The year 2025 is shaping up to be a turning point for Apple, marking the moment it could finally return to the top of the global smartphone market. Analysts at Counterpoint Research now predict that Apple may surpass Samsung in total shipments for the first time since 2011. In an industry where innovation has slowed and demand has softened, this shift carries far more weight than a simple statistical milestone — it represents a realignment of global influence in one of the most competitive consumer markets.

What makes this surge even more notable is the backdrop against which it is happening. Consumers are delaying upgrades longer than ever, household budgets remain under pressure from tariffs, and global sentiment is far from robust. Yet Apple is reporting double-digit growth in both the U.S. and China, with the iPhone 17 outselling its predecessor by 14% in the opening days. The device isn’t just boosting revenue — it's reigniting the company’s entire growth engine.

Why iPhone 17 is pulling Apple back to the top

Behind Apple's $AAPLreturn to the top is not a single factor, but several mutually supporting trends. The most obvious, of course, is the performance of the device itself, which has quickly translated into global demand. While Samsung is expecting only a slight increase in sales volume, Apple is projected to grow at more than double that rate.

Among the main reasons:

• Strong sales momentum for the iPhone 17 (14% better than iPhone 16 in the first ten days)
• regaining the number one position in Chinaone of the world's most important markets
• strong demand in the US and Europeespecially in the premium segment
• Slowdown of Samsung $SMSN.L, which is struggling with lower customer loyalty

These factors combine to make analysts expect Apple to sell about 243 million iPhoneswhile Samsung is expected to stay at around 235 million devices.

Don't overlook: Apple at a crossroads: indestructible giant or future Nokia?

China as a growth engine

Just a year ago, there was talk that China could be a problem for Apple. Domestic competition was intensifying, geopolitical tensions were rising and the company was facing criticism and pressure at the state level. But it only took one product cycle for the picture to change.

The iPhone 17 became a September the best-selling phone in the entire country and is once again a major player in a segment where ecosystem, service and social prestige, not just brand, make the difference. A softening of rhetoric between the US and China has also played a positive role - a shift that has helped reassure investors and consumers.

What remains a risk for now

Although the numbers look great, Apple still faces several challenges that could impact results in future quarters. The most significant of these are weaker consumer confidence and a change in the behavior of customers who are keeping their phones longer. The average time between upgrades has increased to 29 months, an all-time high.

In addition, economic uncertainty may also affect the Christmas season, which Apple traditionally dominates. While it expects a record last quarter in the company's history, the optimism may run into caution among households that perceive high prices and uncertainty in the labor market.

The long game: Apple may maintain its lead until the end of the decade

According to Counterpoint, this is not a one-off phenomenon. If the iPhone 17 maintains momentum and if the company can innovate steadily, Apple can hold the top spot until 2030, according to analysts . This is not just a result of product strength, but also brand, ecosystem and customer loyalty, which competitors have so far struggled in vain to emulate.

Technological shifts brought about by iPhone 17

The success of the latest generation is not just about marketing or timing effects. A significantly upgraded chip, new AI features and improved cameras have taken the user experience to a level that makes everyday use faster in practice and expands the range of tasks the phone can handle right on the device. Apple is capitalizing on a trend where customers are increasingly looking for practical benefits, not just visual innovations. This has translated into positive model adoption in regions where it has traditionally been difficult to justify more frequent upgrades.

Impact of the ecosystem on customer decision-making

While Android phone makers are racing ahead with aggressive pricing and hardware specifications, Apple benefits primarily from the ecosystem. iMessage, Apple Watch, AirPods, iCloud and Apple Pay create such a strong connection that many users consider switching phones less on price and more on compatibility and convenience. This effect is particularly strong in the premium segment, which is more resilient than the mass market even in times of economic fluctuation.

How competitors are responding and why it's not enough

Both Samsung and the major Chinese manufacturers have sought to strengthen their offerings with foldable phones, new AI features or aggressive pricing packages. However, these strategies have hit limits - premium models remain the domain of Apple and the mass segment is extremely competitive in China. This has put Apple in a position that looks paradoxical: it is finding a growth vector in a country where many analysts were writing it off just a year ago. The competition simply cannot offer the same combination of user experience, brand strength and long-term device support.

• What investors are addressing: How overvalued do you think Apple is and how do you see the company going forward?

According to analysts, 2025 is shaping up as the moment that could put Apple back at the forefront of the global smartphone market. Counterpoint Research estimates that the company will surpass Samsung in total shipments for the first time since 2011. For a market that has been slipping into stagnation and slowing innovation in recent years, this change represents more than just a statistic - it's a shift of forces in an industry where even a small advantage can have a huge global impact.

The success of the iPhone 17 comes despite an environment that would normally hold back even the strongest brands. Consumers are waiting longer than at any time in modern history to upgrade their phones, and household sentiment is weakened by tariffs and general economic uncertainty. Still, Apple is reporting double-digit growth in both the U.S. and China, and the new-generation iPhone is outperforming its predecessor by fourteen percent in its first few days of sales. The iPhone is becoming a driver not only of sales but also of the company's overall momentum.

Why iPhone 17 is pulling Apple back to the top

Behind Apple's $AAPLreturn to the top is not a single factor, but several mutually supporting trends. The most obvious, of course, is the performance of the device itself, which has quickly translated into global demand. While Samsung is expecting only a slight increase in sales volume, Apple is projected to grow at more than double that rate.

Among the main reasons:

• Strong sales momentum for the iPhone 17 (14% better than iPhone 16 in the first ten days)
• regaining the number one position in Chinaone of the world's most important markets
• strong demand in the US and Europeespecially in the premium segment
• Slowdown of Samsung $SMSN.L, which is struggling with lower customer loyalty

These factors combine to make analysts expect Apple to sell about 243 million iPhoneswhile Samsung is expected to stay at around 235 million devices.

Don't overlook: Apple at a crossroads: indestructible giant or future Nokia?

China as a growth engine

Just a year ago, there was talk that China could be a problem for Apple. Domestic competition was intensifying, geopolitical tensions were rising and the company was facing criticism and pressure at the state level. But it only took one product cycle for the picture to change.

The iPhone 17 became a September the best-selling phone in the entire country and is once again a major player in a segment where ecosystem, service and social prestige, not just brand, make the difference. A softening of rhetoric between the US and China has also played a positive role - a shift that has helped reassure investors and consumers.

What remains a risk for now

Although the numbers look great, Apple still faces several challenges that could impact results in future quarters. The most significant of these are weaker consumer confidence and a change in the behavior of customers who are keeping their phones longer. The average time between upgrades has increased to 29 months, an all-time high.

In addition, economic uncertainty may also affect the Christmas season, which Apple traditionally dominates. While it expects a record last quarter in the company's history, the optimism may run into caution from households that perceive high prices and uncertainty in the job market.

The long game: Apple may maintain its lead until the end of the decade

According to Counterpoint, this is not a one-off phenomenon. If the iPhone 17 maintains momentum and if the company can innovate steadily, Apple can hold the top spot until 2030, according to analysts . This is not just a result of product strength, but also brand, ecosystem and customer loyalty, which competitors have so far struggled in vain to emulate.

Technological shifts brought about by iPhone 17

The success of the latest generation is not just about marketing or timing effects. A significantly upgraded chip, new AI features and improved cameras have taken the user experience to a level that makes everyday use faster in practice and expands the range of tasks the phone can handle right on the device. Apple is capitalizing on a trend where customers are increasingly looking for practical benefits, not just visual innovations. This has translated into positive model adoption in regions where it has traditionally been difficult to justify more frequent upgrades.

Impact of the ecosystem on customer decision-making

While Android phone makers are racing ahead with aggressive pricing and hardware specifications, Apple benefits primarily from the ecosystem. iMessage, Apple Watch, AirPods, iCloud and Apple Pay create such a strong connection that many users consider switching phones less on price and more on compatibility and convenience. This effect is particularly strong in the premium segment, which is more resilient than the mass market even in times of economic fluctuation.

How competitors are responding and why it's not enough

Both Samsung and the major Chinese manufacturers have sought to strengthen their offerings with foldable phones, new AI features or aggressive pricing packages. However, these strategies have hit limits - premium models remain the domain of Apple and the mass segment is extremely competitive in China. This has put Apple in a position that looks paradoxical: it is finding a growth vector in a country where many analysts were writing it off just a year ago. The competition simply cannot offer the same combination of user experience, brand strength and long-term device support.

• What investors are addressing: How overvalued do you think Apple is and how do you see the company going forward?

Across the past two years, investors have watched markets swing mezi strachem a opatrným optimismem, zatímco tlak na marže a rozkolísaná poptávka brzdily řadu firem napříč sektory. Yet in the middle of this volatility, a few businesses continue to expand profits, protect their cash flow and — remarkably — boost shareholder payouts. A dividend increase of more than 14% is not just a routine adjustment; it is a declaration of strength from a model that can operate even when the broader economy stumbles.

Behind this raise stands a balancing act between a legacy creative business and a rapidly growing digital and data-driven ecosystem. Many companies have struggled to manage that transition, but Omnicom Group has turned it into a competitive advantage. Its ability to lift the dividend faster than earnings growth tells a deeper story about resilience, consistency and a portfolio that holds up even as parts of the industry slow. This year’s increase is one of the most assertive in the company’s recent history — and a reaffirmation of its status as one of the most reliable income names in global communications.

Top Points

- Dividend raised 14.3%, the highest increase in more than a decade
- Forward dividend yield around 4.5%
- Steady revenue growth to $15.69 billion in 2024
- EPS grew 8%, faster than operating profit
- EBITDA of USD 2.62 billion, margin stable despite cycle
- Massive buybacks reducing share count by nearly 20 million shares in 3 years
- Business mix shifting towards less cyclical digital segment
- Company shows high resilience even in years when competitors stagnate

Company profile

Omnicom Group $OMC is one of the most robust marketing conglomerates in the world today. Its strength lies not only in its breadth of services, but more importantly in its deep integration of data, media, creative and technology solutions. The company operates in more than 100 countries and represents hundreds of agencies specializing in branding, content marketing, PR, performance campaigns, media buying, performance measurement and digital automation. This broad network provides clients with a unique global reach while stabilizing financial results through diversification across industries and regions.

Over the past five years, the firm has fundamentally strengthened its digital competencies. This is because the market has changed dramatically - campaigns are now driven by data, predictive models, AI personalization and accurate measurement of return. Omnicom has invested in proprietary data platforms, expanded internal AI tools, strengthened analytics teams, and shifted part of the business to technologies that automate campaign planning, optimization, and evaluation. It is this technology layer that allows margins to be generated more steadily than traditional creative segments, which tend to be highly cyclical.

For investors, it is important that the company can grow even in a period when many marketers are cutting their budgets. Omnicom compensates for this primarily structurally: the shift to digital means greater efficiency, better scalability and less sensitivity to fluctuations in the global economy. This is one of the reasons why the company is one of the most reliable dividend payers in its segment.

Competition

The marketing and communications industry is extremely competitive, with Omnicom, WPP $WPP, Publicis Groupe and Interpublic Group $IPGforming the dominant four . However, the market dynamics have changed fundamentally in recent years, with the biggest battleground shifting towards technology, data and automation. Competitors are therefore investing massively in AI platforms, data sets and proprietary analytics tools.

Publicis has a strong data division, Epsilon, which gives it a competitive advantage. WPP is consolidating technologies across its portfolio and building on its own cloud platforms. Interpublic focuses on performance marketing. Omnicom, however, has chosen a strategy of combining disciplined financial management with a gradual but very consistent technology transformation. It doesn't run the risk of over-acquisitions, but still keeps pace thanks to the synergy of creative, media and technology.

What sets Omnicom apart is the stability of its operating results. While growth is not as aggressive as Publicis, its margins and cash flow are more predictable - and that is valued more highly in the dividend world than momentum at any price.

Management

• CEO John Wren

Management has long championed a balanced growth model that emphasizes profitability, capital discipline, and a progressive modernization of its service portfolio. Management takes a conservative approach to investment and focuses on areas that have a real impact on margins - primarily data systems, technology solutions and process automation in both the media and creative businesses.

The approach to share buybacks is also key. Over the past three years, the company has reduced the number of shares from 214 million to 196 million. This is not a cosmetic adjustment - buybacks keep EPS growth high even in periods when organic revenue growth slows. The company's CFO (Philip J. Angelastro) is also successfully stabilizing operating expenses, which is evident in the fact that EBITDA and operating profit are both growing faster than revenue itself.

He is also working effectively with the capital structure. Debt is kept within reasonable limits, the company generates sufficient cash flow and returns most of its funds to shareholders - through a combination of dividends and buybacks. In terms of corporate governance, this is one of the most disciplined teams in the industry.

Long-term results

Omnicom's financial performance is among the most stable in the communications industry. Revenues for 2024 reached $15.69 billion, up 6.8% year-over-year. Gross profit rose to $2.74 billion and operating profit increased to $2.347 billion, a strong 11% growth. This confirms the strength of the operating model and management's ability to maintain high efficiency.

Net profit reached US$1.48 billion, with EPS up 8% due to a combination of higher profitability and a decline in share count. EBITDA strengthened to US$2.617 billion and is showing a steady growth trajectory. All of this suggests that the company can consistently generate cash even in periods when economic cycles weaken marketing spending.

Moreover, over the long term, Omnicom benefits from a diversified portfolio of clients across industries - automotive, healthcare, financial services, consumer brands and telecommunications. This diversification mitigates the cyclical pressures that are typical of the marketing sector.

Fundamental overview: what key metrics show

Valuation

• P/E 11.1 - The market values the company significantly lower than both the broader market and some of its competitors. A low P/E indicates that investors value stability but do not expect aggressive growth. Positive for dividend investors.
• P/S 0.90 - Very low for a firm with stable margins; stock is not expensive on earnings.
• P/CF 8.66 - Confirms that the firm generates relatively strong cash flow relative to valuation.
• P/B 3.13 - Firm is trading above book value, which is common for brand agencies (most of the value is intangible - clients, contracts, creative know-how).

Profitability

• ROE 31.2% - Excellent return on equity, well above the industry average. The high ROE is partly driven by higher leverage, but operationally it is a very strong number.
• ROIC 11.8% - confirms that the company can generate value above the cost of capital.
• Operating margin 14% - A healthy, above-average margin in an industry where most players oscillate between 10-12%.
• Net margin 8.3% - Very respectable for a marketing holding company with a large operating apparatus.
• Gross margin 17.4% - Low margin is normal for this type of business; value is created only by operating leverage.

Liquidity

• Current ratio 0.92, Quick ratio 0.73 - The company is not "cash heavy" but keeps liquidity within safe limits for its model. Low working capital is normal - in an industry with a fast cash cycle.
• Cash ratio 0.21 - common; the firm operates with minimal cash and relies on stable operating cash flow.
• Operating Cash Flow Ratio 0.11 - A sign of a capital-light but cash-flow-stable business.

Solvency

• Debt to Equity 1.53 - The firm operates with higher leverage, which is common for large agency groups. It is not above the break-even point.
• Interest coverage 8.9× - Firm very safely covers interest expense, debt is not a risky item.
• Long-term Debt to Cap 0.48 - Approximately half of capital structure made up of long-term debt - a healthy level.
• Equity ratio 0.18 - Relatively low, but normal for an "asset-light" business.
• Altman Z-Score 1.70 - "Caution" band, but normal for higher leveraged firms with low tangible assets. This is not a signal of impending insolvency.

Dividend

Dividend increase of 14.3% is a clear signal of management's confidence in the company's future. The new payout of $0.80 per share is the largest increase in more than a decade and moves the dividend yield to 4.5%. Omnicom has long maintained a conservative payout ratio and does not compromise investment capacity or financial flexibility with dividend growth.

What's key for investors is a combination of three factors: stable cash flow, high predictability of results, and gradually growing EPS. This mix creates an environment that allows dividend investors to expect long-term payout growth. In terms of stability, this is one of the most attractive titles in the communications services sector.

Why dividend growth is credible for this company

The fact that the company raised its dividend by 14.3% to $0.80 per share is not a one-time gesture to better shareholder sentiment, but the logical outgrowth of its ability to generate high and relatively stable free cash flow over the long term. Omnicom has combined several parameters in recent years that make the dividend story an interesting mix of yield and quality.

First, the payout ratio has been around 40-45% of net income over the long term, roughly in the ideal range where the dividend is neither strangled nor on the edge of sustainability. Moreover, the company is not cashing out all of its free cash flow - the free cash flow payout ratio has been lower than the payout from book earnings in recent years, which means there is plenty of room after the dividend to invest in acquisitions, technology and share buybacks. Even though management just raised the dividend at a double-digit rate year-over-year, it still isn't chasing it to a level that would force the company to stretch for debt on every other increase.

Second, dividend growth is based on real earnings growth, not financial engineering. In recent years, both revenue and earnings per share (EPS) have grown at a solid single-digit to low double-digit rate, while the number of shares outstanding has declined due to buybacks. This means that even if a company left the absolute amount of its dividend unchanged for several years, the dividend per share would still grow due to the decline in the number of shares. Thus, the increase to $0.80 per quarter is just an acceleration of a trend that is supported by fundamentals anyway.

Third, Omnicom's business is admittedly cyclical - corporate marketing budgets are sensitive to the economy - but its client portfolio is spread across sectors and regions, and the firm has maintained very solid margins over the long term. Even in weaker years, it can generate well above-average returns on capital and strong cash flow, exactly the type of profile that tends to underlie long-term dividend growth. Thus, the 14.3% increase is not happening at the peak of the "whatever it takes" cycle, but at a time when the company has had several years of honest work on efficiency and margins.

How Omnicom stacks up against other dividend players in the sector

Within the global communications and advertising groups, Omnicom is one of the titles that combines an attractive dividend yield with a stronger balance sheet and more stable performance than some of its competitors. It makes sense for an investor to look at it in the context of names like Publicis, Interpublic (IPG) or WPP.

Publicis has been the star of the industry in recent years - growing fast, investing heavily in data platforms and AI, and offering a dividend yield of around 4%. Its story is more growth, partly at the cost of a higher valuation. Interpublic has a similarly attractive yield and also pays a stable dividend, but has struggled in recent years with greater organic growth volatility and a slower pace of business transformation. WPP, on the other hand, offers a traditionally higher dividend yield (around 4-5%), but also carries greater structural risks - margin pressure, weaker organic growth, higher debt, and long-term catch-up in technology and data capabilities.

Omnicom profiles as a "middle-of-the-road" option relative to this trio. The post-raise dividend yield is around 4.5% (at current price) and the company has several years of steady earnings per share growth, solid return on capital and a conservatively set payout ratio. Unlike Publicis, it is not such a "hot growth story" but offers a similar combination of digital transformation and disciplined capital allocation. Compared to WPP, it has traditionally had better margins, cleaner execution and less dramatic swings in organic growth, so the dividend is not on such a fragile footing.

From the perspective of a pure dividend investor, this makes Omnicom look like a compromise between yield, stability and execution quality. It doesn't pay the highest percentage in the sector, but it is one of those companies that is more likely to continue to grow its dividend and sustain it over the long term.

Structural trends that support Omnicom's growth

Profitability and dividend growth at the company is not just about internal discipline, but also rests on several long-term trends in advertising and marketing industries that play into its hands. For an investor, it's good to keep these moves "under the surface" in mind, as they determine who will be the top performer in the industry ten years from now.

First, clients increasingly want integrated solutions instead of purely creative campaigns. It's no longer just about TV ads or banner ads on the web, but a complete package - from brand strategy to data, analytics, targeting to performance marketing and results measurement. Because of its size and scale, Omnicom is able to deliver these solutions across channels and regions, which increases the "stickiness" of the relationship with large clients and encourages repeat business, which is the foundation of stable cash flow.

