

1. Extremely high expectations were already priced in - While the results showed strong double-digit growth in both revenue and profitability, the market expects not just "strong numbers" from Microsoft at this stage, but acceleration. Azure growth of 39% and cloud growth of 26% were very good, but did not represent a significant acceleration from the previous quarter, which at current valuations is not enough to move the stock up further.

2. Cost and ROI concerns on AI investments - Microsoft is investing massively in AI infrastructure, data centers and development, which while supporting the long-term story, increases uncertainty around margins and free cash flow in the short term. Some investors are choosing caution after the results and realizing gains until it is clear how quickly AI investments will translate into further earnings acceleration.

3. Valuation sensitivity in the late-cycle megacap - Microsoft is now perceived as a "safe AI play," which has put the stock at high multiples relative to its historical average. In such an environment, even a slightly cautious tone to the outlook or the absence of a significant positive surprise leads to an immediate downward market reaction, not because the story has broken, but because the room for error is minimal.

That shift is becoming visible beneath the surface. While the automotive segment is adjusting to a more normalized margin environment, other pillars of the business are absorbing a growing share of strategic attention. Energy storage is scaling at a pace that reshapes cash generation, while autonomy, AI, and robotics increasingly define long-term optionality rather than near-term earnings. The tension for investors is clear: the short-term profit profile looks constrained, but the business model itself is becoming broader, more resilient, and harder to value through traditional automotive lenses.

How was the last quarter?

Q4 2025 at Tesla delivered a combination of weaker volumes and sales, but significantly improved gross margins, exactly the type of quarter that looks "worse" on the surface, but in the details shows that the company can drive efficiencies even in a price-tight environment. Total revenue in Q4 was $24.9 billion, -3% YoY vs Q4 2024 ($25.7 billion) and also -11% QoQ vs Q3 2025 ($28.1 billion). The biggest drag was the automotive sector: automotive sales of USD 17.7bn, -11% YoY and -16.6% QoQ, while the Energy sector, on the other hand, continued to grow, partially cushioning the decline in autos - energy generation & storage of USD 3.84bn, +25% YoY and +12.4% QoQ. Services & Other was USD 3.37bn, +18% YoY but slightly -3% QoQ, so the Energy segment was almost exclusively the driver of the quarter in terms of revenue growth.

At the profitability level, the most important signal is in gross margin. Total gross profit was $5.01bn, +20% YoY but -0.9% QoQ. However, the key takeaway is that Tesla was able to increase GAAP gross margin to 20.1%, +386 bp YoY (from 16.3%) and +210 bp QoQ (from 18.0%). In other words, even though it sold less and earned less than in Q3, there is improvement on unit economics and mix. However, the operating level is not so optimistic anymore, as the cost base growth continued: operating expenses of $3.60bn were +39% YoY and +5% QoQ, which put the brakes on operating leverage. The result was income from operations of USD 1.41bn, -11% YoY and -13% QoQ, while the operating margin of 5.7% was -50bp YoY and slightly -10bp QoQ. At the EBITDA level, the picture is more stable: Adjusted EBITDA of USD 4.15bn is -4% YoY and -1.7% QoQ, but Adjusted EBITDA margin of 16.7% is holding solid at just -17 bp YoY, even +170 bp QoQ vs Q3.

Cash flow is the biggest "twist" of the quarter and the reason why the market often reacts better than net income would suggest. Operating cash flow of $3.813bn was -21% YoY and also -39% QoQ (Q3 was $6.238bn). Yet Tesla remained FCF positive: free cash flow of $1.42bn is -30% YoY and significantly -64% QoQ (Q3 $3.99bn). Capex was USD 2.393bn, -14% YoY but up slightly from Q3 (c. +6% QoQ), so part of the FCF weakness is simply attributable to weaker OCF in the quarter. At the same time, the balance sheet remains extremely strong: cash, cash equivalents & investments of USD 44.1bn, +21% YoY and +5.8% QoQ.

Operationally, Q4 was weaker in autos but record in energy. Total deliveries of 418,227 were -16% YoY and -15.9% QoQ, while production was 434,358, -5% YoY and roughly -2.9% QoQ. Inventories increased: days of supply 15 is +25% YoY and +50% QoQ (up from 10 in Q3), suggesting a less "tight" balance between production and demand at the end of the year. Against this stands energy: storage deployed of 14.2 GWh was +29% YoY and +13.6% QoQ, a record quarter even with a clear acceleration. And software monetization continues: Active FSD subscriptions of 1.1m is +38% YoY and +10% QoQ. Infrastructure continues to grow at a pace that confirms the long-term "moat": supercharger stations +17% YoY and connectors +19% YoY.

• Full presentation with results.

Operational metrics and ecosystem scaling

Tesla produced 1.65 million vehicles in 2025 (-7% YoY) and delivered 1.64 million vehicles (-9% YoY). The decline was primarily in other models outside of Model 3/Y, where deliveries fell 40% YoY. In contrast, the APAC region recorded record deliveries, confirming the geographic shift in demand.

The power sector saw record deployment of 46.7 GWh (+49% YoY), a fifth consecutive record quarter at the gross profit level, and a rapidly growing network of Virtual Power Plants, which already includes more than 1 million installed Powerwall units.

The infrastructure continues to expand, with Tesla operating 1,553 sites, 8,182 Supercharger stations and nearly 78,000 plugs, representing YoY growth of around 17-19%.

Outlook and strategic priorities

Tesla clearly declares that 2026 will not primarily be about maximizing automotive margins, but about building the infrastructure for the next wave of growth. The company plans to roll out six new production lines across vehicles, energy, batteries and robotics, including the launch of Cybercab and Tesla Semi production in the first half of 2026.

In autonomy, Tesla continues to iterate rapidly in FSD (Supervised), with active subscribers growing to 1.1 million (+38% YoY). The Robotaxi service launched in Austin in January 2026 with the phasing out of safety oversight, a key step toward monetizing autonomous software. In parallel, the company is investing in its own AI stack - the goal is to more than double AI training capacity in Texas during 1H 2026.

The energy segment is expected to be one of the main growth drivers. Tesla plans to start production of Megapack 3 and Megablock in Houston, while storage demand remains extremely strong due to growth in electricity consumption, data centers and AI infrastructure.

CEO commentary

In his comments, Elon Musk reiterated that short-term financial results are not the main measure of Tesla's value. Management, he said, is purposefully sacrificing a portion of automotive margins in favor of long-term volume growth, data collection, and building infrastructure for autonomous driving and AI. Musk has repeatedly stressed that Tesla's key asset is not the cars themselves, but the software, data and ability to scale the autonomous system globally.

At the same time, however, he struck a more realistic tone than in previous years. Executives acknowledged that the environment of price competition remains challenging and that a return to historic levels of automotive margins will not be quick. The focus was on cost control, more efficient production and a gradual increase in the proportion of revenue from higher value-added areas, particularly Full Self-Driving, energy solutions and future AI applications.

Long-term results

The long-term trend in Tesla's $TSLA results shows a very sharp contrast between the better phase of 2021-2022 and the significantly more challenging period of the last two years, when the company had to deal with demand normalization, the EV price war, and a sharp increase in its cost base. While Tesla will have spent $53.8 billion in 2021 and $81.5 billion in 2022, a year-on-year growth of over 50%, the momentum has gradually run out. The year 2023 still brought solid revenue growth to USD 96.8 billion (+18.8%), but 2024 marked a virtual stagnation, with sales reaching USD 97.7 billion, equivalent to a growth of less than 1%. This development clearly shows that Tesla has hit the limits of rapid volume expansion and that further growth will no longer be automatic, but will have to be 'earned' either by pricing or new segments.

An even more pronounced change is evident at the level of margins. Gross profit peaked in 2022 at USD 20.9 billion, but has been systematically declining since then - to USD 17.7 billion in 2023 and to USD 17.45 billion in 2024. The main problem is not just revenue stagnation, but the cost structure. Cost of revenue has risen from USD 40.2 billion in 2021 to USD 60.6 billion in 2022 and further to USD 80.2 billion in 2024, with the rate of cost growth outpacing the rate of revenue growth in recent years. This is the exact opposite of the operating leverage that has allowed Tesla to grow profitability explosively in the past. As a result, gross margins have moved significantly lower from levels above 25% in 2021-2022, and the company now operates in a much thinner unit margin environment.

At the operating level, the break even more clearly. Net profit reached a record $13.7 billion in 2022, but fell to $8.9 billion in 2023 and to just $7.1 billion in 2024, a drop of more than 48% from the peak. Operating costs play a major role in this. Operating expenses rose from USD 7.1 billion to USD 10.4 billion between 2021 and 2024, an increase of almost 50%, with growth continuing at over 18% in 2024. Thus, Tesla today carries the cost structure of a company that is still investing as a growth title but generating revenue more in the style of a mature cyclical business. This mismatch is the main explanation why operating margins have fallen from 16.8% in 2022 to around 7% in 2024.

Shareholding structure

Tesla's stock is heavily institutionally owned. Institutions hold approximately 50% of the stock, with Vanguard (7.6%), BlackRock (6.2%), and State Street (3.4%) remaining the largest investors. Insider ownership of around 12.6% continues to ensure management's strong interdependence with the company's long-term performance.

Fair Price

The main reasons why Tesla stock is rising after earnings, even though most metrics are down year-over-year:

1. Significant margin improvement despite weaker sales - The market is overlooking the decline in sales and earnings and focusing on the fact that Tesla was able to increase its overall gross margin to 20.1% in Q4, up 386bp YoY and over 200bp QoQ. This is a clear signal that the automotive price war is not leading to the destruction of unit economics and that the company has room to re-scale profitability gradually.

