It seems like an interesting buy $DSY.PA, I don't yet have the software segment well represented in my portfolio.... could you please send me a counterargument on this stock? Thank you.....

Hollywood has been shaken by one of the most consequential deals in its modern history. Netflix announced a definitive agreement to acquire the studio and streaming assets of Warner Bros. Discovery in a transaction valued at $72 billion plus assumed debt. The deal unites the world’s largest streaming platform with one of the most storied studios in entertainment, handing Netflix its first major production empire complete with iconic franchises, decades of film and TV archives, and the premium HBO and HBO Max brands. For Netflix, long dependent on licensed partners and outsourced production, the acquisition marks a strategic transformation that positions it as a fully integrated entertainment giant.

According to the announced timeline, the transaction will close after Warner Bros. Discovery completes a corporate restructuring planned for summer 2026. Before the deal is finalized, WBD will spin off its Global Networks division — including CNN and a portfolio of cable channels — into a separate public company called Discovery Global. Netflix will acquire only the studio and streaming operations, the segments considered the future drivers of media growth. Market reaction was swift: WBD shares jumped 6%, while Netflix dipped nearly 3%, reflecting both enthusiasm about unlocking asset value and concerns about leverage and regulatory scrutiny.

What Netflix actually wants to buy: The content that defined an era

The deal would give Netflix $NFLX not only production capacity for the first time, but more importantly, key elements of its Hollywood identity. Warner Bros. $WBD has iconic studios in Burbank, hundreds of thousands of hours of film and television archive, and brands that generations of viewers have come to regard as cultural symbols. HBO delivers prestigious, world-class productions. Combining these assets with the distribution power of Netflix would create an unmissable media entity that would make it very difficult for competing players to compete.

And while Netflix has long built original programming from the ground up, it has never had its own extensive library of legacy content. That may be the reason the company committed to the largest acquisition in its history. For Disney or Paramount, such a combination would further escalate competitive pressure, as Netflix could redefine its distribution and licensing strategy with the newly acquired rights.

Regulation as the biggest obstacle to the whole deal

The acquisition raises immediate antitrust concerns. The combined company would have around 450 million subscribers and control two massive content libraries. Some U.S. lawmakers are already warning that such a move could harm consumers because Netflix could gain too strong a bargaining position and limit competition. Netflix, on the other hand, argues that the deal would allow it to lower prices through bargain packages and that its real competitor is YouTube, not the traditional Hollywood studios.

The fight for regulatory approval is likely to be long and complex. Paramount Skydance $PARA even sent Warner Bros. a legal letter calling the whole process unfair and tilted in Netflix's favor. Even more pointedly, some politicians have commented on the situation, openly expressing concerns about the erosion of media plurality.

Why Warner Bros. is backing down: Traditional TV is in decline

Warner Bros. has gone into selling mode at a time when the traditional television business is going through the biggest slump in history. Their cable division is reporting a 23% year-over-year drop in revenue, and the outflow of subscribers and advertising continues to accelerate. The streaming war that Netflix unleashed more than a decade ago is now hitting the original media houses hard. Selling the studio for tens of billions of dollars may be the last chance for Warner Bros. to stabilize its finances and restructure its entire portfolio.

Netflix is benefiting from this competitive weakness. The company enters the negotiations in an exceptionally strong position: it ended 2024 with more than $39 billion in revenue and a market value of over $430 billion. Its subscriber growth and financial discipline also position it as one of the best-managed media companies today.

What could the merger mean for Hollywood?

This deal would redefine the rules of the game. Netflix would cease to be an "outsider" and become a full-fledged studio giant with the ability to produce, archive and distribute content in the manner of traditional studios - only with a huge data base and algorithms that can predict viewing behaviour. A future strategy could include exclusive premieres, more aggressive licensing, and new models of collaboration with creators.

Hollywood, on the other hand, has traditionally relied on theatrical releases, and Netflix has so far refused to put movies into theaters on a larger scale. This merger may further increase tensions between filmmakers, movie studios and platforms. A scenario in which Netflix is owned by Warner Bros. would have been unimaginable just five years ago - and yet it's within reach today.

The financial structure and logic of the deal

If Netflix had indeed completed its acquisition of Warner Bros. Discovery, it would be one of the largest media transactions of the century - and the first purchase of this magnitude in Netflix's history. Early information available suggests that negotiations are underway with a value of around $30 per share, which would value Warner Bros. at approximately $70-75 billion. In addition, Netflix is offering a record "breakup fee" of $5 billion, which Warner Bros. would receive if the deal is blocked by regulators. Such a high guarantee alone shows how serious Netflix is about the deal and that it is prepared to absorb significant regulatory risk.

From a financial standpoint, it is crucial for Netflix that it buys primarily assets, not cable networks. Warner Bros. plans to spin off CNN, TNT and TBS before the deal closes, clearing the portfolio of the traditional TV business, which is in steep decline. Netflix will thus take the most valuable things on the balance sheet - movie and TV studios, the content library, HBO Max and the rights to premium franchises. The company has ample market capitalization (over $430 billion), robust cash flow and very stable subscription revenue, allowing it to structure the deal with a combination of cash and new bonds without jeopardizing its investment-grade rating.

In practice, the acquisition would not only strengthen Netflix's ownership structure, but also dramatically change its cost base: the company would stop spending billions a year licensing outside content and become the de facto owner of one of the most valuable Hollywood libraries ever. At the same time, it would gain direct control over production and distribution, allowing it to dramatically reduce long-term operating costs and increase margins.

Why Netflix is doing it: The strategic motivations that are changing its future

The acquisition of Warner Bros. Discovery would represent a major strategic change that comes at the exact moment when the streaming market is starting to slow down. Netflix has been looking for several years for additional growth engines beyond traditional subscriptions - introducing an advertising plan, expanding into the gaming business, investing in live streaming and sports. Yet the company is missing one key pillar that competitors like Disney or Paramount have: an extensive library of legacy content that has held its value for decades. Warner Bros. addresses this weakness in one fell swoop.

Another theme is independence from licensing. Netflix has historically depended on temporary licenses of other studios' movies and series, costing it billions of dollars a year while reducing the stability of its catalog. A Warner Bros. acquisition would mean permanent ownership of the hits that have defined television culture. The company would gain IP that it can adapt, expand, sell or combine across media - just as Disney does with its franchises.

In terms of the future of the streaming economy, it's also a defensive move. Netflix doesn't want to wait for competitors to complete their own consolidations and create a counterweight to its global dominance. A merger with Warner Bros. would give the company not only content, but also the prestige of a traditional movie studio, physical production capacity, experienced creative teams, and infrastructure that it would have had to build itself over years and at multiple costs.

Warner Bros. Discovery entered the third quarter at a moment when its hybrid media strategy is being tested more než ever. The company continues to juggle the decline of its traditional TV networks with the growing strength of its streaming platforms and film studios, creating a mixed picture that reflects both the challenges and the long-term opportunity ahead. Even as total revenue dipped year over year, momentum in several high-value segments began shifting investor attention toward the company’s medium-term growth prospects.

The Q3 2025 results highlight this contrast clearly: linear TV and advertising remain structural headwinds, while the studio business delivered a stronger-than-expected performance and the streaming division showed improving profitability and renewed subscriber engagement. Together with a meaningful rebound in free cash flow, these trends suggest that WBD is not merely enduring the industry reshuffle — it is laying the groundwork for a return to sustainable growth.

Top Points

• Revenues between 2021-2024 grew from $958 million to $2.52 billion.
• Gross margin steadily above 45%, operating margin 13%.
• Analysts raise target prices - Truist to $105, BofA $91, Piper Sandler $90.
• Nevro acquisition significantly strengthened portfolio and growth momentum.
• Altman Z-score over 11 - extremely robust financial stability.
• Minimal debt, high operating cash flow, balance sheet with no weaknesses.
• Highly scalable business with a combination of robotics, implants and neurostimulation.

Company profile

Globus Medical $GMED is one of the world's leading manufacturers of spinal implants, orthopedic devices and robotic surgical systems. Today, the company operates at the intersection of three rapidly growing areas of medical technology: spinal surgery, musculoskeletal implants and robotic-assisted procedures. This combination creates a powerful advantage - a robust portfolio that can grow both organically and by acquisition, while reducing dependence on one segment like many competitors.

The company's transformation began several years ago with the introduction of a robotic system ExcelsiusGPS, then expanded to include imaging platforms, intelligent operations planning and minimally invasive technologies. The result is a comprehensive "surgical ecosystem" strategy that offers customers a complete solution - from implant to navigation to robotics. This business model is extremely powerful because surgeons and hospitals prefer a single system that reduces the risk of errors, saves time and increases the success rate of procedures.

The year 2023, however, was a watershed year. The company made one of the largest acquisitions in its history, changing not only its size but also its long-term strategic direction. As a result, today Globus Medical stands among the fastest growing medtech players in the world.

Product portfolio and pipeline: Where Globus Medical really makes money

Globus Medical is one of the most comprehensive players in spinal surgery, robotic navigation and orthopedic implants. The company has built a unique position by combining hardware, implants, software and robotic systems into one integrated surgical ecosystem. This model allows it to win long-term, high-margin clients because hospitals typically migrate to the entire platform, not just individual products.

The foundation of the portfolio is spinal surgery implants, which have been a stable source of revenue over the long term. However, in recent years, the fastest growing robotic system ExcelsiusGPS, one of the most powerful disruptors in minimally invasive surgery. Combining navigation, 3D imaging, precision instrumentation and software integration, the system is becoming the backbone of the entire surgical workflow. Globus is also expanding the pipeline with new implants, orthopedic systems and AI tools for surgical planning. This breadth of portfolio creates a network effect: once installed, the system generates recurring revenue from both implants and software licenses.

Nevro acquisition: A strategic move with high potential and risk

The acquisition of Nevro was one of the most important moves in the history of Globus Medical. The merger brings the company into the neuromodulation segment, a market worth over $6-7 billion annually and with a long-term growth rate of 8-10%. In addition, neuromodulation implants are an area where customers stay with one supplier for years due to the complexity of integration into hospital systems.

Nevro brings cutting-edge technology HF10, one of the most effective chronic pain therapies on the market. For Globus, this means entering an adjacent clinical segment that complements spine surgery as some patients move from orthopedics to neuromodulation therapy. Synergies are expected especially in sales, marketing and cross-selling - spine surgeons often refer patients for neuromodulation.

Integration is a risk - Nevro has been loss-making for a long time, with higher operating costs and weaker margins. However, Globus is one of the most efficient companies in medical devices, and analysts expect synergies to come within 12-24 months. The acquisition has the potential to propel the company into the next growth cycle, but will require precise execution.

Competitive position: the battle for the surgical market

Globus Medical competes with giants like Medtronic $MDT, Stryker $SYK, Zimmer Biomet $ZBH, and Boston Scientific $BSX. Yet the company has long grown faster than most competitors thanks to a strategy focused on innovation, rapid product development and aggressive robotics expansion. In the spinal surgery segment, Globus has become a viable alternative to Medtronic Mazor X thanks to the power of ExcelsiusGPS, with some hospitals citing lower overall costs and a shorter learning curve for surgeons.

The difference is that Globus is a clean technology company. It doesn't have a gigantic portfolio from other segments, so it can channel all its energy into spine and navigation systems. This focus increases the speed of innovation and allows it to respond quickly to clinical needs. In addition, in the acquisition Nevro takes over the neuromodulation segment, where it will compete with Boston Scientific and Abbott - companies with bigger budgets but slower innovation cycles.

Financial performance: growth that cannot be ignored

Globus Medical's financial results over the past few years show an exponential shift. Revenues have jumped from about $1 billion to more than $2.5 billion, a pace that is exceptional in medtech. But it's not just the pace that's important, but the quality of that growth.

The company has been able to maintain high gross margins (46-47%), which means that expansion has not come at the expense of profitability. While operating margins have been temporarily weighed down by the integration of Nevro, in the long term it has room to grow back above 15%. Crucially for investors, operating cash flow is strong and liquidity is excellent - the firm is not reliant on debt, which is rare in a sector with high investment.

What differentiates Globus Medical from competitors is an Altman Z-score above 11, which signals almost zero risk of financial distress. This ratio is between 3-5 for most medtech companies. Globus is deep in the safe zone, which boosts investor and partner confidence.

Margins and profitability: what is the real driver of profitability

Globus Medical's margin profile has been very attractive over the long term. Gross margins of over 45% and operating margins of over 13% are well above the average for healthcare institutions. Yet the years 2024-2025 show the company entering a phase of investment expansion - the Nevro acquisition has increased OPEX and reduced net profitability.

The key point is that margins are under pressure not because of weak business, but because of the growth of the business. The development of robotic systems, the expansion of the implant portfolio and the integration of the new acquisition are generating short-term costs that may translate into higher revenues in the coming years. In addition, Globus has one of the best ROICs in its segment, confirming that it is investing capital efficiently and without redundant acquisitions.

Valuation: premium price or fair valuation?

Globus Medical is one of the companies whose valuation is, at first glance, higher than many healthcare companies of the same size. P/E of ~28×, P/S approximately 4,2× and Price-to-Cash-Flow 20× may seem like a relatively expensive valuation, especially when some competitors can be bought cheaper. But medical implants, spinal surgery and robotic navigation are among the most profitable segments of the healthcare market, where quality players typically maintain premium valuations.

The fundamental question is therefore not whether Globus is "cheap", but whether is the premium valuation justified - and whether the company has a sufficient growth profile to "grow" the valuation in the future. The numbers and market trends suggest that the answer is yes in most respects.

Why is Globus Medical willing to value the market at a premium?

Investors are paying for three things with this company:

• an unusually strong balance sheet (virtually no net debt, Z-score of 11.2)
• the growing share of roboticswhere margins and growth are multiples higher than implants.
• the ability to grow organically at a rate that significantly outperforms the segment average

This puts Globus structurally closer to companies like Stryker and Intuitive Surgical - companies that have sustained long-term P/Es between 30-45x. Thus, what matters to investors is not the current P/E, but the EPS trajectory.

Growth catalysts: what can lift a stock the most

Globus Medical has some strong catalysts ahead that can push earnings and valuation to new levels:

• Rapid expansion of ExcelsiusGPS robotics in Europe and Asia.
• Successful integration of Nevro and growth of the HF10 product
• Synergistic revenue from the combination of spinal surgery and neuromodulation
• launch of the next generation of navigation systems
• Strong recurring revenue growth (implants + software)
• expansion of the portfolio of high margin biologics

Each of these catalysts can individually support share price growth; their combination creates extraordinary potential.

Key risks: what can spoil the story

Despite strong fundamentals, Globus faces real risks:

• Nevro integration could be more expensive and lengthy
• Neuromodulation market has strong players and high marketing costs
• competitive pressure in robotic surgery is extreme
• Hospitals are limiting capital spending in a time of budget cuts
• Higher OPEX may reduce EPS and FCF in the short term

Wind at least till 2035

The industry in which Globus operates is experiencing a structural boom. An aging population is dramatically increasing demand for spinal procedures, orthopedic implants and chronic pain management. In the US, spinal surgeries are expected to grow 6-8% per year and neuromodulation implants 8-10% per year. Globus thus stands at the center of two megatrends that complement each other.