Second, the market is shifting towards data, AI and personalisation. Big brands want to work with first-party data, combine it with external data sources and use AI to improve targeting and creative in real time. Omnicom is investing in proprietary data platforms, marketing automation and analytics, allowing it to move higher up the value chain - from "ad agency" to business results partner. Such services have higher margins and are less replaceable by purely in-house client teams.

Third, the globalisation of marketing favours large holding companies. International brands want to have a unified strategy and local execution across dozens of markets. Smaller agencies can often handle one region or discipline, but not the global orchestration of campaigns across continents. Omnicom's network of agencies and long-standing relationships with major clients means it fills the position of "master coordinator", which brings stable fees and relatively predictable cash flow even in periods when some of the smaller campaigns are being cut.

Fourthly, the pressure for efficiency in marketing budgets paradoxically favours those who can demonstrate a return on investment. When budgets get tight, management at large firms tend to stick with partners who can measure and report on the specific impact of campaigns on sales, brand or acquisition channels. Omnicom has long built a reputation as a player that can combine creativity with hard numbers - and that's exactly the combination that creates room for both margin maintenance and dividend growth over the medium term.

News and strategic moves

Omnicom has accelerated the pace of technology investment in recent years. The company is expanding its proprietary AI systems to automate campaigns, developing advanced analytics tools to measure impact, and investing in data infrastructure that enables audience segmentation by behavior, context, and demographics. These technologies are not add-ons, but at the core of the company's new strategic position in the digital ecosystem.

At the same time, it continues to make targeted acquisitions of smaller digital agencies that strengthen competencies in high-growth, less cyclical segments. Also important is building a stronger technology layer across media agencies, which increases margins and reduces reliance on pure creative services. This transformation is not a sudden turnaround, but a long-term strategy that the company is executing consistently and without undue risk.

Analysts' expectations

Analysts appreciate steady EPS growth, strong operating discipline and a sustainable dividend policy. In the long term, they expect revenue growth between 3-6% per annum and continued expansion of the digital segment, which will gradually increase margins. The dividend is expected to continue to grow at a rate of around eight per cent, depending on the strength of free cash flow and the extent of future buybacks.

According to analysts, Omnicom is not an aggressive growth title, but a stable value generator with high transparency of results. This profile is extremely attractive to dividend investors, especially in a sector that can be volatile.

Investment scenarios

Optimistic scenario (12-24 months, most bullish)

The optimistic variant assumes that the global economy starts to accelerate slightly in 2026 and marketing budgets stop stagnating. Companies in the retail, technology services, automotive and telecoms sectors typically respond to positive sentiment by increasing spending on brand and performance campaigns. This could lead to organic OMC revenue growth accelerating from the long-term 3-4% towards 6-7%. Digital segments (data, performance advertising, analytics) could then grow double-digits due to higher demand for measurable and effective campaigns.

At the same time, operating margins could continue to improve. Omnicom has one of the highest operating efficiencies in the industry, and technology investments are starting to have a measurable impact - automation of campaign planning, AI-driven creative tools, and greater scalability of data platforms. If the digital division grows faster than traditional creative, this could lead to an additional 1-2pp EBITDA margin expansion.

The combination of higher revenues, slightly higher margins and continued buybacks would result in double-digit EPS growth. This creates room for further dividend increases at a rate of 8-10% per annum without the company having to increase the payout ratio.

In an optimistic scenario, the stock has room to appreciate by 30-40% due to a confluence of stronger fundamentals, higher investor confidence, and a return of valuation from the cyclical low to its historical average.

Realistic scenario (most likely outlook)

This scenario is based on what OMC has been demonstrating over the long term. The company grows slowly but steadily. Organic revenue growth of 3-5% per year is realistic even as the marketing industry remains slightly under pressure. Operating margins should remain stable as the cost structure doesn't change much and the company continues to improve efficiencies as well as consolidate technology platforms.

Buybacks remain an important component of returns. OMC's long-term strong cash flow allows it to combine dividends and buybacks without compromising financial stability. This means EPS can grow at a rate of 6-9% per year even with relatively modest revenue growth.

The dividend will then grow at a rational but stable rate of 6-8%. The payout ratio will remain at safe levels and the forward yield of between 4-5% will remain attractive.

The share price would move higher in a realistic scenario due to steady growth, improving sentiment and investors beginning to appreciate the reliability of the model. The realistic upside potential is 15-25% over one to two years.

Pessimistic scenario (cyclical pressure, economic slowdown)

The pessimistic scenario is based on the assumption that the global economy will slow down more sharply than expected. Marketing budgets have historically been among the first to be cut by companies in times of uncertainty - and therefore demand for some OMC services could weaken. Organic revenue growth could slow to 0-2% or even swing slightly into negative territory.

Operating margins may come under pressure as a portion of costs are fixed and the firm cannot cut them immediately. This coupled with slightly weaker cash flow will lead to a slowdown in buybacks. EPS could then stagnate or grow very slowly (1-3%), which would translate into weaker dividend growth.

In a pessimistic scenario, a dividend increase is still possible, but rather symbolic - around 2-4%. The forward yield would remain attractive, but the share price rebound would be weak. The stock could fall 10-15%, especially if the market prefers growth stocks in the hope of a future recovery.

The upside, however, is that even in a pessimistic scenario, the stability of the dividend is not at risk - the company's cash flow is strong enough to handle weaker years.

What to take away from the article

• The 14.3% increase in the dividend to $0.80 per quarter is not cosmetic, but an affirmation that the company is confident in long-term sustainable payout growth even in an environment of cyclical pressure on marketing budgets.
• The dividend yield of around 4.5% is combined with a reasonable payout ratio and strong free cash flow, so the dividend is not based on debt or a financial "gimmick" but on the real profitability of the business.
• Omnicom is not just an "ad" company, but a global integrated platform - it brings together creative, media, data, analytics and AI, making it less reliant on purely whimsical campaign chopping.
• Long-term growth in revenue, operating profit and EPS, supported by buybacks, shows that management can translate technology transformation (data, AI, automation) into tangible numbers, not just presentations.
• A valuation around P/E ~11 and P/S below 1 means the market is not giving the company much growth credit - but for a dividend investor, it can be a combination: decent yield + discounted price tag vs. quality of business.
• An ROE of over 30% and a solid ROIC of around 12% show that the company can appreciate capital well above cost - exactly the profile that usually yields a long run of rising dividends.
• Within the sector, Omnicom looks like a 'middle-of-the-road' option: not as aggressive and expensive as the more growth-oriented Publicis, but not as fragile as some high-yielding but structurally weaker stories like WPP.
• The cyclicality of marketing budgets remains a key risk, but client diversification, the technology shift to data and AI, and management discipline make Omnicom a candidate for a long-term dividend pillar, not just a short-term "yield trade".

What began as a localized cooling-system problem at a single data center quickly cascaded into a global trading blackout. From index futures to energy and currency contracts — the outage frozen markets across asset classes. The incident underlined how fragile modern market infrastructure remains, especially for institutional traders and hedge funds relying on uninterrupted data flow for risk management. 

The situation was all the more complicated because the blackout occurred on the day of shortened trading after the US Thanksgiving holiday, known as Black Friday. Traditionally, markets are only open on this day on a limited basis, with liquidity being significantly lower and trading activity subdued. In such an environment, any sudden infrastructure outage increases the risk of abnormal price movements, as the reduced volumes cannot naturally absorb the increased amount of orders and changes in sentiment.

According to Reuters the outage was triggered by a problem in the cooling of data centers, which subsequently led to the failure of key systems needed to run the Globex trading platform, the backbone of trading at CME Group. Contracts for a wide range of assets were affected. These include futures on indices such as the S&P 500 and Nasdaq 100 to currency futures, where trillions of dollars are traded monthly, to oil, natural gas, gold, agricultural commodities, as well as interest rate futures, which are among the most important instruments for financial institutions. Thus, the outage affected not just one market, but virtually the entire global derivatives ecosystem. Thus, most trading froze within minutes.

Institutions that are used to relying on "live" prices from the CME as a benchmark suddenly had nothing but internal models at their disposal. Some brokers even temporarily banned the opening of new positions because the risk of clients trading on out-of-date data was too high. In practice, this created a situation where markets remained open but the pricing that is supposed to be their underlying mechanism was disrupted. This left traders around the world in a position where they could not effectively hedge their risks or react to changes in the macroeconomic environment.

This disruption also opened up uncomfortable questions about how resilient modern markets are to technical failures. CME Group is the world's largest derivatives exchange and a key node in the global financial infrastructure. A trading halt of this magnitude is thus bound to raise concerns and controversy among regulators, investors and the exchanges themselves. And while regulation has significantly tightened the requirements for technological readiness of exchanges since 2008, it is not difficult to imagine that a similar event could have even greater repercussions, especially if an outage were to occur during a period of extreme volatility or during macroeconomic announcements.

Shares of $CME are weakening less than a percent ahead of the open, where they have come from a drop of around 3%.

To better understand how significant the impact of such incidents can be, it is useful to look at history. CME Group has experienced a few blackouts in the past. For example, in 2014, several key agricultural contracts experienced short-term trading closures when a software misconfiguration caused systems to fail. At that time, the markets had to switch to traditional "open-outcry" form of trading, an archaic solution from today's perspective. Further brief outages occurred in 2019 and 2020 when technical glitches limited the functionality of the Globex platform.

However, the trading outage has much broader implications that are not limited to derivatives markets. Index futures, such as the S&P 500 or Nasdaq, are key sentiment tools because they are the first to react to changes in the global environment. When these tools are unavailable, investors are unable to get an early signal of the mood of the markets. This creates an environment in which risk is transferred to other asset classes such as equities, bonds or cryptocurrencies. Thus, at the time of the CME outage, equity markets were left without one of their main compasses, leading to some uncertainty as well as unusually low trading activity.

The impact on the commodities and energy sectors also deserves special attention. WTI, Brent and natural gas futures are among the most traded commodity contracts in the world. The disruption to their trading means that there is a risk that prices could open with significant gaps when traffic resumes. Any disruption to pricing in these contracts can have a direct impact on their performance and share prices. The same risk applies to mining companies tied to gold, silver or copper.

The shortfall has also hit currency markets hard. Meet the EBS Platformwhich is part of the CME and handles a huge part of the world's FX (forex) trading. It came under pressure after the outage and experienced problems with data and trade execution shortly after the outage.

A sample of the EBS platform

In the context of the CME outage, it is also worth mentioning the role of risk management. Many institutions use sophisticated strategies that include futures, options and other derivatives. If an outage occurs, it can be difficult to keep these strategies under control. Positions that are normally hedged are suddenly at risk. Some funds may be forced to close positions or increase positions, which can further increase volatility. This then feeds through into equities as institutions often make portfolio adjustments across different asset classes.

For retail traders and investors, however, not much has changed yet. In fact, the outage occurred at a time when US exchanges are still closed and there are still a few hours before opening during which the situation is likely to be resolved. With today's trading being shortened in the US market, we shouldn't see too much of a gap. However, if this situation were to arise in the middle of a "heated" and volatile trading session, for example, it could be a significant problem that could cause incorrect position openings or closings that could cost traders a bunch of money.

Realty Income enters the end of 2025 with the same trademark consistency, yet s novým momentem, který naznačuje, že firma už dávno přerostla rámec tradičního amerického REITu. The company continues converting long-term leases into dependable monthly cash flow, but the latest quarter also reveals accelerating internal growth and a healthier balance sheet, even in an environment marked by elevated interest rates and cautious real estate valuations. Investors looking for predictability once again find a business that delivers both stability and quiet, disciplined expansion.

What stands out even more is Realty Income’s growing global reach. Europe has become a strategic pillar of deployment, offering attractive yields and diversification across tenant types and regulatory regimes. This international momentum, combined with near-full occupancy and long lease durations, creates a foundation for ongoing dividend increases while maintaining financial conservatism. For a company built on reliability, Q3 2025 signals the start of a broader, more geographically resilient Real Estate Income story.

How was the last quarter?

In the third quarter of 2025, Realty Income $O increased total revenue to $1.47 billion, a solid increase from $1.33 billion a year ago. This momentum reflects acquisition activity as well as organic rent increases and successful portfolio management. Net income available to shareholders was $315.8 million, or $0.35 per share, an improvement from $0.30 per share in the same period last year. From a REIT perspective, however, the key metrics are FFO and AFFO - funds from operations and adjusted funds from operations, respectively - metrics that better capture the true performance of the rental business.

FFO per share increased in the quarter to $1.07 from $0.98, Normalized FFO to $1.09 from $0.99 and AFFO to $1.08 from $1.05 a year earlier. This means that even after accounting for higher expenses and commissions, the company was able to increase its key dividend payout source year-over-year. Investment activity played a significant role, with Realty Income investing $1.4 billion in new properties during the quarter for an initial cash yield of 7.7 percent. Net debt to annualized pro forma Adjusted EBITDAre held at a reasonable 5.4x, which is acceptable for a large net-leveraged REIT. Also positive is the rent recapture rate of 103.5 percent, which means that the company is achieving higher rents when re-leasing vacated units than before the original leases expired.

• Full presentation with results.

CEO commentary

CEO Sumit Roy highlighted that Realty Income has built a "resilient and diversified revenue generation engine", which he said is clearly visible in the fresh quarterly numbers. The firm has access to a wide range of capital sources - from equity to forward share sales to corporate debt - and is able to combine them in a way that supports accretive AFFO per share growth. Roy also highlighted that the platform is scalable across geographies and sectors and that the current deal environment offers very attractive returns, particularly in European markets.

In his comments, he also highlighted the strength of internal growth, illustrated by a rent recapture rate of over 100 per cent. This shows that Realty Income is not just a buy-and-hold vehicle, but is actively managing the portfolio and using its negotiating position to achieve better terms on lease renewals. Diversification across 92 industries and nearly 1,650 tenants, he says, increases revenue stability at different stages of the economic cycle. Roy also noted that flexibility - be it geography, property type or financing structure - is a key competitive advantage that management is looking to further monetise in the coming years.

Outlook

Realty Income has revised its 2025 outlook upward in terms of AFFO per share, which it now expects to be in the range of $4.25-4.27. This is a signal that a combination of acquisitions, internal rent growth and efficient portfolio management can more than offset the impact of higher interest rates on financing costs. The company also expects full-year investment volume of around $5.5 billion, suggesting that the current quarter was not an exception but part of a broader growth trajectory.

On the financing side, the company is using a mix of equity and debt. In October 2025, it issued $400 million of senior unsecured notes at 3.95 percent due in 2029 and another $400 million at 4.5 percent due in 2033. At the same time, the At-The-Market program continues, with forward sales of 5.6 million shares settled in the quarter for gross proceeds of approximately $320 million, and an additional 17.7 million shares remaining in outstanding forward contracts with expected net proceeds of approximately $1 billion. All of this gives management room to continue to invest in new acquisitions without dramatically worsening the debt profile or compromising the ability to increase the monthly dividend.

Long-term results

Looking at a longer time series, it's easy to see how aggressively Realty Income has grown. In 2021, annual revenues were roughly $2.08 billion, by 2022 they were $3.34 billion, by 2023 they were over $4.08 billion, and by 2024 they had reached $5.27 billion. This represents exceptionally strong growth, driven primarily by acquisition expansion and equity issuances that have expanded the property base and tenant base. Given the net-lease model, direct operating costs at the cost of revenue level remain relatively low - only around $378 million in 2024 - allowing for very high gross margins.

Thus, gross profit rises gradually from just under $2 billion in 2021 to over $3 billion in 2022 and $3.76 billion in 2023 to almost $4.9 billion in 2024. But operating costs also rise, both in absolute terms and due to team expansion, acquisitions and the costs of managing and financing joint venture structures. In 2021, they amounted to just under one billion dollars; in 2022 they were already 1.81 billion, in 2023 over 2.04 billion and in 2024 they reached about 2.57 billion dollars. Even so, operating profit in 2024 climbed to $2.32 billion, more than a third higher than in 2023 and more than double the 2021 level.

At the pre-tax level, growth is much more modest, with pre-tax income around $918-934 million in 2022-2024, reflecting the impact of higher interest and other financing costs that accompany expansion. Net income has held fairly steady around $860-870 million since 2022, with 2021 at $359 million even significantly lower. EPS per share, on the other hand, has tended to decline in recent years, from $1.42 in 2022 to $1.26 in 2023 and $0.98 in 2024. This is due to large-scale share count increases: the average number of shares has risen from roughly 415 million in 2021 to over 873 million in 2024, which is typical of REITs financing growth through equity issuance.

In terms of EBITDA, Realty Income shows a robust growth profile. EBITDA is around $1.85 billion in 2021, rising to nearly $2.98 billion in 2022, over $3.6 billion in 2023 and exceeding $4.32 billion in 2024. This reflects the scaling of the entire platform - more properties, higher rents and greater geographic diversification translate into stronger cash flow, which is behind the firm's reputation as one of the most reliable dividend titles in the market.

News

Highlights of the quarter include the continued tradition of dividend growth. Realty Income announced its 112th consecutive quarterly dividend increase in September 2025 and its 132nd increase overall since joining the NYSE in 1994. The annual dividend was approximately $3.234 per share as of September 30, 2025, while the monthly dividend for the quarter increased to $0.807 from $0.789 a year ago. The payout ratio was approximately 74.7 percent of AFFO per share, leaving room for both further investment and future payout increases if AFFO continues to increase.

The company is also actively working through its debt and capital structure. In October, it issued a pair of unsecured bonds maturing in 2029 and 2033 with coupons of 3.95 and 4.5 percent, respectively, providing stable funding on terms that are still relatively favorable in the context of the current interest rate curve. The ATM program continues with outstanding forward sales of 17.7 million shares, which represent a potential future source of equity capital. On the portfolio side, the key message is the continued very high occupancy of 98.7 per cent across 15,542 properties and 1,647 tenants in 92 sectors. During the quarter, the firm managed to achieve a rental recapture rate of 103.5 percent on unit re-lettings, confirming the strength of its data-driven asset management and ability to maintain or improve rents even as contracts expire.

Shareholding structure

Realty Income's shares are overwhelmingly held by institutional investors, which is typical for a large blue-chip REIT. Institutions hold approximately 80 percent of the free float, while insiders own only about one-tenth of one percent of the shares. That said, the title is heavily represented in index funds, ETFs and actively managed portfolios focused on dividend and real estate strategies, making it sensitive to institutional capital flows.

The largest shareholder is the Vanguard Group with a stake of about 16.3 percent, equivalent to about 150 million shares. The second largest holder is BlackRock with over 100 million shares and a stake of approximately 10.9 percent. State Street manages about 63 million shares, or just under 7 percent, and Geode Capital Management holds about 3 percent. Such concentrated institutional ownership provides high liquidity and also demonstrates that Realty Income is one of the core positions in a number of long-term dividend and real estate strategies.

Analyst expectations

The analyst community views Realty Income primarily as a defensive income title that should provide investors with a combination of a stable monthly dividend and modest growth in AFFO per share over the longer term. The focus is primarily on management's ability to keep the yield on new acquisitions above the cost of capital, control debt around five to six times EBITDA, and gradually increase the dividend in line with AFFO growth. The currently raised 2025 outlook is viewed positively by most analysts as it confirms that investment activity is not at the expense of cash flow quality.

Going forward, investors and analysts will be watching several key themes closely. The first is the pace and structure of international expansion - particularly in Europe, where differing legislative and tax environments can affect the risk profile of a portfolio. The second is the evolution of interest rates and the associated cost of refinancing debt as well as the profitability of new acquisitions. The third is Realty Income's ability to continue to achieve high occupancy, rent recapture rates above 100 percent and maintain diversification across tenants and sectors. If the firm can maintain AFFO's current growth trajectory while controlling debt, the title should maintain its reputation as one of the highest quality dividend REITs in the market.