2. Record and accelerating business in Energy & Software - Energy generation & storage achieved record shipments and revenues with 25% YoY and 12% QoQ growth, while the number of active FSD subscribers grew to 1.1m (+38% YoY). It is these segments that have significantly higher long-term margin potential than car sales and reinforce the thesis that Tesla is no longer a pure car company.

3. Strong Balance Sheet and No Negative Surprises in Outlook - Cash and investments rose to $44.1 billion (+21% YoY) and the company remains FCF positive even in a weaker quarter. The outlook does not contain any shocks in the form of deteriorating liquidity, the need for external funding or a sharp increase in capex, which combined with low market expectations was enough for the stock to react positively.

I’d like to describe my position in $AMZN, which I entered a year ago at $211 per share. It now represents 2.2% of my portfolio, and the stock currently trades around $245.

Three main reasons why I consider AMZN a good investment:

1. Dominant position in e-commerce: Amazon continues to hold a significant share of the global online retail market, benefiting from network effects, extensive logistics infrastructure and recurring Prime subscriptions that support customer loyalty and steady revenue growth.

2. AWS as a high-margin growth engine: Amazon Web Services remains the market leader in cloud computing, generates significant free cash flow (FCF) and is expanding into areas like artificial intelligence and machine learning, which positions it for sustained high growth in an increasingly digital economy.

3. Diversified revenue streams: Beyond retail and cloud, Amazon also earns revenue from advertising, streaming (Prime Video) and new ventures like healthcare (Amazon Pharmacy) and robotics, which is positive for further innovation and revenue diversification.

Two key risks that could affect the investment:

1. Intense competition: Competitors such as Walmart, Alibaba and Shopify are strengthening in e-commerce and cloud services, which could reduce Amazon's market share and pressure margins through price wars or competitive innovations.

2. Regulatory scrutiny: Ongoing antitrust investigations and potential regulations in the US and EU could lead to fines, forced divestitures or restrictions on business practices. This can increase operating costs and uncertainty.

Why I believe long-term holding of AMZN makes sense:

Amazon has a successful track record of innovation under strong leadership and continuously reinvests in high-growth areas like AI and logistics. Its ecosystem creates durable competitive advantages, and with accelerating globalization the company is well positioned to face challenges in the coming decade. That makes it a key growth position in my portfolio despite short-term volatility.

I plan to add more if the stock drops to around $215, which I see as an attractive entry point for dollar-cost averaging.

Do you hold AMZN? What is your target price or view on its long-term potential versus regulatory risks?

Market reaction was severe, with Fiserv experiencing some of its worst trading sessions on record after the results and outlook revision were disclosed. The combination of weaker revenue growth, a sharp cut in adjusted earnings expectations, and sweeping leadership changes created a heightened sense of uncertainty among shareholders and Wall Street alike.

What Went Wrong at Fiserv

The core of the sell-off stemmed from disappointing operational performance and an unexpected guidance reset. $FI reported third-quarter adjusted earnings per share well below what analysts had forecast, and organic revenue growth decelerated sharply, reflecting weakness in key segments. Management’s revision of the full-year outlook saw earnings expectations trimmed from roughly $10.15 to $10.30 per share down to about $8.50 to $8.60, while expected revenue growth was slashed to just 3.5 percent–4 percent after previously being positioned near double-digit levels.

These results were interpreted by the market as a sign that Fiserv’s recent growth narrative was losing momentum, particularly as competitive and macroeconomic headwinds emerged. For an industry leader in payment processing and financial infrastructure technology, such a sharp recalibration caught many investors off guard and ignited a broader reevaluation of the company’s strategic trajectory.

Leadership Shake-Up and Strategic Response

In response to the downturn, Fiserv’s leadership initiated a sweeping overhaul of its executive team and corporate structure. The company announced high-profile appointments to the leadership team, including new co-presidents and a chief financial officer, as part of what it has termed the “One Fiserv” action plan, aimed at revitalizing growth, tightening operational execution, and enhancing client focus.

This strategic reset is intended to address structural issues identified by management, including overly optimistic past assumptions, gaps in product execution and investment timing, and competitive pressures in the payments ecosystem. However, the market’s initial reaction suggests that confidence in the company’s ability to execute a turnaround remains tentative at best.

Analyst Views and Valuation Considerations

The sell-off has prompted a flurry of analyst activity, with many firms adjusting price targets and revising expectations for Fiserv’s longer-term prospects. While some have lowered targets significantly following the guidance cut, a number of analysts still view the share price decline as creating potential valuation opportunities, noting that Fiserv currently trades at historically low multiples relative to expected earnings.

The divergence in views highlights the tension between short-term performance concerns and longer-term structural strengths. Fiserv’s core business units including merchant solutions, financial technology platforms for banks and credit unions, and payment network services remain significant competitive assets, even as near-term growth pressures persist.

What Investors Should Watch Next

Looking ahead, investors will be focused on several key indicators that could signal stabilization or renewed momentum:

Execution on Strategic Plan: Progress under the One Fiserv initiative, particularly around client retention, product innovation and operational efficiency, will be critical to restoring confidence.
Revenue and Earnings Trajectory: Upcoming quarterly results and updated guidance will be scrutinized for signs that Fiserv can arrest the recent slowdown and begin to deliver consistent growth.
Margin Trends: With guidance reflecting compressed growth and profitability expectations, improvements in operating margins would be viewed as a positive development.
Competitive Positioning: How Fiserv navigates competition from other fintech firms and adapts to shifting client needs will influence long-term positioning.

For now, the sell-off in Fiserv represents more than a temporary setback — it underscores how swiftly investor sentiment can shift when growth expectations are reevaluated. At the same time, the reset may afford long term investors an opportunity to assess the company’s fundamentals, valuation and capacity for execution as it navigates what could be a defining phase in its evolution.

This is where the current phase becomes more interesting. After a cautious investment pause in 2023–2024, leading chipmakers are once again committing to long-term capacity plans. The difference this time is not scale, but precision. Growth is shifting toward fewer, far more complex systems with disproportionately high economic value. The rising weight of EUV and the early commercial rollout of next-generation lithography are changing the revenue mix, the margin profile, and ultimately the predictability of future cash flows. The underlying question is no longer whether spending returns, but whether technological exclusivity turns volatility into durability.

How was the last quarter?

The fourth quarter of 2025 was one of the strongest quarters in the company's history for$ASML Holding $ASML and a key validation of the turnaround of the investment cycle in the semiconductor sector. Revenues of €9.7bn marked quarter-on-quarter growth of around 29% compared to Q3, when ASML reported €7.5bn. This was a significant acceleration year-on-year, driven mainly by higher shipment volumes of EUV systems and the first recognition of sales from two High NA EUV systems, which have a fundamentally higher unit value than standard EUV machines.

Gross profit in Q4 reached €5.07 billion, corresponding to a gross margin of 52.2%, close to the company's historical highs. The margin was supported by the product mix - a higher proportion of EUVs, rising service sales and improving operational efficiency in production. Installed Base Management, i.e. servicing and upgrades of already installed systems, generated €2.13 billion in the quarter, representing approximately 22% of quarterly revenues and confirming ASML's strategic shift towards more stable, recurring revenues with above average margins.

Net profit for Q4 was €2.84bn, while EPS rose to €7.35, a sequential increase of over 33%. In terms of cash position, there was a significant strengthening, with cash and short-term investments reaching €13.3bn at the end of the year, up from €5.1bn at the end of Q3, reflecting both strong profitability and the collection of high volumes of advances for new systems.

A key indicator was net new bookings, which reached €13.2 billion in Q4, one of the highest quarterly figures in the company's history. Of this amount, €7.4 billion was attributable to EUV systems, which clearly shows that investments in the most advanced manufacturing technologies are accelerating, especially in the context of AI, data centers and advanced logic chips. Total backlog grew to €38.8 billion, a level exceeding the entire year's revenue, providing exceptionally strong visibility of future earnings.

On a full-year basis, 2025 revenues reached €32.7 billion, accelerating from 2024 and confirming the return of the growth trajectory. For the full year, gross margin was 52.8%, net profit €9.6bn and EPS €24.73. Despite the lower number of systems shipped compared to 2024, the overall financial result was better thanks to a significantly higher average price of equipment sold.

• Full presentation with results.

Full-year results 2025

For the full year 2025, ASML reported revenues of €32.7bn, up approximately 16% year-on-year compared to 2024. Gross profit reached €17.3bn and gross margin reached 52.8%, confirming the company's ability to maintain pricing power even with high investment in development. Net profit of €9.6bn represents a slight decline from an extremely strong 2023, but remains well above 2021-2022 levels.

In terms of volumes, 300 new lithography systems were sold in 2025, fewer than in 2024, but their average value increased significantly. This confirms the strategic shift towards more technology-intensive and expensive solutions, where ASML has a virtual monopoly.

CEO comment

CEO Christophe Fouquet described 2025 as another record milestone and highlighted that the medium-term outlook for customers has visibly improved in recent months. A key factor, he said, is the sustainability of AI demand, which is leading to increased capacity plans across the industry. This shift has been directly reflected in record order intake and backlog growth.

The CEO also pointed out that ASML continues to invest heavily in people, development and manufacturing infrastructure to be able to support growth not only in 2026 but also in the years to come. In particular, the focus is on EUV and High NA technologies, which will be key for the next generation of chips.

Outlook

ASML's outlook for 2026 is one of the strongest signals that the current demand is not a short-term cyclical blip, but a structural shift in the semiconductor industry. For Q1 2026, the company expects revenues in the range of €8.2-8.9bn, which even at the low end would represent a very solid start to the year after an extremely strong Q4. Gross margin is expected to remain in the 51-53% range, suggesting that the cost pressure associated with the ramp-up of new technologies is fully offset by pricing power and product mix.