Another major factor is the automation of operating theatres. Hospitals are suffering from a shortage of surgeons, which is leading to faster adoption of robotic systems. ExcelsiusGPS is one of the few devices on the market that combines robotics and navigation in one workflow, and is therefore growing installations at a double-digit rate. These macro-trends form long-term fundamentals that reduce the cyclicality of the entire business.

Robotics + implants + neurostimulation

Globus Medical is building a broad technology baseranging from traditional titanium implants to sophisticated robotic systems and implantable neurostimulation devices. This diversification enables growth in multiple segments simultaneously.

Key technology pillars:

• ExcelsiusGPS - robotic system for spinal surgerywhich significantly increases the accuracy of procedures.
• Excelsius 3D - imaging platformthat integrates robotics and navigation.
• Comprehensive implant portfolioincluding stabilization systems, cervical implants and interbody fusion devices.
• Neuro HFX neurostimulationone of the most advanced therapeutic systems for pain management.

Globus does not seek to compete on low price, but on technological superiority and clinical value. Its products target the premium segment of the market, where it does not compete on price but on treatment outcomes. And this is where the company is gaining the most share.

Market opportunities

• Aging population and the rise of musculoskeletal diseases.
• Demand for minimally invasive surgery.
• Increasing success rate of robotic-assisted procedures.
• Expansion of neurostimulation due to ongoing clinical trials.
• Consolidation of hospital systems - comprehensive solutions are preferred over single products.

The scope for growth is extremely wide: the market is around USD 10 billion for spinal implants, USD 8 billion for neurostimulation and over USD 5 billion for robotics, all of which are growing faster than the overall healthcare sector.

Analysts' expectations.

Analysts agree that Globus Medical has entered a new growth phase. Truist has raised the target price up to USD 105 - which implies about 25% potential to the current price of $83-84. BofA and Piper Sandler are just a bit lower, but their reasoning is similar:

• the company is beating expectations
• improving margins
• Nevro acquisition boosts growth momentum
• Robotics platform raises barriers to entry

Needham remains cautious and holds Hold, but even here analysts acknowledge the quality of the results. The difference of opinion is therefore mainly about valuation, not the business itself.

Investment scenarios

Optimistic scenario

• Rapid integration of Nevro.
• Revenue growth above 15% per annum.
• Expansion of robotics adoption in hospitals.
  Expected price development: 100-115 USD.

Realistic scenario

• Steady double-digit growth.
• Margins between 12-14%.
• Strong cash flow and minimal debt.
  Expected price development: USD 90-100.

Pessimistic scenario

• Slowing adoption of robotic systems.
• Weaker integration of Nevro.
• Margins fall below 10%.
  Expected price development: USD 70-78.

What to take away from the article

• Globus Medical is experiencing the fastest growth in its history.
• The acquisition of Nevro was a strategic breakthrough that increased the size and potential of the company.
• Margins and balance sheet are among the strongest in the medtech sector.
• Analysts are raising target prices and see up to 25% upside.
• There are risks, but they are primarily short-term.
• GMED is one of the companies that combines the stability of the healthcare business with the growth momentum of technology titles.

Fresh unemployment data in the United States has brought a new boost of optimism to the market, but also a wave of questions. Jobless claims fell to three-year lows, which in conventional models would imply solid consumer demand fundamentals and stable corporate profits. But in the current economic environment, it's not that simple. Investors have to consider whether low claims really mean a strong labor market or just reflect a short-term seasonal distortion. It is this dilemma that will determine how the S&P 500 reacts in the weeks ahead.

The evolution of jobless claims from 2022

Analysis of current data

The most recently released data on new jobless claims in the United States provided an unexpectedly strong boost to the markets. The value of claims fell to 191,000, the lowest level recorded since September 2022. This result exceeded the expectations of analysts, who had been counting on values of around 220,000. Investor reaction was immediate, although a one-off figure may not tell the whole truth about the real state of the US labour market. Stock markets strengthened.

In economic terms, this statistic measures only the number of new jobless claims in a given week and is not the same as the monthly unemployment rate or the number of jobs actually created or lost. Nevertheless, it is one of the fastest available signals of changes in employment dynamics. Yesterday's report, therefore, has generated increased interest in whether the US economy has a period of acceleration ahead of it or whether it is more likely to be statistical noise caused by seasonal factors, including the fact that the week in question included the Thanksgiving holiday, which often skews the statistics with delayed claims.

Why is this data important?

In order to understand the true significance of this number for investors, it is necessary to look at what jobless claims actually measure. It is the number of people filing for unemployment benefits for the first time. That said, it provides a fairly quick indication of whether companies are starting to lay off workers on a larger scale. The lower this figure is, the more it signals stability in the labour market as fewer people are losing their jobs. At the same time, however, it is important to realise that jobless claims say nothing about how many people have found new jobs. That is, they do not tell us about the overall strength of labour demand, but rather inform us about the current rate of layoffs. This nuance is crucial because some economic phases are characterized by firms not laying off but not hiring. The labour market is then neither strong nor weak - it is frozen. This regime is described, for example, by analysis from MarketWatchwhich notes that low jobless claims can sometimes reflect a phase of stagnation, not growth.

A historical perspective

A historical perspective shows that similarly low readings tend to occur during periods of economic expansion. For example, in 2017-2019 (see chart below), jobless claims were below 210,000 for a sustained period of time and the labor market was experiencing one of the strongest expansions in modern history. However, today's situation is different in many ways. The economy is in the slowdown phase of the interest rate cycle, and inflationary pressures remain weaker than in 2022-2023, but still higher than the Fed would like to see in the long run. In addition, the economy is now facing structural changes. From the massive shift to automation, to the growing importance of AI, to the gradual tightening of financial conditions for small businesses. All of this could have a major impact on future employment trends. A study published on arXiv entitled "Identifying Economic Factors Affecting Unemployment Rates in the United States" for example, shows that unemployment is not a short-term indicator but is influenced by long-term economic factors such as productivity growth, technological innovation, and demographic trends.

The evolution of jobless claims between 2017 and 2019

When we look at how continuing unemployment claims, or continuing jobless claims, which measure the number of people who have been receiving benefits for a longer period of time, are performing, it is a different picture than initial claims. In fact, these continuing claims are holding at around 1.94 million, which in turn is a relatively elevated level. This may suggest that, while people are not being made redundant on a mass scale, they are also failing to find new jobs quickly. This tends to be a signal that the labor market is slowing, even if jobless claims look great. This mismatch can affect household demand in the longer term as long-term unemployed consumers gradually cut back on spending.

Continuing jobless claims 2022-2025

And it is US household consumption that is one of the key factors determining the performance of the S&P 500. Consumption accounts for approximately 68% of U.S. GDP, and when consumers feel stable and employed, it supports the earnings of retail, service, manufacturing and technology companies. A strong labor market is therefore one of the most important fundamentals for index and stock price growth.

Historically, there is a clear correlation between falling unemployment and S&P 500 growth. WiserInvestor.com analysis showed that when unemployment was between 3.5-4%, the S&P 500 averaged annual returns of between 10-15%. However, this has not always been the case. In some periods, too low unemployment led to increased fears of an overheating economy, which triggered tighter monetary policy and a subsequent cooling of markets.

Possible market reactions

On the one hand, the developments of recent days have therefore brought some relief to investors. Indeed, if jobless claims continued to rise significantly, this would indicate the start of a period of more massive lay-offs, which in financial history usually heralds a recession or at least a significant slowdown. Yesterday's low figure of 191,000 may thus go some way to dampening investors' fears that the US economy is beginning to slump. Markets often react positively to this information, as better employment means higher consumption, higher demand for corporate products, and ultimately higher corporate sales. This psychological effect can lead to short-term increases in stock prices, especially in sectors sensitive to consumer sentiment.

On the other hand, if jobless claims prove to be an anomaly caused by seasonality, short-term disappointment may follow. Investors should therefore keep an eye on further reports over the next few weeks. If the number returns to above 220k, the current decline could be interpreted as a seasonal blip rather than evidence of an accelerating US economy. Similarly, the payrolls data is also worth watching as it will play an important role in the Fed's rate decision. This is because too rapid wage growth could again fuel inflationary pressures and spark a debate on tighter monetary policy, which would have a negative impact on equity valuations.

The long-term perspective is also interesting for markets. If the labour market remains stable and companies continue to retain employees, this could help the S&P 500 index to overcome some of the short-term turbulence and provide positive momentum. However, it must be acknowledged that the current growth of the S&P 500 is largely driven by just a few of the largest technology firms, which are keeping the index afloat thanks to their dominance and huge investments in AI. If the labour market were to deteriorate, the negative impact would be primarily on consumer-oriented firms, while some tech giants might be relatively more resilient.

Comparison with history

When compared to historical periods, the current level of jobless claims is more consistent with calm economic periods than crisis years. For example, during the 2008 financial crisis, jobless claims moved above 650,000 per week. At the time of the COVID-19 pandemic, they even surpassed the 6 million mark. So, if we look at the latest data, it rather shows that the US labour market is still holding very solid fundamentals. This is good news for long-term portfolio-oriented investors.

Jobless claims 2006-2025

One of the factors that could affect the labor market in the coming quarters is technological transformation. According to some studies, for example from MIT or the Brookings Institution, the growth of investment in artificial intelligence and automation in some sectors may lead to less pressure on hiring. Companies may be able to handle more work with fewer people. On the other hand, technology also creates new jobs, especially in high-skilled sectors. The overall impact on the labour market is therefore still unclear, but investors should monitor this area closely as it may affect both the unemployment rate and the future structure of the US economy.

Impact on markets

From the perspective of the S&P 500, the key factor is whether the US economy manages to stay in the soft landing zone, a process where inflation falls, unemployment remains low and GDP growth stabilises. The Fed is communicating this path as its preferred scenario, and the labor market is crucial in this process. In the past, if the number of jobless claims started to get above 260,000 or more, that would have been one of the first signals of an impending recession. The last time this happened was in 2007-2008 and also in 2001 during the bursting of the dot-com bubble. However, the numbers look more favourable at the moment.

Overall, then, yesterday's drop in jobless claims represents a short-term positive for the markets that may help restore investor confidence in the resilience of the US economy. However, it remains to be seen whether this is the start of a new trend or merely a seasonal blip.

Warner Bros. Discovery entered the third quarter at a moment when its hybrid media strategy is being tested more než ever. The company continues to juggle the decline of its traditional TV networks with the growing strength of its streaming platforms and film studios, creating a mixed picture that reflects both the challenges and the long-term opportunity ahead. Even as total revenue dipped year over year, momentum in several high-value segments began shifting investor attention toward the company’s medium-term growth prospects.

The Q3 2025 results highlight this contrast clearly: linear TV and advertising remain structural headwinds, while the studio business delivered a stronger-than-expected performance and the streaming division showed improving profitability and renewed subscriber engagement. Together with a meaningful rebound in free cash flow, these trends suggest that WBD is not merely enduring the industry reshuffle — it is laying the groundwork for a return to sustainable growth.

How was the last quarter?

Third quarter revenues were $9.0 billion, down 6% year-over-year, with weakness primarily seen in advertising and traditional linear channels. Advertising revenue and distribution fell 16% and 4%, respectively, reflecting continued declines in cable viewership and weaker demand in key advertising segments. Still, the results were less negative than the market expected, and some investors see a possible bottom in linear erosion.

Streaming and studios offer a significantly better picture. Streaming revenue remained steady year-over-year at $2.63 billion, the company increased subscribers by 2.3 million, and managed to combine subscription growth with profitability growth for the first time since the pandemic years. The studios segment delivered the biggest surprise, with revenues up 24% year-over-year thanks to strong film and TV production, which partially erased the one-time negative effects of last year's Olympic sublicense.

• Full presentation with results.

At the profitability level, the numbers were even more compelling. Adjusted EBITDA rose 2% to $2.47 billion, despite continued pressure from linear TV. The improvement was underpinned by streaming and studios, which together posted EBITDA growth of 58%. Cash flow also pleased: free cash flow of $701 million was up 11% and the company continued its rapid deleveraging, paying down $1.2 billion of debt in the quarter.

However, overall net income fell into a $148 million loss due to restructuring charges and asset amortization. This is a typical accounting phenomenon for $WBD, while operationally the company is generating solid profitability.

• Don't overlook: Netflix wants to buy HBO Max from Warner Bros.

CEO Commentary

In particular, management highlighted the company's strategic successes in streaming and studios. According to the CEO David Zaslav the growth in streaming profitability is "fundamental confirmation that the model is moving into a mature phase" where it is no longer about maximising subscriber volume, but about monetising through advertising, higher tariffs and cost optimisation. Zaslav also highlighted the performance of the studios, which are once again becoming one of the engines of growth thanks to a better pipeline of movies and TV productions.

On the other hand, management openly admits that linear media will continue to be a source of pressure. The company is therefore accelerating a reorganization to cut costs, simplify the structure and allow for a faster shift of capital toward faster-growing divisions. Zaslav reiterated the need to reduce debt, which he calls "the number one strategic priority" and which should allow the firm greater flexibility in the years ahead.

Outlook

Warner Bros. Discovery $WBD continues to position itself as a hybrid media player, combining the production power of Hollywood studios with global streaming. The company expects streaming margins to continue to grow in the coming quarters while studios benefit from a strong film calendar and stabilizing TV production.

A key question mark is the rate of erosion of linear TV. WBD plans to mitigate this impact through further savings, contract restructuring and greater integration of content between streaming and traditional distribution. The company also announces continued debt reduction to be a key pillar of its improved financial position in 2026.

Long-term results

The long-term numbers show WBD's media transformation in full view. While 2021 was still a period of strong profitability, the massive acquisition of WarnerMedia dramatically increased costs, depreciation and debt. The years 2022 to 2024 were marked by the scale of the integration and high restructuring costs - and also by deep losses caused by the accelerating decline in linear revenues.

Revenues in 2024 were $39.3 billion, down nearly 5% from 2023. While gross margins remained relatively stable, operating expenses rose 44%, resulting in an operating loss of over $10 billion. At the same time, EBITDA fell dramatically from $22.4 billion to $11.6 billion. These results reflect the cost pressures of integration, along with pressure on traditional segments.

It is important to emphasize, however, that WBD has already passed the worst phase of its transformation. The latest quarterly data shows cost reductions, studio growth, streaming stabilization and improving cash flow. Longer term, the key remains the pace of debt reduction - if the company can reduce leverage to 2.5x EBITDA, it will open the way for a return to strategic flexibility.

News

During the quarter, the company grew its streaming subscriber base to 128 million, continued to reorganize its linear business, and paid down $1.2 billion of debt. Studios benefited from a more successful movie season and strong production is expected to continue in 2026. WBD also stepped up cost optimization, which is already delivering positive cash flow results.