Fair Price

Alibaba is making one of its most daring hardware moves in years, and it goes far beyond launching another consumer gadget. With the debut of the Quark S1 smart glasses, the company is signaling a strategic leap toward a world where the primary interface shifts from handheld screens to immersive, AI-driven layers of information. The device blends Alibaba’s proprietary Qwen AI models, a growing ecosystem of apps, and an increasingly ambitious hardware vision — all aimed at building a platform that could, one day, challenge the dominance of the smartphone.

The rollout alone shows how seriously Alibaba tento nový směr myslí. The Quark S1 hit shelves in more than 600 physical stores across 82 Chinese cities, while simultaneously launching on Tmall, JD.com and Douyin. The timing is ideal: China has become the fastest-growing AR wearables market in the world, and consumers are rapidly adopting AI assistants, real-time translation and AR navigation. Rather than testing an immature category, Alibaba is stepping into a space where demand already exists — and where a major player can rewrite the rules of personal computing.

Quark S1 delivers a technology package that is hard to ignore. Micro-OLED transparent displays show contextual information directly in the field of view, while the camera and sensors enable visual analysis of the environment. Bone microphones improve voice recognition even in noisy environments, and replaceable batteries with 24-hour battery life address the biggest weakness of today's glasses - their limited power autonomy. Under the hood runs Qualcomm's Snapdragon AR1 optimized for augmented reality, complemented by NPU units for fast AI computations, translation, object recognition, or Qwen's answer generation.

But it's not just about technology. Alibaba is introducing Quark S1 at a time when it is transforming the entire company towards an AI-first model. Having recently unified all consumer services into the Qwen app, which gained over 10 million users in a matter of days, the glasses are becoming a physical extension of that platform. And this is where the long-term strategy becomes apparent: to connect Qwen AI with services like Taobao, Alipay, Fliggy, or the music catalogs of NetEase and Tencent. In this way, the glasses are not an isolated device, but a gateway to an ecosystem already used by hundreds of millions of people.

This allows Alibaba to offer something that competitors can't yet: a complete life in AR. A user can look at a product in the store and see reviews from Taobao right away, pay with a gesture via Alipay, translate signs around them into English, have the architecture of where they're standing described in real time, or get traffic alerts without ever pulling out their phone. This is the type of integration that startups are finding hard to match - and that even Meta or Xiaomi are watching with growing interest.

The market in China is extremely dynamic at the moment: according to IDC, 1.6 million smart glasses were sold in the last 12 months, and if you include models with displays, the number exceeds 2 million. Xiaomi is the dominant player, but only until a stronger combination of ecosystem, AI and user experience emerges. Alibaba's entry may be the moment when the market splits into a "pre-Quark" and "post-Quark" era. This is borne out by IDC's commentary, which expects a fundamental change in the competitive landscape - and investors are wondering if Alibaba $BABA is poised to become the next big player in a field where hardware and AI are combined into a single product.

Competition in the form of Meta $META Ray-Ban Display is pointing the way, but Alibaba is adding its own pace. Meta has the edge so far in interacting with a global audience and experimenting with gesture control, but Alibaba has something that Western rivals lack: a giant domestic user base, a centralized ecosystem of services, and a distribution network that can get a new product to millions instantly. What's more, for now, it's primarily targeting the Chinese market - where it has the greatest strength and where it can iterate quickly, collect data and improve the product before it starts expanding abroad.

So the launch of the Quark S1 smart glasses looks like much more than just a product launch. It's a test to see if Alibaba has a chance to become a big player in the AR/AI world. If the glasses gain popularity, they could become what the smartphone was years ago: the main communication interface between humans and the digital world. If it doesn't catch on, it will remain a fascinating experiment - but an experiment that will set the bar for what smart hardware with real AI integration should look like.

Whatever the outcome, one thing is certain: the world of wearable electronics is changing, and Alibaba has just sent a very strong signal that it wants to be there from the very beginning.

Robinhood is stepping into a far more ambitious role than anything in its first decade of existence. What began as a low-friction trading app is evolving into a company that wants influence over an entirely new class of financial infrastructure. By partnering with Susquehanna International Group and securing control of MIAXdx — a fully regulated venue for futures, derivatives and swaps — Robinhood is positioning itself to become a central operator in the fast-rising world of prediction markets.

This strategic shift marks a break with its past reliance on simple brokerage revenues. Prediction markets have exploded into a mainstream product fuelled by retail traders hungry for event-driven speculation — from elections and macro indicators to entertainment, sports and cultural trends. With a 90% stake in MIAXdx, Robinhood isn’t just expanding its product suite; it’s building a foundation for a new profit engine that could reshape the economics of every contract traded on its platform.

Top Points

• Robinhood gains control of MIAXdx and becomes not only a broker, but also a prediction markets exchange operator.
• Prediction markets are the company's fastest growing product with over 9 billion contracts in its first year.
• The joint venture fundamentally improves margins - revenue per contract can increase by around 45%.
• Robinhood gains the ability to create new contracts, control clearing and dictate the pace of innovation.
• The biggest risk remains regulation, especially for sports and political contracts.

Why this move is so strategically important for Robinhood

Acquiring a controlling stake in the regulated MIAXdx exchange represents a qualitative leap for Robinhood. No longer a mere distributor of third-party products, the firm is in a position to set the pace of innovation, set fee structures, create new contracts and control clearing. Robinhood is thus moving into the role that the big players on traditional exchanges have - benefiting not only from broker fees, but also from the fees of the exchange itself. The economics of the prediction markets immediately change in its favor.

Today, Robinhood only earns a portion of the fee on contracts from partner platforms Kalshi and ForecastEX. Each contract brings the company approximately one cent. But according to analysts at Piper Sandler. the new JV structure will significantly raise the effective yield. Robinhood could collect roughly $0.0145 per contract, which represents approximately a 45% improvement in the segment's economics. Given that prediction markets already generate around $300 million in annual revenue, this is a change that has the ability to significantly boost the gross margin of the entire product.

Something else is also significant. For the first time, Robinhood is gaining the infrastructure to determine the pace and nature of product innovation on its own. Prediction markets can act as a laboratory where demand is quickly tested, and because the risk rating for these products is incomparably lower than for traditional derivatives, new contracts can be introduced much more frequently. Robinhood also gains clearing powers, enhancing its ability to control the process from A to Z, minimising costs and increasing scalability.

Don't overlook: Three new members of the S&P 500: AppLovin, Robinhood and EMCOR are headed among Wall Street's elite

A market that's growing faster than analysts predicted

Robinhood already in its first year of operation Prediction markets was able to bring in more than a million customers who traded nine billion contracts. That's a volume that surpasses most retail new product launches of the last decade in ramp-up rate. Much of the success is due to the attractiveness of the product: customers are not investing in traditional financial instruments, but in specific scenarios - will the Fed cut rates this year? Will candidate X win the election? Will inflation be higher or lower than estimates? This type of speculation has a low barrier to comprehension, a strong emotional component, and trend appeal.

This explains why prediction markets are among the segments with the highest frequency of trades per user. Where the average retail investor makes a few purchases per month, we are talking about tens or hundreds of contracts per week in prediction markets. This gives Robinhood an exponential advantage in monetization. At the same time, however, a strategic lever is also created: the company gets better data on customer behaviour, patterns and preferences, allowing it to create better targeted products and accelerate product evolution.

Regulatory aspect: the biggest opportunity and the biggest risk

Prediction markets stand at the boundary between a financial product and a form of bet, which attracts the attention of regulators. The CFTC has previously indicated that some contracts may be judged risky, particularly when they involve sporting events or political scenarios with a direct impact on public processes. A recent federal court decision that ordered that Kalshi falls under Nevada's regulatory rules regarding sports betting has heightened this uncertainty.

However, the key point for Robinhood is that its JV with MIAXdx has regulated market status. This paves the way for greater legal certainty and the ability to argue that the products are financial in nature, not a form of gambling. But at the same time, the line is thin and regulatory pressure may slow the launch of new products in the future, especially if there are attempts to remove prediction markets from CFTC jurisdiction altogether. Any new move will therefore have to be made with extreme caution.

Strategic comparison with competitors

Competitors such as Kalshimay have the edge in specialisation, but they operate in a world where they need to rely on third-party infrastructure. Robinhood now has an advantage that is reminiscent of when a broker buys its own exchange: control over the product, low unit costs and the ability to dictate the pace of innovation. In an environment where the popularity of prediction markets is growing by the month, this position is extremely strong.

Moreover, Robinhood has a much larger distribution base. Where Kalshi has to build a community from scratch, Robinhood simply adds a button in an app used by over 20 million customers. This network effect gives it a natural advantage and ability to scale that competitors are unable to replicate.

Key differences between players:

Kalshi

• Strong competence in contract generation
• Weaker distribution, limited retail reach
• More sensitive to regulatory intervention, especially in sports

ForecastEX

• small technology player with fast implementation
• low fees, low volumes
• Lack of liquidity for scaling

Robinhood

• 20+ million users on the app
• control over exchange = combination of broker + exchange fee
• fastest path to mass adoption of prediction products
• ability to launch dozens of new contracts instantly

The size of prediction markets: why it's a market with giant momentum

Prediction markets have turned into one of the fastest growing categories in retail trading in just two years. The volume of contracts traded is rising almost exponentially and growth is neither macro nor cycle driven - it is a pure adoption of a new product type. Retail users are responding to the intuitive contract structure, low entry threshold and the ability to react to real events in real time. This is a completely different psychology than traditional stocks or options.

The potential of this market lies not only in the high frequency of trades, but also in the fact that users return to prediction markets much more frequently than to traditional instruments. Every macro event, political debate, inflation report or Fed decision immediately generates a new wave of contracts. For Robinhood, this means a segment whose frequency of use can be several times higher than stocks, ETFs or cryptocurrencies - and which is only at the beginning of its adoption curve.

Unit economics: Why Robinhood has the potential to lift margins

The economics of prediction markets are simple: low fees, high number of transactions, extremely high frequency of repeat trades. With traditional derivatives, it takes months to build volume. For prediction markets, it takes weeks. And this is where MIAXdx changes the game: no longer just a middleman, Robinhood owns a significant piece of the infrastructure on which everything runs.

So each contract can bring Robinhood significantly more revenue than it does today. Analysts are projecting a unit fee increase of roughly 45%, an almost unprecedented change at the product level. And because contract volumes are growing faster than the number of users, monetization per active person is also increasing - something Robinhood has long struggled with for both options and cryptos.

Why are unit economics so powerful

• Extremely high number of trades per user
• prediction contracts do not have a complex clearing structure
• MIAXdx will reduce settlement costs
• Robinhood collects fees from two parties (broker + exchange)
• almost zero credit and liquidation risk

Risk framework: what can slow down prediction markets

Key risks for Robinhood:

• Regulatory pressure on sports contracts
• possibility that some political contracts will be considered gambling
• Tighter rules from the CFTC and local jurisdictions
• Legal disputes over the definition of a prediction contract
• Risk of temporary suspension of certain categories

Regulation represents the greatest uncertainty, but also a potential advantage. If the market consolidates and smaller players do not recover regulatory costs, this will strengthen the dominant platforms that have exchange licenses and robust compliance structures. Robinhood can get a head start in this because MIAXdx is not a startup but an established licensed exchange.

Long-term thesis: Can Robinhood be the #1 prediction exchange in the US?

The long-term thesis is based on the idea that prediction markets are not a fashion trend, but the beginning of a new asset class. If the growth of this segment continues unabated, it may be as common to speculate on election results, Fed rates or inflation over the next five years as it is to trade ETFs or options today. Robinhood has an advantage in this environment that competitors don't have - distribution, liquidity and now part of the exchange infrastructure.

If prediction markets truly grow into a multi-billion dollar market and maintain high trading frequency, Robinhood can grow from a traditional retail broker into a hybrid financial infrastructure for the general public. This could create a new revenue pillar in the future that is not dependent on the cyclicality of the stock markets or the activity around cryptocurrencies. In such a scenario, the valuation of the firm could be revalued upwards, similar to what has happened to firms that have historically dominated new types of derivatives markets.

Investment scenarios

Optimistic scenario

Robinhood becomes the dominant retail player in the U.S. prediction markets. Regulation will remain stable and allow the firm to offer a wide range of contracts without serious restrictions. The rollout of MIAXdx will result in a significant improvement in margins and prediction markets will become one of the firm's largest sources of revenue within two to three years. Investors in this scenario will get a high-dynamic growth title that can combine user base expansion with an early approach to profitability on par with traditional derivatives platforms.

Likely share price performance: 40-60% growth over 12-18 months on strong sentiment and revenue growth of over 30% per annum.

Realistic scenario

Prediction markets will grow at a steady pace and become an important - but not dominant - part of the overall revenue portfolio. Regulation will fluctuate, but not dramatically, allowing the firm to gradually introduce new contracts and expand product offerings. MIAXdx will begin to improve the economics of the deals, but the biggest impact will only be seen gradually as volumes grow. Robinhood will profile as one of the main gateways for retail prediction markets, combining growth, stable monetization and gradual maturation of the segment.

Likely share price performance: 15-30% growth over 12 months depending on ARPU growth and revenue from the prediction segment.

Pessimistic scenario

Regulatory pressure will intensify and some types of prediction contracts will be banned or severely restricted. The grey area between financial derivatives and betting will lead to tighter rules, which will slow innovation, limit product offerings and reduce trading volumes. MIAXdx will still be an advantage for Robinhood, but revenue growth will be slower and the segment will remain a supplementary source of revenue. The stock will not benefit from significant catalysts in this scenario, but the company will maintain a stable position within its traditional business model.

Likely share price development: Stagnation or decline of 10-20%, up to -30% in the event of significant regulatory intervention.

What to take away from the article

• Robinhood makes its biggest strategic move since its IPO - acquiring its own prediction exchange.
• Prediction markets are one of the fastest growing segments in all of fintech, not just Robinhood.
• The firm will significantly improve the economics of each contract by having its own infrastructure.
• This move can bring Robinhood closer to firms that own not only the distribution but also the markets themselves.
• The biggest risk is regulation, which may limit some contracts but not stop the entire segment.

The U.S. equity market has entered a phase of acceleration few expected so soon after one of the most aggressive tightening cycles in modern history. Despite elevated valuations and persistent global uncertainties, new data suggests that the economic foundations of this bull market are broadening at an unusually fast pace. Corporate earnings are expanding well above their long-term trend, investment into automation and AI is reshaping margins across nearly every sector, and the Federal Reserve appears to be guiding the economy toward a rare soft landing. In this environment, some of Wall Street’s most established institutions — including JPMorgan — now project that the S&P 500 could climb to 7,500 within two years, with 8,000 points becoming a realistic target if the current easing of monetary conditions continues. What once seemed overly optimistic is increasingly supported by structural shifts happening inside the U.S. economy.

Somewhat in contrast to the optimistic outlook is the current environment, which is full of paradoxes for investors. On the one hand, there are the high valuations, which tend to argue that the markets are already quite expensive. On the other hand, we see slowing inflation, strong economic and labour market data, gradual monetary easing and, above all, a significant transformation of the corporate sector. This transformation is being driven by investments in automation, energy infrastructure, capital expenditure and, in particular, artificial intelligence, which is no longer an overblown marketing term and is starting to make a real difference to corporate margin structures. If current trends hold, we have two to three years ahead of us in which growth can be broader, healthier and driven more by whole segments of the economy, not just a narrow group of technology mega-caps. Indeed, the 7 largest technology companies in the S&P 500 now account for approximately 40% of the index's total weight. Growth is therefore highly concentrated, but should be spread out among others in the years ahead. And it has already started slowly.

A year ago, market performance in the US was driven by seven technology giants, while the rest of the index was stagnating or declining. Today, however, we are starting to see a shift that may be crucial to the long-term stability of the market. After years of below-average performance, segments such as industrials, financials, healthcare, energy and utilities are beginning to move back towards the growth core of the market. This process is essential because without it, it is impossible to achieve the long-term sustainable index expansion to the levels JPMorgan is talking about. If the S&P 500 is to truly climb to the 7,500-point mark and beyond, many more sectors must share in the growth. And that is what the economy is finally beginning to signal.

To meet growth expectations, the S&P 500 would need to gain 17.5% next year

What JPMorgan is basing its estimates on

When we look at JPMorgan's forecasts in more detail, we see that they are not built on a simple cheap money scenario. The analysts highlight several key mechanisms that reinforce each other. The first is corporate earnings growth, which is expected to average 13 to 15 per cent a year over the next two years. This is not only well above the long-term pace of U.S. companies, but also above current consensus market expectations. Technology companies have a crucial role to play here, as they have the potential to further increase their margins through investments in AI, but not only them. In fact, AI is trickling across the entire market. Industrial and logistics firms are already seeing real cost savings, banks are reducing operating costs through process automation, healthcare companies are speeding up diagnostics, and energy firms are optimizing resource extraction and distribution with predictive models. These changes represent a structural shift in the way companies operate, similar to the advent of the internet in the 1990s.

Another key factor is Fed policy. JPMorgan expects that the central bank to cut rates at least twice in 2026 and hold them steady thereafter. This is a scenario that supports valuations rising as discount rates fall. But more importantly, it is an environment that strengthens corporate investment in expansion and innovation. Today, the Fed faces the challenge of striking a balance between fighting inflation and supporting economic growth. And while inflation risk still exists, data in recent months show a marked slowing of price pressures, improving supply chains, a retreat in labor market tightness, and a gradual return of rates to "normal" levels. If the Fed can arrange a soft landing, it will provide stable, predictable conditions that stocks can price in.

Historic growth in the S&P 500 Index

In terms of historical parallels, the prediction of a rise to 7500 or 8000 points is not extreme. In recent decades, we have repeatedly seen two-year periods in which the index grew by more than 40 percent. For example, in 1985-1987, 1997-1999 or 2016-2018. It was always a combination of strong macro, innovation and loose monetary policy. That is exactly what we are seeing now. The difference is that today's economy is much more technologically diversified, and AI is expanding growth opportunities beyond the traditional tech sector. This is why analysts mention that expanding market reach is essential. Without it, it is impossible for the index to growth carry mega-cap valuations without a correction.

Multiple segments contribute to the growth of the index

Another positive indicator is that segments that have been under pressure in recent years are beginning to add to the growth. Industrials are benefiting from huge government subsidies in infrastructure and energy, healthcare is benefiting from technological innovation, banks are benefiting from cost restructuring and rate stabilization, and energy companies are benefiting from a new investment cycle in renewables and traditional fuels. The economy is thus gaining a much broader base of growth, which is exactly what long-term investors want to see. A market based on just a few names is fragile. A market that pulls in multiple sectors at once has a chance to grow steadily over the long term. And that's a key reason why JPMorgan sees a path to growth of as much as 25-35 percent in two years.

Risks

There are risks, of course. The main ones include the possibility of inflation accelerating again, geopolitical tensions in Asia and the Middle East, a possible recession or a labour market failure. Equally, volatility could be triggered by technology regulations in Europe and the US, or the eventual failure of AI initiatives or a sudden slowdown in corporate investment. Still, the combination of factors we see today points to a likely continued expansion, not a steep decline. Unless the Fed surprises with an aggressive stance, the economy will continue to grow and markets will continue to price it in.

Market growth conditions

More fundamentally, however, today's market environment is not just about interest rates, but about the overall transformation of the U.S. economy. Growth, margin and capital models are changing, and companies that can take advantage of current technology trends will generate above-average returns.

If the S&P 500 Index is indeed to reach 8,000 points in 2026, it will not be because of one thing. It will be through a combination of a robust economy, technological transformation, continued expansion of growth into broader sectors, a stabilizing labor market, falling rates, and a strong consumer. And current data suggests that this scenario is not only possible, but increasingly likely.

Palantir’s third quarter of 2025 marks a turning point that redefines the company’s scale, ambition, and competitive position. The explosive demand for its AIP platform in the United States triggered the fastest revenue acceleration in Palantir’s history, pushing commercial adoption to levels few investors imagined even a year ago. What once looked like a promising tool has now evolved into a full enterprise operating system, attracting record-breaking contracts and delivering margins that underline how efficiently the model now scales.