On a full year 2026 basis, management expects revenue between €34bn and €39bn, a potential year-on-year growth range of approximately 4-19% compared to 2025. The upper end of the outlook implicitly assumes a significant acceleration in EUV system shipments, further commercial expansion of High NA EUV and continued growth in Installed Base Management, which should benefit from a record installed base.

The company also anticipates high R&D investment - R&D costs of around €1.2bn per quarter- confirming that ASML is sacrificing short-term cost optimisation for long-term technology leadership. Management repeatedly emphasizes that demand for advanced lithography is increasingly driven by AI workloads that require the most advanced manufacturing nodes and high yields, where ASML has a virtual monopoly.

News and capital allocation

ASML announced a new share buyback program of up to €12 billion to be implemented by the end of 2028. The majority of the repurchased shares will be cancelled, which increases the long-term value per share. The company is also planning a total dividend for 2025 of €7.50 per share, representing 17% year-on-year growth.

In addition, management announced a reorganization of the technology and IT teams to streamline development processes and accelerate innovation in key areas. This is a move designed to foster long-term competitiveness in an environment of increasing technological complexity.

Long-term results

ASML's long-term financial development clearly shows that the company has undergone a transformation from a cyclical equipment supplier to a structural winner in the technology megatrend. Between 2021 and 2025, revenues grew from €18.6 billion to €32.7 billion, representing a cumulative growth of more than 75%. Gross profit increased from €9.8bn to €14.5bn over the same period, with gross margins holding steady above 50%, which is exceptional in a capital-intensive industry.

Operating profit has long been around €9bn per annum, even in years when there has been a slowdown in semiconductor capacity investment. Net profit has fluctuated between €5.6bn and €9.6bn, with declines in some years driven primarily by the timing of shipments rather than deteriorating fundamentals. EBITDA rose from around €7.2bn in 2021 to over €10.1bn in 2025, confirming a strong ability to generate cash even with high investment.

An important structural trend is the gradual decline in the number of shares outstanding due to share buybacks, which supports long-term EPS growth, even in periods when net income is stagnant. Installed Base Management has gone from being a complementary segment to a key stabilising element in the results, significantly reducing cash flow volatility over the cycle.

Analyst expectations and target prices

Following the release of the Q4 2025 results and updated 2026 outlook, analyst consensus remains clearly positive towards ASML, although the emphasis on valuation and high market expectations is more prevalent in commentary. Most large investment banks view ASML as a key structural winner in the AI investment cycle, with exceptional revenue visibility due to its record backlog and dominant position in EUV lithography.

Goldman Sachs

Goldman Sachs ranks ASML among its top picks in the European technology sector. Goldman is working with a target price of €1,050-1,100 per share and notes that if the upper end of its 2026 revenue guidance (€39bn) is met, ASML can generate EPS well above €30 in the coming years without margin pressure.

Morgan Stanley

Morgan Stanley also remains at an Overweight recommendation, but the tone is slightly more cautious compared to Goldman. In particular, the bank highlights the EUV mix and the ramp-up of High-NA systems, which raise the technology barrier to entry and long-term customer ROI. Morgan Stanley's target price is around €980-1,020, with analysts cautioning that the stock's near-term performance will be sensitive to the pace of backlog execution and any shifts in Foundry customers' investment plans, particularly in Asia.

Fair Price

After being forced to rebuild its traffic model and prove independence from search algorithms, the company is now producing margins more typical of software monopolies than consumer fintech. The real investment debate is no longer about demand. It is about durability: can a platform built on comparison and intent remain structurally profitable when distribution rules change again?

Top points of the analysis

• Gross margin of over 90% confirms exceptionally good unit economics

• Transition from deep operating losses to net profit within two years

• Significant operating leverage finally translating into results

• Low debt and high liquidity reduce cyclical risks

• Valuations still reflect past risks, not current business realities

• Distribution stability and credit cycle remain key factors

Company profile and sources of value

NerdWallet $NRDS operates as a digital financial advisor and comparator whose core value is its ability to connect consumers with specific financial products at the point when their demand is highest. The firm does not bear credit risk itself, does not provide capital, and does not expose itself to the regulatory demands of the banking industry. Its assets are the user's attention, trust and ability to convert.

Revenue is generated primarily through commissions from financial institutions. These commissions are either fixed per client acquired or variable according to the value and quality of the contract. This means that one "good" user is often worth significantly more than dozens of passive visitors. It is this asymmetry that is behind the extremely high gross margin, which was around 91.6% in 2024.

Historically, the company's greatest strength has been its ability to generate huge amounts of organic growth through search engines. This model has enabled growth without the need for massive marketing budgets, but has also created structural vulnerabilities. As algorithms changed and competition intensified, it became apparent that some of the growth was not built on a sufficiently robust foundation. This led to a rethinking of the entire strategy and a shift from a pure "traffic-first" model to user economics and return on capital.

Core products and services - where is the growth and where is the stability

Credit cards remain the most important segment. These represent the highest unit value for the business, as banks are willing to pay high commissions to acquire creditworthy clients. This segment is highly cyclical, but has the potential to return to double-digit growth in an environment of stabilizing or declining rates. This is where the eventual recovery in consumer credit will be most rapid.

Personal loans and refinancing form the second pillar. This segment is more volatile but also very sensitive to macroeconomic impulses. It was significantly subdued in the years of high interest rates, but once credit conditions ease, it could again represent a strong growth engine. Importantly for NerdWallet, it does not invest capital here, but only brokers demand, which significantly reduces risk.

Insurance is a stabilizing component of the portfolio. It grows more slowly but provides relatively stable income across the cycle. Over the long term, it helps smooth out fluctuations and increases the predictability of cash flow.

Competitive environment - with whom the company competes

The main competitor is Credit Karma, which has the advantage of deeper data work and strong integration into the broader technology ecosystem. This allows it to personalise very precisely, but also makes it less flexible and more dependent on the strategy of the parent platform. NerdWallet, by contrast, is independent and can optimize offerings across partners without conflicts of interest.

Bankrate benefits from long-term brand building and strong media reach, but its model is more costly and less scalable. Most of the value is created at the content level, not conversion optimization.

NerdWallet profiles itself as a lower volume but higher quality platform. This is clearly reflected in asset efficiency - asset turnover of 1.61 is among the highest in the sector.

Management

CEO Tim Chen has been with the company for a long time, and his biggest test has not been the growth phase, but a period of slowdown and pressure. It was here that management demonstrated its ability to adapt its strategy to the realities of the market. The decision to slow growth, reduce cost experimentation and focus on return on capital was not popular, but it proved to be the right one.

The way management has approached cost optimisation without damaging gross margin or product quality adds credibility to future plans. Capital is not allocated to risky acquisitions or expansion. Instead, it is invested in technology, content and monetization tools that add value to the existing user base.

For the investor, it is key that management has demonstrated a willingness to protect the economics of the business, even at the cost of a temporary slowdown in growth. This significantly reduces the likelihood of value destruction in future cycles.

Financial performance

The company's revenue increased from £379.6m to £3.6m. USD 538.9 million in 2021. USD 538.4 million in 2022, further to USD 599.4 million in 2013. USD 687.6 million in 2023 and USD 687.6 million in 2023. Growth has gradually slowed, but it is crucial to interpret this correctly. This was not a loss of relevance, but a conscious redirection of strategy from growth to profitability.

Gross profit grew in absolute terms at almost the same rate as sales, confirming the stability of the unit economics. The gross margin remained above 90% even during the slowdown, proving that the pressure was not on the product side but solely on the cost side. This is where the biggest change has occurred.

Operating costs, which in the past grew faster than sales, have stabilised. As a result, the transition from an operating loss of -€19 million to an operating loss of -€1.5 million was achieved. USD 9.4 million in 2022 to an operating profit of USD 9.4 million. This shift of almost USD 30 million in 2024 will result in a net profit of USD 2.5 million. USD in two years clearly shows that the company is now operating at a completely different level of efficiency.

Net profit reached 30.4 million. EBITDA of USD 54.1 million was achieved in 2024, corresponding to a net margin of 9.22%. The EBITDA of USD 54.5 million confirms the ability to generate cash even without further expansion. Return on equity is exceptional - ROIC 19.49%, ROE 19.19% and ROA 14.87% show that NerdWallet is one of the most efficient players in the financial services sector today.

Balance sheet, cash flow and financial stability

One of the most underrated aspects of NerdWallet is its balance sheet. While many digital platforms in finance are dependent on external funding, debt, or constant access to capital markets, here we see quite the opposite picture. The company operates with virtually zero debt, which fundamentally changes the risk profile of the entire investment.

Total assets amount to approximately EUR 438 million. USD 433 million, with liabilities of only around USD 73 million. USD 73 MILLION. Equity is around EUR 364 million. This implies a very high equity ratio of around 82 %. In other words, the vast majority of assets are financed by equity, not debt. Both debt-to-equity and debt-to-assets are effectively zero.

Net cash position of around EUR 57 million. USD 57 means that the company has more cash than debt. Working capital in excess of $200 million. USD 200 provides a comfortable cushion for operations and any short-term fluctuations in earnings. Liquidity ratios - current ratio of 3.7 and quick ratio of 3.26 - are well above the sector average and indicate very low risk of tight liquidity.

From a cash flow perspective, it is key that the company has reached a stage where operating cash flow exceeds net profit. An operating cash flow ratio of around 1.38 confirms that profits are not just an accounting construct, but are actually translating into cash. EBITDA of over 54 million. USD 54.5 million creates a sufficient internal funding source for further development without the need to reach for debt or shareholder dilution.