Shareholding structure

Institutional investors hold approximately 73.6% of the shares. The largest shareholders are:

• Vanguard Group - 11,35 %
• BlackRock - 7,45 %
• State Street - 6,39 %
• Harris Associates - 3,87 %

Insiders own roughly 5.95% of the company, which is a relatively high share among media companies.

Analysts' expectations

According to Wells Fargo'smost recent report dated October 31, 2025, analyst Steven Cahall reiterates a Buy rating on WBD Overweight and a $16 price target . Cahall argues primarily:

• Stabilization of streaming with growing EBITDA.
• a strong recovery in trials
• continued deleveraging
• the potential to restructure the linear segment

Fair Price

The explosive growth of generative AI has pushed global infrastructure to its limits, exposing a fundamental bottleneck: modern data centers cannot be built fast enough. Every new AI campus requires massive electrical capacity, complex logistics, and synchronized coordination among dozens of public and private entities. Seeing the mounting pressure, Palantir, Nvidia and CenterPoint Energy unveiled Chain Reaction, a platform designed to orchestrate the entire lifecycle of AI-driven construction using real-time intelligence.

Rather than patching individual pain points, Chain Reaction attempts something unprecedented — a unified digital backbone that links chip manufacturers, construction teams, utilities, grid operators, permitting offices and regulators. By fusing those datasets and analyzing them with AI models, the platform is built to detect delays before they appear, propose routing alternatives and automate decision flows that today take months. If successful, it could redefine how physical AI infrastructure is planned and built worldwide.

Solving the problems that are slowing down the entire AI economy today

Building a modern AI datacenter isn't just about concrete, servers and cooling systems. It's about an extremely complex network of vendors, permits, investments, and production capabilities that often fails on the fact that different company departments aren't working with the same data. Any delay in one link in the chain is immediately passed on to the other players: the power company is waiting for the designer, the designer is waiting for the rack supplier, the supplier is waiting for components from TSMC or other manufacturers. There is low predictability and a high level of uncertainty in the whole process.

This is where Chain Reaction. The platform will use AI not only for classic analysis of schedules, but also for reading unstructured data - for example, from email conversations between purchasing departments and subcontractors or from technical notes from project teams. As a result, it can pick up signals of potential delays before standard corporate systems detect them. Palantir $PLTR brings its experience in modeling large-scale operational networks to the system, Nvidia $NVDA adds AI acceleration and data tools, and CenterPoint Energy $CNP brings its knowledge of energy infrastructure and permitting processes.

• Don't overlook: Palantir | Q3 2025: Fastest growth in company history, record contracts and explosion of the US commercial segment

The goal is clear: master the AI boom before it outgrows infrastructure

AI datacenters are being built around the world at a pace that is already outpacing power grids and construction capacity. Many projects today are delayed by months or years - and it is these delays that are critical to the entire technology sector, as they are holding back the growth of cloud services, chip makers and AI model providers. Nvidia itself admits that its biggest limits lie not in a lack of demand for chips, but in the fact that datacentres are not ready on time.

Ultimately, it's not just about new software, but about trying to build a digital backbone that enables faster and more accurate planning for projects with billion-dollar budgets. If Chain Reaction proves successful, it could become the essential tool without which the next wave of AI infrastructure cannot be built. And it will also open up other major market opportunities for Palantir, which with this project is moving from the realm of defense and government systems to the center of global technology transformation.

What is the role of Palantir, Nvidia and CenterPoint Energy

Each of the partners in the Chain Reaction project brings something critical that has been missing from the datacenter construction process. Palantir becomes the brains of the system. Its software connects thousands of data sources, models logistics chains and can predict where a project is likely to be delayed. Nvidia provides the computational layer needed for simulations, predictive models, and the processing of unstructured data that conventional enterprise systems ignore. Through its role in the AI ecosystem, it can connect vendor design information, chip partner manufacturing capabilities, and GPU availability status.

CenterPoint Energy then complements a critical element that technology companies can't address on their own - energy infrastructure and permitting. This is where most of today's delays occur: substations, transmission systems and local grid upgrade processes are governed by regulations that are slow and cumbersome. CenterPoint knows where and why projects are getting stuck, allowing Chain Reaction to work with reality, not just optimistic construction plans.

How Chain Reaction works technically

Chain Reaction isn't just another project software - it's an operating system for building AI infrastructure. At the core is the ability to work with data that is not normally part of any ERP or planning system. AI models can read emails, technical attachments, project documentation, inspection reports, contracts, order interfaces and field notes. The system then creates linked supply chain models and can detect the risk of delays before the subcontractors themselves realise.

Technically, it is a hybrid of Palantir's software modules and fast inference models running on Nvidia's GPUs. Running in the background are millions of simulations that can evaluate in minutes how the construction schedule will change if chip companies announce a production slippage, if the authority extends the permitting process, or if the power company doesn't get the materials for a line upgrade. The result is not a static schedule, but a living model that updates in real time.

This approach is one of the first examples of how AI can manage large-scale infrastructure projects whose complexity exceeds the capabilities of traditional planning tools.

Project risks and limits

While Chain Reaction has enormous potential, it also faces limits that may determine the pace of its adoption. One of the biggest challenges is data quality and availability. Not all companies are willing to share internal metadata, email communications or delivery statuses - and without this, the system cannot fully understand the true bottleneck of the project. Another risk is energy regulation. While software will speed up planning, it won't speed up laws that often hold up the construction of new lines or substations.

Technical risks include overloading the AI infrastructure itself. While Nvidia's models can handle huge amounts of data, for projects involving thousands of contractors and dozens of large partners, the system can become extremely complex. And, of course, there's the cybersecurity risk - a platform that handles sensitive data from power grids and new datacenters can become the target of advanced attacks.

While these risks are solvable, they show that Chain Reaction is not an instant magic solution, but the first step towards digitising a sector that has been driven for decades by paper, isolated systems and human guesswork.

What Chain Reaction can change by 2030

If the project is successful and gains widespread adoption among energy companies, developers and hyperscalersit could fundamentally change the face of the AI economy. Datacenters that take three to five years to build today can be built faster and with greater predictability. Cloud companies could plan expansion more securely, chipmakers would know more precisely when to deliver hardware, and power grids could be upgraded at a coordinated pace.

By 2030, Chain Reaction could become the standard not only for building AI centers, but also for gigafactories, semiconductor factories, power blocks, or building new cloud regions. For Palantir, this would mean entering one of the largest industries of our time, for Nvidia a new application of its AI infrastructure, and for energy companies a significant acceleration of projects that are holding back the entire technology sector today.

If the current AI revolution needs an infrastructure to keep pace with it, Chain Reaction could be just the first true "AI for AI".

Are you changing your strategy before the end of the year? Are you significantly buying or selling any stocks?

In recent weeks/months, apart from $BTCUSD, $META and $TTD I haven't been buying anything else and have mostly just been watching market developments. The next notable event will probably be the Fed meeting, which could change overall sentiment and potentially create new opportunities.

Puerto Rico is moving closer to reshaping its fragile energy system through a conditional seven-year LNG agreement with New Fortress Energy, a deal that could redefine the island’s path to stability. After years of blackouts, hurricane damage and institutional dysfunction, regulators are weighing whether one company should again play a central role in powering the territory. The approval is not final — but it signals that Puerto Rico is willing to trade concentration of supply for the promise of reliable fuel and lower volatility in the grid.

For New Fortress Energy, the proposal represents a pivotal moment. The company is burdened with heavy debt, rising project costs and investor pressure after delays in its floating LNG hub in Mexico. Securing Puerto Rico as a long-term customer could restore confidence in its balance sheet and create a steady stream of cash flow. Yet the agreement comes with strict conditions designed to curb monopolistic power, require shared delivery risk and open port access to competitors. Whether NFE can meet these obligations will determine if the deal becomes a financial turning point — or a new flashpoint in Puerto Rico’s energy politics.

Top points

• Puerto Rico regulators tentatively approved a seven-year contract with New Fortress Energy for LNG supplies worth an estimated $3.2 billion.
• The gas is to flow from a floating NFE LNG facility in Altamira, Mexico, with volumes of up to 75 TBtu per year and a minimum of 40 TBtu, indexed to the Henry Hub at a premium.
• The Supervisory Board's approval is conditional on the revision of LNG "tolling" contracts, opening access to the San Juan terminal to competition, and a mandatory agreement between NFE and an alternative supplier.
• New Fortress carries high debt, offshore FLNG cost issues in Mexico and is dealing with debt restructuring as well as deferral of results.
• The contract has been criticized because of the risk of a de facto monopoly on LNG and the island's dependence on a single terminal, but it may also reduce the cost of power generation in the short term relative to oil and diesel.

What exactly was approved: seven years, billions of dollars and one terminal

The basis of the deal is a seven-year contract under which New Fortress $NFEis to supply LNG to Puerto Rico's electricity system. Volume-wise, we're talking units in the tens to low hundreds of tankers per year - up to 75 TBtu of LNG, with a minimum take-or-pay of around 40 TBtu. The fuel is to flow from NFE's floating facility off Altamira, Mexico, where the company has commissioned a rapidly deployed FLNG project and is seeking to produce gas from it for a number of customers in the region.

Pricing is pegged to the Henry Hub, the benchmark U.S. gas price, plus a fixed markup in the order of units of dollars per MMBtu. For Puerto Rico, it's a step toward greater predictability in fuel costs - the island has long suffered from a reliance on more expensive and environmentally inferior fuels such as heavy fuel oil or diesel. For New Fortress, on the other hand, it's an anchor that can stabilize offtake from its own FLNG for several years and make it easier to finance the entire project.

Why this is a matter of survival for New Fortress

New Fortress Energy has profiled itself in recent years as an aggressive player looking to rapidly build LNG infrastructure in Latin America and the Caribbean. But that strategy is running up against the harsh realities of finance. The company carries long-term debt of nearly $8 billion, has repeatedly delayed earnings releases and is in talks with creditors to restructure its obligations. Ratings agency Fitch recently downgraded its rating to "limited default" after missing an interest payment, a clear indication of just how tight the situation is.

Adding to this is the fact that the offshore LNG project at Altamira in Mexico has faced higher costs and delays. On the other hand, capital, which was supposed to generate stable cash flow, has for a long time been mainly a cash drain. Analytical commentary on NFE has increasingly used words such as "lifeline" or "last chance" - precisely in the context of the Puerto Rico contract. Thus, the seven-year contract is not just an interesting deal, but potentially a key pillar on which the reconstruction of the entire company's balance sheet can stand.

Puerto Rico between stability and dependence

For Puerto Rico, LNG supply from NFE is both an opportunity and a trap. An opportunity because the island can reduce electricity generation costs, reduce emissions, and obtain a more predictable fuel supply compared to petroleum products. The island's energy transformation envisions more gas as a bridge fuel on the path to renewables, and NFE already operates a major LNG terminal near San Juan that supplies key power plants in the system.

But at the same time, any outage at this hub could paralyze much of the island's system. The Board of Supervisors itself warns that the San Juan terminal is a "single point of failure" - if New Fortress curtails supplies or a dispute over payments arises, Puerto Rico could face plant outages. This is exactly what has happened in the past when NFE reportedly held up an LNG shipment over a payment dispute and part of the island's capacity had to be shut down.

Regulators hold back monopoly: conditions that change contract logic

Puerto Rico's Financial Oversight Board (FOMB) has made it clear this time that signing a contract does not mean capitulating to one supplier. On the contrary - the approval is conditional on a move to open the market to competition. In practice, this means three essential requirements:

Revision of the LNG "tolling" contract - The government must modify the conditions under which other players have access to the terminal and infrastructure if NFE is unable to supply gas.

Open access to the port of San Juan - Modify lease and port agreements to allow competitors to technically and legally step in and use the infrastructure for their own supply.

Mandatory backup supplier - NFE must contract with a third party to take over part of the supply in case the company declares "force majeure" or is unable to deliver gas.

This combination changes the original logic of the contract, which the Board of Supervisors strongly rejected over the summer as an attempt to create a de facto monopoly with too long a duration and insufficient consumer protection. The new version is shorter, cheaper, without exclusivity and with clearly defined mechanisms for competitors to access.

How the contract has evolved: from a 20 billion dollar ambition to a more 'realistic' agreement

The original draft contract was significantly larger - there was talk of up to $20 billion and a very long commitment that would virtually assure New Fortress a dominant role in the Puerto Rican LNG business for decades. The Board of Supervisors shot down that proposal over the summer with a clear verdict: too expensive, too long, too dependent on one player. Political pressure, public criticism and a new round of negotiations followed.

The current version is a compromise. The seven-year horizon, the possibility of extension, improved pricing and the removal of exclusive provisions are the result of an effort to bring both the risk of monopoly and the financial burden on the Puerto Rican budget and end consumers under control. From the island's perspective, this is a move towards pragmatism - still a high dependence on a single supplier, but with safeguards that were previously absent. From New Fortress's perspective, perhaps a less lucrative but all the more important contract - without it, the reputational and financial pressure could be even greater.

Financial impact: What a seven-year contract can really do to NFE's numbers

The Puerto Rico contract may have a face value of $3.2 billion, but it is crucial for investors to understand how much of that translates into real operating results. LNG supplies indexed to Henry Hub + premium typically generate 10-18% EBITDA margin for similar projects in the region. If this margin is confirmed for New Fortress, the Puerto Rico contract could generate annual EBITDA of around $45-70 million, depending on the utilization of Altamira's FLNG unit and gas price developments.

Such a contribution would have a dramatic impact on the overall balance sheet. The company has long-term debt in excess of $8 billion, so even an EBITDA increase of tens of millions could improve its Net Debt/EBITDA ratio by 0.1-0.2 points per year. This in itself does not solve the debt, but it sends easy-to-read signals towards rating agencies and creditors, especially if the company starts to report stable and repeatable cash flows.

Importantly, this contract also acts as a "proof of revenue" for the entire Altamira offshore project. As long as deliveries are reliable and free of technical difficulties, NFE could use this data to attract additional buyers of FLNG capacity - which is key, as current utilisation of the project is still below the level needed to make a full return on investment.

This gives investors the first meaningful indicator of whether the costly Mexican unit can become a stable cash flow generator or remain an expensive asset with no clear monetization.

Political and regulatory background: Why Puerto Rico is more complicated than any other LNG destination

For investors to understand the risks and opportunities of the contract, they need to see the broader political-regulatory context. Puerto Rico is unique in that the island's energy sector is under scrutiny U.S. Financial Oversight Board (FOMB)which was established by Congress as part of the restructuring of Puerto Rico's sovereign debt. The board can veto energy contracts, block investments, and oversee any major operational changes at PREPA, an energy company that has been in bankruptcy since 2017.

This means that any contract entered into by Puerto Rico is not only commercial, but also political. Contracts often circulate between the government, PREPA, the Board of Supervisors, the Puerto Rican Supreme Court, and federal institutions. In the past, we have seen a number of cases where contracts for gas, renewables and infrastructure have been approved, then cancelled and rewritten because of regulatory interference.