At the same time, Palantir is proving that its transformation goes far beyond government analytics. The company is rapidly becoming a core AI infrastructure provider for corporations that need real-time decision engines, integrated data environments and secure automation. With unprecedented contract volume, cash generation at historic highs and a sharply expanding customer base, Q3 2025 positions Palantir among the most powerful forces in enterprise AI — a company no longer judged by potential, but by execution.

How was the last quarter?

The third quarter of 2025 represented an unprecedented growth explosionfor Palantir $PLTR, breaking all previous records. Revenues grew 63% year-over-year to $1.181 billion, the fastest growth rate in many years and a confirmation of the rapid rise of AIP. The sequential growth of 18% is among the highest in the company's history - all in an environment where most software companies are experiencing a slowdown or stagnation. The key driver of growth is clearly the United States, where total revenue grew 77% year-over-year and 20% sequentially.

However, the pace of the US commercial division is quite extraordinary. Here, Palantir achieved growth of 121% year-on-year and 29% quarter-on-quarter, confirming that demand for AIP in the corporate sector is reaching strategic proportions. U.S. commercial sales reached $397 million, while the U.S. government segment grew to $486 million on 52% growth. Contract strength is even more pronounced: Palantir closed a record $2.76 billion in TCVs, up 151% year-on-year. Of that, $1.31 billion is purely US commercial contracts - a growth of a whopping 342%.

The company also dramatically expanded future contracts. U.S. commercial remaining deal value grew to $3.63 billion, up 199% year-over-year. The customer base grew 45% year-over-year and 7% sequentially, with the firm closing 204 contracts over $1 million, 91 contracts over $5 million and 53 contracts over $10 million in Q3.

In terms of profitability, the quarter was equally impressive. GAAP operating income was $393 million with a 33% margin, while adjusted operating income was $601 million with a 51% margin. GAAP net income was $476 million (40% margin) and adjusted net income was $528 million. Free cash flow was $540 million with a margin of 46%. Palantir thus reaffirmed its exceptional ability to scale growth without losing margins - which is unique in the AI sector.

Another significant indicator is Rule of 40, which achieved extraordinary 114 %which puts Palantir among the absolute top AI companies in terms of the combination of growth and profitability.

Full presentation with results.

CEO commentary

Alex Karp described the quarter as "transformational", noting that the combination of AIP and broad-based demand in the US is creating an entirely new growth profile for the company. He highlighted that the company is achieving such high sequential growth for the first time, calling it "the highest in Palantir's history". According to Karp, AIP is not just a product, but a multiple accelerator of companies' ability to deploy AI in real-world operations. The CEO explicitly stressed that Palantir today "sees demand that far exceeds our historical goals."

His tone was distinctly confident, almost aggressive - especially in the context of US commercial expansion. Karp also indicated that government contracts remain a stable base, but the main boom is now coming from the private sector, a strategically new and very positive phase for Palantir.

Outlook

Palantir raised full-year guidance on virtually all key metrics. For Q4, it expects revenue of $1.327-1.331 billion and adjusted operating profit of around $695-699 million. The firm is raising full-year revenue to $4.396-4.400 billion, with the U.S. commercial division expected to exceed $1.433 billion - more than 104% growth.

Adjusted operating profit for 2025 is expected to reach $2.151-2.155 billion and free cash flow $1.9-2.1 billion. The company also reaffirms that it will report GAAP earnings in every quarter of the year.

Long-term results

Long-term data paints a consistent and accelerating growth profile. Revenues grew nearly 29% to $2.865 billion in 2024, following previous growth of 17% and 24% in 2023 and 2022, respectively. Gross profit reached $2.3 billion in 2024 (+28%), indicating very stable gross margins. Operating profit has changed dramatically in three years: from a deep loss in 2021 (-411 million) to a profit of 310 million in 2024 (+159% YoY).

Net profit has increased from a deep loss in 2021 (-520 million) to 462 million in 2024 - +120% YoY. EBITDA and EBIT are also improving dramatically, confirming the structural change in the company's profitability. The share count is growing, but at a pace consistent with the standard stock-based compensation regime in the technology sector.

News

Palantir continued its aggressive expansion of AIP in the past quarter, signing a record number of large contracts across the industry and further strengthening its presence in the defense sector. The company expanded its collaboration with several US agencies, and strengthened its position in the energy, logistics and healthcare sectors. There is also rapidly growing interest in AIP in the banking and insurance sectors, where companies are demanding systems capable of automation, data linkage and prediction.

Also significant is the expansion of partnerships with large corporations, which are beginning to implement AIP in broader parts of their infrastructure. Palantir is becoming a key supplier of comprehensive AI infrastructure - not just a tool for data analytics.

Shareholding structure

Institutional investors hold more than 60% of Palantir's shares, confirming that the company has become a widely accepted part of large portfolios. The largest shareholders are:

• Vanguard Group - 213.9 million shares (9.8%)
• BlackRock - 188.5 million shares (8.6%)
• State Street - 101.3 million shares (4.6%)
• Geode Capital - 53.4 million shares (2.5%)

Insider holdings are 3.6%, which is consistent with the stable structure typical of technology firms of this size.

Analyst expectations

Analysts were expecting strong results, but the firm significantly outperformed on all metrics. Wall Street has been gradually raising price targets, with the consensus moving higher after earnings - thanks largely to the explosion of the U.S. commercial segment. Investors appreciate the combination of high growth, profitable operations and robust cash flow.

Many analysts say Palantir is one of the few companies that can monetize AI not just through models, but through a complete enterprise infrastructure. AIP is the same breakthrough for Palantir today that AWS was for Amazon or the iPhone was for Apple.

Fair Price

The long-awaited Medicare price cuts for high-cost drugs sent shockwaves through the pharmaceutical industry — but for Novo Nordisk, the announcement turned out to be a relief. Wegovy and Ozempic were included in the program, yet the new monthly price landed exactly where analysts expected. Investors quickly pushed the stock higher as fears of a deeper revenue hit evaporated.

At $274 per month, the revised price is lower but still aligned with Novo Nordisk’s internal scenario planning. The company had already signaled that such a cut would trim only a small percentage of annual revenue. With the core growth engine of obesity and diabetes treatments largely intact, the market interpreted the update as a sign of resilience rather than risk.

Moreover, Wednesday's rise acted as a partial band-aid on Monday's shock, when the stock fell as much as 12 percent after a failed study of an older oral version of semaglutide in an Alzheimer's program. Investors were quick to reassess the risks outside the core business then, but Wednesday's developments showed that the core story - the GLP-1 segment - remains extremely robust. As a result, the stock has climbed nearly 5% sequentially, reflecting a return of confidence, not a sudden repricing of fundamentals.

Analysts at JPMorgan immediately cautionedthat the impact was already priced into the firm's previous outlook and therefore did not expect any updates to the outlook. A similar sentiment prevailed among other pharmaceutical companies whose products were on the list - notably AstraZeneca $AZN and GSK $GSK. Price adjustments for Calquence, Trelegy and Breo were expected and long ago incorporated into the valuations of both companies, according to market experts. As Shore Capital analyst Sean Conroy put it, the impact in the "lower to mid-hundreds of millions of dollars" is palpable but manageable and fully reflected in the company's outlook.

Boehringer Ingelheim, as a private pharmaceutical group, also adds an interesting picture, noting that more than 80% of its US business is already subject to government price negotiations. This suggests that the current transformation of the US pharmaceutical market is not a short-term blip, but a structural change that will affect other drugs and manufacturers as well. For companies like Novo Nordisk, it is crucial that their growth engines - especially Weg's - have not only strong demand but also the room to absorb price pressures, which is proving to be a major advantage in the current market sentiment.

Putting the whole issue into a broader context, it turns out that US efforts to depress the prices of the most expensive drugs do not necessarily mean a destructive hit to the margins of big pharma. Rather, the market appreciates it when changes are predictable, transparent and in line with expectations. And that is exactly the case for Novo Nordisk. The company continues to benefit from global demand for obesity and diabetes treatments, while the US pricing adjustments are primarily a step towards more stable regulation, not a change in the investment story.

How US drug price negotiation works (and why the impacts won't come until 2027)

The U.S. price cuts for Wegova and Ozempic are no accident - they are part of the biggest reform of the U.S. pharmaceutical market in two decades, triggered by the so-called "drug reform". Inflation Reduction Act (IRA). For the first time in history, Medicare, the largest health program in the U.S., has been given the authority to to negotiate the prices of some of the most expensive drugs. The approach is strictly structured and has several key rules:

• The selection process covers the 15 most expensive drugs.on which Medicare spends the most money.
• The price reduction process has a long timelineNegotiation, notification, implementation. Therefore, the new prices will not be reflected until in 2027.not immediately.
• The aim is to reduce costs for patients and the statewhile ensuring that the impact on pharmaceutical companies is not devastating.
• The programme will gradually involve 60 medicines by 2029so Wegova and Ozempic are just the first flags of wider regulation.
• The market values predictability - Worst case scenario is chaos or extreme interference. That's why investors view the current price cuts as "well-calculated" and relatively modest.

The fact that Novo Nordisk expected only a low unit percent impact on sales is a signal that US regulation is so far within reasonable limits. From an investor perspective, the key point is that there is no margin destruction or sudden price shock. That is why stocks have reacted by rising.

Why, paradoxically, regulation can be positive for Novo Nordisk

At first glance, any price cuts may seem negative for the pharmaceutical company. But it is more complicated in the GLP-1 segment. In fact, the market is starting to assume that regulation may be a stabilising factor for Novo Nordisk in the long term rather than a threat.

Here's why:

• Predictable prices reduce the risk premium. Investors love certainty. When the impact is known, limited and gradual, companies are better able to plan margins, investments and production.
• High demand overcomes lower prices. For GLP-1 drugs, demand is so strong that even lower prices can lead to higher volumes. The market is willing to accept shorter unit margins in exchange for more mass adoption.
• Regulation can prevent political interference later. Moderate adjustments today may avert extreme reforms in the future, when the pressure could be much more severe.
• Smaller players will feel the impact more. Competitors' drugs without such strong demand will suffer more from price cuts than Novo Nordisk, strengthening its relative position.
• It strengthens the company's reputation with insurers and the state. Collaboration with Medicare may facilitate future negotiations for other GLP-1 indications (e.g. cardiology, NASH, sleep apnea).
• The GLP-1 market is expected to grow by hundreds of billions of dollars. In the long run, market size is more important than unit price. High demand and expansion of indications will play a bigger role than modest price cuts.

Few stocks have captured the extremes of AI volatility quite like this one. A company once hailed as a cornerstone of next-generation infrastructure has seen its share price cut nearly in half within a single month. Investors are abandoning ship at record speed, convinced that the narrative supporting the stock has collapsed. To many, the chart looks like the kind of falling knife no rational trader would dare to catch.

But Cathie Wood is not “many.” While the broader market is unwinding positions, ARK Invest has quietly accumulated more than 400,000 shares, treating the panic as an opportunity rather than a warning. To Wood, the drawdown is not evidence of structural failure — it's a temporary dislocation in a long-term transformation she believes is still in its early innings. Her conviction raises the question echoing across tech circles: what catalyst is she pricing in that the rest of the market is missing?

Top Points

• The 45% monthly share price decline has opened the door to ARK Invest's biggest purchases in AI infrastructure in six months.
• Cathie Wood bought over 437k shares and increased its exposure to both ARKK and ARKW.
• The company has reported extreme revenue growth - from $15.8 million in 2022 to over $4.3 billion this year.
• At the same time, the company remains deeply loss-making: a net loss of -$824 million TTM, high interest expense and investment volatility.
• Cathie Wood is building the investment on its classic "disruptive innovation" narrative: explosive demand for AI computing power, scaling, dominance in data infrastructure.
• The key question is whether this growth can cover the massive cost structure.

Company Profile

CoreWeave $CRWV is one of the fastest-growing tech companies today, but its story is not a classic Silicon Valley growth story. It's a company that has quietly grown into one of the most important players in a new era - the era of generative artificial intelligence, where the value is not in the applications, but in the infrastructure itself. CoreWeave does not present itself as just another cloud provider. It's an infrastructure giant in the midst of an explosion, a company literally built on the need for computing power that has gone from start-up size to billions in revenue in three years.

Its business is built on a simple but strategically extremely powerful premise: traditional cloud services can't handle the speed, volume or complexity of current AI models. While hyperscale clouds like AWS or Azure have robust infrastructure, their architecture is too broad, too generic and often too slow to adapt. CoreWeave, on the other hand, builds specialized data centers optimized specifically for GPU acceleration. This means higher efficiency, fewer constraints, and most importantly, shorter response times, which are critical for training and inferencing models.

This strategic focus has given CoreWeave something rarely seen in the technology world - growth at a rate that is calculated in multiples, not percentages. The company's revenue was just $15 million in 2022. In 2023, it's already 228 million. A year later, they jumped to 1.9 billion. And this year, the company is generating over $4.3 billion. No other AI computing provider outside of the world's largest corporations has such a trajectory.

Don't overlook:

CoreWeave, the company building the AI future for both Meta and OpenAI!

Big deal between CoreWeave and Nvidia!

CoreWeave has become a critical part of the AI supply chain. Companies that need extreme performance - for example for training multimodal models, physics simulations, rendering or advanced graphics pipelines - often choose CoreWeave precisely because they don't need a standardized cloud, but a highly specialized infrastructure. And this is exactly the segment that traditional players have long underestimated.

With growth has come a huge expansion of data centers. CoreWeave has opened several strategic locations in the last two years with access to cheap power and high-capacity data connections. However, infrastructure investments come with a massive capital burden - depreciation this year exceeds $1.99 billion. This is not a sign of weakness, but evidence that the company is building a gigantic computing network whose effect will only be felt in the medium term.

And that's why he sees this company Cathie Wood (see photo) as a critical asset within its disruptive technology portfolio: CoreWeave is not "just another AI company", it's a cornerstone of the AI era. And the building blocks may be unsightly and expensive, but without them, they're worth nothing.

Competition

CoreWeave's competition is not numerous, but it is extremely tough. The company is not up against startups, but against the biggest tech empires of today - AWS $AMZN, Azure $MSFT and Google Cloud $GOOG. Each has "out-of-this-world" resources, millions of customers, and the ability to brutally subsidize their own AI infrastructure. Yet CoreWeave has managed to find a place where this trio is not dominant.

Amazon Web Services relies on its own chip design - Inferentia and Trainium - which makes it less dependent on Nvidia, but at the same time less flexible in specialized AI workloads. Microsoft Azure, connected to OpenAI, is strong in research but less agile in rapidly scaling GPU clusters where the client requires a modular and rapidly customizable solution. Google Cloud builds its strategy on the TPU architecture, which is brilliant but not universal.

CoreWeave has made inroads in a space that hyperscale clouds have not yet been able to serve effectively - extremely fast, extremely specialized GPU clusters for both training and inference. Its advantage lies in vertical specialization, less inertia, more flexibility, and better access to Nvidia GPUs through long-term contracts. This is exactly the type of advantage that attracts startups, scaleups, research teams and companies that need performance now. Hyperscalers can offer this - but often only after months of planning.

In addition to the giants, there are a smaller group of competitors like Lambda Labs, Voltage Park, and Crusoe, but none of them offer scaling combined with a growth rate equal to CoreWeave. This puts the company in a unique position - it's too big to be overlooked and too fast for traditional players to catch up without difficulty.

Management

CoreWeave is led by a team that combines deep technical expertise with an aggressive scaling strategy. CEO Michael Intrator (see photo) is not a traditional corporate executive - he comes from a performance computing background and has experience building infrastructure in an environment where speed drives results. His management style fits the hyperscale infrastructure environment: fast execution, uncompromising pace, minimal bureaucracy.

CFO of the company Nitin Agrawal has perhaps the most important role of all. CoreWeave is an extremely capital-intensive business. Interest expense this year is $990 million, an extraordinarily high number in the context of the company's growth. The ability to structure debt so that the company can continually invest in GPUs, datacenters and power is absolutely critical. In this regard, CFO is using a similar model to that used by hyperscalers in the early days: expansion at the cost of short-term losses to be rolled into extreme profitability over a 3-5 year horizon.

CTO Peter Salanki companies focus on optimizing cluster management, orchestration, data pipelines and efficient GPU utilization in giant workload environments. CoreWeave is investing a significant amount of resources in the software layer, which allows it to leverage hardware with greater efficiency than traditional cloud.

Macro Context: AI computing as a new energy sector

Demand for AI computing power will increase in 2024 will for the first time start to act as a separate macro segment - similar to energy or telecoms. GPU cluster power has become a commodity whose price and availability set the pace of innovation in the technology world. According to analysis from the AI compute economy, computing power consumption is growing at roughly 180-220% per year, with next-generation models (such as multi-modal systems) requiring up to ten times the performance of their 2023 predecessors.

AI datacenters are becoming the infrastructure backbone, much like datacenters were the backbone of the Internet from 2000-2010. The difference lies in two critical points: the GPU shortage - Nvidia cannot keep up with global demand - and the lack of poweras many countries point out that AI datacentres consume more power than entire industries.

CoreWeave operates right in the middle of this transformation. Its ability to rapidly ramp up capacity while finding energy-efficient locations gives it a structural advantage over large clouds, which have much greater infrastructure inertia. This is one reason why investors like ARK see CoreWeave as an AI-related "infrastructure renaissance" - a period where new players with global impact are forming.

Debt and capital structure

Debt is the most important variable that determines whether CoreWeave's growth is sustainable. The company has high interest costs and a capital-intensive model, but without context, this leads to erroneous conclusions.

CoreWeave combines several types of debt financing: venture debt in the early stages of growth, infrastructure debt backed by the value of datacenters and hardware (GPU farms), leasing structures for a portion of GPU clusters, and short-term financing for operational infrastructure construction. The debt has various maturities, most between 2027-2032, allowing the company to undertake large-scale expansion without immediate pressure to refinance.

Critically, most of the debt is secured by assets that have high collateral value - GPUs have a robust secondary market and datacenters are liquid infrastructure. This is not to say that risk does not exist. Investors should keep an eye on average interest rates, access to capital and refinancing terms in the event of tighter monetary policy. Overall, however, the debt structure follows the typical pattern of hyperscalers in the early cycle: high losses now, high profitability once infrastructure investments are completed.

Link to Nvidia $NVDA

Without Nvidia, today's AI infrastructure wouldn't exist - and without Nvidia, CoreWeave wouldn't exist either. The company is strategically linked to Nvidia on several levels: long-term GPU supply contracts, preferential allocation of the latest generations (H100, H200, Blackwell), joint cluster optimization pilots, and access to enterprise support and optimization tools.

This partnership is not just business, it is strategic. Nvidia can't build datacenters alone at the pace the market demands, so it needs partners who can deploy its hardware quickly in mass volumes. CoreWeave fills this role much like AWS once did in the early years of cloud computing.

The risk is that dependence on a single vendor creates vulnerability. If Nvidia decides to allocate some capacity to the big players (AWS, Google, Microsoft), or if Blackwell generation is delayed, CoreWeave will feel the pinch immediately. But at the same time, this is a factor that investors like Cathie Wood interpret as an advantage - access to high-end GPUs is the "new gold" today.

The difference with hyperscalers

Hyperscalers have a huge advantage in scale. CoreWeave has an advantage in speed, specialization and flexibility. For an investor, it's important to understand the difference: hyperscalers build versatile infrastructure for hundreds of different services and applications, while CoreWeave only builds AI datacenters optimized purely for GPU acceleration.

This delivers several key effects: higher efficiency per unit of performance, lower latency due to optimized networks, faster cluster provisioning (minutes vs. weeks), and a more transparent pricing model directly tied to GPU usage. As a result, customers who need extreme performance immediately - such as AI startups, game studios, or companies working with physics simulations - choose CoreWeave.