An Altman Z-Score of 8.4 virtually eliminates the risk of financial distress. In the context of the cyclical business of personal finance, this is a critical element of the investment thesis - the firm is able to survive a significantly worse macroeconomic scenario without having to sacrifice strategy or shareholder value.

Valuation

Current market capitalization of around $964 million. USD and an enterprise value of around USD 843 million. USD 844 million puts NerdWallet in a position that is very interesting from an investment perspective. At first glance, the company may not appear to be "extremely cheap", but a deeper look at the multiples and their implications shows a significant disconnect between the quality of the business and the valuation.

The stock is trading at about 13.4 times earnings, 1.21 times sales and about 10.4 times operating cash flow. These multiples are more typical of stagnant or highly cyclical companies with low returns on capital. Here, however, we have a business with a gross margin of over 90%, ROIC of nearly 20%, and double-digit sales growth.

A price-to-book of 2.4 may seem higher at first glance, but it makes sense in the context of a capital-light model and high ROE. The company is generating significantly higher returns on capital than the book value of assets would imply. A price-to-sales of 1.21 is extremely conservative in a digital platform environment, especially considering that a significant portion of sales is already reflected in net income today.

The market today implicitly assumes that profitability is fragile, cyclical and potentially temporary. This is where the investment contradiction lies. If the current level of margins is sustainable and revenue growth stabilizes in the low double digits at least, the current valuation does not make economic sense.

5 reasons why NerdWallet could grow in the coming years

1) Diversification beyond credit cards: insurance and banking products as a more stable pillar

NerdWallet has long been heavily dependent on credit card commissions, a segment sensitive to the economic cycle. But the company is gradually strengthening the insurance, personal loan and bank account areas, which tend to be more stable and more scalable. This reduces dependence on one category and increases the predictability of revenue.

Where it can grow: especially in the US, where it has a strong brand and high traffic.

2) Mortgages as a long-term growth bet

The acquisition of Next Door Lending allowed NerdWallet to go deeper into mortgages and participate not only in acquiring leads, but also in the actual brokerage. The mortgage market may be cyclical, but with future rate declines, there could be a strong wave of refinancing and new home purchases. This would open up a significant source of growth for the company.

Where it can grow: the US mortgage market and housing finance.

3) Development of investment and advisory services (wealth management)

NerdWallet is starting to build its own financial advisory and wealth management platform. This is strategically important because it can earn long-term, recurring revenue instead of one-time commissions. In addition, the firm can offer these services to users who come to the site for basic financial products.

Where it can grow: the US, particularly among retail investors and the middle class.

4) International expansion in English-speaking countries

NerdWallet's model is based on content and comparisons of financial products, which is relatively easy to transfer to other countries. The company already operates in the US, UK and Canada and is gradually expanding its product offering and partnerships with banks and insurance companies there.

Where it can grow: the UK, Canada and eventually other Anglo-Saxon markets.

5) Better monetisation of existing users

NerdWallet has millions of visitors per month. If it can better personalise its offer, link products together and increase conversion rates, it can significantly increase revenue per user even without a surge in traffic.

Where it can grow: across all major markets, especially the US.

Growth projections for specific markets

• FinTech market (globally):

  • Size in 2024: approximately USD 220-395 billion

  • Expected growth: roughly 15-20% CAGR

  • Projection: more than 1.5 billion. USD 1.5 billion by 2033-2035

• Personal Finance Software:

  • Size in 2024: approximately USD 1.4 billion

  • Expected growth: approximately 7-12% CAGR

  • Projection: approximately USD 2.5-4.2 billion by 2032

• AI solutions for personal finance:

  • Market size in 2025: approximately USD 1.1 billion

  • Expected growth: around 22% CAGR

  • Projection: roughly USD 3 billion by 2030

Investment scenarios

Optimistic scenario - return to growth phase

In the upside scenario, there is a combination of several factors that reinforce each other. The credit cycle in the US gradually normalizes, banks and card providers increase marketing budgets and refocus on acquiring quality clients. With its position at the top of the "tables", NerdWallet is a natural beneficiary of this trend without having to change its business model or increase risk.

At the business level, this means a return to double-digit revenue growth, particularly in the credit card and personal loan segments. Thanks to the cost optimisation already carried out, this growth is translating into profit significantly faster than in the past. The operating margin is moving from around 7% today towards 10-12%, while the net margin is stabilising around 10%.

In terms of financial results, this would imply:

• Revenue growth towards the 850-900 million mark. USD 850 million within a few years

• net profit in the order of EUR 70-90 million. USD

• continued strong operating cash flow without the need for external capital

Realistic scenario - stable profitable business with gradual revaluation

The base case scenario assumes that the macroeconomic environment remains mixed. The credit cycle does not deteriorate, but neither does it improve significantly. In this environment, NerdWallet continues to grow gradually based on better monetization of its existing user base and a more stable product mix.

Revenues are growing at high single-digit to low double-digit rates, with most of the benefit coming from conversion optimization, not aggressive traffic growth. Operating margins are improving slightly due to operating leverage, but without dramatic jumps.

Financially, this would mean:

• Revenue of around 750-800m. USD

• net profit of 40-60 million. USD

• stable and predictable cash flow

Valuation remains relatively conservative, but the market is gradually recognizing that profitability is not temporary. The share price rises in this scenario primarily due to earnings growth.

Pessimistic scenario

The negative scenario assumes that the consumer credit cycle remains subdued for an extended period of time or that further changes in online distribution occur that reduce the quality of traffic. In this environment, NerdWallet faces stagnant sales and pressure to grow.

Crucially, the restructuring has meant that the company is not falling back into deep losses. The cost base is set to maintain profitability even with lower growth. Margins are narrowing but remain positive.

Financially, this would mean:

• stagnant sales around current levels

• lower but still positive net profit

• maintaining a strong balance sheet and cash position

In this scenario, share price growth is limited, but the downside is relatively protected by a debt-free balance sheet and the ability to generate cash. The investment turns into a "wait and see" position rather than a loss story.

Risks - what would have to fail

• Further structural changes to online distribution that would permanently reduce the quality of traffic

• Extended credit cycle with low willingness of banks to spend on customer acquisition

• Competitive pressure on commissions and monetization

• Risk of management sacrificing profitability again in favour of growth

What to watch next - specific signals for the investor

• Revenue growth in the credit card and loan segments

• Operating and net margin development

• Operating cash flow and its ratio to net profit

• Stability and traffic structure

• Cost discipline of management

What to take away from the article

• A high-margin, capital-light business

• The transition to structural profitability is supported by data

• Balance sheet significantly limits downside

• Valuation does not reflect return on capital

• Credit cycle is a key catalyst

The semiconductor sector has had a period that is outside of normal cycles. While previously sentiment around chips typically revolved primarily around consumer electronics and supply cycles, recent years have shifted the center of gravity of demand toward infrastructure, thus:

• data centers,

• accelerated computing (AI/HPC),

• network elements,

• high value-added memories.

The result is a combination of rapid growth in AI revenues and a massive investment race across the supply chain. From foundry capacity(the production capacity of chip factories - i.e. how many chips or silicon wafers a company can realistically produce in a given period) to high-end end products.

This is well illustrated by the latest sector outlooks. In its updated outlook, World Semiconductor Trade Statistics (WSTS) envisages a global semiconductor market close to USD 1 trillion (approx. USD 975 billion) for 2026 and growth of over 25% year-on-year, driven in particular by the memory market, which should see annual growth of up to around 30%. Similarly, a January 2026 study by Gartner, for example, pointed out that global semiconductor industry revenues grew by 21% (to ~US$793bn) in 2025, highlighting that AI chips already represent an extremely significant part of the overall market.

AI as a new capital cycle

The main difference from the past is that the demand is not just from end-customers making end products (phones/PCs), but capital. IT companies are investing in computing capacity and network as infrastructure. Nvidia $NVDA in their fiscal year 2026 results repeatedly shows how quickly their data center area has become the dominant driver. In Q3 of fiscal 2026, they reported revenue of $57 billion (+62% YoY) and an outlook for the next quarter of around $65 billion.

The other piece of the puzzle is on the supply side. High-end manufacturing is capacity and technology constrained and requires extreme CAPEX. TSMC confirmed the investment pace in January 2026 and talked about a capital budget of $52-56 billion, a signal that the pressure to expand the most advanced nodes (and related capabilities) is not ending. This has once again boosted technology stocks.

Another important element is that the boom is not just happening at chipmakers, but also at key suppliers of manufacturing technology. Reuters describes how AI demand is also pulling in $ASML - a firm that dominates EUV lithography (critical for cutting-edge processes), becoming an indirect barometer of the investment cycle for the entire industry. This is where a structural tension arises: when the entire sector increases CAPEX(a firm's capital expenditure on fixed assets - this is money that the firm spends not on day-to-day operations, but on building or expanding its manufacturing and technology base).

Why do valuations differ for $NVDA, $TSM and $AMD?

While these three stocks are often lumped together, the market values them for different reasons:

• Nvidia: monetization of AI infrastructure (accelerators + network + software ecosystem) and ability to translate growth into margins and cash flow

• TSMC: critical semiconductor manufacturer

• AMD: greatest leverage for AI/data center expansion (CPU/GPU), but at the same time more sensitive valuation to whether it can deliver expected growth rates as well as margin growth

Important caveat: expensive or overvalued doesn't necessarily mean that the stock will start to fall/sell off and that companies with these valuations can't continue to grow.