That is why it is important that the tentative approval of the Puerto Rico contract comes with tough conditions. It is a mechanism to prevent monopolization of the market, but it is also a signal to investors that "regulation will play a major role in LNG contracts, right up to the point of full launch." New Fortress is thus entering an environment that can be both a great opportunity and a very uncomfortable source of uncertainty for investors.

LNG market in the Caribbean: limited competition, high volatility and NFE's strategic location

The Caribbean is a specific region for LNG. It is not a large market in volume terms, but a a market with extremely limited supply options. Most of the islands do not have their own infrastructure or terminals, so any player that builds such infrastructure gains a temporary competitive advantage.

New Fortress has taken full advantage of this, expanding aggressively over the last five years and now has a presence in Puerto Rico, Mexico, Jamaica and the Dominican Republic. But this geography bears two key characteristics:

1) High volatility in LNG prices.

Caribbean countries often purchase LNG through spot contracts or short-term contracts. Thus, prices can fluctuate between US$3 and US$15/MMBtu even within a single year. A company that owns an FLNG unit may be protected from extremely high spot prices, but at the same time is exposed to the risk of low prices that squeeze margins.

2) Few competitors

The region is dominated by a few names - Shell, New Fortress and local energy companies. Infrastructure installation is slow, expensive and politically complicated. If NFE manages to stabilize both Altamira and the Puerto Rico contract, it may reach a position where it has several years of quasi-exclusive access to the smaller Caribbean markets.

3) Geographical proximity to Mexico

Altamira is strategically very advantageous - U.S. pipelines have ample capacity, transportation distances to Puerto Rico are relatively short, and logistics costs are significantly lower than shipping gas from Qatar or West Africa. This can stabilise margins and increase reliability of supply.

Overall, this means that if New Fortress can consolidate Puerto Rico, it can become a regional LNG hegemon - but only if it can manage the financial risks and regulatory challenges.

Valuation and revaluation: How the contract could change NFE's investment profile

New Fortress has been valued as a company in restructuring for the past two years - low EBITDA multiple, high risk premium, extreme volatility and investor mistrust. The Puerto Rico contract could change that optics in two ways:

1) It increases cash flow predictability

Investors and rating agencies love regular and contractually guaranteed earnings. If a stable EBITDA contribution of USD 40-70 million per year is confirmed, NFE can gradually move from the "distressed infrastructure" category to the "regional LNG operator" category.

This could change the EV/EBITDA multiple from the current low levels towards 7-9x where smaller LNG operators in the US and Latin America are trading.

2) Improves bargaining power for debt refinancing

Current NFE financing terms are tough as lenders see high risk of debt default. But if the Puerto Rico contract actually runs and Altamira generates repeatable revenue, the company can refinance some of the debt on less draconian terms.

That could lower interest costs, increase free cash flow and subsequently open up space for other projects - or for debt reduction.

3) It opens the way for a share rerating

If investors start to see NFE as a "regional LNG infrastructure" rather than a "risky startup with giant debt", the stock could be revalued upwards even without dramatic earnings growth. This happens routinely in the energy industry - rerating is sometimes more valuable than growth itself.

What does this mean in practice?

If valuations move from distressed levels to the average of smaller LNG players, it could mean 15-40% rerating within 12-24 months, even without expansion in other countries.

Investment scenarios

Optimistic scenario - Puerto Rico as a stabilizing anchor

In the optimistic version of the story, New Fortress successfully completes all regulatory conditions, signs a back-up contractor, the government adjusts access to the San Juan terminal, and the contract gets off the ground without delay. Deliveries from Altamira run on schedule, the FLNG facility uses most of its capacity, and NFE finally turns a capital-intensive project into a stable cash flow. The seven-year contract will become a reference for other buyers in the region, from the Dominican Republic to smaller Caribbean markets, and New Fortress will gain a better negotiating position with banks and potential partners.

Debt will gradually start to be refinanced on less distressed terms, the credit rating will stabilise and the market will start to see the company less as a restructuring problem and more as a riskier but functional LNG infrastructure. In such a scenario, the stock could gradually revalue the firm from a "distressed asset" to a cyclical player with a higher risk premium but a visible growth pillar. Price-wise, this could mean a significant re-rating rally if it is confirmed that the Puerto Rico contract is indeed generating stable margin revenues and no new technical or political issues arise.

Realistic scenario - Contract runs, but debt and politics keep pushing

The realistic scenario assumes that the contract will run, but the path will not be smooth. The NFE will manage to meet the basic conditions, the government will make the minimum necessary adjustments, but some aspects - opening access to the port, engaging competitors, the practicalities of a back-up contractor - will develop slowly and with constant political noise. The company will still be under the scrutiny of the supervisory board, NGOs and the media, which has criticised it heavily in the past for unreliable supply.

Debt levels will remain high and debt restructuring will take time, but the Puerto Rico contract will bring at least partial stabilisation of cash flow. For investors, it will be a title that can offer above-average returns but with high volatility - any new headlines about problems at FLNG or a dispute with regulators can mean sharp swings. Stocks in such a scenario add slowly rather than rise explosively, and remain suitable for investors willing to accept higher risk in exchange for a potential re-rating over a few years.

Pessimistic scenario - Conditions that NFE cannot handle

In the downside scenario, the combination of regulatory conditions, capital constraints and operational risks prove too much for New Fortress. Delays in the implementation of a back-up contractor, legal disputes around open access to the terminal or potential technical issues at Altamira may lead to the Supervisory Board not approving the contract outright or reconsidering it over time. Without a stable Puerto Rican pillar, NFE finds itself back in its current position - high debt, problematic monetization of infrastructure, and increasing creditor pressure.

In such a scenario, there may be further downgrades, stricter creditor demands, asset sales "below cost" or shareholder dilution due to new share issues. In such an environment, the stock would react with further declines and the market would increasingly price the company as a restructuring story with an uncertain outcome. In addition, Puerto Rico would find itself in the uncomfortable position of having to quickly seek an alternative supplier, which could increase costs and risks to the island's energy stability in the short term.

The moral of the story

• The current approval of the contract is a major but conditional victory for New Fortress - it is not yet a done deal.
• For NFE, the seven-year contract represents a potential lifeline that could stabilize FLNG use in Mexico and improve cash flow.
• For Puerto Rico, the deal is a step toward cheaper and cleaner fuel, but also toward continued reliance on one critical terminal and one major supplier.
• The Board of Supervisors has learned from the original "$20 billion" proposal and set tough conditions to limit monopoly and open the infrastructure to competition.
• Investors should watch less for headlines about the stock's rise after the announcement and more for what's going on behind the scenes: the implementation of the terms, the debt restructuring and the actual operation of FLNG Altamira.

Private sector job growth came in well below forecasts, catching Wall Street off guard. Investors are now recalibrating expectations for the Fed’s next moves — with a weaker labor market potentially signaling a sooner-than-expected rate cut. Could this shift redefine how markets perform in early 2026?

United States ADP Unemployment Change (1M)

But the latest numbers don't look pretty. In November according to ADP (alarge U.S. private firm that compiles payroll and HR data for hundreds of thousands of companies) the U.S. private sector lost 32,000 jobs, the third decline in the last four months and the largest decline since the spring of 2023. That's a signal that is immediately being written into stock prices, bond prices and expectations for how the Fed will behave.

Exactly how this statistic works

The ADP National Employment Report is released every month and measures the change in private nonfarm employment in the U.S. Unlike the official government report (BLS Employment Situation), it is not a survey, but an analysis of actual payroll data from the payroll systems of ADP - the firm that processes payroll for more than 26 million U.S. employees. ADP can see in real time how many people are actually getting paid, in what sectors, how the number of employees is changing, and how dynamically wages are growing or not. The report is produced in partnership with the ADP Research Institute and the Stanford Digital Economy Lab and reflects employment change in the week that includes the 12th day of the month. The same reference logic is used by the BLS, which allows for a good comparison between the two sources. Crucially for the market, ADP comes out roughly two days before the official NFP report from the BLS, so it acts as a preview of the labor market data. Therefore, on the day of the ADP release, we often see elevated volatility in stocks, bond yields and currency pairs with the dollar. Investors and traders thus calibrate their portfolios according to this report ahead of the official government data.

History

Historically, the modern form of the ADP report dates back to the beginning of the millennium. Detailed ADP microdata series are analyzed by Federal Reserve economists, among others. The 2018 studypublished in the Federal Reserve Finance and Economics Discussion Series, for example, shows that weekly employment indexes can be constructed from ADP payroll data that match official data very well and greatly improve the accuracy of real-time measurement. The authors conclude that the scope and coverage of the ADP data is comparable to the sample from which the BLS (Current Employment Statistics) draws, and that these data have high informational value in terms of short-term labour market developments. A follow-up study in 2019published as a chapter in NBER's Proceedings, shows that combining BLS and ADP data provides a better estimate of real-time employment than relying on a single source.

Yet there is an eternal controversy surrounding the ADP report. How much to trust it and how it differs from the official BLS data. Pew Research Center in one of the recent analysis points out that the ADP only covers the private sector, while the BLS reports total employment, including government employees. They account for roughly 14% of all jobs. That means it is methodologically fair to compare ADP only to the private portion of the BLS data, not the total. And when we do that, the picture looks interesting. CME Group analysis indicates that over the last decade there is a numerical correlation of about 94% between ADP and BLS (private portion), which is very high, but at the same time there are often strong monthly deviations. This is exactly the paradox. In the long run, the curves coincide, but in individual months they can send conflicting signals to the market.

An example from June 2025: the ADP reported a loss of 33,000 jobs, while the BLS reported an increase of 147,000 in total employment.

Why do these discrepancies arise in the first place? The Fed's 2022 article summarizes four main reasons why the ADP and BLS numbers often disagree: different data sources (administrative payrolls vs. survey), different definitions and coverage (e.g., gray economy, small firms, changes in corporate structure), different seasonal adjustment methodologies, and revisions the BLS makes retrospectively.

Why markets react to the ADP report

Despite these limitations, in practice, ADP acts as a very important indicator. Why? Because the market doesn't wait for the truth, the market reacts to surprises. When the consensus of analysts expects ADP to show, say, +100k new jobs, and instead it comes in at -30k, they immediately recalculate the probabilities of what the Fed will do, how fast the economy will slow, what corporate profitability will look like, and how stocks and bonds are priced today.

After the latest disclosure yesterday, the Dow rose slightly, but the S&P 500 and Nasdaq were under pressure as investors reassessed exposure to growth and cyclical sectors that are more sensitive to the health of the economy. At the same time, the chances of the Fed cutting rates again at its December meeting were rising. Futures implied a probability of a cut of up to around 90%. This is a typical market reaction to a weak report. Bad news for the real economy translates into good news for liquidity and rates, which can paradoxically help stocks in the short term.

The likelihood of an interest rate cut by the Federal Reserve at its December meeting

Source: https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

Figures for November

Looking at the specific November ADP 2025 numbers, the picture is interesting for investors. The private sector lost 32,000 jobs, with small businesses with up to 50 employees bearing the brunt of the losses - they shed roughly 120,000 positions, according to ADP. Larger firms were much more stable, with some segments even adding jobs. Sector-wise, there were losses in manufacturing, construction, information and professional services, while education, health care and hospitality still added jobs.

At the same time, the average annual wage growth rate is still around 4.4%-4.5%, only very slowly declining from post-pandemic highs. This means that the labour market is cooling, but it is still not downright weak - more like stagnant. Companies are hiring less, but not yet firing en masse.

A look at history

Looking at the history since 2000, ADP has become a quiet but respected barometer of the labor market over the years. During the dot-com bubble, the 2008-2009 financial crisis, and the covid shock of 2020, it has portrayed the onset of massive layoffs in the private sector quite accurately.

Studythat worked with ADP data between 2000 and 2017 confirms that it is possible to reconstruct major labour market movements with very high accuracy and that the high frequency of data releases helps to better capture sudden breaks. For example, the sharp falls in employment in spring 2020.

On the other hand, investment firms and analysts have repeatedly warned against reading ADP purely mechanically, i.e. in terms of numbers. Charles Schwab in its detailed text on the divergence of BLS vs. ADPexplains how these divergences can create both short-term opportunities and pitfalls. For example, if ADP comes out extremely weak and the market sells stocks and dollars in panic, but then the BLS data shows relatively solid employment, a sharp reversal of the trend can occur - and those who blindly bet on ADP alone will be left on the wrong side of the move.

The decline in the ADP employment curve in 2019-2020 (covid pandemic)

Source: https://adpemploymentreport.com

Impact on today's markets

What does ADP say about the current phase of the cycle and the impact on markets today? In summary, the picture is that the labor market is weakening slightly. Private sector employment has fallen three times in four months, with November delivering the largest decline since 2023, but outside of small businesses, the situation is relatively contained for now.

The pace of wage growth has slowed but remains above 4% per annum, suggesting that inflationary pressure from the labour market is easing but has not completely disappeared. Sectorally, more cyclical sectors such as construction, manufacturing and professional services are shedding jobs, while more defensive segments such as healthcare and education are still hiring. Combined with the data on new hires, which ADP also publishes, the picture that emerges is that firms are still replacing departing employees, but opening new positions at a significantly lower rate. This is a classic late-cyclical pattern. The economy is not in recession, but the dynamics of the labor market are losing steam.

From the Fed's perspective, all of this shifts the pendulum to the easing side of monetary policy. Weaker labor market data means a higher probability of further rate cuts. The market is already implying the near certainty of a third straight cut at the December meeting.

But at the same time, the central bank cannot ignore the fact that inflation may have fallen, but it has not yet been completely defeated, and that too aggressive easing may re-inflate market bubbles. ADP is one of the key inputs in this equation. The Fed closely tracks not only the headline jobs number, but also the structure by firm size, sector and wage dynamics.

But the absolutely key point is that the ADP report should be taken seriously by investors, but it certainly should not be followed 100% of the time. It is important to read it alongside other indicators. It is essential to look at the longer-term trend, not just the data from the last month.

Devon Energy delivered a far stronger third quarter than the market anticipated, stepping into a period of commodity volatility with performance that outpaced nearly all of its U.S. shale peers. Production climbed to the top end of guidance, supported by efficient development in the Delaware Basin and an aggressive focus on lowering well costs. Instead of the cautious, defensive quarter analysts expected, Devon posted results that signal a company regaining momentum at the operational core of its portfolio.

Even more notable is the company’s improving capital discipline. With spending coming in well below plan and operating costs trending lower for a third consecutive quarter, Devon generated substantial free cash flow that strengthened the balance sheet and enabled continued shareholder returns. In an environment where many producers struggle to balance reinvestment with cash generation, Devon is positioning itself as one of the most operationally consistent and financially resilient operators in the Permian.

How was the last quarter?