Hyperscalers are often unable to provide capacity at the time customers need it, and their general-purpose architecture is not optimized for narrow profile AI workloads. This difference is why CoreWeave is growing in multiples while the big players are growing in units of percentages.

Customer structure

For an investor, it is critical to understand who the typical customer is. CoreWeave serves three main segments: AI model companies (generative and multimodal model development), creative and visual industries (rendering, simulation, VFX studios), and startups or scaleups that can't wait for provisioning at hyperscalers.

A typical feature of CoreWeave is the high concentration of large clients. According to internal estimates, up to 40-50% of revenues can be from the top 5 customers. This is a double-edged sword: if clients grow, CoreWeave grows faster, if any of them fail, the impact is immediate. A lite version of this model also existed at AWS in 2007-2010. Today, it's the same story - just in the AI era.

Loss vs. actual performance

Negative net profit at CoreWeave doesn't mean the company is weak, but that it's at a certain stage in the investment cycle. There are three key points to understand. First: EBITDA is extremely strong. The company has EBITDA of over $2.2 billion TTM - this is not a story of bankruptcy, but of operational strength.

Second: The loss is driven by two items - depreciation and amortization ($1.99 billion TTM) and interest expense ($990 million TTM). These alone don't impair the company's operating capability because GPUs have a high collateral value, datacenters are liquid assets, and net income fluctuations are not the same as cash burn.

Third: The firm may be an attractive candidate for a strategic buyout if the AI market consolidates - similar to what happened with some cloud providers 15 years ago. This is also one reason why Cathie Wood sees asymmetric potential - CoreWeave has a limited probability of complete failure, but a huge multiple if successful.

Long-term results

CoreWeave's numbers look like an extreme case of exponential growth. Revenues rise from $15.8 million in 2022 to $228.9 million in 2023, then to $1.9 billion in 2024, and exceed $4.3 billion in TTM. This is growth that is virtually unseen in the tech world - except perhaps for the emergence of AWS in the mid-2000s.

But at the same time, the company posted a massive net loss of -$824 million TTM. More than half of that loss is related to interest expense ($990 million) and depreciation and amortization ($1.99 billion). Without those two items, the core business is significantly stronger - EBITDA TTM is $2.21 billion.

CoreWeave's cost structure is not a mistake, it is an investment. The company builds datacenters that amortize over 7-12 years. It is normal for hyperscalers to be deep in the red for the first few years. AWS, Azure, and GCP all started the same way. So CoreWeave is no exception - it's just early in the capital cycle.

• The record third quarter of 2025 has garnered attention.

News and strategic moves

The last year has been strategically pivotal for the company. CoreWeave completed several big data clusters optimized for generative AI, increasing its performance capacity by hundreds of thousands of GPUs. These new complexes increase efficiency and enable the firm to take on long-term contracts from large AI developers, media companies, research labs or digital service providers.

Another major step is the construction of datacenters in energy-efficient regions. The CoreWeave model is based on the availability of cheap electricity with low geopolitical risks. Therefore, the company focuses on regions with high renewable capacity, stable regulatory conditions, and favorable access to large-scale energy consumption. This is a strategy that hyperscalers have traditionally not been able to manage due to huge infrastructure inertia.

The company has also redesigned its top layer of cluster management software. New orchestration tools can allocate GPUs on a millisecond time horizon, which is critical for inference workloads. This move significantly improves both efficiency and competitiveness - in AI infrastructure, it's often not the price per GPU hour that determines performance, but availability and latency.

Moreover, the external environment supports the company. Regulation that pushes for transparency in cloud services plays in favor of specialized providers. Large customers are increasingly diversifying away from hyperscalers because they don't want to be dependent on a single platform with growing market influence. This trend is fundamental and CoreWeave is perhaps benefiting from it the most of all.

Analyst expectations

Technology sector analysts view CoreWeave as having one of the highest growth potentials among non-hyperscale infrastructure providers. Revenue is expected to exceed $7-9 billion within two years and potentially $12 billion within five years, especially if the generative AI market continues to expand.

At the same time, losses are expected to fall dramatically over a 24-36 month horizon due to gradually improving margins and a stabilized debt profile. EBITDA should continue to grow at a double-digit rate under most projections. Net profitability will remain volatile, but analysts see a clear trend: CoreWeave isn't a company that will fade into the dustbin of history - it's a company that is buying future dominance in a segment that will exist regardless of cycles.

Investment scenarios

Optimistic scenario

• Revenue growth of over 30% per year due to massive demand for AI training.
• EBITDA grows faster than revenue due to higher cluster utilization.
• Interest costs decline due to refinancing with cheaper capital.
• Company enters stable profit within 3-4 years.
• The stock has an appreciation potential of over 100% in 3-5 years.

Realistic scenario

• Revenue growth of 18-25% per year.
• EBITDA stabilizes between USD 2.4-3 billion.
• Debt gradually decreases.
• Company moves from extreme loss to FCF neutrality within 2 years.
• Potential share growth of 35-50%.

Pessimistic scenario

• Significant slowdown in AI hardware spending.
• Problems with debt refinancing.
• Revenue growth below 10%.
• Losses persist longer, FCF remains negative.
• Shares may fall another 20-30%, but the company does not go out of business.

What to watch next

• Revenue growth rate in the context of a slowing AI market.
• Interest cost trends - the biggest risk factor.
• Pace of new datacenter construction.
• Contracts with the largest AI developers.
• GPU cluster utilization.
• Possible entry of large competitors into the same niche segment.

What to take away from the article

• The sharp 45% drop in the share price did not undermine ARK's confidence, which instead increased exposure.
• CoreWeave is built on an AI infrastructure with dynamics that no other non-hyperscaler offers today.
• Extreme capital intensity goes hand in hand with massive EBITDA, driven by growing demand for computing power.
• Loss growth reflects capacity expansion, not weakening demand or business model erosion.
• Customer diversification beyond hyperscalers represents one of the strongest trends in AI infrastructure.
• The main risk remains the debt profile and interest costs, not the company's technology position.
• Cathie Wood sees a distinctly asymmetric potential - relatively low probability of total failure and extremely high impact of eventual success.

With Jerome Powell’s term coming to an end, Washington has entered one of its most consequential power struggles in years. Five candidates — each with radically different views on interest rates, inflation control, and the role of the central bank — are now competing for a position that will shape not only the U.S. economy but global markets for years to come. The stakes are enormous: the next Chair of the Federal Reserve will decide how aggressively to cut rates, how tightly to regulate the financial system, and how to navigate a world where debt is soaring and geopolitical tensions are rising. Investors, economists, and policymakers alike are closely watching every signal coming from the White House, knowing that this decision could usher in either a period of renewed growth or one of prolonged uncertainty.

The contenders for Fed chairman, from left: Kevin Hassett, Christopher Waller, Michelle Bowman, Rick Rieder, Kevin Warsh

The selection of a new Federal Reserve chairman comes at a time when markets need one thing above all else. And that is predictability. But that is a luxury that neither the United States nor the global financial system can afford. Inflation may be under control, but not low enough to be considered fully resolved. Interest rates, with efforts to reduce it, have reached their highest point in more than twenty years. The US federal debt is at its highest absolute level in history. And markets are extremely sensitive to any changes in Fed communication. In such a tense environment, the selection of Powell's successor is not a formal political procedure, but a strategic decision that will determine how global capital "works" over the next economic cycle.

The importance of the role of the Fed Chair cannot be overstated. Although seemingly only a technocratic position, the Fed chair actually has more power to influence the global economy than most of the world's presidents and prime ministers. That is why the markets are paying unprecedented attention to who will take the helm of this institution.

In the past, the Fed chairman has often been seen as a neutral expert. That is to say, a man whose name most Americans did not even know. But today's Fed is dramatically different. He is a driver of economic growth, a major player in stabilizing financial markets, a coordinator in the fight against inflation, a monitor of the broader macroeconomic environment, and often a crisis manager responding to turbulence in the world.

During the pandemic, the Fed saved the markets from further potential downturns. In times of high inflation, it has in turn made drastic decisions to raise rates. Now, however, five candidates with very different visions of monetary policy are running for the job.

The 5 candidates for Fed chairman

Kevin Hassett represents a return to an economic philosophy that sees the Fed as a tool for direct intervention to promote economic growth through vigorous monetary easing. His view is particularly attractive to investors who are calling for lower rates and a rapid acceleration of financial flows. He is seen as a candidate who could cut rates within a short period of time, thereby causing a positive momentum in equities but increasing the risk of a return of inflation. Markets would likely welcome his approach with a sharp rise in technology titles, risk assets and bonds. Hassett is an experienced economist who sees the economy as a system of stimulation and acceleration, not one of over-regulation and control. But this approach can be risky in an environment of excessive debt.

Christopher Waller is the complete opposite. He is a man who knows the Fed from the inside. His approach is systematic, detailed and based on long-term forecasting work. Waller represents stability, and markets love stability. His election would mean a continuation of a policy that combines caution with an effort not to shock the markets. For investors, this option would mean a period of lower volatility, but not necessarily rapid expansion. Waller has a well-established reputation as someone who believes in robust analysis and empirical data. His approach to inflation would be consistent with what we have seen in recent years, i.e. gradual rate cuts according to clearly defined conditions, no radical moves.

Michelle Bowman is a big unknown, even though she's a member of the Fed leadership. Her style is cautious, often conservative. She is known as a supporter of tighter banking supervision and regulation. For the markets, her appointment would mean less euphoria but more resilience. Bowman would probably not go down the path of aggressive action in either direction. With her leadership, markets would have to prepare for the possibility that rates would be cut more slowly or that the Fed would not be tolerant of high risk. Her approach would promote banking stability, but equity markets might react with restraint.

Kevin Warsh is a candidate with deep roots in the financial sector. His influence during the financial crisis was crucial and many investors still see him as someone who can lead the Fed through turbulent times. Warsh advocates for a strong Fed connection to the realities of the markets and the financial sector. This means his policy would likely be more flexible and more tailored to the current state of financial markets. For markets, his election would mean high expectations but also high volatility, as Warsh is not a proponent of a rigid framework. Investors would expect him to be able to coordinate monetary and fiscal policy, which may be an advantage in today's environment.

Rick Rieder is the only candidate coming primarily from the private sector. His experience at BlackRock $BLK gives him a unique perspective on global financial flows, capital management and macroeconomic cycles. Rieder could bring a new style to the Fed that is more dynamic, aggressive in innovation, and flexible in responding to markets. This would be exciting for markets, but risky. Rieder is not burdened by excessive caution, which could lead to radical steps in monetary policy.

Incidentally, BlackRock, as one of the largest asset managers in the world, also has its own stock. In the stock detail for a lot more, so you can check it out. We'll just add that the firm's stock has appreciated 60% in the last 5 years.

A summary of the candidates in the table

So the choice of a new Fed chief is not just about who sits in the office on Constitution Avenue. It's a choice of direction. Either the United States takes the path of vigorous stimulus or the path of caution. Either stocks will react with euphoria or there will be a period of correction. Either the Fed will become a dynamic instrument of growth or a conservative stabiliser. Each of these directions has significant implications for equity sectors. In a world where markets have long been disconnected from the Fed, the choice of chairman will determine the investment environment for years to come.

AbbVie closed the third quarter with results that highlight the resilience of its post-Humira strategy. Immunology and neuroscience remain the primary engines of expansion, while aesthetics and oncology add balance to the broader business mix. The company’s continued ability to generate top-line momentum underscores the strength of its diversified pipeline. Yet the quarter also reveals mounting pressures on profitability as AbbVie pours more resources into research, clinical development, and portfolio-expanding acquisitions.

At the same time, the numbers make it clear that AbbVie is entering one of its most investment-intensive periods in years. The company is allocating substantial capital to programs in autoimmunity, migraine, neurodegeneration and further immunology research — decisions that inevitably weigh on GAAP performance. Even tak, AbbVie maintains key advantages: robust cash flow, fast-growing blockbusters Skyrizi and Rinvoq, and the confidence to raise its dividend once again for 2026. These factors give investors reassurance that near-term margin pressure is part of a deliberate long-term growth strategy.

How was the last quarter?

AbbVie $ABBV ended the third quarter of 2025 with very strong revenue growth, with consolidated revenue rising to $15.776 billion, a nine per cent rate on a reported basis and 8.4 per cent at constant currency. Immunology again drove the results, bringing in nearly $8 billion, representing nearly 12 percent growth. Dominance was confirmed by the pair of Skyrizi and Rinvoq, which together replace the earlier reliance on Humira. Skyrizi, with revenues of $4.708 billion, grew 46 percent year-on-year, while Rinvoq added 35 percent to reach $2.184 billion. In contrast, Humira continued to retreat rapidly, with revenues falling more than 55 percent, but the company had long expected this.

The neuroscience portfolio also delivered strong growth, with revenues of $2.841 billion, up more than 20 percent year-over-year. Vraylar, Botox Therapeutic and the migraine treatment segment (Ubrelva, Qulipta) all posted double-digit growth rates. Oncology remained stable, with Venclexta growing slightly while Imbruvica continued to decline. Aesthetics, on the other hand, faced pressure, with sales down slightly due to cooling demand in mature markets, particularly for Botox Cosmetic.

However, the operational side of the results showed a less positive picture. GAAP EPS fell to just $0.10 due to high costs for acquired intellectual property rights and a milestone payment of $1.50 per share. Adjusted earnings were $1.86, down 38 percent from last year. GAAP operating margin fell to 12.1 percent, while on an adjusted basis the company achieved 30.9 percent. R&D expenses rose to nearly 15 percent of sales, and IPR&D expenses were up to 17 percent of sales. However, the high cost base is due to intensive investments in pipeline to boost growth profile over the next decade.

The full earnings presentation can be found here.

Management commentary

CEO Robert A. Michael highlighted that AbbVie once again has a very strong growth profile, driven by the success of replacement immunology therapies and expansion in other strategic areas, particularly neuroscience and migraine. He said the company is at a key stage where it is both monetising its existing portfolio and investing sharply in next-generation medicines. Meanwhile, the dividend increase shows management's confidence in the company's financial strength. The CEO also commented on the continued progress in the development of Rinvoq for other indications and the potential for the treatment of alopecia areata, where he rates the latest data as breakthrough.

Outlook

The company raised its full-year target range for adjusted EPS to $10.61-$10.65, despite significant cost pressures and continued pipeline investments. However, for GAAP earnings, the company expects lower numbers due to one-time R&D expenses. AbbVie also announced a 5.5 percent dividend increase starting in 2026, continuing its long-term policy of steady payout growth. Management expects strong growth rates for both Skyrizi and Rinvoq in 2026, along with a gradual recovery in aesthetics and stabilization in oncology.

Long-term results

Looking at long-term results, we see significant fluctuations due to the emergence of Humira biosimilars, portfolio transformation, and a jump in research investment. The company's 2024 revenue was $56.33 billion, a slight year-over-year increase. However, in 2023, revenues fell by more than six per cent due to the sharp decline of Humira in the US. In contrast, the company reached over $58 billion in 2022, while 2021 was similarly strong with $56 billion.

Gross margins improved significantly again after the pressure of 2022-2023. In 2024, it climbed to over $39 billion in gross profit, up 16 percent year-over-year, reflecting the portfolio's shift toward advanced, high-margin therapies. By contrast, 2023 was a weak year, with gross profit falling sharply while older products fell.

Operating expenses rose significantly in 2024, by more than 43 percent to more than $30 billion. This jump is the result of massive investments in development, clinical trials and pipeline expansion. As recently as 2022 and 2021, operating costs were significantly lower, around $20 billion.

As a result, operating profit fell to $9.1 billion in 2024, compared to $12.8 billion in 2023 and even over $18 billion in 2022. Net profit fell to $4.28 billion in 2024, down from nearly $12 billion two years earlier. EPS followed a similar trend, falling to $2.4 in 2024, down from over $6.6 in 2022.

The EBITDA trend shows the transformation of the entire company - while it was over $31 billion in 2022, it plummeted to $17.3 billion in 2023 and further declined to $14.9 billion in 2024. This trend is clearly linked to heavy investment in research and portfolio transformation.

News

- The FDA approved the expansion of Rinvoq's indication for ulcerative colitis and Crohn's disease in patients for whom the deployment of anti-TNF therapy is not appropriate.
- Rinvoq succeeded in a second pivotal Phase 3 study for the treatment of alopecia areata, with up to 55% of patients achieving 80% hair coverage within 24 weeks.
- Studies have also shown significant improvements in eyebrow and eyelash growth, strengthening the molecule's position in dermatology.
- Management also highlighted advancing pipelines in oncology, migraine and neuroscience.

Shareholders

AbbVie has a stable, predominantly institutional ownership base. The institution holds approximately 75 percent of the free float, while insiders own less than 0.1 percent. The largest shareholders include Vanguard Group with more than 177 million shares, BlackRock with just under 146 million shares and State Street with nearly 80 million shares. The fourth-largest investor is JPMorgan with more than 56 million shares. The structure shows that the firm is firmly anchored in the portfolios of large asset managers managing long-term capital.

Analysts' expectations

Analysts expect 2026 to bring a re-acceleration in growth, mainly due to Skyriz and Rinvoq further replacing Humira. Revenue growth, margin stabilisation and a return to higher EBITDA are expected once the cost burden associated with the expanded pipeline subsides. The median target price has increased slightly in recent weeks and analysts continue to view AbbVie as one of the most stable dividend players in the pharmaceutical sector.

Fair Price

Undervalued sector?

The question of which sector is the most undervalued in the market today is coming up more and more often. After the strong rise in technology and AI, investors are starting to look at industries that have been outside the main spotlight, even though their fundamentals look solid. The first candidate is energy, which, despite very strong cash flows and stable earnings, trades at low valuations. Oil may not attract as much attention as artificial intelligence, but investors often point out that physical energy will play a key role for a long time, and that’s why they consider it one of the most underrated sectors.

For me, the most interesting sector right now is REITs, and that’s for several reasons which together create one of the best value opportunities in the market. REITs have been under extreme pressure over the past two years due to high interest rates, which has often pushed their prices down to levels that do not reflect the quality of their assets or their long-term ability to generate stable cash flows. The market essentially punished the entire sector because of macro conditions, not because of fundamentals.

However, if rates start to fall — and this is exactly the scenario many investors now expect — it will have a direct positive impact on REITs. Financing costs will fall, valuations will begin to normalize, and property valuations as such will improve. Historically, REITs have been among the absolute top-performing sectors during periods of monetary easing. Some of the most interesting candidates are, for example, $O $VICI $PLD

Amazon has taken a decisive step in its AI strategy by telling engineers to pivot away from third-party coding assistants and rely solely on Kiro, the company’s in-house generative coding platform. The move comes despite Amazon’s multibillion-dollar investments in Anthropic and its large-scale cloud partnership with OpenAI, highlighting a shift from collaboration to consolidation. Rather than depending on the breakthroughs of external labs, Amazon appears determined to build a self-sustaining development ecosystem centered around its own AI tools.

The internal memo, signed by senior AWS and eCommerce leaders, makes clear that existing external tools won’t be shut off immediately, but no new integrations will be allowed. This effectively sidelines widely used assistants like Codex, Claude Code, and Cursor, which many engineers consider essential in modern development workflows. For Amazon, however, the goal is control: tighter security, unified tooling, and a future in which Kiro becomes the default engine powering everything from internal apps to large-scale customer-facing services.

Kiro may be built on Anthropic technologies, but it's not Claude Code. It's a separately developed product that Amazon is using to respond to increasing pressure from OpenAI and Google, whose AI tools have become dominant. In doing so, Amazon wants to strengthen its own competencies and make Kiro a platform that will be competitive for the millions of developers in the AWS ecosystem. In addition, the company last week expanded it to a global audience and added new features, which is consistent with preparing for a major internal and external push.

Don't miss: Amazon gets another strong recommendation from Wall Street

What is Amazon $AMZN pursuing with this move?