Nvidia $NVDA

Nvidia is no longer just a graphics card manufacturer. It has transformed into an AI computing platform that connects hardware, software and an ecosystem of partner technologies. This is essential to understanding why its valuation is reaching its current extreme levels. The market today is valuing the future revenue stream generated by continued dominance in AI, not just the current results, even if those are also very good for Nvidia right now.

In fiscal year 2026, Nvidia reported sales of $57.0 billion in 3Q, representing year-over-year growth of over 60%. However, this growth is not evenly distributed across segments. Data centers are pulling the numbers up, while traditional gaming GPUs are growing less. The result is exceptionally high margins (up to 55%) and free cash flow, which, if sustained, may justify a higher valuation in a few years.

However, the market is not only pricing hardware. The key is what NVDA monetizes from the entire AI ecosystem: software (e.g. CUDA), optimizations for hyperscalers, and networking technologies that complement custom acceleration in data centers.

Nvidia is often valued by Forward P/E and EV/EBITDA (total enterprise value/operating profit), which are higher than other high-tech companies. For example, Forward EV/EBITDA can be above 30, while the historical median for technology titles is significantly lower. The reason? The market discounts very high rates of profitable growth in prices for several years ahead.

There are two key factors to this:

• Measurable cash flow - while many technology growth companies are based on the promise of future profits, Nvidia actually generates high operating profits.

• A strong position in all key AI segments from GPUs to software layers and complementary technologies.

However, what justifies the high valuations is the market leadership and relentless margin growth in the years ahead. Without maintaining these key parameters, high valuations would be vulnerable. But already, looking at the chart, it may appear that the stock has run out of breath. Since the growth of the first half of last year and the years before, the stock has barely moved in the last 6 months. They are currently trading at the same prices as they were in November and are up only 4% since August, having been down several percent last week.

Nvidia's valuation is extremely sensitive to three key variables:

• Data center revenue growth rate: if demand for AI accelerators slows, the market would quickly reassess growth expectations

• Margins and product mix: a shift to lower margins (e.g. a greater proportion of price sensitive products) could significantly reduce free cash flow

• Competitive pressure: the arrival of strong alternatives (e.g. proprietary AI chip hyperscalers) may limit the growth space

TSMC $TSM

Taiwan Semiconductor Manufacturing Company is the largest manufacturer of state-of-the-art processors on the planet, providing technology and capacity to other manufacturers (e.g. Nvidia, AMD or Apple). The company's business model is therefore structurally different from companies that only design their chips.

TSMC controls a significant majority of the market for the most advanced manufacturing nodes (e.g. 3nm and now 2nm technologies) that are required for high-end AI chips. Its ability to be the first to introduce advanced processes and the use of EUV lithography is one of the key competitive advantages that keep the company's margins high and demand from high-end chip designers. This technological dominance is also the reason why TSMC is achieving higher growth than other manufacturing companies.

According to surveys, TSMC holds over 70% of the global market for advanced chip manufacturing, and its technologies are key to growth industries. This share also means that the supply of capacity for the most advanced processes is highly inelastic: building new factories requires huge investments and several years of construction, which limits rapid response to fluctuations in demand.

Unlike traditional semiconductor manufacturers, who are considered cyclical by short-term supply shocks, the market values TSMC as part of an "AI super-cycle" where investment in computing infrastructure drives long-term growth. Investing in new factories is a kind of subscription to future revenues, as the new factories will supply the market with high value-added after years of construction.

TSMC's capex this year is estimated at $52-56 billion - a huge sum even in the context of technology companies - and reflects a strategy to secure demand not just this year but over the long term. Building a new processor factory often costs tens of billions of dollars and 2-3 years of time, which amplifies barriers to entry for competitors.

According to current analysis, the market does not value TSMC as a classic cyclical business, but rather as a monopoly supplier of critical infrastructure for the AI ecosystem. This is reflected in valuations. The stock has appreciated hundreds of percent over the past few years, and even given the current outlook, it is trading above its fair price. This is confirmed by the Fair Price Index on Bulios.

The biggest sensitivity in TSMC's valuation comes from the geopolitical factor. Although the business model itself looks like an innocent manufacturer on the surface, most of its current production takes place in Taiwan, which exposes it to geopolitical risks, export regulations, and pressures to diversify production. Therefore, TSMC is also investing in factories in the US and Japan, which increases cost and time to commercial production, but also partially reduces concentration risk.

This may also have an impact on valuation. While corporate fundamentals remain strong, the risk premium associated with geopolitical threats and the cost of geographic diversification may leave valuations lower than purely stable Western tech giants even with the same growth.

Fundamental to TSM's growth drivers

• Dominant market share in cutting-edge hubs and role as a key part of AI infrastructure

• Massive capex as a subscription to future revenues with a long payback time horizon

• Technology dominance and massive margins (above 50%)

AMD $AMD

Advanced Micro Devices stands as the second major platform in the chip world, benefiting from the growth of AI and data centers, but with a unique blend of risk and opportunity that differentiates it from both Nvidia and TSMC. AMD's valuation today is driven by investor-appreciated revenue growth, particularly in data centers.

AMD today generates revenue across three major segments:

• Data Centers

• PC processors

• Gaming

Data centers are now the most important growth driver due to growing demand for server CPUs(EPYC) and AI accelerators(Instinct), while the traditional PC and gaming segments are relatively smaller and more cyclical.

In addition, the company is looking to diversify its technology base. The acquisition of Xilinx and other startups has allowed AMD to better integrate AI acceleration and new architectures, which is reflected in its AI hardware development.

According to company plans and analyst estimates, AMD is targeting a 35% CAGR(compound annual average growth rate over a given period, including compound interest) in total revenue and a 60% CAGR in data center revenue in the coming years, with a goal of reaching $100 billion in data center revenue by 2030.

With this outlook, AMD is valued as a growth stock with a valuation that strongly reflects expectations for future AI and datacenter revenues. The stock is already up 20.3% year-to-date and is 38% above its intrinsic value, according to the Fair Price Index, which is based on DCF and relative valuations. Investor optimism is thus very high and shows that the stock is selling in the market today with the prospect of great future value added.

The biggest competitive challenge for AMD is two things:

• The dominance of competitors in key markets - Nvidia still has a large dominance in AI accelerators and a strong ecosystem around software. Even though AMD has been gradually increasing the performance of its Instinct GPUs, the company's position is still rather challenger to $NVDA.

• Intense margin pressure - AMD's margin trajectory is more volatile than some other players due to price competition, high spending and new architecture development.

This combination means that AMD's valuation may be more volatile. When the market assesses that growth will continue, valuations will remain high; but at the first sign of slowing growth or loss of share in key segments, prices may be sensitively revised.

For example, several analysts have recently raised price targets for AMD stock, citing the expected impact of AI products and growth trajectory, while some forecasts are more cautious given competitive pressures and weaker margins.

Conclusion

The current extreme valuations in the semiconductor sector should not be viewed solely as the result of a cyclical recovery or short-term enthusiasm around AI. Valuations primarily reflect a structural shift in the role of chips in the global economy. Semiconductors are becoming an absolutely key product needed to enter the data center, automation, cloud, defense systems and industrial applications markets. The market is therefore increasingly pricing in not only current profitability, but more importantly the sector's expected long-term position in investment flows related to computing capacity, connectivity and digitalization.

At the same time, the entire industry is entering an environment where supply is extremely limited in terms of technology and capital. The development of the most advanced production nodes requires tens of billions of dollars per year, cutting-edge know-how and a narrow ecosystem of suppliers, which significantly increases barriers to entry and reduces the flexibility of supply. The combination of structurally increasing demand and slowly scalable production creates the basis for consistently higher valuations across the sector.

Do you have $ASML in your portfolio? Do you think the stock could reach $2,500 this year?

The fourth-quarter results reflect that transition. LVMH remains highly profitable and cash generative, yet the group is facing its first broad-based revenue decline in years alongside mounting pressure on key segment margins. The market reaction is therefore cautious—not because the business is broken, but because the era of effortless luxury growth is over.

What was the last quarter and full year of 2025 like?

LVMH $MC.PA achieved sales of €80.8 billion in 2025, down five per cent year-on-year, with an organic decline of one per cent. The fourth quarter alone delivered organic growth of one percent, a stabilization from the third quarter but not a return to previous momentum.

Operating profit from ordinary activities came in at €17.8 billion, down nine percent, and operating margin declined to 22 percent. Currency movements and weaker volumes in the segments with the highest historical profitability had a significant impact here. Net profit attributable to the Group was €10.9 billion, down thirteen percent from 2024.

The positive side of the results is cash flow. Operating free cash flow rose eight percent to €11.3 billion, while net financial debt fell 26 percent to €6.9 billion. This confirms that LVMH can generate cash and strengthen its balance sheet quickly even in a worse cycle.

• Full presentation with results.

Performance of individual segments

The Fashion & Leather Goods segment, which has long been the Group's main source of profitability, recorded sales of €37.8 billion, down five percent organically. Operating profit decreased by thirteen percent to €13.2 billion, yet the segment maintained an exceptionally high operating margin of 35 percent. The weaker performance was mainly related to the normalisation of demand after an extremely strong 2024, particularly in Japan, where the weak yen helped at the time.

Wines & Spirits was the weakest link in the portfolio. Sales fell organically by five percent and operating profit fell 25 percent to €1.0 billion. The biggest pressure came from the cognac category, where trade barriers and weaker demand in China and the US had a negative impact.

In contrast, Selective Retailing was one of the clear winners of the year. Revenues there grew organically by four percent and operating profit jumped 28 percent to €1.78 billion, mainly due to the continued expansion of Sephora. The segment's margin increased to 9.7 percent, a significant structural shift.

Perfumes & Cosmetics remained stable at the sales level but managed to increase operating profit by eight percent thanks to product innovation, while Watches & Jewelry posted organic growth of three percent but a slight decline in profitability due to higher network development costs.