Devon Energy $DVN delivered results in Q3 2025 that exceeded its own expectations in almost all key parameters. Production reached 853,000 barrels of oil equivalent per day, breaking the upper guidance limit, and oil production itself climbed to 390,000 barrels per day. This shift was not the result of a one-time effect, but a combination of improved performance in multiple regions, particularly in the Rockies and Eagle Ford, where new drilling exceeded expectations and increased overall production efficiency.

Financial results were also strong. Revenues from oil, gas and NGL sales were $2.8 billion, with improved oil price realization able to partially offset weaker gas prices. Operating cash flow increased to $1.7 billion, representing a nine percent increase over the previous quarter. But even more significant was the growth in free cash flow, which climbed to $820 million. This is one of the most important metrics for investors, as it determines the company's ability to pay dividends, make buybacks and reduce debt.

In addition, Devon was able to maintain capital expenditures at $859 million, about five percent less than planned. This result is a testament to more efficient cost management, better service acquisition pricing and optimized drilling cycles. At the same time, the company was able to reduce unit costs of production, with total operating expenses falling to $11.41 per barrel of oil equivalent. Lease operating expenses along with transportation and processing costs were $8.85 per BOE, three percent below the company's estimates.

At the earnings level, the company reported net income of $687 million ($1.09 per share), while core, adjusted earnings were $656 million. The stability of the results is supported by balance sheet strength - Devon holds $1.3 billion in cash, has no revolving credit facility, and has reduced its net debt to EBITDAX ratio to a very conservative 0.9x through continued deleveraging.

• Full presentation with results.

CEO commentary

Clay Gaspar Called the third quarter "the best this year", not only due to strong production or lower costs, but also due to noticeable progress on the corporate program Business Optimization. The program is expected to deliver $1 billion in cumulative savings by 2026, and more than 60 percent of the goal has already been met. Gaspar emphasized that the next phase of optimization will build on digitizing processes, deploying advanced data analytics and faster operational decision-making.

The CEO also pointed to the fact that thanks to high capital discipline and technological innovation, the company has been able to increase production without the need for dramatic cost increases. Going forward, he expects steady production and a decline in capital in 2026, a unique position compared to the competition in the Permian, where many producers are reporting rising CAPEX due to mining inflation.

Outlook

Devon expects fourth quarter production between 828-844k BOE/d, with oil production expected to be 383-388k barrels. This represents a slight reduction from Q3, but still at a very robust level consistent with a long-term strategy of stable production without excessive CAPEX increases.

Capex will be between $890-950 million, reflecting higher drilling activity before year-end. For 2026, the company projects CAPEX in the range of $3.5-3.7 billion, roughly $100 million lower than 2025, while maintaining production in the range of around 835-855 thousand BOE per day. This outlook is particularly attractive to return-oriented investors as it implies higher future free cash flow.

Long-term results

Looking at the last four years, there are significant cyclical swings characteristic of the oil and gas sector, but also stabilizing elements that Devon has gradually built up. Revenues have stalled at $15.6 billion in 2024, a modest 2.8 percent growth after the significant 2023 decline caused by weaker commodity prices. Thus, in contrast to an extremely strong 2022, Devon has gradually found a balance between production, price and cost structure.

More significant changes can be seen in the cost base. Production costs in 2024 reached $11.3 billion, up 13.6 percent from the previous year. However, the growth partly reflects higher activity, changes in the drilling portfolio and higher service inflation at Permian. Gross profit fell to $4.27 billion, a 20 percent decline. The decline in operating margin is noticeable - operating profit of $3.77 billion is more than 21 per cent lower than in 2023.

Looking even further out, however, to 2021-2022, the huge volatility caused by geopolitical shocks and the rise in oil prices following the Russian invasion stands out. 2022 was an extremely strong year, so it is logical that the 2023 and 2024 results look weaker. However, the company was able to remain profitable despite lower sales, thanks to efficient capital management and a conservative approach to debt.

Devon shows a significant decline in net profit to $2.89 billion in 2024, a nearly 23 percent drop from 2023. However, comparing the results to the period prior to 2022 shows that the firm's overall profitability has improved over the long term, and the current level of results represents a new stable base that the firm is looking to continue to build on through cost optimization and maintaining production volumes.

News

- Achieving 60% of the one billion dollar Business Optimization target
- Closing the acquisition of the remaining interests in Cotton Draw Midstream
-Strengthened position in Permian through the purchase of 60 net locations
- Continued share-buyback program, 13% of all shares repurchased to date

Shareholding structure

Devon Energy's ownership structure fits the profile of a large US mining company and clearly shows the dominance of institutional investors. They hold approximately 80 per cent of all freely traded shares, which is above the industry average. The largest shareholder is the Vanguard Group with more than 13 percent - a significant and long-term holding that is often seen as a stabilizing element. It is followed by BlackRock, State Street and Geode Capital, which together control another ten percent of the company.

Insider ownership remains low, around 0.8 percent, which is common in the energy sector. Thus, the shareholder structure indicates strong institutional support, high liquidity, and that any significant changes in sentiment by large funds can have a rapid impact on the share price.

Analysts' expectations

According to the latest analyst consensus published by MarketScreener and Reuters Estimates there is a positive sentiment towards Devon Energy. Analysts now expect steady free cash flow growth in 2026 due to a decline in CAPEX and stabilization of oil prices in the $75-85 range.

Specifically, analysts at JPMorgan (analyst Arun Jayaram) have affirmed the rating of Overweight with a price target of 67 USD, citing a combination of robust cash flow, continued deleveraging and the benefits of the optimization program. Jayaram highlights that Devon is emerging as one of the best managed producers within Permian in terms of capital discipline and ability to generate above-average margins even in an environment of pressure on gas prices.

Fair Price

Intel shares jumped more than 8% after analyst Ming-Chi Kuo reported that Apple is seriously considering shifting part of its M-series chip production to Intel. If confirmed, the move would mark a major turning point not only for Intel but for the entire semiconductor landscape. Apple is one of the world’s most demanding and prestigious customers, and regaining its trust would signal that Intel’s manufacturing ambitions are finally becoming credible again.

The report comes at a decisive moment. Intel is trying to revive and reposition its foundry business, which generates over $4 billion per quarter but continues to trail far behind the company’s product division. Even so, Intel is determined to compete with TSMC and Samsung on the global stage. Should Apple choose Intel Foundry as early as 2027, it would serve as a powerful validation that the company’s technological overhaul is beginning to pay off.

Why a potential collaboration with Apple is so crucial

Kuo states that Apple $AAPL wants for future M-series chips to use Intel's $INTC process 18A-Pwhich is an improved version of the upcoming 18A technology. The move wouldn't mean that Apple is abandoning TSMC $TSM - it will remain a major supplier - but that Apple needs a second source of manufacturing, especially for the MacBook Air and iPad Pro.

From Intel's perspective, several points are important:

• Apple never outsources production of its most technologically important chips to weak players.
• A successful collaboration would prove that Intel can produce high-end ARM chips for the most demanding clients.
• It would open the door to other large customers who have so far chosen TSMC.

In other words, it's not just about the contract. It's about reputation.

New leadership and big investments are changing Intel beyond recognition

With the departure of Pat Gelsinger and the arrival of CEO Lip-Bu Tan, Intel has been radically transformed. The company has raised capital, received government support and attracted key investors, including Nvidia and SoftBank, who together have invested $7 billion to develop its foundry infrastructure.

Fundamental changes:

• The US government now owns about 10% of Intel
• Tan has significantly accelerated the development of manufacturing processes
• the company finally got 18A prototypes to real customers after years
• Intel stopped promising and started delivering

These factors are behind the stock's dramatic rise - +113% over the past 12 months.

Comparison with current leaders: Intel not yet catching up, but catching up

Despite the current euphoria, the reality is stark: Intel is still far behind Nvidia and AMD in the AI race. Nvidia dominates the accelerator market with a capitalization of over $4.4 trillion and AMD is aggressively gaining ground in server processors.

Lisa Su said at AMD Analyst Day:

• Targeting 50% share in data centers within 3-5 years
• 40% share in client processors
• AMD's long-term belief that it can take market share from Intel on a sustained basis

So Intel is running a race where it must succeed both technologically and reputationally.

Why Apple is coming in now

There are several reasons that Apple is considering Intel after years of TSMC dominance:

• The effort to diversify production outside of Taiwan
• the need for more capacity for next-generation ARM chips
• good in-house design experience - Apple doesn't want to deal with the technology constraints of foundry partners
• Intel has reportedly significantly improved revenue and process stability

Although production is not scheduled to begin until 2027, a decision has yet to be made now.because Apple is planning chip generations 2-3 years in advance.

What this means for investors

If Apple chooses Intel as the second supplier of M-series chips, it will:

• Intel's biggest reputational win in more than a decade
• long-term revenue from a premium contract (MacBook + iPad)
• massive pressure on TSMC
• a signal to other OEMs that Intel is back in the game

Why Apple needs a second chipmaker

While Apple has long relied on TSMC as its exclusive M-series and A-series chipmaker, the world around it is changing dramatically. Rising geopolitical risks in the Taiwan region, extremely high demand for 3nm and 2nm manufacturing capacity, and the increasing technical demands of products in the Mac and iPad segments mean that Apple can no longer build its product cycle on a single supplier. A second reliable partner isn't just a convenience - it's a strategic necessity if Apple wants to maintain its pace of innovation and stability of supply.

Moreover, with the explosive growth of AI models running directly on devices, there is a growing need for massive computing architectures that have very narrow limits in terms of power efficiency. Thus, Apple is planning for future generations of chips even earlier than today and needs to ensure that it will have sufficient manufacturing capacity regardless of what TSMC's priorities are. Intel, if it indeed adheres to the 18A/18A-P roadmap, may represent exactly the type of insurance policy that will allow Apple to risk bigger technology leaps without worrying about inadequate production lines.

So the reasons Apple is actively seeking a second partner are not short-term. They are:

• Diversification of risk
• ensuring long-term capacity stability
• a better negotiating position vis-à-vis TSMC
• faster innovation of the next generation M-series
• protection against future geopolitical shocks

If Apple's choice of Intel is confirmed, it will mean that the company is finally offering a competitive technology platform after years - and Apple believes it enough.

Who stands to gain and who stands to lose from the collaboration

The potential Apple-Intel partnership isn't just a tech event. It is a tectonic shift across the entire chipmaking segment that could redistribute power, capital and technological know-how. To understand who actually benefits from this collaboration and who can unleash some of their influence, it is worth keeping an eye on the four main players:

Intel

Gains the most.

• A reputational leap that no marketing campaign can buy
• access to one of the world's most demanding customers
• A strong signal to other clients - especially Qualcomm, Amazon, Google or Meta
• long-term revenue from premium chip manufacturing

Apple

Winning quietly.

• Builds a diversified supplier landscape
• Increases pressure on TSMC, which may lead to more favorable pricing and priorities
• Gains greater flexibility in innovation planning
• Reduces the risk of product delays - especially key for MacBook Pro

TSMC

Not losing position, but losing exclusivity.

• Loses its status as the only chipmaker for Apple
• May affect long-term contracts and capacity allocation
• Pressure to increase efficiency and revenue

AMD and Nvidia

Indirect impact.

• Once Intel gains more prestigious foundry customers, it will have more resources to invest in its own products
• AMD may cease to be Intel's only challenger in processors
• Nvidia, on the other hand, is seeing Intel's strength in the manufacturing segment - which may rewrite the competitive dynamics in AI chips after 2027

Overall: Intel is the biggest winner. TSMC is the most under pressure. Apple is strengthening its position as king of supply chains.

For income investors, few things are as seductive as a stable, century-old consumer-goods company offering a headline dividend yield near 9%. Add to that a multi-decade streak of uninterrupted quarterly payouts and 23 consecutive years of dividend increases, and the story appears almost too good to pass up. On paper, the company still generates more than $5 billion in annual revenue and remains a familiar brand in millions of households.

But the surface-level appeal hides a growing imbalance. The yield has surged not because the company became significantly more profitable, but because its share price has fallen to multi-year lows. With a trailing dividend of roughly $0.99 per share against a stock price hovering near $11, the payout ratio has crept above 100%, signalling pressure on both earnings quality and cash coverage. Analysts are beginning to warn that rising leverage, shrinking margins and downgraded outlooks may force management to reconsider whether its prized dividend policy is truly sustainable.

Top points

• Dividend yield is around 9% with an annual payout of about $0.99 per share.
• The payout ratio from the last 12 months exceeds 100% of accounting earnings (about 108%), which is a warning sign for a conservative defensive title.
• 2024 revenue was $5.10 billion and virtually flat year-over-year (+0.25%), while net income doubled after a weak 2023, but has not grown linearly over the long term.
• Gross margins of around 37.5% and operating margins of just under 6% show solid but not exceptionally high profitability in an environment of cost inflation.
• Leverage is higher: Debt/Equity around 1.7, Altman Z-Score around 2.1 - the "caution" zone, i.e. increased caution.
• The company has a very decent dividend history: it has raised its dividend for the 23rd consecutive year, and the current quarterly payout of $0.2475 marks the 93rd consecutive quarterly dividend.
• Some analyses (e.g. at Seeking Alpha, also referenced in the SimplyWallSt review) have been openly talking about the likelihood of a dividend "cut" after Q3 2025.

Company Profile

Flowers Foods $FLO is one of the largest bakery and packaged bakery manufacturers in the US. Under its roof are brands such as Nature's Own, Wonder, Dave's Killer Bread or Canyon Bakehousethat target the mass market to the premium and better-for-you segments. The company supplies baked goods and other products to retail, supermarket, foodservice and other channels throughout the United States.

Its business is a typical "defensive consumer staple": people eat bread and pastries in recessions and expansions. In theory, this should mean high sales stability - and indeed it is showing. Turnover has held around $4.8-5.1 billion in recent years, and the company will make $5.10 billion in 2024, only slightly above the 2023 level. The more significant movements are within the bottom line - on margins, costs and net income - rather than on the top line itself.

• Presentation with last quarter's results.

Long-term results: revenue growth, swing in profits

It's clear from the data that Flowers Foods is in a typical "in-between" year between growth and stability. Revenues have grown from $4.33 billion to $5.10 billion since 2021, representing cumulative growth of roughly 18%. Profitability, however, is more volatile.

• In 2022, the company earned $228 million. USD
• In 2023, net profit fell to USD 123 million. USD
• 2024 then brought a return to a higher level of 248 million. USD, a year-on-year growth of more than 100%

This means that the company can "squeeze out" profits if it can improve its mix, pricing and cost base. But it also shows that results are sensitive to input costs (flour, raw materials, energy) and pressure from large retail customers. EBITDA for 2024 jumped to $525 million. This is a solid level, but in terms of debt and dividend obligations, the cash flow "surplus" is not infinite.

Dividend history: strong tradition, growing tension

On the dividend side, Flowers Foods really has a lot to offer. The company has already built on its 93rd consecutive quarterly dividend and the 23rd year in a rowthat it has raised its payout. The quarterly dividend of $0.2475 was reaffirmed in November 2025, when the company announced a payout due in December.