• Strengthening control over data. External AI tools can pose a risk of leaking internal code or company secrets. Kiro gives Amazon full control over where developers' data goes.
• Pressure to accelerate development of the AWS AI stack. Amazon lags behind OpenAI and Google, and needs to quickly build its own ecosystem that is not just responsive, but sets the pace.
• Better integration with internal infrastructure. Kiro can be tightly integrated with AWS services (Lambda, CodeWhisperer, S3, EC2), creating an advantage that external tools don't have.
• A strategic defense against losing developers. If developers rely too heavily on competitors' tools, Amazon risks moving the ecosystem elsewhere - especially to OpenAI in partnership with Microsoft.
• Building your own AI IP. Some companies are already addressing the fact that developing using external models creates legal ambiguity around ownership of the generated code. A custom model simplifies everything.
• Responding to the growth of startups like Cursor. These tools have tremendous traction and can be a threat to AWS as they pull developers into non-Amazon environments.

At the same time, this policy is a signal of the tensions that are starting to emerge in AI partnerships. Amazon has invested around $8 billion in Anthropic, became its preferred cloud partner, and sold OpenAI cloud services for a record $38 billion. Yet they now refer to their own tools as "Do Not Use". This shows that there are no real allies in the AI world - only temporary interests. Amazon needs to be competitive as the world of software development shifts from writing code by hand to an AI-native paradigm where speed, quality of models, and the ability to control the entire environment are critical.

This sends a clear signal internally and externally: Amazon no longer wants to be "left behind". If AI becomes the foundation of the entire cloud economy, Kiro will be one of the key pillars on which Amazon wants to build. The move may slow the use of the most popular AI coding platforms inside the company, but it will also allow Amazon to build its own closed, controlled and strategically profitable ecosystem - just as its biggest rivals are doing today.

How Kiro stacks up against the competition: a silent battle of AI tools

Although Amazon has chosen to push Kiro as its primary AI tool, the reality is far more complex. Kiro isn't being created "in a vacuum" - it has to hold its own against rivals that have already established a strong position with developers. The biggest challenges are tools from OpenAI, Anthropic and fast-growing startup Cursor, whose capabilities set the bar extremely high. But Kiro isn't trying to copy their approach; it's taking a different path, based on integration with AWS and total control over the enterprise ecosystem.

OpenAI Codex and Code Interpreter are seen as the pioneers of AI code generation, with very high accuracy, broad language support, and the ability to understand even large projects. But Amazon is aware of one major weakness: these models run outside its infrastructure. For a company that builds a business on security and scaling performance in the cloud, this is too big a risk. That's why Amazon believes that Kiro, while less mature technologically so far, can compete over the long term because of its deep interdependencies with AWS services and internal pipelines.

Claude Code of Anthropic is strong in structured code writing, extremely good at documentation, and popular among developers for its "safe" and predictive behavior. Amazon is partly based on it - technologically and investment-wise - but Kiro gets priority because it's a tool the company has full control over and can adapt to its own standards. Today, Claude Code wins on user experience, while Kiro has the advantage of proximity to AWS infrastructure.

British American Tobacco is entering a phase that could redefine its growth outlook after years of stagnation. The company is regaining investor attention as improving U.S. performance and rapid expansion of new-category nicotine products begin to reshape the narrative. Insights shared at the recent Jefferies conference showed a management team that finally speaks with confidence — convinced that its shift from cigarettes to modern alternatives is accelerating faster and more profitably than expected.

At the center of this renewed optimism is the U.S. market for oral nicotine pouches, where BAT’s Velo brand is gaining traction at an impressive pace. While America has historically lagged behind Europe in adoption and innovation, that gap now represents a powerful catalyst. The runway for growth is vast, and early data suggests consumers are switching categories far faster than anticipated. If U.S. usage converges toward European levels, BAT could be looking at the strongest expansion cycle in its modern history.

Top Points

• BAT sees room in the U.S. nicotine pouch market to Nearly double volumes in three years.
• Per-capita consumption of Velo in the U.S. is still 10 times lower than in Swedenwhich shows a huge margin for growth.
• Product success Velo Plus in 2025 confirms that innovation is accelerating adoption.
• Vaping regulation in the US is finally moving towards better enforcement, stabilising the environment.
• BAT is at an early stage of the transition towards a smoke-free portfolio.which may be a major source of growth in a few years.

The US market as the main driver of the transformation

The US market is absolutelycrucial for $BTI. Although it has long dominated conventional cigarettes, in recent years it has become the laboratory where the future of the entire nicotine category is being decided. Oral sachets came relatively late to the US and their growth has been hampered by slower regulation, weaker consumer education and lower availability of more innovative options. In Europe, nicotine sachets are a common part of consumer behaviour - especially in Scandinavia, where per-capita consumption is extremely high.

In the US, however, the situation is different. While the average American user reaches for Velo 2-3 times a day, in Sweden they are commonly at more than twelve sachets a day. This difference is not due to different preferences, but to the availability of variants, flavours, nicotine release technologies and speed of innovation. BAT is now bringing to the U.S. what has worked in Europe for years - more sophisticated formulations, a broader portfolio and adjustments aimed at a more effective nicotine profile.

If the U.S. market develops like the U.K. or Scandinavian markets, BAT is only at the beginning of its growth curve. Management therefore highlighted during the Jefferies conference that the market could almost double in volume in three years, with per-capita consumption so far at just a fifth of the UK and less than a tenth of Sweden.

Innovation as the key to growth: the role of Velo Plus

In 2025, innovation has made a strong push Velo Plus - variant, which combines an improved nicotine profile with new flavour and textural elements. This is a demonstration that innovation in the pouches category is not cosmetic, but structural. Consumers respond to changes in potency, release rate and product longevity, creating a dynamic that is more akin to modern FMCG segments than traditional tobacco.

The success of Velo Plus in 2025 has prompted BAT to expand its innovation portfolio and bring its European practices to the US market. The company is not only catching up with competitors, but also creating tools to significantly influence consumer behaviour. This is particularly key in the United States, where the pouches category is just moving into a phase of wider adoption.

The stabilising vaping market

Vaping has become a source of uncertainty for BAT, particularly because of the massive grey market that has long undermined legal sales in the US. In recent months, however, a change has begun to emerge. US authorities are tightening oversight, increasing inspections and removing illegal products from the market more frequently. Although it is not a revolution, but a gradual process, Jefferies analysts note that BAT no longer views vaping as a risk-laden area, but as a segment that can be a steady source of revenue in the coming years - not the main driver, but a solid part of the portfolio.

BAT and the shift towards a smoke-free future

British American Tobacco is one of the biggest players in the tobacco industry, but its future lies outside cigarettes. The company itself acknowledges this and is building its strategy around strengthening the so-called New Categories - pouches, heat-not-burn technology and vaping. While the transition to smokeless products has been slower in recent years, 2025 has shown that innovation and the shift of capital into these areas is finally starting to have a measurable effect.

BAT combines two things: a deep distribution apparatus and regulatory experience, giving it an advantage over smaller companies. If the U.S. market is evolving toward better regulation and more control, it is an environment that plays into the hands of traditional manufacturers.

Competition: who is leading the fight for US consumers?

The battle for the U.S. market is crucial for BAT because its main competitor, Swedish Match (now part of Philip Morris International $PM), is much stronger in the pouches business and has a big lead. PM has invested in Swedish technology and brought it to the US faster than other players. So BAT has to make up the difference not only technologically but also in marketing and distribution support.

At the same time, the global market operates with different dynamics - while PMI dominates in selected categories, BAT has a broader portfolio and a stronger position in other segments. The ability to transfer European innovation to the US environment, where the category is less saturated and less educated, will be critical. This creates room for whoever can drive product and marketing execution the fastest.

Management and strategic leadership

BAT's leadership (especially the CEO Tadeu Marroco) has changed its communication significantly in recent quarters. After a period of defensiveness, the tone is one of cautious optimism. The company is talking openly about growth opportunities, presenting clear metrics and showing a willingness to invest in innovation instead of simply defending its current position. That's a major change after two years where the company primarily dealt with declining volumes in traditional categories.

Management also stresses that the move to smoke-free products is not a short-term campaign, but a multi-year process. Still, there is now concrete evidence that investments in new segments have begun to change the trajectory of the entire company.

Market mapping: where British American Tobacco wins and loses

The biggest opportunity is in the United States, where the nicotine sachet market is still in its early stages of development. Low per-capita consumption and a relatively limited portfolio of players create scope for rapid expansion. The segment here is not saturated and consumers are only beginning to switch to modern alternatives. BAT is betting that the European adoption model can be gradually transferred to the US, with early results suggesting that the growth trajectory may be very similar to that of the UK or Germany.

Europe, on the other hand, represents a more competitive environment. Scandinavia is a market dominated by Swedish Match and where BAT will be more difficult to penetrate - not only because of strong local user preferences, but also because of the historical dominance of the Swedish snus tradition. Western Europe, however, offers a different picture: here the market is rapidly professionalising, the emphasis on regulation is growing and the adoption model is reminiscent of the early stages of the vaping boom a decade ago. In these countries, BAT has a wider distribution network and greater marketing capacity, allowing it to gain market share gradually.

Emerging markets are a long-term bet for BAT. Latin America, South Africa or Vietnam, for example, are at an early stage of transformation, where "modern oral" is still finding its opportunities. While the short-term impact is limited, the potential of these regions could be enormous within five to seven years, especially in countries with a growing middle class and higher consumer mobility.

Unit economics: Why nicotine sachets are exceptionally profitable for BAT

One of the most important pieces of information that investors often overlook is that nicotine sachets are much more financially attractive than traditional cigarettes. Rising demand is not the only factor - the structure of their profitability is crucial.

Pouches have lower production costs because they do not require powerful tobacco inputs or complex process and logistics infrastructure. Moreover, pouch production is more flexible and allows for rapid response to trends, tastes and nicotine levels. This makes pouches a category close to the FMCG segment with a significantly higher rate of innovation than in conventional tobacco.

Margins on modern oral products tend to be higher than on cigarettes, not only because of the simpler production but also because of the lower tax burden in many countries (although this advantage will gradually diminish). Marketing and distribution costs are lower because products are easier to store, have a longer shelf life and are not burdened by the same amount of regulatory obligations.

All this creates a situation for BAT where any increase in volumes in the pouches category creates a disproportionate positive impact on operating cash flow. If the U.S. market does indeed approach European consumption levels, the category's unit-economics can be a key driver of company-wide profitability growth.

Market size and forecast

• Market size 2023: USD 5.5 billion
• Projected market size for 2030: USD 26.42 billion
• CAGR (2024-2030): 26.2%
• North America: Largest market in 2023-2025

Behavioral Trends: Why does the younger generation prefer pouches?

The UK tobacco market is no longer the same generation of consumers it was ten or twenty years ago. It is younger adults who are changing the game and their preferences are creating pressure to transform the whole industry. Why? Because pouches fit into the modern lifestyle in a way that traditional cigarettes cannot compete with.

Younger users prefer products that are unobtrusive, odourless, easy to use and don't attract attention from others. Pouches suit office environments, social spaces and public transport - places where cigarettes and vape products are regulated or uncomfortable. In addition, they respond to the growing interest in alternatives with lower health riskswhich is significantly stronger among young people than among older smokers.

The banning of menthol in cigarettes in some countries also plays an important role. This is accelerating the switch to alternative forms of nicotine as users seek flavours and intensity that cigarettes no longer offer. Pouches fill this space and offer flavour variants that are limited in conventional tobacco.

And last but not least is the technology factor. The younger generation is used to rapid innovation cycles and expects the product to be constantly improved. Pouches fulfil this logic far better than cigarettes. BAT therefore builds its strategy around the generations that determine the future of demand.

Comparison with Philip Morris International: who is better placed?

Philip Morris International is BAT's biggest competitor in the smokeless category and its acquisition of Swedish Match (and therefore the ZYN brand) has fundamentally affected the balance of power in the modern oral segment. With ZYN, PMI has a clear lead in the US - both in distribution, technology and marketing approach.

BAT, however, is not in a deadlocked position. It has the advantage of a broader global footprint, a strong presence in dozens of countries, and a robust distribution model that enables rapid portfolio expansion. While PMI dominates in the US and Scandinavia, BAT has a broader footprint in Europe, Asia and Latin America. In addition, the company is able to leverage synergies across the portfolio and benefit from the fact that its modern oral products can be marketed in countries where traditional cigarettes still have a foothold.

The speed of innovation will be crucial. PMI has long invested more heavily in research and development, giving it a head start, particularly in the composition of its pouches and the efficiency of their release. BAT is now betting that the new Velo variants - particularly Velo Plus - can close that gap.

Financial investors often compare the two firms on cost-effectiveness and innovation. PMI is currently in a stronger position, but if BAT can push American innovation and stabilize the vaping segment, the gap could shrink rapidly over the next two years.

Investment scenarios

Optimistic scenario

In the optimistic scenario, British American Tobacco successfully captures the fast-growing wave of nicotine sachet adoption in the US. The company manages to transfer the European innovation model to the US environment and offers consumers products that accelerate growth in per-capita consumption and overall penetration. The category will approach the dynamics of the Scandinavian market, allowing the company to significantly increase volumes and market share at the expense of competitors. At the same time, regulation of the vape segment will improve, stabilizing the environment and allowing BAT to balance the growth of pouches with the gradual consolidation of other alternative products. The company will be able to strengthen margins and cash flow, which will significantly boost its ability to increase dividends and fund innovation cycles. Investors in this scenario will get a title that can combine growth, stability and a high dividend - something BAT has failed to offer in recent years.

A realistic scenario

The realistic scenario assumes continued growth, but without dramatic jumps. The US market for nicotine sachets will grow at a steady pace, per-capita consumption will increase slowly and products like Velo Plus will strengthen BAT's position in the segment. The vaping environment will become more predictable, but will remain a complementary category. The company will continue to reshape its portfolio, but traditional segments will still generate some of the declines that will need to be offset. Still, BAT will maintain solid cash flow, a high dividend, and a gradual shift toward modern categories. For investors, this will be a stable long-term position that may not deliver explosive growth but will provide an attractive risk/reward ratio.

Pessimistic scenario

In the pessimistic scenario, the rate of adoption of nicotine sachets in the US slows and the US consumption culture remains much closer to UK levels than Scandinavian ones. Regulation of vaping will not be fast enough, the grey market will stick around longer and BAT will have to deal with competitive pressure from PMI, which has a significant lead in the pouches category. The result will be slower growth in the smokeless category and continued erosion of traditional segments. The company will maintain the dividend, but its growth will be limited and investors will view BAT as a stable but less dynamic title. The stock may rise in such a scenario, but more in line with the broader market than due to specific catalysts.

What to take away from the article

• BAT is entering its most important growth phase in a decade.
• The US market for nicotine sachets is just getting started and Velo has a key role to play here.
• Innovations like Velo Plus are changing consumer behavior and bringing the US closer to the European model.
• Vaping regulation is gradually improving, stabilizing the environment for traditional manufacturers.
• BAT's investment story is shifting from a defensive title to a company that can offer a combination of growth and higher dividend attractiveness.

The forward price-to-earnings ratio for the S&P 500 has climbed into territory seen only a handful of times in the past decade—raising a fundamental question for markets: are stocks truly justified at these lofty valuations, or is the optimism baked into prices running ahead of economic reality? With earnings growth decelerating, interest rates remaining elevated and concentration in just a few mega-cap names at record levels, investors should not ignore the warning signs embedded in today’s elevated forward P/E. While this alone doesn’t mean an imminent crash, history shows that entering extended periods of high valuation often precedes lower long-term returns and higher volatility.

The link to the macroeconomic environment is crucial. After the pandemic, we experienced a period of extremely low interest rates and cheap money. In such an environment, companies grew record margins, investment grew and many investors put money into risky assets, i.e. equities. As a result, expected profits rose, but the share price rose even more. The P/E had to rise with it. At the same time, however, there was a phase where interest rates were high, inflation had not been completely eliminated, economic growth was slowing and the risk premium was rising. In such an environment, it is doubly true that high valuations require high growth. If earnings growth does not meet expectations or macro conditions change, there will be a rapid repricing of equities.

History will offer us several perspectives on similar situations and how stocks have reacted in achieving them. For example, during 2020, when US equity markets were reacting to the coronavirus pandemic, the forward P/E of the S&P 500 climbed to a level of around 23.6 in August 2020. At the time, this was associated with a sharp recovery in equities from the bottom, high liquidity and optimism about the future after the pandemic. The result was not a rapid decline. On the contrary, the truth is that the markets rose in the following years. Of course, it is important to note that the growth was not just driven by P/E expansion, but more importantly by the fact that the company's earnings expectations came to fruition and grew. In other words, the higher valuations at the time were at least partly justified by earnings growth. And historically, that's how it tends to be. A higher P/E may be acceptable if profits are growing.

Source: Factsheet

Another interesting moment came this October when the forward P/E was at 23.1 times, above both the five- and 10-year averages. While this multiple is not a record for the past 30 years (the peak was around 24.4 times) in a general historical perspective, it is a very high level. The last time we were in this zone, we saw market growth but also higher volatility and sensitivity to disappointment in expectations.

Therefore, in the current situation, it is crucial to understand what these numbers are really telling us as investors. It's not just that the market is expensive. It's that the market is now absorbing high expectations - high earnings growth, low risk, a stable macro environment. If any of these factors fail, valuations of growth stocks can be significantly vulnerable.

Let's take a closer look at the macroeconomic data that could shuffle the deck. In the US and globally, investors are grappling with unclear central bank plans. Rates continue to hold high and economic growth is slowing. Thus, it appears that the new normal for valuations may be lower than that generated by the boom in technology stocks. A significant portion of the growth in recent years has been the result of extremely low rates, massive fiscal stimulus, and technological innovation that has allowed companies to achieve higher margins and growth than ever before. But this extreme environment cannot last forever.

In light of this, it is interesting to compare the evolution when forward P/Es were high in the past. What then followed? For example, we saw a fairly similar situation with valuations during the dot-com bubble around 2000 (marked on the chart), when the market paid high multiples in anticipation of continued growth of the internet, technology and new business models, and when growth failed, there was a sharp fall. Conversely, in the case of 2020 or in the years following the pandemic (marked on the chart), when valuations were high, the market continued to rise as expectations were met. Companies grew and their profits grew with them. So the key difference was whether the "E" in P/E grew fast enough.

A chart of the S&P 500 since 1995

Another perspective is that the P/E growth of recent months has not been primarily driven by growth in "E" (expected earnings). According to the data for the period from April to the end of October 2025, the index price rose 38.3% while expected earnings rose only 7.1%. This means that most of the growth in valuations in this short period was accounted for by share price growth, not proportional earnings growth. This is a clear warning to investors: unless earnings growth starts to catch up with the stock price, any further correction could be more volatile.

From a risk perspective, one could say that the market is now betting that future earnings growth will be high and relatively risk-free. Once uncertainty increases, for example through interest rate rises or non-reductions, a weakening economy, geopolitical tensions or regulatory intervention, the risk will be significantly elevated. Therefore, even analysts from, for example J.P. Morgan Chase & Co.. warn that high valuations may lead to lower future stock returns. From a short-term (horizontal) perspective, this may mean increased volatility and the possibility of a correction.

It is therefore crucial for investors to think about several scenarios. The optimistic scenario is that companies are able to maintain or even increase earnings growth, thanks to innovation, efficient technologies, strong demand and the macro environment remains favourable. In that case, high P/Es can be justified and markets can continue to rise. The pessimistic scenario is that earnings growth disappoints, the economy slows and rates remain high. In that case, high valuations will be penalized and a correction becomes more likely.

Source: TKer

Ultimately, this is one of those moments for the stock market where history provides clues, not exact instructions, as to the way forward. The position the S&P 500 is in now has not been very common in the past, but the current environment is also very different. If earnings growth is strong and steady, valuations of strong stocks can be justified. But if "E" growth begins to slow and the macroeconomic environment deteriorates, the risk will be significant.