Management comment

In his comments, Bernard Arnault stressed that 2025 was all about resilience and long-term strategy, not about maximising short-term growth. He said the group was sustained by local customer loyalty, brand strength and the ability to create unique retail and cultural experiences.

At the same time, management openly acknowledges that the environment remains uncertain and that 2026 will not be about aggressive expansion, but about tight cost control, margin protection and further strengthening brand exclusivity. This is a clear shift in tone from 2021-2023.

Long-term results: a return from the peak of the cycle

Looking at the last four years, it is clear that LVMH has entered a normalisation phase after extremely strong growth. Revenues rose from €64.2 billion in 2021 to €86.2 billion in 2023 before falling slightly to €84.7 billion in 2024.

Operating profit peaked at €22.6 billion in 2023, while it fell to €18.9 billion in 2024, corresponding to a decline in margins from around 26 percent to around 22 percent. EBITDA followed a similar trend, declining from €28.6 billion in 2023 to €22.3 billion in 2024.

Net profit increased from €12.0 billion to €15.2 billion between 2021 and 2023, but fell to €12.6 billion in 2024. Earnings per share decreased from €30.3 in 2023 to €25.1 in 2024, confirming that profitability, while normalizing, remains at very high historical levels.

Shareholding structure

LVMH remains a strongly family-controlled group, with almost 50 percent of the shares held by insider structures linked to the Arnault family. Institutional investors hold approximately 18 percent of the shares, with the free float amounting to approximately 36 percent. This implies high management stability, but also lower sensitivity to short-term market pressure.

Outlook for 2026

Management remains cautiously optimistic. It does not expect a return to double-digit growth, but relies on improving trends in Asia, the continued strength of Sephora and the stabilization of Fashion & Leather Goods. Margin protection, selective expansion and further brand strengthening remain priorities.

Dividend policy remains generous, with a dividend of €13 per share to be paid for 2025, confirming management's confidence in its long-term ability to generate cash.

Analyst expectations and target prices

Analyst reaction following the 2025 results has been cautious and significantly less clear-cut than in previous years. The consensus view is that LVMH remains the best-performing asset in the luxury sector, but there is also a growing view that 2026 will be a transitional year and that a return to higher growth may take longer than the market initially expects.

Morgan Stanley maintained its Overweight recommendation following the results, but lowered expectations for near-term momentum. In its commentary, it highlights that while the core Fashion & Leather Goods segment is still generating an operating margin of around 35%, volume growth remains weak and primarily dependent on local demand in the US. The target price, according to their latest estimate, is in the €820-850 range, implying medium-term rather than rapid growth potential.

Goldman Sachs is more conservative and points to a structural change in consumer behaviour in China. According to the bank, Chinese demand is unlikely to return to the pace of 2021-2023 and the luxury sector is entering a longer phase of normalisation. Goldman Sachs maintains aNeutral stance with a target price of around €780, citing margin pressure and weaker operating leverage with low organic growth as the main risks.

Fair Price

Earnings Shortfalls and Shifting Guidance Shake Confidence

Investors were also unsettled by UnitedHealth’s fourth-quarter results, which revealed softer revenue and a cautious outlook that fell short of Wall Street expectations. Although adjusted earnings per share ticked slightly above consensus, the forecast for full-year revenue came in below projections and included substantial restructuring and cyberattack charges. Analysts noted that the combination of muted top-line performance and a conservative outlook triggered margin concerns that extend across the group of major health insurers.

This earnings shock followed broader sector dynamics earlier in the year, including firms revising guidance due to rising medical costs and higher utilization of healthcare services in Medicare Advantage plans. Those headwinds have eroded confidence and contributed to outsized price swings relative to more defensive sectors.

Policy Developments Compound Sell-Off

Healthcare insurers also faced additional pressure from proposed changes to federal reimbursement policies. The Centers for Medicare and Medicaid Services (CMS) announced a nearly flat rate increase for 2027 Medicare Advantage payments far lower than expected by analysts which disappointed markets reliant on robust reimbursement growth to support future earnings . This proposed adjustment, which included revisions to diagnostic coding rules, translates into roughly $700 million in projected industry revenue versus the much larger gains seen in prior years, exacerbating uncertainty about future profitability.

This policy surprise also weighed on stocks beyond UnitedHealth. Peers including Humana, CVS Health and Elevance Health experienced double-digit declines as investors reassessed valuations in light of changing payment dynamics. The market response illustrates how sensitive healthcare insurers are to federal policy adjustments that influence reimbursement rates and risk scoring formulas.

Sectorwide Ripples and Broader Market Impact

The weakness in major insurance stocks has not been isolated. Market indexes such as the Dow Jones Industrial Average saw significant downward pressure due to UnitedHealth’s weighting and sharp declines in its share price, which concluded one session down nearly 20 percent. Other parts of the healthcare sector including pharmacy benefit managers and healthcare providers have also felt the knock-on effects, with defensive ETF exposures to healthcare stocks falling as investors reduce risk.

Dates earlier in the sell-off also saw major moves. UnitedHealth shares experienced some of their worst performance in decades after guidance revisions, triggering sharp drawdowns not only in the company but in associated ETFs and sector indexes. This divergence between healthcare stocks and broader equity benchmarks highlights the sector’s unique challenges amid rising costs and regulatory scrutiny.

Drivers of the Decline and Structural Headwinds

Several structural issues are contributing to this downturn. Analysts have cited rising medical costs, especially within Medicare Advantage plans, which are more expensive to administer than expected, squeezing margins and pressuring projected growth. Regulatory scrutiny, including investigations into billing practices and billing risk adjustment methodologies, has added to uncertainty. Leadership changes and large restructuring charges have also unsettled investors looking for consistency at the top of major insurers.

What Investors Should Watch Next

Looking ahead, investors will monitor key factors that could influence a turnaround or further declines in healthcare equities. These include clarity on Medicare Advantage rate setting and reimbursement rules, updated guidance from insurers on cost trends, and signals from policy makers regarding healthcare spending and regulation. Should reimbursement rates improve or trend back toward prior expectations, sentiment could stabilize, easing some of the downward pressure.

However, if medical cost inflation remains high and political scrutiny intensifies, healthcare stocks could continue to lag broader markets. For now, the sell-off in UnitedHealth and its peers serves as a reminder that even historically defensive sectors are vulnerable to concentrated policy and operational risk.

The fourth-quarter results confirm operational strength and a long runway of projects, yet they also underline the core challenge for the stock. At today’s valuation, investors are less focused on quarterly beats and more on flawless execution—balancing capital intensity, project timing, and shareholder returns over the coming years.

How was the last quarter?

In the fourth quarter of 2025, NextEra Energy $NEE reported GAAP net income of $1.535 billion, equivalent to earnings of $0.73 per share. Compared to the same period in 2024, this is a significant improvement from $1.203 billion and $0.58 per share. On an adjusted basis, earnings were $1.133 billion and $0.54 per share, respectively, representing modest but steady year-over-year growth.

For the full year 2025, the company reported GAAP earnings of $6.835 billion, or $3.30 per share, while on an adjusted basis, earnings were $7.683 billion and $3.71 per share. Thus, adjusted EPS grew approximately 8.2% year-over-year, which is above the high end of the previously announced range. This confirms that the growth story is not driven by accounting effects, but by actual operating performance.

Structurally, the distribution of performance between the main segments is important. Florida Power & Light increased net income to $958 million in the fourth quarter and for the full year reached $5.012 billion, an increase of approximately 10% year-over-year. Growth was driven primarily by expansion of the regulatory base, which increased 8.1% year-over-year, and continued investment in infrastructure. NextEra Energy Resources, on the other hand, showed significant improvement on a GAAP basis, with quarterly results swinging from a deep loss to a $545 million profit, while on an adjusted basis, results remained slightly weaker year-over-year. However, this does not change the fact that the segment continues to generate record new project volume.

• Full presentation with results.

CEO commentary

CEO John Ketchum particularly emphasized the company's long-term visibility of growth and unique position in the energy transition. In his words, NextEra Energy has not only surpassed the high end of its own outlook in 2025, but has also set the stage for another decade of expansion. Crucially, growth is spread between FPL's regulated business and long-term contracted projects within Energy Resources, reducing volatility in results.

At the same time, Ketchum has been outspoken about the role of growing demand for electricity - particularly from data centers and hyperscalers - and the company's ability to meet that demand quickly and at a scale that competitors often don't have. In this context, he also mentioned the plan to bring the Duane Arnold nuclear power plant back on line through a long-term $GOOG contract, underscoring the company's strategic flexibility.

Outlook

The outlook remains one of the strongest pillars of NextEra Energy's investment story. Management expects adjusted earnings per share to reach $3.92 to $4.02 in 2026. At the same time, the company reaffirms its goal of growing adjusted EPS at a rate of at least 8% per year through 2032 and at the same rate thereafter from a 2032-2035 base year.

Dividend policy remains consistent with the growth profile - the company is targeting roughly 10% annual dividend growth through 2026 and then a rate of approximately 6% through 2028. Importantly for investors, this growth is backed by long-term contracts, a record backlog of projects and a stable regulatory base in Florida.

Long-term results

Looking at NextEra Energy' s performance over the past four years, it is evident that the company went through a growth phase from 2022-2023, but this was followed by a significant cooling in 2024 across virtually the entire income statement. After strong growth in 2023, when revenues jumped 34% year-on-year to $28.1 billion, they fell 11.9% to $24.8 billion in 2024. This decline is not cosmetic - it is a return to below 2022 levels and a clear signal that the pace of expansion has broken in the short term.