Thus, historically, the investor market has viewed FLO stock as a typical stable "income" title - something to hold in a portfolio for the long term, collecting a dividend and not worrying too much about fluctuations in the economy. The problem is that the numbers are starting to defy that narrative:

• An annual dividend of around $0.99 per share at a price of around $11 implies a dividend yield of over 9%.
• The payout ratio from the last 12 months comes out to roughly 108% of net income, meaning the company is paying out more in dividends than it is currently earning.

For "classic" dividend consumers (food, beverage, drugstores), a healthy payout ratio is often between 40-70%. In the short term, higher levels can be managed, but in the long term, an overshot payout is only sustainable if:

1. earnings per share are growing rapidly
2. free cash flow significantly exceeds accounting earnings
3. the company has a very strong balance sheet and minimal debt

For Flowers Foods today, neither of these conditions apply on net - earnings did jump after a bad year in 2023, but not enough to easily cover the current dividend and still allow for significant debt reduction. Add to that a deteriorating capital structure and a weaker Altman Z-Score, and the valuation of dividend "safety" comes out much worse than a few years ago.

A frank conclusion for the investor:

A company can afford a dividend today - but only just. It's sustainable payout, but not sustainable foreverunless profitability improves or the dividend growth rate slows.

That's why some analysts openly warn after Q3 2025 that:

Dividend cut risk is higher today than at any time in the past decade.

In practice, this means:

• 9% yield is tempting, but not safe
• The company could be in for a big payout in the next few years. freeze the dividend
• Alternatively, cut the dividend by 20-40% to bring it to a sustainable level

While the current numbers raise questions about the sustainability of the dividend, the company has several structural advantages and opportunities that can significantly improve its outlook:

1. Stable demand in the staples segment

Bakery, packaged breads, breakfast products and snacks are among the least cyclical items in the consumer basket. This means that even in a slowing economy, sales can remain relatively stable.

2. Strong brands in the portfolio

Brands such as Nature's Own, Dave's Killer Bread, Wonder Bread or Canyon Bakehouse have high loyalty. The company can defend itself against private labels with a premium segment and healthier options.

3. Room for margin growth

The gross margin of 37.5% is decent in the consumer sector and if it could:

• stabilize input prices
• streamline logistics
• optimise the portfolio

this could significantly improve operational performance.

4. Potential acquisition growth

Historically, the company has grown through acquisitions of smaller bakery brands.
There is consolidation in the industry - and Flowers Foods can use its size ($5 billion in sales) to add smaller players.

5. Healthy eating trend

The better-for-you foods segment is growing faster than traditional baked goods.
Dave's Killer Bread is one of the fastest growing brands in the US.
If the company taps into this trend more aggressively, it can grow above the industry average.

6. Automate production

Rising labor and energy costs are motivating bakery companies to invest in automation. For Flowers Foods, this is a way to strengthen margins and improve cash flow within 2-3 years, which is critical to the dividend.

Valuation and fundamentals: cheap stock or value trap?

In terms of classic valuation metrics, Flowers Foods looks very cheap today:

• P/E around 11.7
• P/S approximately 0.44
• P/CF around 7.7
• P/B roughly 1.6

These are values that would make a stable food company with a fixed dividend look like a textbook "value play". But when we look deeper, the picture is less idyllic:

• Net margins of around 3.8% and operating margins of just under 6% - low, albeit industry-standard margins.
• ROE of around 13-14% is solid, but partly driven by higher leverage (Debt/Equity ~1.7).
• Interest coverage of just around 3.9x means interest costs are no longer negligible and may become an increasing burden in a higher rate environment.

An Altman Z-Score of around 2.1 is in the "grey zone" - not a signal of an imminent problem, but not a comfortable safe distance either. Combined with a high payout ratio, this means the company has less room for error - a shock to margins, a larger investment program, or a weaker year could add pressure on the dividend very quickly.

What analysts are saying: conservative numbers, growing skepticism

Analyst coverage of Flowers Foods isn't massive, but it gives a pretty consistent picture. Consensus target prices today are slightly above the current market price - typically in the $13-$15 per share range, implying rather limited price upside in the single-digit to lower tens of percent range.

• Some sources still emphasize the strong dividend history and defensive nature of the business - hence the "hold, collect the dividend and wait for valuations to return to normal" argument.
• On the other side stands analysis that openly raises a cautionary finger over the sustainability of the current dividend after Q3 2025 results, talking about "a dividend cut being more likely than before".

In short, analysts aren't expecting the company to collapse, but more and more of them are asking the same question we are - whether a 9% dividend at a food company is a signal of trouble rather than opportunity.

Dividend: scenarios for the years ahead

Focusing purely on dividend policy, it makes sense to consider several scenarios:

1. maintaining the dividend with minimal growth

The company attempts to maintain its reputation as a 'dividend aristocrat' within its segment at all costs and will only increase the dividend symbolically (e.g. by 1p per year). In this case, free cash flow will be under pressure and the scope for debt reduction will remain limited. This scenario is attractive to investors in the short term (collecting a high dividend) but may delay the resolution of fundamental issues.

2. Dividend freeze

Another option is to not raise the dividend for a few years, leave it nominally at current levels and hope that earnings and FCF grow above the payout. This would mark the end of a series of annual increases, but it would not be an explicit "cut". In terms of fundamentals, this would be a logical move - it motivates management to be more disciplined and gives room to strengthen the balance sheet.

3. An open-ended "dividend cut"

The third option is to cut the dividend to a more sustainable level, say 20-40%, so that the payout ratio falls back to a healthy range of 60-70% of earnings. In the short term, this would likely lead to a negative market reaction, but in the long term it would free up the company. It is no coincidence that some analyses are already mentioning this possibility as "more likely than before".

For the investor, the key point is that the current dividend level is not "free" - it's being redeemed by a high payout ratio, higher leverage and a smaller cushion on the balance sheet.

Key risks and opportunities

Risks:

• The excessively high payout ratio and historically unusually high dividend yield suggest that the market does not fully trust the current payout.
• Leverage is not critical but limits management flexibility in a higher rate and low margin environment.
• The food sector is very competitive - large chains are pushing up prices while inputs (raw materials, energy, wages) remain relatively expensive.
• Any weaker year - a combination of poorer margins and stagnant sales - can increase the pressure on the dividend significantly.

Opportunities:

• If the company can stabilize margins and gradually reduce debt, the current yield can offer a very attractive total return.
• Flowers Foods' brands have a strong presence in the U.S. and baked goods consumption is structurally stable - this is not a cyclical industry dependent on "fashion."
• Paradoxically, any signal that management is taking dividend risk seriously (e.g., a dividend freeze and an emphasis on deleveraging) can boost long-term investor confidence.

What to take away from the article

• The 9% dividend yield at Flowers Foods is not the result of miraculous growth, but a combination of a high payout and a falling share price.
• A payout ratio of over 100% of earnings and a high dividend yield are more of a warning than a guarantee of "safe income" at a defensive food company.
• Flowers Foods has a long and strong dividend history (23 years of growth, decades of uninterrupted payouts), but the numbers suggest that this tradition is under more pressure today than before.
• The underlying business is stable and earnings are relatively resilient, but low margins, higher debt and rising interest costs limit the room for error.
• Analyst target prices no longer offer massive upside - rather they reflect a slightly undervalued but riskier dividend title than before.
• It makes sense for an investor to view FLO stock not as a "safe dividend bond in disguise" but as a high-yielding title with a real risk that the dividend equation will change in the years ahead - both toward a sustainable reset and a potential cut.

Although a 16 % increase for the S&P 500 in 2025 may look attractive at first glance, for such a broad and deep market benchmark it actually ranks as below-average performance compared with historical cycles. With valuations elevated and many investors expecting a breakout year, the modest rally shows how much of the earlier upside has likely already been priced in. Meanwhile, other global markets — including those outside the U.S. — are posting stronger returns, prompting a growing debate: is 2025 a year of complacency for U.S. equities rather than a bull-market surge?

The performance of the Nikkei 225 index since the beginning of 2025

Comparison of the S&P 500 and Nikkei indices

Looking at this year purely through the lens of index performance, the numbers are relentless. Goldman Sachs in November report cites data showing that the Nikkei is up roughly 30% in dollar terms, while the S&P 500 is up "only" 14% (the US index is up 2% today). Further analysis add that 2025 is generally the year when international markets outperform the US market, and the Nikkei is one of the main drivers.

Imagine two portfolios - one purely in the S&P 500, the other split 50/50 between the S&P 500 and the Nikkei - the difference in performance starts to accumulate very quickly. With a 30% return on the Japanese side and 14% on the US side, the diversified portfolio automatically has a higher overall performance. In doing so, you still hold US stocks, you just add Japan. In the first case, you would have a 16% return, but in a diversified portfolio, the YTD return would be 22%.

But why has the Nikkei so dramatically outperformed the US market this year, after decades of being more of an outsider? Part of the answer is cyclical, part structural. From a cyclical perspective, the realignment of global portfolios plays a big role. In its November analysis, Goldman Sachs reported that US investors are accelerating their purchases of Japanese stocks and that the pace of capital inflows from the US into Japanese equities is the fastest since the Abenomics era (The Abenomics era refers to the period of economic reform that began in Japan after Prime Minister Shinzo Abe took office in 2012. His goal was to bring Japan out of 20 years of stagnation, deflation and extremely low economic growth).

Comparison of the Nikkei 225 (black line) and S&P 500 (orange line) indices as of early 2025

Japan's market reforms

The Japanese stock market has seen several waves of corporate governance and capital market reforms. The second phase of these reforms, which has been underway in recent years, aims to increase return on equity (ROE), streamline balance sheets and be more accommodating to minority shareholders. Analysis by Janus Henderson from 2024 describes how the Tokyo Stock Exchange and regulators are pushing firms with low price-to-book ratios to actively increase shareholder value - for example, through buybacks, changing dividend policies or restructuring inefficient assets. This is a fundamental change for a long-undervalued market. When a company has held large amounts of cash or passive assets for years and has a low P/B, it's attractive to investors - but until management is motivated to do something with the capital, it may remain "cheap" forever.

Foreign investors

An important point of current growth is the role of foreign investors. Research by the Japanese think-tank RIETI has shown that a higher proportion of foreign ownership in companies is statistically associated with better performance and greater management discipline. Foreign shareholders are more likely to push for transparency, increased return on capital and efficient allocation of resources. This fits neatly into the current picture where foreign capital is flowing into Japan, pushing for change while benefiting from the market moving valuations higher.

When we break down the specific drivers of this year's growth, we find that it is a combination of several sectors. Traditionally, the Japanese market has been based on exporters such as automakers, industrial conglomerates and energy producers, but in recent years, technology and artificial intelligence themes have played an increasingly important role. Goldman Sachs says bluntly in its commentary that US funds are buying mainly Japanese tech and AI-oriented stocks because they offer a much greater opportunity for future growth compared to their US counterparts.

But it's not just about the growth of individual stocks

While stocks are rising, there is another layer of the story playing out in the background that is key for investors. Yields on 10-year Japanese government bonds have soared to their highest levels in more than 18 years this year. They are currently at the same point as they were in 2007. Yet just a few years ago, Japan was synonymous with zero rates - the Bank of Japan kept 10-year yields around zero by controlling the yield curve and the bond market was de facto paralysed.

The link between what is happening in the Nikkei index and what is happening in bonds is crucial. At first glance, it would seem that the rise in yields and the end of extremely easy monetary policy is bad news for equities. Higher rates mostly mean a higher discount rate, lower valuations and potentially pressure on leveraged companies. But in the Japanese context, monetary policy normalisation is a double-edged weapon. On the one hand, it may teach investors to take Japanese bonds again, but on the other hand, higher yields show that Japan is gradually returning to something more akin to a normal economy. This is a positive signal for equities. The perception is that the risk of structural deflation and permanent stagnation is diminishing.

The reaction of global markets to any signs of a change in Bank of Japan policy shows how important this topic is. Reuters recently described how the mere hint of a possible December rate change from Governor Ueda caused a sell-off in global bonds and a correction in equities as Japanese 10-year bond yields shot to new highs.

But there is another less visible link between the bond and stock markets. And that is domestic investors. Indeed, Japanese financial institutions, insurance companies, pension funds, banks traditionally hold huge amounts of government bonds. When yields were close to zero for a long time, they had a strong incentive to look elsewhere for yield, including in equities. But if bond yields continue to rise, some of the domestic capital from equities may flow back into bonds. At the same time, however, there is room for foreign investors. If Japanese bonds become an interesting safe component of portfolios, this may increase the attractiveness of Japan as a whole. Investors may start to consider a mix of stocks and bonds in portfolios.

Summing it all up in a simple equation, in 2025 Japan acts as an accumulator of three big trends: global rotation from the US to international markets, structural improvement and gradual normalisation of monetary policy.

Chart of the 10-year Japanese government bond yield (JP10Y) since 2000

Summary of the data and its real portfolio implications

But all this data can often be difficult for investors to grasp. It is therefore useful to translate them into concrete implications for portfolio returns. If someone has a US-only portfolio like the S&P 500 ETF, this year shows them two things: first, even a benchmark like that can be outperformed by another major market, and second, diversification is not just a theory, but something that translates into a real difference in returns.

An investor who had part of their portfolio in Japan - perhaps through a Nikkei ETF or a broader global index - will take away better numbers this year than someone who was 100% in the US. But at the same time, it is not wise to make this year a dogma and tilt the entire portfolio to Japan. Just as the U.S. was overheated and vulnerable to a correction after the extreme growth in technology stocks, the Japanese market may eventually reach a similar point.

Risk

Another issue worth considering is the comparison of risk profiles. The Nikkei is less diversified than the S&P 500, being more concentrated in a few big names and sectors. The S&P 500 has broader sector coverage and includes the largest global technology leaders. On the other hand, the U.S. index trades at higher earnings and revenue multiples, while Japan on average offers consistently lower valuations and higher dividend yields in some segments.

The link between Nikkei performance and Japanese bonds has another dimension that is important for strategic allocation. If the Bank of Japan continues to normalize too aggressively, it could chill both the stock market and the economy. A rapid rise in yields would make funding more expensive and divert some capital into bonds, which would reduce the attractiveness of equities. That is why the market is watching closely to see how the Bank of Japan speaks. For now, however, the central bank seems to be aiming for a gradual, cautious normalization, which is more likely to legitimize the market and restore the bond curve to functioning than to trigger a Fed-like shock in 2022.

From a short-term perspective, it may be of interest to the retail investor that the Nikkei's outperformance against the S&P 500 this year is not just in terms of currency exchange rates, which have managed to shake up yield comparisons quite a bit in recent years. Indeed, in some years in the past, the Japanese market seemed to grow only in local currency and when converted to dollars or euros, much of the return disappeared due to the weak yen. This year is different.