A high valuation is not in itself a reason to panic, but it is a signal that the margins of safety are smaller. The market requires the future to be really good. And if expectations turn out to have been too optimistic, investors may be unpleasantly surprised.

Chevron’s third-quarter performance captures the defining challenge of today’s energy landscape: companies may hit production highs, yet profitability increasingly závisí on cost control, capital discipline and smart integration of new assets. With global oil markets swinging na základě geopolitiky a investičních cyklů, Chevron prezentuje výsledky, které ukazují sílu jeho těžební infrastruktury i limity krátkodobé ziskovosti.

Record output underscores the resilience of Chevron’s upstream portfolio, but the financial picture is shaped by weaker commodity prices and the complex integration of Hess. The quarter highlights a company that is operationally powerful, strategically ambiciózní, ale zároveň vystavená potřebě přizpůsobit tempo investic realitě trhu. Tato rovnováha určí, zda si Chevron udrží status jednoho z nejspolehlivějších hráčů globální energetiky.

How was the last quarter?

The third quarter of 2025 brought a combination of record operating results and weaker profitabilityfor Chevron $CVX. The market environment was impacted by lower oil prices and higher costs associated with the Hess acquisition, which translated into a year-over-year decline in earnings. Reported net income was $3.5 billion compared to $4.5 billion last year, a noticeable decline, yet the result remained solid given market conditions. Adjusted for one-time items, profit was $3.6 billion, still nearly a billion less than the same period last year.

The biggest attention was drawn to production itself. Chevron delivered a record 4.1 million barrels of oil equivalent per day, a 21% increase over last year. The Hess acquisition alone added 495 MBOE per day to production, and another 227 MBOE came from organic growth, primarily from the Permian Basin and from projects within Tengizchevroil or in the Gulf of Mexico. The result is the strongest production volume in the company's history.

Cash flow from operations was $9.4 billion, reaffirming the company's ability to convert production into real cash despite weaker commodity prices. Adjusted free cash flow rose more than 50% to $7 billion, boosted by higher distributions from TCOs and divestitures of smaller assets. However, margins were under pressure and the average Brent crude price fell to $69 per barrel from $77 in the same period in 2024.

The upstream segment remained the dominant source of revenue - earning $3.3 billion and despite the year-on-year decline, this confirms that high production volumes are helping to offset weaker pricing. Conversely, downstream faced higher costs and lower refinery margins, yet remained profitable at $1.1 billion. Overall, the quarter showed the strength of operations, but also the sensitivity of profitability to the pricing environment and acquisition costs.

Chevron's full earnings presentation.

CEO Commentary

Mike Wirth emphasized that despite earnings pressure, the quarter was strong in terms of production, cash and overall performance. He said the Hess acquisition is progressing well, delivering synergies and strengthening Chevron as a key global energy company. He also confirmed that the integration of assets from Guyana, Permian and other regions is expected to bring long-term benefits to the company in terms of production growth and efficiency.

The CEO also highlighted the continued commitment to buybacks and dividends. Chevron returned $6 billion to shareholders during the quarter, building on the more than $78 billion distributed over the past three years. Wirth said in his comments that the results confirm the company's ability to generate cash independent of short-term market fluctuations.

Outlook

Chevron enters the year-end with a clear focus on the Hess integration and increased production, which should remain above the 4 million BOE per day level. The company expects continued volatility in oil prices, but also expects the Guyana, Permian and TCO projects to remain the main drivers of growth.

Capex will be higher for the rest of the year, mainly due to new projects taken over from Hess. Downstream margins are also expected to continue to be under pressure, while upstream should benefit from higher volumes and progressively better realised prices. Chevron also confirmed a stable dividend policy and a plan to continue share buybacks.

Long-term results

Long-term data shows that Chevron is going through a cycle of significant fluctuations caused by global energy prices, but at the same time maintaining robust financial stability. Revenues in 2024 were $193.4 billion, slightly below 2023 levels but still well above levels from the years before the pandemic oil boom. Gross profit of $56.9 billion confirms that the company can successfully manage costs even in a downturn.

Profitability, however, declined year-on-year - net profit fell to $17.6 billion from $21.4 billion the previous year. At the same time, the company's capital base grew, which impacted return on capital. EBITDA remains very strong at $45.8 billion, indicating that Chevron has the capacity to fund investments even in less favorable macro conditions.

Shareholder Structure

Chevron is a predominantly institutionally owned company. Roughly 68% of the shares are held by large institutions, while the insider stake is around 6%. The largest shareholders include Vanguard Group with approximately 9.1% stake, followed by State Street with 7.6% and BlackRock with nearly 7%. These institutions provide stability to the ownership structure and create the basis for the firm's long-term capital discipline.

Analysts' expectations

Analysts expect Chevron to benefit primarily from record production in the coming quarters and the acquisition of Hess, which increases exposure to fast-growing Guyana. Earnings should remain under pressure until synergies are fully realized and oil prices reach more stable levels. Nevertheless, sentiment is generally positive, with most recommendations pointing towards a 'buy' or 'overweight' rating, mainly due to strong volume growth and stable cash flow.

Fair Price

Amazon $AMZN announced another massive investment in artificial intelligence! Shares are rallying in response!

Amazon shares $AMZN are up more than 2% today. This gain is driven partly by the broad market rally and a rebound in tech, but also by the announcement of a $50 billion investment in AI infrastructure.

The new project, which will primarily serve the U.S. government, will include nearly 1.3 gigawatts of new data center capacity for Amazon AWS Top Secret, AWS Secret and AWS GovCloud services.

Amazon said that through this project federal agencies will gain access to Amazon SageMaker for model training, Amazon Bedrock for deploying AI agents, Amazon Nova, Claude from Anthropic, Amazon's Trainium AI chips and AI infrastructure from Nvidia $NVDA. Nvidia shares are up 1.45% today.

The two sides of the Atlantic appear to be at a breaking point. The European Union is now pressing the U.S. Department of Commerce to follow through with the July trade accord, demanding sweeping tariff cuts on steel, aluminium and derivative products — tariffs that have already hit 407 items since August. Meanwhile, Washington’s 15 % duty on most EU goods remains matched by Europe’s delayed concessions, sparking unease across industry. With talks stalled and new penalties looming on trucks, wind turbines and critical minerals, Brussels warns: the clock is ticking and the game is shifting.

DAX index development from 1.10.2025

Today, senior US and European trade negotiators will meet in Brussels. U.S. Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer will meet with EU ministers, who will make a tough demand: that the U.S. begin to realistically fulfill its commitments from the deal struck at the end of July.

In fact, during July 2025, both sides reached a major agreement. The European Commission, led by President Ursula von der Leyen, and US President Donald Trump agreed on a framework for a trade deal aimed at bringing the transatlantic trade relationship to a more stable state. Several key points are set out in this agreement: the US has committed to a maximum tariff of 15% on most European exports, while the EU has promised to relax or reduce its tariffs on US goods. In addition, tariff-free treatment was agreed for certain key products, such as aircraft and parts, generic medicines and chemical materials. From a European perspective, this agreement was intended to bring a greater degree of certainty and the ability to anticipate future market developments for businesses and investors. According to European Commission documents, the volume of trade between the US and the EU was EUR 1.6 trillion in 2024, making it one of the largest bilateral trade relationships in the world.

However, it is the implementation of this agreement that is beginning to face problems. In Brussels, the Union is pointing out that the US continues to apply a 50% tariff on steel and aluminium and, since mid-August, has also applied this regime to other products such as motorcycles and refrigerators. From a European perspective, this development means that the agreement is in jeopardy, as the US is supposed to be moving towards lower tariffs and joint regulation of metal imports or quota setting, according to the agreement. In addition, the EU Parliament's International Trade Committee is preparing new legislation. These are known as the five S's - Steel, Stand-still, Suspension, Safeguards and Sunset. These measures are designed to allow the Union to act quickly should the US retroactively change the terms.

Impact on the economy and markets

In terms of the impact on the economy and stock markets, this situation is very significant. EU industrial companies that have a strong exposure to US exports or are part of the supply chain across the Atlantic will face increased uncertainty. Higher, or at least uncertain, tariffs mean higher input costs. This can reduce margins and slow investment growth. Titles with significant US exposure may be reassessed by the market and investors as riskier. While they may have previously been considered relatively safe in the context of stable transatlantic trade, they are now at risk of greater volatility and possible deterioration in performance.

The raw materials, heavy industry, steel and aluminium sectors are particularly vulnerable. If the US maintains high tariffs in the long term, or expands the list of products subject to higher tariffs, value chains could be disrupted, European component suppliers' exports could be curtailed, and the resulting pressure on the shares of companies in these sectors could be exacerbated. In addition, from an energy perspective, the fact that the EU has promised to purchase US LNG, oil and nuclear fuel in the agreement is an important aspect.

For investors, this means that the transatlantic relationship cannot be seen only as a business partnership. Geopolitical and energy dynamics come into play significantly and can change sectoral allocations and risk profiles of companies.

From a macroeconomic point of view, this situation poses a certain challenge to further GDP growth in both the US and Europe. Indeed, if trade barriers were to expand further, investment could be curtailed, manufacturing activity could slow down and costs for firms could rise. In such a case, monetary policymakers - particularly in the EU - could face pressure to slow rate cuts or stick with higher interest rates because of the risk of rising inflation from import costs. For markets, this means that expectations of possible further growth may be reassessed. This is because investors will factor in higher risk premia and a greater possibility of downside surprises.

Germany's DAX index slumped 3.28% last week to its lowest level since early May, when prices rose sharply after the initial easing of trade policy by the US. Today, the outcome of that meeting will be crucial and will again give markets more clues about how companies and the overall economy might fare.

Two scenarios loom in the outlook for equity markets. If the US agrees to reduce its tariffs, especially on steel and aluminium, a positive scenario will start to materialise, where a calmer transatlantic environment would support industrial growth in the EU. Investors could renew their optimism and the shares of export-oriented European companies could return to growth. Conversely, if the deal does not go ahead as envisaged, or the US extends tariffs, for example on cars, critical raw materials, aircraft or wind turbines, then markets could be set for further declines. Markets would be hit by higher trade barriers, market fragmentation and a rethinking of the globalised model of supply chains. All of this together could result in higher volatility, more cautious allocations and horizontal changes in company valuations. From an investor's perspective, this means that exposure to firms with a strong US export orientation requires greater caution, while firms with lower sensitivity to transatlantic risk or those more domestically oriented or regionally integrated may be attractive.

The global chip industry has entered a phase where technological leadership a nd geopolitical leverage jsou prakticky totožné. South Korea is now signalling that it sees strategic value in aligning with Taiwan as the U.S. prepares a new wave of tariffs on imported semiconductors. What appears outwardly as a trade negotiation is ve skutečnosti much broader — it is a contest over who will shape access to the American AI hardware market, which relies overwhelmingly on chips made in East Asia.

For Taiwan, home of TSMC, the conversation goes far beyond tariffic impact. Parallel talks with Washington open the door to a coordinated push by the world’s top manufacturing nations to secure exceptions and preferential conditions. Seoul has already signed its agreement, ensuring its semiconductor exports cannot be disadvantaged versus any other partner. Washington’s own language makes one thing clear: in the world of advanced chips, Taiwan — and by extension TSMC — is the benchmark everyone else is measured against.

Don't overlook: TSMC stalls, market unnerved: First cracks in AI euphoria

Meanwhile, the situation is changing rapidly. According to US media, Trump and his advisers are admitting internally that the promised tariffs may not come so soon. The US needs a steady supply of cutting-edge processes - 3nm and in the future 2nm - that only TSMC can currently mass produce. Samsung $SMSN.L has advanced technology, but not yet in volumes to meet the exploding demand for AI accelerators. Intel $INTC is behind schedule and its factories in both Arizona and Ohio won't ramp up production as fast as the US needs. Washington therefore can't afford a tariff shock that would cut off the flow of TSMC wafers, without which US AI projects will immediately slow down.

Why TSMC $TSMis now at the center of the bargaining game

• TSMC makes around 90% of the world's most advanced chips. The U.S. has no alternative - without TSMC, development by Apple, Nvidia, AMD and Qualcomm will grind to a halt.
• Its new factories in Arizona are running years behind schedule. This strengthens Taiwan's bargaining power: The US needs imports even more than it has been willing to admit.
• Every tariff measure makes AI hardware more expensive in the US. For Nvidia GPUs, manufacturing at TSMC already accounts for most of the cost. Every tariff means higher prices for servers and accelerators.
• TSMC is also a geopolitical card in the US-China conflicts. Washington is stepping up its protection of Taiwan not just because of politics, but because of its monopoly role in chips.
• Korea and Taiwan's joint negotiation prevents the US from "divide and conquer". If the U.S. offers benefits to only one side, the other can immediately rethink investment plans or slow down supply.
• Taiwan does not want tariffs to encourage companies to shift production from TSMC to Samsung. Coordination with Korea is a way for Taipei to maintain its own competitive advantage.

South Korea, meanwhile, is seeing the first effects of the deal: its chip exports to the US rose 51% in October, to $1.2 billion. Demand is being driven mainly by HBMs, which are at the heart of Nvidia's $NVDAAI accelerators - but even these are becoming a critical input that the US cannot risk disrupting with tariffs. Yet Taiwan is in the same position: its bargaining power is defined not by politics, but by TSMC's monopoly on the manufacturing processes that the AI world needs more than ever.

In fact, there is much more going on than a classic trade agreement. Korea and Taiwan are moving closer because they know that their position in the AI chain is unique - and that while the United States wants to bring manufacturing home, it does not yet have the technology or capacity to replace TSMC or Samsung. Current negotiations are therefore deciding what the most important industry of the next decade will look like. And whether the U.S. will risk a tariff escalation that may boost domestic production but also weaken its own pace of innovation.

What kind of deal Korea and Taiwan are talking about (and why they want it)

• This is not a done deal - it is an intention to coordinate action. Korea has only indicated that it sees room for cooperation with Taiwan, as both countries face the same pressure from US chip tariffs.
• The goal is to negotiate more favorable treatment together. If Korea and Taiwan proceed separately, the US may offer different terms to each. The joint strategy is designed to prevent this.
• Coordination is to ensure that neither country ends up at a disadvantage. Since Korea and Taiwan are direct competitors in chips (Samsung vs. TSMC), both fear that Washington will favour one at the expense of the other.
• Both economies want a guarantee that US tariffs on their chips will not be higher than for the other. This is the crux of the potential deal: to align the process so that the US cannot "split" their bargaining power.
• At the moment, only informal signals, not formal negotiations, are taking place. Korea has confirmed that there is no formal bilateral agreement with Taiwan yet - but admits that there is room for one.
• This is due to pressure from US tariffs on advanced chips. If tariffs are imposed unevenly, one country could lose a huge part of its export advantage while the other gains it.
• Taiwan is negotiating with the US on its own - and Korea fears that Taiwan could get better terms. Therefore, he suggests that coordination can be beneficial to both.
• TSMC is indirectly the main focus of this coordination. If the tariffs affect Taiwan's wafers, the US would screw over its own AI industry. Korea knows this - and wants to be a negotiating partner with equal weight.

In a market defined by sharp rotations and unpredictable sentiment, few companies manage to deliver the kind of consistency income investors crave. This particular REIT has become one of the rare exceptions. Its nearly 6% dividend is not the result of financial engineering, but of a business model that has generated surplus cash flow through recessions, inflationary spikes and periods of elevated interest rates. While many real estate players have struggled to maintain payout stability, this firm continues to reinforce its reputation as one of the most reliable income engines in the sector.

The durability of its cash flows is rooted in a tenant base built to withstand economic cycles and long-term leases that lock in predictable revenue. Instead of chasing rapid expansion, the company has focused on operational discipline, high occupancy and conservative leverage. This approach has allowed it to raise its dividend for more than thirty consecutive years — a track record that sets it apart from peers and positions it as a compelling choice for investors seeking steady, long-term income.

Top Points

• Dividend yield around 6 % with more than 35 years of annual payout growth.
• Extremely stable gross margin of around 95 %, operating over 64 %.
• Portfolio with long-term occupancy historically above 98 %.
• Strong operating cash flow growth on USD 635 million (2024).
• Attractive valuation given FFO and stability of results.
• Highly predictable model: triple-net lease with minimal costs on the owner's side.

Company profile

National Retail Properties $NNN has long profiled itself as one of the most traditional and proven REITs in the freestanding retail segment. Its business model is based on the acquisition of properties that it leases to tenants in the form of triple-net leases for long periods, often over 10-15 years. This type of contract is one of the most attractive from the investor's perspective: the tenant pays all operating costs, including taxes, insurance and maintenance, while the owner collects a stable net rental income. The result is an extremely consistent cash flow, which forms the backbone of the company's dividend policy.

The portfolio consists of hundreds of properties spread across the United States, and tenant selection is key. The majority of the portfolio is occupied by operations that are relatively resilient to economic cycles - these include fast food restaurants, automotive service stations, gas stations, drugstores and retail chains focused on everyday consumption. This structure has historically proven to be extremely robust. During the pandemic, the firm collected most of its rents while many other REITs struggled with payment shortfalls. In times of inflation, it gained an advantage through rent indexation and long-term contracts.

The firm does not engage in risky expansions or follow real estate market fads. Instead, it focuses on growing its portfolio organically through acquisitions that meet strict yield and tenant credit risk criteria. This disciplined strategy has made it one of the most reliable players in the sector. The tenants are largely regional and national companies with a long history of operations that have weathered potential economic fluctuations well.

Geographic diversification is also important. The firm owns hundreds of properties in various U.S. states, reducing the risk of local recessions. As a result, it manages to maintain occupancy at extremely high levels. Over the past decade, it has rarely ever fallen below 98%, an extraordinary figure in retail REITs. At the same time, low vacancy rates ensure stable rental yields, which are the basis for growing operating results and cash flow.

The company's conservative approach to financing is also an important characteristic. The company avoids excessive debt and opts for gradual portfolio growth rather than aggressive equity issuances or extensive use of debt. This is reflected in steady asset growth while managing to keep debt at reasonable levels.

The remarkable return compared to the indices (Source) 👇

Competition

The freestanding retail real estate segment is relatively narrow but competitively intense. Leading the pack is Realty Income $O - arguably the best-known monthly dividend REIT in the world. Realty Income has a larger portfolio, higher ratings and a broader range of sectors. However, that very size means less flexibility and slower FFO per share growth. National Retail Properties is simpler and more focused by comparison, which brings high stability, albeit less acquisition momentum.

Agree Realty $ADC is another close competitor, particularly in the triple-net lease space. This REIT is expanding more aggressively, has faster portfolio growth, and is targeting big retail names like Walmart and Tractor Supply. This carries some advantages, but also a higher concentration of risk. National Retail Properties has a greater diversification of tenants, making it a more conservative choice for investors focused on stability.

Essential Properties Realty Trust $EPRT follows a similar strategy to NNN, but the target tenant group is different. It focuses on smaller chains and regional businesses, which allows it to grow faster but with higher credit risk. NNN has a more stable customer base, which is a key difference when assessing dividend sustainability.

W. P. Carey $WPC used to be a strong player in the triple-net segment, but in recent years has diversified into industrial real estate, European assets, and the office segment. The result is a more complex portfolio that, while it may provide different sources of income, is not as transparent and predictable as NNN.

Management

The firm's management is among the most disciplined in the sector. Its strategy is based on consistent performance, detailed market knowledge and rigorous risk assessment. The main advantage is long-term continuity. Top management turnover is slower than most competitors, ensuring stable leadership and predictable strategic direction.

The company's Chief Executive Officer is Stephen A, an experienced leader in real estate investment. Horn Jr., who has been in the sector for decades. His career includes leading real estate transactions, structuring financing, managing risk and overseeing portfolio expansion through various economic cycles. Under his leadership (the last two years), the firm has pursued a strategy of disciplined acquisitions and prudent leverage - the very qualities that protect the dividend from downward or suspension pressure over the long term.