Gross profit has followed this trend even more closely. After a particularly strong year in 2023, when it grew 77% to $18 billion, there was a sharp 17% drop to $14.9 billion in 2024. This suggests that the slowdown was not just about volumes, but also about a worse mix, timing of projects and returns on some investments. Still, it is important to add that absolute gross profit levels remain well above 2021-2022, confirming the firm's structural shift.

At an operational level, the break is even more clear. Operating profit exploded by 151% to $10.2 billion in 2023, but was followed by a 27% decline to $7.5 billion in 2024. Although operating expenses fell 4.5% to $7.4 billion in 2024, it was not enough to offset weaker revenues. This shows that operating leverage has turned against the company in the short term, and investors are rightly watching to see when the effect will turn positive again.

Net income confirms the same story. After a jump in 2023, when it rose 76% year-on-year to $7.31 billion, came a decline of less than 5% to $6.95 billion in 2024.

Earnings per share only confirms this trend. EPS jumped more than 70% to $3.61 in 2023, while it fell about 6% to $3.38 in 2024. Moreover, the decline in EPS was compounded by modest growth in the number of shares outstanding, with the average number of shares rising to about 2.06 billion. That said, some of the pressure per share was not just operational, but also capital.

Shareholding structure

The shareholder structure is typical of a high-quality utility. Institutional investors hold over 83% of the stock and the largest owners include Vanguard, JPMorgan, BlackRock and State Street. The presence of long-term institutional investors supports the stability of the stock, but also increases sensitivity to changes in the outlook and interest rate expectations.

Analyst expectations

Analysts view NextEra Energy as one of the clear winners in the long-term trend of electrification and decarbonization. The consensus expects continued earnings growth in line with management's targets, with the pace of backlog execution and the ability to sustain returns on capital at high levels of investment remaining key themes. The prevailing recommendation is between 'hold' and 'buy', with an emphasis on the long-term horizon and dividend growth rather than short-term price upside.

Fair Price

At the same time, the market today no longer judges AMD as an underdog. Valuations, analyst consensus, and media attention suggest that investors are counting on the datacenter strategy to be a significant success. So the question is not whether AMD will grow, but whether it can meet the bar it and the market have set for itself. And this is where the investment story begins to break.

Top points of the investment thesis

• AMD is targeting more than 60% CAGR in data center revenue through 2030, even above 80% for Instinct AI accelerators.

• Contracts with OpenAI and Oracle significantly increase demand visibility.

• The MI450 generation manufactured at TSMC on a 2nm process may provide a near-term technology advantage.

• Margins remain the biggest structural weakness, significantly lower than Nvidia.

• Valuations already reflect high expectations, limiting the market's margin for error.

Data centres as the backbone of the growth story

The datacenter segment is to $AMD today what the server business was years ago - the point where the company's long-term trajectory breaks. Management openly declares that data centers are set to be the main source of growth over the next five to seven years. The company is targeting a CAGR of over 60% through 2030 - an extreme number that in itself signals that AMD doesn't want to be just a complementary player alongside Nvidia $NVDA, but a full-fledged alternative to hyperscalers.

It's important to point out that this growth is not driven by traditional cloud, but primarily by AI workloads. Model training, inference, multi-modal applications and enterprise AI systems require many times more computing power than traditional server jobs. This is where AMD is trying to convince customers that its accelerators and CPUs can offer a better balance of performance, price and energy efficiency.

From an investor perspective, the key is that AMD is growing from a relatively small base. This allows for a fast percentage rate, but also increases the volatility of results. Once adoption slows or hyperscaler investment shifts, the growth curve could quickly break. The datacenter story is therefore extremely strong, but fragile at the same time.

Contracts and demand visibility

One of the main arguments of the bulls is the fact that AMD is no longer just selling "promises" today. The long-term agreement with OpenAI, which envisages the supply of up to 6 gigawatts of GPU capacity by 2030, gives the company an exceptional level of visibility. For investors, this is a major difference from companies investing billions in capacity without clear customers.

The deployment of roughly 50,000 MI450 chips in Oracle's $ORCL infrastructure then serves as an important reference point. Oracle is one of the key players in the cloud market and its decision signals that AMD is technically and operationally ready to serve large AI clusters. If these projects prove successful, they may act as a catalyst for additional orders from other hyperscalers.

In the long run, however, it is important that AMD is able to repeat and expand these contracts. One-off deployments alone are not enough. The real breakthrough will come when AMD becomes a standard part of AI architectures across the cloud and enterprise segments.

MI450 technology and the competitive battle

MI450 is a key point in the entire roadmap. Manufacturing on a 2nm process at $TSM gives AMD a chance to gain a short-term process edge, which is extremely valuable in the AI world. Higher transistor density and better power efficiency can directly impact customers, one of the few parameters where Nvidia can realistically compete.

But at the same time, hardware is only part of the equation. Nvidia has more than a decade of building the CUDA software ecosystem. AMD is trying to get around this barrier with more open standards and collaboration with the community, but transitioning customers is always a slow and expensive process.

Moreover, Nvidia's competing Ruby generation, planned for roughly the same timeframe, is reported to offer multiple performance improvements over the current generation. This means that AMD may not only have to "catch up", but in some respects even overtake to justify the high market expectations.

Margin as a key valuation threshold

Margins remain AMD's biggest structural issue. Gross margins of around 48% and net margins of around 10% clearly show that the company cannot yet monetise the AI boom as effectively as Nvidia. The difference in margins is not cosmetic, but systemic - based on pricing power, software and market position.

While management is targeting gross margin growth in the 55-58% range and a significant improvement in operating profitability, even partially meeting these goals will require disciplined execution and steady demand. Should margins improve more slowly than the market expects, share price appreciation may be significantly limited even with strong revenue growth.

Conversely, in an optimistic scenario where AMD is able to narrow the margin gap by roughly 10 percentage points, the investment story would be fundamentally rewritten. This is where the math behind the 300%+ appreciation scenario is born.

Valuation and Wall Street's attitude

The current valuation of around 33 times forward P/E clearly shows that the market already trusts AMD today. This multiple implicitly assumes that the datacenter strategy will succeed and that margins will improve over time. The room for error is therefore limited - any disappointment can quickly be reflected in the share price.

This explains the difference between media headlines and the official analyst consensus. Average target prices of around USD 280 imply a moderate growth rather than an exponential scenario. In addition, some investment banks point out that 2026 may be the midpoint of a long AI investment cycle rather than its peak, increasing the market's sensitivity to capital returns.

Capital discipline, cash flow and AI ROI

When looking at AMD's investment thesis, it is key to separate the rate of growth from the quality of growth. It is cash flow that indicates whether a company can fund a massive expansion in AI infrastructure internally or whether it is "buying" future growth at the cost of a deteriorating return on capital. The data for 2021-2024 shows Advanced Micro Devices entering the most challenging phase of the cycle from a relatively solid position, but with increasing demands for discipline.

In 2024, operating cash flow has grown to $3.0 billion, an increase of more than 80% year-over-year. This jump is important as it comes after a weaker 2023, when OCF declined significantly. In other words, AMD is already showing that it can translate increasing sales volume back into operating cash. This is a crucial signal to investors who fear that AI growth will only be "paper" in the long run.

From a free cash flow perspective, the picture is even more interesting. FCF in 2024 reached $2.4 billion, more than double that of 2023. But at the same time, it is still below 2021-2022 levels, when AMD generated over $3 billion per year. This suggests that the company is capable of strong cash generation, but at the same time sacrifices some of its potential in favor of investments and strategic priorities.

AI capex: manageable for now

AMD's capex so far appears relatively moderate. Capex in 2024 was roughly €636 million. This is an increase from previous years, but still not the aggressive investment profile typical of pure datacenter players. This has two interpretations. On the one hand, AMD is benefiting from a fabless model and not taking on the full investment burden of production. On the other, it means that the real pressure on cash flow may only come if the company starts to massively ramp up development, software and system solutions around AI.

Investing cash flow remains volatile, which is typical for the semiconductor sector. Crucially, however, AMD does not yet give the impression of a company burning cash without scrutiny. Investments are primarily funded by operating cash, not by raising debt or issuing shares. This is an important difference from many younger AI players whose growth is contingent on external capital.

Buybacks as a test of management confidence

One of the most underappreciated signals of AMD's capital discipline is share buybacks. In 2024, the company bought back roughly $1.6 billion worth of stock, which is less than the 2022 extreme, but still a significant portion of free cash flow. This sends a clear signal to management: it believes that even with high investment demands, the company has the financial capacity to return capital to shareholders.

From an investment perspective, this is important. If AMD faced a situation where it had to reinvest all its cash just to keep up with the competition, buybacks would be the first item to disappear. That's not happening yet. On the contrary, AMD is trying to balance between growth and return on capital, which adds credibility to its long-term strategy.

Where the +348% scenario comes from and why Wall Street is taking it with a grain of salt

The scenario that AMD shares could grow by around 348% by 2030 is not based on a Wall Street consensus, but a model-based growth scenario that has appeared primarily in analyst and journalist texts focused on long-term technology trends.

The logic of this scenario is simple at first sight. If AMD could maintain a more than 35% CAGR in total revenue over a few years, with the datacenter segment growing at a rate of more than 60% per year, then the stock could appreciate multiples while maintaining a relatively stable valuation multiple. From today's levels of around $230, the price could theoretically approach the $900-1,000 per share mark. It is important to stress that this calculation does not work with a re-rating of valuation, but with the assumption that the market will be willing to pay similar multiples for AMD as today.