Comparison with the US

The Japanese story in 2025 is thus in many ways a mirror of what we saw in the US in the previous decade. A market that was long considered uninteresting is reawakening thanks to a combination of monetary policy, structural reforms and global trends. While U.S. stocks have benefited for years from financial innovation, the rise of technology, and extremely cheap money, Japan is now benefiting from a change in corporate culture, and the fact that corporate valuations are relatively cheaper compared to the U.S. Statistics on record foreign investment in Japanese equities (over 6.2 trillion yen in 2023, the most since 2014) already only confirm the global shift of wealth.

For the long-term investor, Japan may still represent an interesting portfolio component. Not as a replacement for the US, but as a strong complement. The key is not to succumb to the euphoria of one year, but to look at a combination of factors: index performance, the direction of capital flows, the state of the bond market and the structure of reforms. This year's numbers are just the beginning of the story. Whether Japan continues to outperform the US market in the coming years will depend on how consistently the country completes reforms, how carefully the Bank of Japan handles rate normalisation, and how global demand for technology, AI and industrial products evolves.

Qualcomm closed 2025 with one of the most complex narratives in its recent history. On one side stands a record-breaking performance of the QCT division, powered by a rebound in flagship mobile demand, accelerating automotive wins and a rapidly expanding footprint in edge AI. On the other stands a sharp GAAP profit distortion caused by the latest U.S. tax rules—a one-time shock that rattled headline numbers without reflecting any real weakness in operations.

Looking past that accounting noise, the company’s trajectory is unmistakably shifting. Qualcomm is stepping out of the long shadow of smartphones and leaning into a diversified compute portfolio that spans connected vehicles, industrial automation, IoT devices and early forays into AI-centric data infrastructure. Q4 2025 marks not an end, but a beginning—the first tangible chapter in Qualcomm’s move toward becoming a broad-based provider of intelligent computing systems.

How was the last quarter?

In terms of revenue and operational metrics, Qualcomm $QCOM delivered one of the strongest numbers in recent years. Revenue grew 10% year-over-year to $11.27 billion, with by far the biggest contributor coming from the QCT. Its revenue was up 13%, driven by improving demand in high-end phones, a fast-growing automotive business and solid IoT performance. Gross margin remained stable at 52%, confirming Qualcomm's ability to monetize the increased technological complexity of its platforms.

However, GAAP financial performance was significantly impacted by the new U.S. tax legislation, which forced the company to establish an accounting provision of $5.7 billion. This provision has no impact on cash flow, however, it caused a reported GAAP net loss of USD -3.1 billion. Meanwhile, non-GAAP results tell a very different story - adjusted earnings grew 7%, non-GAAP EPS reached $3.00, and operating profit excluding non-recurring items grew at double-digit rates in most segments.

Handsets were up 14% year-over-year, a significant improvement after a prolonged stagnation. Automotive added 17%, and in particular its annual momentum confirms its transition into a strategically key segment. IoT, up 7%, completes the mosaic of steady, broad-based growth across QCT. QTL's licensing division is down 7% but maintains extremely high margins, making it a stable source of free cash flow even in less favourable periods.

Overall, the fourth quarter confirmed that Qualcomm is entering a new phase of the technology cycle where it no longer relies on a single growth engine, but builds performance on multiple segment pillars with high resilience to market cyclicality.

• Full presentation with results.

CEO commentary

CEO Cristiano Amon Rates 2025 as a breakthrough year:

Record QCT results confirm that Qualcomm stands on a much broader foundation today than ever before. Automotive and IoT are growing double digits, demand for our AI platforms is accelerating, and we are entering segments that will form the computing backbone of the next decade.

Amon also highlighted that Qualcomm has a fully integrated technology stack for autonomous driving, opening the door to a fast-growing market that until now has been dominated by Nvidia. The company also hinted at further steps toward energy-efficient computing solutions for data centers - an area where it can offer an alternative to the GPU-centric model thanks to low power consumption and architectural optimizations.

• Don't miss: Qualcomm | Q3 2025: Earnings growth and record results in automotive and IoT

Outlook

For the first quarter of fiscal year 2026, Qualcomm expects:

• Revenue of $11.8-12.6 billion
• QCT $10.3-10.9 billion
• Non-GAAP EPS of USD 3.30-3.50

The outlook is based on four stable trends:

1. Return to premium smartphones
2. accurately predictable automotive growth thanks to extensive design wins
3. Strengthening positions in edge AI and industrial systems
4. normalisation of the licensing business

The firm also communicated that it now expects an effective tax rate of around 13-14%, which is crucial for predictability of results.

Long-term results

Qualcomm's long-term results show a company that has been able to restart growth and return to strong profitability after the covid boom and subsequent semiconductor market correction. Revenues in 2025 reached $44.3 billion, returning to the record levels of 2022. It is also the second consecutive year of double-digit revenue growth, despite structural changes in the mobile market. The development confirmed that QCT's key segments - mobile chipsets, automotive and IoT - are starting to generate more stable and diversified revenue than in the past, when Qualcomm depended primarily on a cyclical smartphone economy.

Gross margins have been able to stay high during this growth thanks to a better product mix and higher demand for premium platforms. While manufacturing costs grew at a faster pace than sales, the company still maintained gross profit above $24.5 billion, a near return to pre-correction levels in 2022. However, the structure of operating profitability changed significantly: while the company struggled with revenue declines and cost growth spikes in 2023, 2024 and 2025 brought a clear turnaround. Operating expenses grew only modestly and operating profit jumped more than 22 percent to $12.35 billion, nearly double the 2023 figure.

The picture is also remarkable in terms of operating metrics. Both EBIT and EBITDA have grown at double-digit rates for two consecutive years, showing that Qualcomm can scale its new growth cycle more efficiently. EBITDA of $14.9 billion in 2025 is still below 2022 levels, but the gap is closing rapidly and the pace of recovery shows that the margin pressure from 2022-2023 is gradually fading. In addition, the company has been consistently reducing share count through buybacks, which is boosting per-share metrics - while 2025 GAAP EPS has fallen sharply, this decline is primarily driven by a single accounting item.

This is because 2025 net income is significantly impacted by an extraordinary tax burden that distorts year-over-year comparisons. While before the tax legislation intervention the net profit trend would have continued to grow, the resulting figures show a 45 percent drop. Adjusted for the tax effect, however, Qualcomm's long-term trajectory remains positive: the company has stabilized after the turbulent years of 2022-2023, has resumed growth in all key segments, and is once again approaching its historical performance. Thus, it is more important for investors to track the structural strength of the results than the optical decline in net income, which does not fundamentally reflect the reality of the development.

News

The year 2025 brought several key milestones:

• Automotive: launch of a complete platform Snapdragon Ride Flex and the first commercial implementation of a fully integrated driving stack.
• AI & Edge: Expansion of AI architectures into robotics, industrial automation and edge systems.
• Data Centers: Qualcomm outlined directions for further expansion - low-power inference, specialized accelerators, and collaboration with partners in autonomic systems.
• Capital Discipline: US$12.6 billion returned to shareholders during the year in dividends and buybacks.

Shareholder structure

Dominance of institutional investors provides stability:

• Institutions hold 81.82% of shares
• Largest positions:
• • Vanguard - 10,60 %,
  • BlackRock - 9,20 %,
  • State Street - 4,94 %,
  • Geode - 2,40 %.

Analysts' expectations

According to the latest analysis Morgan Stanley analysts affirm rating Overweight and target price 210 USD. The report highlights three strategic pillars: an expanding automotive market, stabilizing licensing, and significant potential in edge AI.

Fair Price

Tesla’s most polarizing vehicle has officially begun its journey beyond North America. The company has started customer deliveries of the Cybertruck in South Korea, marking a milestone moment for both Tesla and one of the most competitive EV markets in Asia. The launch signals that Tesla sees real global potential in a model that was long assumed to be tailored almost exclusively for U.S. roads and consumer tastes.

The first units were handed over on November 27, accompanied by a large community event and an explosion of social-media activity. For Tesla, South Korea is more than a test market—it is a strategic proving ground for whether the Cybertruck’s design, performance and brand pull can resonate beyond Western markets. If the debut proves successful, it could accelerate Tesla’s plans to bring the Cybertruck to other regions, with Australia emerging as the next likely stop.

Cybertruck In Korea: two versions and a price that targets the premium segment

In South Korea, the Cybertruck is offered in two configurations:

• AWD - equivalent to A$151,700 (US$100,100)
• Tri-motor "Cyberbeast" - equivalent to A$167,300 (110,400 USD)

The variants differ not only in power, but also in driving dynamics and capability.
The AWD version has:

• twin-motor drive
• 123 kWh battery
• 0-100 km/h in under 4.5 seconds
• over 520 km of EPA range
• up to 5 tonnes of towing capacity, which is of specific interest to Korean owners looking for the practical side of this otherwise extravagant truck

On the other hand, the high-end Cyberbeast pushes the limits further: accelerating to 100 km/h in 2.7 seconds and reaches a top speed 210 km/h - figures that are almost absurd for a pick-up truck.

NHTSA gives five stars and an exceptional safety record

According to data presented by Tesla $TSLA, the Cybertruck in Korea comes with a 5-star safety rating derived from US NHTSA tests.

NHTSA states that the Cybertruck has:

• Lowest likelihood of injury of all pickup trucks tested
• lowest rollover risk - 12.4%
• Very strong cab structure thanks to the stainless steel "exoskeleton" architecture

For customers in Asia, where safety is often a key parameter when choosing an EV, this is an important consideration.

Australia is waiting for a right-hand drive version - and Tesla may soon deliver it

In Australia, Tesla has exhibited the Cybertruck at a large number of EV trade shows over the past year and a half. Several showrooms have even had it permanently on display - most recently on the Gold Coast in Queensland.

This has fuelled speculation that a right-hand drive version is already in developmentand that Australia may be one of the next markets with real distribution. Given that South Korea has now been given priority, it's clear that Tesla already has the global distribution logistics in place for the Cybertruck.

• Don't overlook: Tesla | Q3 2025: Record deliveries and cash, but profitability hits ceiling

Sales reality: interest yes, numbers no

Despite all this, Cybertruck has its problems. It was expected to be a sales blockbuster that would disrupt the US pickup segment - but the reality is more tempered.

In the last quarter, Tesla sold:

• 5,385 units Cybertrucks
• about 16,000 units since the beginning of the year

What caused the weaker results?

• Production shortfalls
• more than ten public recalls in two years
• a slump in demand after the end of the federal tax credit for EVs
• complications with service and parts supply due to the Cybertruck's specific design

So how stable production is and how Tesla manages to curb the problems that have hampered its North American launch will be critical to entering new markets.

What entering the South Korean market means for Tesla

For Tesla, it's not just about further geographic expansion - South Korea is one of the world's most demanding and tech-savvy automotive markets. It is home to brands that dominate the entire EV segment (Hyundai, Kia), and is also one of the countries with the highest proportion of EVs per capita. If the Cybertruck succeeds here, it will be an important signal to Tesla that the model can work outside the US, where it relies on very different consumer behavior.

South Korea is specific in several ways: customers prefer technological superiority, demand quality service infrastructure and respond quickly to mobility trends. Tesla therefore uses this market as a testing laboratory for its global ambitions. Success here could accelerate Cybertruck's entry into other Asian markets that are watching Korea's moves closely - Singapore, Hong Kong and Australia, for example.

Key reasons why Korea is a strategic milestone:

• High EV penetration per capitawhich enables rapid adoption of new models
• an extremely technology-oriented populationthat values innovation
• strong domestic competitionagainst which Tesla can distinguish itself with unusual design and performance
• a market that quickly creates trends in the rest of Asia

So Tesla is not throwing itself into an easy environment - it is entering an arena where the decision is being made as to whether the Cybertruck can be a global product or remain an American specialty.

How Cybertruck fits into Korea's infrastructure

From an infrastructure perspective, South Korea is one of the best-suited nations for modern electric vehicles. However, that doesn't mean that the Cybertruck doesn't have challenges ahead - especially because of its size and specific design. Urban centers like Seoul or Busan have narrower streets, smaller parking bays and stricter limits for large vehicles.

This puts the Cybertruck in contrast to the normal Korean demand for more compact SUVs. Tesla, however, believes this difference can be an advantage: The Cybertruck becomes a visual symbol of prestige and originality, not just a utilitarian choice.

Which may help its integration into Korean operations:

• A well-established network of Superchargersextended to rural areas
• advanced assistants and autonomous functionsto help manoeuvre in tight spaces
• the growing popularity of large premium SUVswhich is gradually changing customer preferences
• longer range and high efficiencywhich is important in a country with heavy highway traffic

Another factor is the adaptation of the software to local rules. Korean drivers place a strong emphasis on driver assistance systems, map-based cues, accurate road markings and integration with local apps. Here, Tesla is gradually adapting navigation, voice and safety features to make the Cybertruck feel like a full-fledged vehicle designed for Korean traffic.

It also has the advantage of Korea having one of the fastest 800V charging networks in the world. Although the Cybertruck operates on a 400V architecture, Tesla is working on adapters and optimizations that will allow it to use most public stations without power limitations.

In the quiet outskirts of Cleveland sits a facility that shapes the future of spaceflight. Inside the Glenn Research Center, metal chills to cryogenic temperatures, engines are tested to their limits, and every component must withstand conditions that would destroy anything less than perfect. This is one of NASA’s most demanding environments — and soon, Plug Power’s liquid hydrogen will be part of it. What seems like a small federal contract on paper is, in reality, an endorsement that only a handful of companies ever earn.

Hundreds of miles away, at NASA’s Neil A. Armstrong Test Facility in Sandusky, entire rocket systems are pushed to the edge inside a vacuum chamber capable of mimicking the near-absolute zero of deep space. Every drop of LH₂ used here undergoes scrutiny at a level unmatched in commercial industry. Plug Power becoming an approved supplier is therefore less about revenue and more about validation. NASA’s selection signals that the company’s technology, safety regime, and supply chain have cleared a bar that many never reach — and that Plug Power is ready for missions where failure simply isn’t an option.

Top Points

• Plug Power wins first NASA contract to deliver up to 218,000 kg of liquid hydrogen - a benchmark achievement of exceptional strategic importance.
• NASA uses LH₂ in testing rocket engines, cryogenic systems and hardware for the Artemis program - consumption is growing faster than available capacity.
• The plug is gaining validation that opens the door to the space sector, where the annual market for LH₂ can reach billions of dollars.
• For NASA, the contract is a test of reliability - and for Plug, a chance to land other, much larger contracts.

NASA contract: A small contract, but a game-changing breakthrough

NASA doesn't choose contractors based on price. There are three criteria: accuracy, safety and reliability. The award of the Plug Power $PLUGcontract means the company has met all three parameters in an area where mistakes are not forgiven. Delivery of up to 218 tonnes of LH₂ is certainly not essential in terms of revenue, but it is essential in terms of reputation and entry into the top tier of customers.

The red thread of the whole contract is validation. NASA has a long history of working with large cryogenic companies - Air Liquide, Linde, Praxair. With this move, Plug Power is joining a club that seemed out of reach just a year ago. What's more, NASA's contract is not for one-off deliveries, but for the long-term operation of two test complexes. This means regular consumption, high quality requirements and the possibility of extending the cooperation in case of reliable performance.