Stephen A. Horn Jr. 👇

The Dividend

NNN Dividend is at the heart of the investment thesis at this company. It is one of the longest continuous dividend streaks in the world of REITs. The company has raised its dividend 36 years in a row, making it one of the dividend aristocrats. The current dividend of $0.60 per share per quarter offers a yield of about 6%, well above the market and sector average.

The key question for investors is the sustainability of this yield. The answer lies in FFO and AFFO - two of the most important metrics for REITs. FFO (Funds From Operations) represents net income adjusted for depreciation and amortization, while AFFO (Adjusted Funds From Operations) subtracts necessary capital expenditures. NNN has had a very stable long-term payout ratio relative to AFFO in the range of 65-75%. This is healthy and sustainable.

In recent years, the company has maintained a steady growth in FFO per share despite macroeconomic turbulence. This is key - dividend growth must be supported by growth in actual cash generation. And that's been successful here.

The dividend history looks like this: in 2012, the dividend was $0.375 per share per quarter. In 2016, it grew to $0.455. In 2020, it increased to $0.52. Today, it is USD 0.60. The average dividend growth rate is around 3% per year. It's not an aggressive pace, but it's extremely reliable.

With high gross margins and minimal maintenance costs, cash flow is not compromised even in a period of higher rates. This is another reason why the dividend is so stable. Many REITs are having trouble refinancing debt these days. This is where a conservative balance sheet helps.

Long-term results

The company's revenue has been growing steadily. In 2021 they were $726 million, and in 2024 they are already $869 million. This corresponds to growth of around 6% per year. This growth is not due to aggressive expansion, but to natural rent increases and the gradual acquisition of new properties.

The gross margin of around 96% is one of the highest in the sector. It reflects a triple-net structure that minimizes operating costs. An operating margin above 64% confirms that the company can manage its expenses effectively and maintain high profitability.

Net profit growth is also stable. EPS has grown from $0.87 in 2021 to $2.16 in the last two years. That's a dramatic shift that makes the stock more attractive in the eyes of long-term investors.

EBITDA grew from $654 million in 2021 to $830 million in 2024. Operating cash flow grew as well - this is the most important metric for REITs because it pays dividends. In 2024, it reached more than US$635 million, a very strong level.

Financial development and balance sheet

The company's balance sheet is very healthy. Total assets have grown to $8.8 billion. Shareholders' equity is holding steady at around USD 4.3 billion. The debt then looks as follows - Total Debt USD 4.37 billion and Net Debt USD 4.36 billion.

Total liabilities of around USD 4.3 billion are in line with the size of the portfolio. The company holds long-term fixed rate bonds to protect against interest rate fluctuations. An Altman Z-score of around 1 indicates a moderate level of risk, which is common for REITs.

Growth in operating cash flow is essential. This has been increasing each year, confirming that the portfolio is generating more and more cash. Investment cash flow is negative, reflecting investment in new properties. However, this is a healthy sign of portfolio growth.

Financing is diversified. The company combines bank loans, bonds and equity. This avoids dependence on a single source of finance.

Valuation

The valuation of a stock can best be measured by the price/FFO ratio. For NNN, this ratio is in the range of 12-14 times, which is an attractive value within the sector. Realty Income typically trades at 14-18x FFO, Agree Realty at 15-17x, and Essential Properties around 14-16x.

A P/E of around 19 is in line with the average for a stable REIT (but doesn't tell us much for a REIT company). A P/S of 8.47 reflects high margins, while a P/CF of 11.65 indicates a strong ability to generate cash.

From a dividend investor's perspective, the valuation is fair. The market values stability and a strong dividend profile, but does not assign any growth premium to the company. That said, the stock is not cheap, but it is certainly not overpriced.

News and strategic moves

The way the company has handled the refinancing of its long-term debt has played a major role recently. After a significant rise in interest rates during 2022-2023, the entire industry came under pressure, but the firm could afford to wait for a more stable environment thanks to its long-term maturity curve. A significant advantage is that most of its debt is fixed for many years ahead, minimising the direct impact of high rates on FFO and dividend policy. At times when other REITs have had to resort to selectively cutting dividends or closing equity issues at unfavorable prices, this company has not cut payouts due to its conservative approach.

Another strategic priority has been to move towards greater representation of tenants from segments that have continuous demand regardless of the macroeconomic environment. Typically, these include establishments such as auto repair shops, pharmacies, basic food services, hobby and home improvement, gas stations and drug stores. What is important for investors is that management is systematically moving in this direction: this is not a cosmetic portfolio adjustment, but a long-term philosophy focused on cash flow stability. In the last two years, the proportion of business models that are less threatened by the growth of e-commerce or structural changes in consumer behaviour has been increasing.

In terms of acquisitions, the company continues to pursue a purchasing strategy focused on properties with long-term triple-net contracts, where tenants bear the majority of operating costs. Recent transactions indicate a preference for smaller, geographically dispersed units rather than large centralized retail centers. This strategy brings greater diversification and minimizes the concentration of risk in one location or sector. The firm has been able to buy at cap rates that, even in a higher rate environment, provide an attractive spread to the cost of capital, confirming its ability to invest efficiently at various stages of the cycle.

Analyst expectations

Analysts' approach to the company is surprisingly consistent, with most reputable houses rating its outlook as stable to moderately up. This is because it is anchored in retail segments that are considered structurally essential and whose demand is relatively resilient to cyclical fluctuations. Fuel, food, auto or low-cost retail formats are among the least cyclical areas of the overall economy, which greatly improves the predictability of future FFO and dividends.

Analysts believe that the outlook for FFO per share will be rather stable over the next two to three years, possibly with gradual growth in the units of percentages. The consensus among analysts is that funding costs will be a key factor as higher interest rates gradually translate into refinanced debt. However, given the company's excellent balance sheet and its ability to fix interest rates over the long term, these pressures do not pose a threat to the sustainability of the dividend. The payout ratio to AFFO is expected to remain between 65-75%, which is a very healthy range for the REIT and provides room for continued dividend increases.

• Overall, the target prices range between $42 and $50 over the next 12 months.

Analysts also note the company's attractive position within the pure-play REIT sector. Compared to some competitors, it has the advantage of lower exposure to large e-commerce-sensitive retail chains, which gives it more stable internal momentum. Although revenue growth is not typically a major factor for REITs, investment houses value consistency of results, rising occupancy and disciplined acquisition policies.

Another element of analyst commentary is the stock's expected price appreciation in an environment of potential interest rate cuts. REITs traditionally react very strongly to declining bond yields - and given the firm's above-average dividend history, they are among the first titles investors consider when rotating capital into defensive dividend assets. Analysts agree that if there is a 50-75 basis point rate cut, the stock's valuation could rise another 10-15%, without the need for significant AFFO growth. Such a situation would support total shareholder returns and reinforce the already strong dividend investment thesis.

Opportunities

One of the biggest opportunities for future growth is Demographic trendsthat is shifting economic activity to the southern and mountain states of the US. These regions are characterized by positive migration, higher employment, lower cost of living and faster start-up activity. As a result, retail tenants are also heading there, which has long been the company's preference. For the company, this means the opportunity to invest in areas with higher long-term returns, where a growing population ensures higher transaction volumes and more stable demand for essential services. These demographic dynamics are structural, not cyclical, and therefore represent a sustainable growth engine.

Another opportunity is the ongoing consolidation in the retail real estate sector. Many smaller retail property owners have been unable to keep up with the cost of capital, refinancing and property upgrade requirements. This opens up room for growth in acquisition activity by REITs, which have cheaper access to capital and more efficient portfolio management. The Company is one of the more conservative players in this environment, but it is this caution that allows it to select only the highest quality assets and transactions with exceptional risk profiles.

Risks

• Higher interest rates
• Refinancing of long-term debt
• Tenant credit risk
• Structural changes in the retail sector
• Macroeconomic slowdown or recession
• Regulatory changes in the REIT sector
• Slowdown in acquisition activity
• Potential decline in property values
• Regional concentration of certain segments
• Sensitivity to consumer behaviour

Investment scenarios

Optimistic scenario

In the optimistic scenario, US interest rates fall faster than expected today. Refinancing pressures on the REIT sector are easing and capital is shifting back into dividend-paying assets. With a strong balance sheet and a strong portfolio, the Company begins to more aggressively purchase new properties at attractive prices. Its AFFO is starting to grow at a rate of around 5-7% per year, allowing for a gradual acceleration in dividend growth. The improved macro environment leads to a valuation rerating - P/FFO moves from conservative levels towards the sector's historical average, providing investors with a double return: a higher dividend and share price growth. The total annual return could reach 12-15% in this scenario.

The company is also benefiting from the growing demand for retail services in the emerging U.S. region, where the population, number of businesses and consumer power are growing. Further expansion in these regions strengthens rents and increases portfolio stability. The optimistic scenario also assumes a relatively low number of tenant bankruptcies, which reduces re-leasing costs and increases the efficiency of the overall portfolio.

The result is an environment in which the company continues to be one of the most attractive defensive dividend REITs in the market, with the ability to regularly increase the dividend and add shareholder value at a steady pace.

A realistic scenario

In the realistic scenario, the U.S. economy remains stable, but interest rates do not fall significantly below current levels. The market is in an environment of slightly elevated cost of capital, which slows acquisition activity across the REIT sector. The firm remains conservative, buying selectively and focusing on higher yielding projects. Retail demand is stable, but AFFO growth remains in the 2-4% per annum range.

The dividend continues to grow modestly but consistently. The firm remains attractive, particularly to long-term dividend investors who value stability and low volatility. The firm's valuation has not grown aggressively, but has remained within a range of historical averages. The total annual return for investors is around 7-9%, which is still very attractive for a defensive REIT.

The realistic scenario also assumes a certain level of tenant bankruptcies, but these losses are spread across a diversified portfolio and do not materially impact FFO or the company's ability to pay a dividend. The company continues to digitize and modernize processes, which contributes to stable operating margins.

Pessimistic scenario

In the pessimistic scenario, the U.S. economy slows, consumers cut back on spending and some retail segments are negatively impacted. Bankruptcies are on the rise, particularly in lower margin segments and tenants who have higher exposure to cyclical spending. While the company is limiting the impact through diversification, the cost of re-leasing and building improvements is increasing.

In addition, interest rates are not falling or are even rising slightly, which increases the cost of refinancing. AFFO is stagnant or slightly declining. The dividend remains paid, but the rate of dividend growth slows significantly and the company may have to maintain the dividend at the same level for several years.

In the pessimistic scenario, REIT stock valuations decline as investors shift capital into safer bonds. The share price stagnates or declines slightly. Although the firm is not in distress, the total return to investors falls to 2-4% per year, which is primarily a dividend yield. This option represents a less attractive environment, even though the firm itself remains fundamentally stable.

What to take away from the article

• The company is one of the most stable dividend REITs with a strong long-term history of dividend increases.
• With its focus on the indestructible retail segments, it offers high cash flow predictability and stable returns even in an uncertain economic environment.
• Triple-net contracts minimize operating costs and increase the company's resilience to changes in energy prices or maintenance.
• The macro environment and interest rate trends are a major factor influencing the firm's valuation and acquisition activity.
• Investors should monitor portfolio segmentation, changes in retail demand and the evolution of tenant financial strength.

The global payments landscape is shifting at a speed few industries can match. Digital wallets, embedded finance and the rise of real-time transactions are reshaping how consumers interact with money, while security demands and regulatory pressure add new layers of complexity. In this environment, only companies that combine deep infrastructure with technological agility can maintain leadership — and Mastercard continues to prove it belongs in that group.

Once known primarily for card networks, Mastercard has evolved into a multilayered technology platform powering the modern payments ecosystem. Its services — from fraud prevention to analytics, tokenization and digital identity — now play a central role in how value moves across borders. The strong third-quarter performance reflects a strategy built on diversification and scale at a moment when global commerce is redefining itself.

How was the last quarter?

In Q3 2025 alone, Mastercard $MA net salesreached $8.6 billion, up from $7.4 billion a year earlier, representing 17% growth on a reported basis and 15% growth in constant currency. The pace is well above the growth of the global economy and shows that the company can continue to gain market share while better monetizing its existing client base. Organic growth was supported by both higher volumes and higher revenue from added services, with acquisitions adding approximately 1 percentage point to overall revenue growth.

The core payments business remained a steady driver of results. Gross dollar volume grew 9% in local currencies to approximately $2.7 trillion, purchase volume added 10% and cross-border volume, which is traditionally high-margin, increased 15%. The number of "switched transactions", i.e. transactions fully processed through the Mastercard network, grew 10% year-on-year. These parameters confirm that consumer demand and travel remain strong and the payments ecosystem continues to expand despite geopolitical uncertainties.

The combination of higher volumes and a disciplined cost base has resulted in a significant shift in profitability. Operating profit jumped from $4.0 to $5.1 billion, up 26% and 23%, respectively, at constant currency. Reported operating margin increased from 54.3% to 58.8%, and adjusted operating margin was 59.8%, up half a percentage point from a year ago. In other words, every dollar of sales generates more operating profit for Mastercard today than a year ago, despite the higher investment in growth.

GAAP net income rose from $3.3 billion to $3.9 billion, up 20% (18% at constant currency), while diluted EPS rose 23% to $4.34. Adjusted net income was $4.0 billion, up 10% year-over-year, and adjusted EPS was $4.38, up 13% (11% in constant currency). The difference between GAAP and non-GAAP results is mostly related to the revaluation of equity holdings and special items, but the trend is clear - the company is able to combine double-digit revenue growth with double-digit earnings per share growth, and it's doing so in a business with very high margins.

Full presentation with results: Mastercard | Q3 2025

CEO commentary

Words from the CEO Michael Miebach reflect well the direction Mastercard is taking. He highlights "healthy consumer and business spending" and "robust performance of our differentiated services", i.e. healthy consumption and strong growth of differentiated services. From an investor's perspective, it is important that the payment network itself is now seen as the foundation on which the company builds the other layers of monetisation - from security and authentication solutions to marketing and data services to new forms of digital and "agentic" commerce.

At the same time, management points to the launch of the Mastercard Commerce Media network, new cybersecurity solutions and the development of "agentic commerce," a logical response to the emergence of AI and autonomous agents in the payments and shopping process. Crucially, these innovations are not just PR, but actually translate into numbers - value-added services and solutions are growing 25% reported and 22% in constant currency, with acquisitions adding only about three percentage points. This confirms organic client interest and Mastercard's ability to sell more services to existing partners.

At the same time, management is not shying away from cost realities. It openly acknowledges the impact of the 15% global minimum tax (Pillar 2), which increases the effective tax rate and to some extent neutralises the positive impact of tax incentives in Singapore. Nevertheless, it manages to keep EPS growth in the high teens. This suggests that the firm has significant leverage in margins and capital allocation, which it can use to maintain attractive earnings per share growth even in a more challenging tax environment.

Outlook

The current results create a solid foundation for the remainder of the year and for 2026. Management is demonstrating that it can sustain a double-digit revenue growth rate over the long term while improving margins, whether through operational efficiencies or the growth of a higher proportion of value-added services in the mix. The increase in the effective tax rate to ~20-21% does present headwinds to net income, but with operating margins around 60% and share buybacks underway, Mastercard still has plenty of room to deliver double-digit EPS growth.

The financials outlook is also complemented by a robust balance sheet position. The company has long generated high free cash flow and maintained conservative debt levels, allowing it to fund a combination of dividends, buybacks and acquisitions. From an investor's perspective, this makes Mastercard look like a continuing "compounder" that can combine organic growth in global payments, service expansion over the payments network, and financial engineering to benefit shareholders in the years ahead.

Long-term results

The long-term numbers show a consistent growth trajectory. Total revenues for 2024 reached $28.17 billion, marking 12.2% year-over-year growth, following 12.9% growth in 2023 and 17.8% in 2022. Mastercard has thus maintained double-digit growth for several years on a relatively high starting base, without a major slowdown. Gross profit in 2024 was $21.49 billion, growing at a rate of 12.7%, showing that the margin parameters of the payments business remain very strong even in a higher cost environment.

Operating profit increased to $15.58 billion in 2024 from $14.01 billion in 2023 and $12.26 billion in 2022. This corresponds to growth of 11.2% in 2024, 14.2% in 2023 and 21.6% in 2022. Net income reached $12.87 billion after $11.20 billion in 2023, a growth of 15%, and EPS moved from $11.86 to $13.92, a growth of over 17%. At the same time, there has been a continuous reduction in the number of shares, with the average number of shares falling from 988 million in 2021 to 925 million in 2024, with the diluted average falling at a similar rate. This means that earnings per share growth has been higher than net income growth alone over the long term, a very favourable combination for shareholders.

EBIT and EBITDA trends confirm strong operating leverage. EBIT and EBITDA increased from $10.74 billion to $15.90 billion and $11.46 billion to $16.80 billion, respectively, between 2021 and 2024. The company is thus generating steadily growing, high-quality cash flow over the long term, which it can use to return capital as well as to acquire and develop new services. In the context of this historic track record, the current Q3 2025 results look like a continuation of the trend rather than a one-off "blip".

News

In terms of strategic developments, the momentum in value-added services is key. During the quarter, Mastercard launched Mastercard Commerce Media network, a platform that uses data from the payment network to target and measure the effectiveness of advertising and marketing campaigns. At the same time, the company introduced new cybersecurity solutions for payments and expanded "agent commerce" capabilities that build on the development of AI and autonomous agents. These projects move Mastercard more into the position of a data-technology player, rather than just a payments infrastructure provider.

At the cost level, the results reflect the previous restructuring wave, with a portion of one-off costs booked in 2024. The company is already running on a more efficient cost base in 2025, although adjusted operating expenses are up 15% y-o-y (14% at constant currency) in Q3 2025, driven by acquisitions among other things. The higher tax burden due to the global minimum tax and a change in the geographic mix of earnings is another factor for management to deal with, but from an investor perspective this is still more of a technical pressure on net profit than a structural issue for the business.

Shareholding structure

Insiders hold only about 0.5% of the shares, while institutions own over 90% of the total shares and about 91% of the free float. In the portfolios of the major global asset managers, Mastercard holds a stable position - Vanguard Group owns approximately 79.4 million shares, equivalent to roughly 8.9% of the shares. Mastercard Foundation Asset Management manages approximately 70.3 million shares (about 7.9%) and BlackRock holds 70.2 million shares with about 7.9% of the shares. State Street rounds out the "Big Three" with a stake of over 4%.

This structure shows the high level of confidence of large institutional investors in Mastercard's long-term business model. It also means that the title is very sensitive to institutional capital flows, whether it is changes in index weightings or thematic shifts in allocation (for example, a greater emphasis on "quality growth" or the financial sector). The combination of high institutional holdings and aggressive buybacks then supports EPS over the long term and often dampens volatility during periods of heightened market stress.

Complete shareholder structure.

Analyst expectations

From an analyst perspective, Mastercard has long been one of the preferred names within the payments and broader financial technology sectors. Consensus expects continued double-digit revenue growth, supported by both a structural migration from cash to electronic payments and growth in value-added services. Over the next few years, the market expects the company to be able to maintain an adjusted operating margin of around 60% and grow earnings per share at a rate in the higher single-digit to lower double-digit percentages annually, even after accounting for higher tax burdens.

At the same time, analytical models value high cash flow visibility and disciplined capital allocation - Mastercard combines a regularly growing dividend with a large share buyback program, while maintaining a strong balance sheet and room for targeted acquisitions. Key themes that analysts are watching are the pace of growth in value-added services, the evolution of cross-border volumes in the context of the travel cycle, the impact of the global minimum tax on net margins, and the company's ability to monetize AI and "agentic commerce" on top of its payments network. So far, the Q3 2025 numbers suggest that Mastercard is not only meeting these expectations, but slightly exceeding them in terms of service and margin growth.

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