But this is where the first major problem begins. This approach implicitly assumes that sales growth will be of sufficient quality, i.e. that it will be reflected in profitability and cash flow. Once it became apparent that AMD was growing rapidly but margins remained structurally low, the market would very likely react by compressing the valuation multiple, which would invalidate the entire 348% scenario.

Investment scenarios to 2030

Optimistic scenario

• AMD successfully launches MI450 and subsequent generations by matching or surpassing the competition in key AI workloads.

• Datacenter revenues will indeed grow at 55-60% CAGR for most of the decade, AI accelerators will remain the main driver.

• Gross margins will gradually move into the 55-58% range, with operating margins exceeding 30%, significantly improving the monetization of growth.

• AMD will become the standard second AI infrastructure vendor for hyperscalers, not just a complementary alternative.

Realistic scenario (strong growth but with limits)

• AMD will meet most of its volume plans, but the technology lead will remain limited and competitive pressure will persist.

• The datacenter business will grow very fast, but the pace will gradually slow towards a 35-45% CAGR.

• Margins will improve but remain well below the market leader; gross margins will stabilise around 50-52%.

• The market will value AMD as a strong growth player, but not as a dominant leader.

• The stock will offer above-average valuations in the tens to lower hundreds of percentages, not the extreme +348% scenario.

Pessimistic scenario

• Competitive solutions will remain ahead technologically and AMD adoption will prove slower than the market expects.

• AI capex cycle will slow or become more selective, reducing the pace of data center orders.

• Margins will improve only marginally, high R&D and manufacturing investments will weigh on profitability.

• Valuations will compress because current pricing already implicitly assumes the success of the datacenter strategy.

What to take away from the article

• AMD has one of the strongest growth stories in AI infrastructure outside of the absolute market leader.

• The +348% by 2030 scenario is possible, but represents an upper bound on results, not a baseline expectation.

• The key is not just revenue, but the ability to significantly improve margins and monetize the AI boom.

• Current valuations already reflect some of the optimism, reducing the market's tolerance for execution error.

• For the investor, it is a highly asymmetric bet: potentially extraordinary returns in exchange for higher risk and volatility.

In early 2026, financial markets came under intense pressure in response to a policy proposal aimed at capping credit card interest rates in the US. President Donald Trump unveiled a plan to cap annual credit card interest rates at 10%, which in practice would radically curtail the traditional model on which card issuers and banks have long built their profit margins and cash flow.

The current average annual percentage rate (APR) for credit cards in the US is typically above 20%, and in some segments over 30%. This gap between the market and the proposed cap was immediately reflected in the pricing of financial assets ranging from bank titles to consumer finance to the large Visa $V and Mastercard $MA payment networks, which are not direct lenders but whose business depends heavily on transaction volume and the fees associated with processing.

The market has reacted sharply. Shares of key players in the payments industry posted significant losses during the first days of regulatory pressure, while volatility also increased in indices that include these sectors.

It is important to stress that no legislative framework with such a cap has yet passed Congress, which means that this is a political move rather than a legally binding regulation. Nevertheless, markets react to expectations, and in this case those expectations and concerns are significant enough to reshape the valuation patterns of firms across the payments and banking sectors.

Source: Bulios stock detail

This context is extremely important for understanding what is happening to the stocks of Visa and Mastercard, companies that do not issue credit per se, but whose business model is closely linked to transaction fees, payment volumes and credit card activity. The absence of clear caps on interest rates allowed card issuers to generate high revenues, which in turn led to higher transaction volumes from which both companies benefited through fees.

In this situation, it is crucial to understand which parts of these companies' business could be threatened by the potential reality of the proposed changes and which parts would remain immune.

Visa $V

Visa is one of the most significant players in the global payments ecosystem. It operates as a network platform for transactional payment card processing and thus does not primarily act as a lender that issues credit to consumers. Its business model is largely based on transaction processing fees, authorization services and other associated payment service revenues in more than 220 countries.

Visa's financial results show relatively stable growth despite macroeconomic uncertainty. Year-over-year growth in payment services and transaction processing revenue contributed to more than 8% growth in payment volume . Visa also increased its dividend and share repurchase program, reflecting strong free cash flow and an emphasis on returning capital to shareholders.

In terms of market value, Visa has long been one of the largest financial technology titles. According to the most recent data, the stock had a market capitalization of about $628 billion.

Although Visa does not charge interest directly to consumers and is not a credit card issuer like banks, its market valuation has been hit by political pressure to limit credit interest rates. In the financial markets, Visa's stock initially came under pressure on concerns about the broader regulatory implications. The price fell 6.7% in two days and has basically gone nowhere in the last eight trading days. Thanks to this move, one share of $V can be had on the exchange for the same price as last January.

This reaction is consistent with the general trend of investors penalizing payment and financial system-related titles in the short term in anticipation of regulatory intervention, even though that intervention primarily targets the credit business of card issuers, not the transaction processing business of the Visa network itself.

In the long term, however, it is important to see the broader context of the payments market. Visa and Mastercard have agreed with US retailers to reduce transaction fees in 2025. They have reduced them from the previous rate of 2-2.5% of the value of payments. This agreement, which has yet to be judicially approved, may impact future revenues from payment networks, particularly in the retailer segment.

At the same time, payment networks face long-standing antitrust practices that may reduce some margins in the medium term if litigation and settlements continue.

Visa's short-term share price declines due to political pressure highlight the market's sensitivity to disruptions in the consumer credit environment. However, it is important to consider that Visa's network fundamentals are based primarily on transaction fees and payment processing, not credit card interest income. This means that the proposal to limit interest rates may not fundamentally disrupt the firm's long-term business model unless it is accompanied by broader interventions in fee policy or transaction volumes.

Longer term, the key drivers of growth for Visa in the expansion of cashless payments remain positive, with increasing adoption of digital payment methods continuing. This makes it one of the most important technology players in the global financial system also in 2026.

Still, it's important to note that the stock's growth ahead of 2025 has pushed the price to a level that is high, according to the Fair Price Index on Bulios. Indeed, $V stock is currently trading nearly 33% above its fair price.

Mastercard $MA

Mastercard is a company with one of the largest global payment networks, operating as an infrastructure for processing payment transactions between merchants, banks and end customers. Unlike banks, it does not charge interest on consumers' credit balances, but earns primarily on transaction processing fees, network access fees, and "value-added services," i.e., value-added security, data analytics, and digital solutions.

Mastercard reported robust revenue and earnings growth in 2025, with its operating results exceeding market expectations. In Q3 2025 , net sales grew 17% year-on-year, while the higher value-added services segment achieved growth of over 25%. This growth reflects increasing global payment transaction volumes and the proliferation of digital payment methods around the world.

The volume of switched transactions also grew, confirming the steady use of the payment network by consumers and merchants. According to external data, Mastercard continued to report year-on-year growth in processed transactions in the first months of 2025, including an 11% increase in transaction volume , supported by wider adoption of cards and contactless payments.

At the stock valuation level, Mastercard has long been among the largest technology companies in the world, with a capitalization of around several hundred billion dollars and a stable position in many investment portfolios. Wall Street also confirms a positive outlook for earnings in 2026, with forecasts for both net income and earnings per share (EPS) growth in the double-digit range. You can find out where the company stands in terms of detailed numbers right in the stock detail here on Bulios.

As with Visa, Mastercard has seen that the discussion about capping interest rates on credit cards has led to pressure on the stock price. Their price has fallen in $MA companies to where they were trading back in November 2024 after a 10.6% drop (from January 9 to today).

These declines reflect market sentiment and concerns about possible future crackdowns rather than a specific change in legislation. Again, the proposal itself has not yet passed Congress and has not been implemented as law. However, the increased risk acts as a variable that may increase the volatility of the title in the short term.

While interest rates on credit cards are not a direct source of revenue for Mastercard, any limitation on transaction or processing fees could have a deeper impact on the long-term revenue model.

Also, there are long-standing antitrust disputes related to fees that may have medium-term implications for the fee structure of the fee model, which is a separate regulatory factor, however not directly related to credit card interest rates.

Nevertheless, Mastercard continues to invest in technology and innovation, including the expansion of digital payment methods, security solutions and partnerships that enhance the addressable market. In addition to traditional transaction processing, the company is focusing on value-added services (products and services beyond the basic payment process) that contribute to margin growth and revenue diversification.

Another trend is technology integration, including biometric payment solutions and integration with global EMV standards.

The impact of the current political debate has been mainly reflected in higher stock valuation volatility and increased perception of regulatory risk. Mastercard's business model structure, based on transaction fees, payment volumes and added services, is decoupled from credit card interest income, which means that the direct impact of the proposal to limit interest should be limited. However, any intervention in fee policy or fee reductions may have a longer-term impact on the company's revenue and margin structure.

Like Visa $V shares, Mastercard $MA shares are currently trading above their fair intrinsic value. You can see this in the Fair Price Index, where the "fair price" calculation is based on DFC and relative valuation.

Conclusion

The stock market, with its reaction to Trump's proposal to cap credit card interest rates at 10%, has clearly demonstrated how much sentiment and regulatory expectations affect company valuations outside of the immediate target area of legislative change. Political pressure caused sharp declines in shares of financial titles including Visa and Mastercard, with investors significantly overestimating the risk of potential regulation before any legislation could be passed or implemented.

The controversy surrounding the interest rate cap is more of a signal of growing political and media pressure on the entire financial sector and consumer credit products than an actual effective regulatory measure.

However, if there are broader legislative changes affecting fee structures or transaction processing in the future, similar to the ongoing controversy over interchange fees, this may have a more profound effect on the long-term returns of these networks and their valuations.

And for companies whose stocks are overvalued, the declines can be very sudden and very sharp, as investors expect strong results and future growth from these companies. Once that belief is even hinted at, stocks react immediately.