At the same time, this contract is the first real test of Plug's own cryogenic transport fleet. The company has been working for years to integrate the entire hydrogen chain - production, liquefaction, storage and distribution. NASA is now testing whether that integration actually works.

Liquid hydrogen in space: A fuel that's coming back into the spotlight

The use of liquid hydrogen (LH₂) has not always been commonplace. In the 1990s, parts of the rocket industry moved away from this technology - it was too expensive, difficult and inefficient for smaller missions. Today, the tables are turning. When NASA resumed the lunar return program, it reaffirmed that LH₂ is the only fuel that provides sufficient energy density for the heaviest launch vehicles.

Why NASA uses LH₂:

• it is the lightest and most energetic rocket fuel
• when combined with liquid oxygen, it produces an extremely efficient combustion process
• simulates vacuum conditions when testing cryogenic systems
• is indispensable for large upper stage rockets such as SLS or New Glenn

A single Artemis mission can consume hundreds of tons of hydrogen - and that's purely for launch. But NASA's test centers consume dozens more tons a year because the infrastructure runs even when it's not flying. That means steady and recurring demand.

That's where commercial space companies come in:

Blue Origin, ULA, Relativity Space - all working with configurations where liquid hydrogen plays a vital role. So Plug Power is not just courting NASA. They are bidding for the entire space ecosystem, which will be one of the largest consumers of LH₂ in the world over the next decade.

Strategic value: Plug $PLUG is gaining something that can't be bought - NASA's trust

NASA has historically taken a conservative approach to supplier changes. When it entrusts someone with operational fuel, it means that:

• it has certified the manufacturing process
• verified the purity of the hydrogen
• verified the transport equipment
• approved safety documentation
• approved the emergency response capability

In practice, this means that Plug Power has received a quality seal that is worth more than the contract itself. This paves the way for three major opportunities:

1) Increased chances for additional NASA contracts. - NASA often starts small - and builds it up over time.

2) Entry into aerospace research - Liquid hydrogen is also being tested in aviation electrification projects.

3) Commercial space companies are orienting themselves to NASA standards - If Plug meets NASA standards, it will meet the standards of launch providers.

Where there may be a problem: Risks that could fundamentally affect the future

Risk 1: Insufficient LH₂ production capacity

Plug has experienced several project delays and investors are still watching the performance of its liquefaction units.

Risk 2: Extremely challenging logistics

Any problem with refrigeration during transport means an immediate loss of some cargo. NASA does not forgive mistakes.

Risk 3: The company's financial situation

Plug Power is still struggling with high costs and the need for external financing. Without stable cash flow, expanding the space business is difficult.

Risk 4: Pressure from giants

Air Liquide, Linde and Air Products all have infrastructure that Plug is still building.

Risk 5: NASA will not award additional contracts

A contract is a test, not a commitment to long-term cooperation. These risks cannot be ignored. NASA's delivery must be flawless - or Plug Power's entire space story will stop before it starts.

Why Space LH₂ could be Plug Power's biggest business opportunity

The rocket industry is entering an era where demand for liquid hydrogen will grow rapidly:

• Artemis program will require regular launches and extensive testing
• SLS rocket consumes hundreds of tonnes of LH₂ per launch
• NASA test facilities run year-round
• commercial companies plan dozens of tests and launches per year

Conservative estimates are that the LH₂ market for space applications could reach $5-7 billion per year in the US by 2030 .

If Plug gains just a small fraction - 1-3% - it could mean:

• Stable annual revenues of $50-150 million
• dramatic improvement in cash flow
• a return of investor confidence
• A strategic shift from a "troubled hydrogen company" to a key player in space logistics

The importance of the contract to Plug Power's long-term revenues

The $2.8 million contract is insignificant in size in the context of Plug Power's financial situation, but its strategic weight is incomparably greater. NASA is one of the institutions that has extremely stringent standards for safety, quality and reliability - and the fact that Plug has achieved approved contractor status puts the company in a category of entities capable of performing cryogenic logistics for the most complex space operations. For investors, this is a moment that could change the investment thesis: for the first time, Plug is entering a market where it is not playing for one-off contracts, but for long-term strategic partnerships.

The long-term potential lies primarily in the volumes that NASA typically consumes in its programs. A single SLS rocket launch for the Artemis program can require hundreds of tons of liquid hydrogen, and NASA conducts dozens of engine tests, cryogenic simulations and operational cycles per year. If Plug can successfully deliver a relatively small volume of 218 tonnes under the current contract, it opens up the possibility of bidding for much larger tenders - not only at NASA, but also in the commercial segment, where demand for LH₂ is growing rapidly thanks to companies such as Blue Origin, ULA and Relativity Space. This synergy could create a new stable revenue pillar independent of the traditional Plug Power hydrogen business within a few years.

• Don't overlook: Plug announces new share issue!

Competitive landscape in liquid hydrogen supply

The liquid hydrogen supply market is highly concentrated and has so far been dominated mainly by large industrial gas players such as Air Liquide, Linde and Air Products $APD. These companies have huge production capacity, robust transportation infrastructure and long-standing relationships with US federal agencies. Plug Power's entry into a segment traditionally dominated by giants with tens of billions of dollars in revenues represents a dramatic change in dynamics. NASA typically works with suppliers that can provide stability in extreme conditions, resilience to outages, and accuracy on the order of hours during launch windows - this is what makes Plug Power's win unique.

Where Plug stands against the competition:

• Air Liquide - The largest global player in LH₂, has historically supplied NASA. Has an extremely reliable infrastructure but a less flexible pricing structure.
• Linde - Strong US footprint, dozens of cryogenic plants. NASA's traditional "go-to" partner for stable supply.
• Air Products - Largest US hydrogen producer, strong in petrochemical and industrial, but less focused on aerospace segment.
• Plug Power - Smaller player with aggressive growth, its own cryogenic fleet and ambition to vertically integrate the entire chain - from production to delivery. The NASA contract may be a testament to its technical reliability.

This comparison shows that Plug Power is not a winner because of its size, but because of its ability to offer NASA flexibility and speed that the traditional giants cannot always deliver.

Timeline: what may follow in the next few years

2025-2026: Validation of reliability and logistics capacity

In the first 12-18 months, NASA will closely monitor the accuracy of delivery, quality of cryogenic transport, and reliability of Plug Power while operating at Glenn Research Center and Armstrong Test Facility. If Plug meets expectations, NASA will increase order volumes and open the door for the company to categories where it handles ten times the LH₂ quantities. At the same time, safety standards will be monitored, as transporting liquid hydrogen requires a high degree of technical expertise.

2026-2030: Possible expansion of cooperation, entry into the commercial space sector

If Plug Power successfully passes the validation period, it may become one of NASA's preferred suppliers not only for test facilities but also for launch infrastructure. These are already contracts in the tens to hundreds of millions of dollars per year. In a parallel vein, Plug may also break into commercial contracts - Blue Origin's programs routinely use LH₂ for BE-3 and BE-7 engines, ULA uses LH₂ for its Centaur V, and new rockets are consuming more and more of this fuel. If Plug can build a reputation with NASA, it also gains a competitive advantage in the commercial market, where trust in suppliers is a critical factor in selecting partners.

Investment scenarios: How NASA can change Plug Power's trajectory

Optimistic Scenario

In this scenario, Plug successfully manages the NASA contract and subsequently wins:

• additional repeat orders
• access to higher volumes for test equipment
• a pilot contract for Artemis ground operations
• first commercial contracts with ULA or Blue Origin
• stabilization of the liquefaction plants in Georgia and New York

The company will begin to generate positive operating cash flow, margins will improve due to higher volumes, and investors will begin to see Plug as a technology company with a real order base, not a speculative story.

Expected stock reaction:

Rise by 60-120 % within 12-24 months, as PLUG's valuation is extremely low and even small changes in sentiment can have a large price impact.

Realistic scenario

NASA deliveries will be fine, but expansion will be slower. The company will win repeat contracts at a similar level and gradually get into the broader space supply chain. Production capacity will stabilize, but the company will still need capital to expand hydrogen infrastructure. Plug will start to show a gradual improvement in margins, but it won't be a coup.

Expected stock reaction:

Rise by 20-40 % within 12 months - thanks to improving fundamentals and a reduction in the risk premium.

Pessimistic scenario

Plug Power runs into trouble:

• Delivery delays
• LH₂ quality issues
• logistics chain failures
• NASA's lack of interest in further cooperation

Add to this the continued pressure on cash flow and the company may be forced to reissue shares. The space segment will not open up, the reputational effect will be minimal and Plug will remain in the position of a company struggling to survive in an overstretched hydrogen business.

Expected stock reaction: A decline of 20-40 %and more in extreme cases.

What to take away from the article

• The NASA contract is small in value but huge in importance - it is a benchmark entry into the space ecosystem.
• Liquid hydrogen will be a key fuel for space programs in the next decade.
• Plug Power gets validation that can't be bought - NASA certification carries global weight.
• The biggest opportunity for Plug is the chance to become a stable supplier for test and launch operations.
• The biggest threat is the company's financial health, logistics and competition from cryogenic giants.
• The outcome of the NASA contract may determine whether Plug returns to a growth trajectory or remains a company struggling to survive.

The latest Institute for Supply Management (ISM) survey has just sounded alarm bells for the US manufacturing sector — PMI has dropped to 48.2 %, marking the ninth consecutive month of contraction. With new orders shrinking, production cooling down and employment in factories under pressure, this isn’t just a worrisome number. It’s a red flag for global supply chains, corporate profits and investor sentiment heading into 2026. In our in-depth breakdown, we explore why this emerging weakness could reshape equity, bond and currency markets in the coming quarters — and which sectors may surprise with strength despite the downturn.

At first glance, the November ISM Manufacturing PMI report looks like just another macro number that will fly through the headlines and be replaced by something new in a few hours. In reality, however, this figure is much more than that. It is one of the most sensitive thermometers of the US economy, telling us quite accurately what shape the industry is in, what the outlook is for companies, how the Fed will make decisions and therefore what kind of environment awaits stocks in the coming months.

How the ISM Manufacturing PMI works

Let's start from the ground up. The ISM Manufacturing PMI is an index compiled each month by the Institute for Supply Management based on surveys of purchasing managers at manufacturing companies. They answer questions such as: are new orders increasing or decreasing? Are you increasing or decreasing production? Are you hiring or firing? Are delivery times from suppliers getting shorter or longer? Are you building inventory or depleting it? These responses then form five sub-indices: new orders, production, employment, supplier deliveries and inventories, each with equal weight in the overall PMI. The result is a number between 0 and 100, where 50 points represents the line between expansion and contraction from the previous month. Above 50, the industry grows; below 50, it contracts. But the index itself has long pointed to another important threshold: a value of around 42.5 points has historically been the threshold below which we often see not only industry contraction but also a decline in the overall economy, or recession.

The latest report

The November report says several key things. The headline Manufacturing PMI dropped to 48.2 from 48.7 in October, remaining below 50 for the ninth straight month, i.e. in contraction. According to the ISM itself, the U.S. economy as a whole remains in expansion, thanks to strong service and consumer sectors, but manufacturing as a whole cannot get going. The structure of the index is even more important to an investor than the headline figure itself. The new orders sub-index has fallen below 48 points, employment has fallen well below 50, and firms are, on average, reducing inventories while input prices remain elevated.

Simply put: demand is weakening, firms are cutting back on plans, hiring less and reacting nervously to uncertainty caused by tariffs, structural changes in supply chains and ever-increasing cost pressures. Wall Street adds that November's decline was linked specifically to the continued impact of tariffs on automobiles, auto parts and heavy equipment, which are driving up costs and motivating some manufacturers to shift production outside the US.

Chart of the evolution of the ISM Manufacturing Managers Index (PMI) from 2020

Historical context

To understand the significance of the 48.2 figure, we need to put it in a historical context. TradingEconomics analysis shows that over the past two years, the ISM Manufacturing PMI has often been in the 46-50 point range and very rarely returns above 52-53, as was typical in the healthy growth phases of previous expansions. In November 2024, for example, the PMI reached 48.4 points after a previous low of 46.5 in October. Back then, there was talk of an eighth straight month below 50 but above 42.5, which exactly matches today's situation. It is thus evident that US industry has been oscillating for some time in a range typical of a slowdown, but not yet of a deep recession.

If we look further back in time, we find several periods with which to compare the present. In 2015-2016, the PMI repeatedly fell to 48 points in response to the oil shock, the strong dollar and China's slowdown. Back then, there was a lot of talk about an industrial recession without a recession of the overall economy. We saw a similar picture in 2019, when the PMI fell to around 48 points due to the trade war and uncertainty around tariffs. The overall economy eventually fell into a formal recession because of the pandemic, not because of the PMI itself. An even more extreme episode was 2008, when the index fell well below 40 points. At that time it was a systemic financial crisis and industrial collapse.

Today's 48.2 points are therefore to be seen as continuing weakness, but not as a signal of total collapse.

The PMI is interesting not just in itself, but mainly in how it evolves over time and what it shows about the future. Study published in the journal Economic Modelling shows that the PMI has a good role in predicting macroeconomic information such as business cycles and economic growth, and that changes in it often precede changes in GDP and industrial production. Other work, Using the Purchasing Managers' Index to Assess the Economy's Strength and the Likely Direction of Monetary Policy, revisits how the PMI is used by central banks. The long-standing view is that a significant and sustained decline in the PMI increases the likelihood of monetary policy easing, while readings well above 50, on the other hand, encourage tighter conditions.

That said, today's weaker PMI also increases the likelihood that the Fed will be more willing to cut rates, and that can be paradoxically positive for stocks if the industry is not too weak.

Stocks vs PMI

In contrast, when we look at the relationship between PMI and stock market returns, the result is not clear-cut. A more recent study from 2024which examined whether PMI helps predict stock market returns, concluded that PMI values "cannot contribute significantly to the prediction of market performance", and on the contrary, evidence showed that variables related to volatility and market expectations have much better predictive power. For the investor, this makes an important distinction: the PMI is a great indicator of the real economy and the cycle, but it is not a tool for timing stock entry. It gives the market context, not a specific buy signal.

Moreover, in the current market, we need to perceive that the US manufacturing PMI is not an isolated phenomenon. The weakness of the industry is strongly evident elsewhere in the world. The Eurozone is at 49.6 points according to the November HCOB Manufacturing PMI, also in the light contraction zone, while Germany is at 48.2 points, almost identical to the US. In some countries, the numbers are even weaker: South Africa's PMI index fell to 42.0 points in November, already consistent with a significant contraction in the sector. In Japan, on the other hand, we see that manufacturing is under pressure, while the services sector remains in expansion.

Impact on markets

In terms of the immediate impact on markets, the key is how much the November number surprised investors' expectations. According to FXStreet analysts were expecting a slightly higher figure of around 48.6 points, so the actual 48.2 was a slight negative surprise. More importantly, though, is the structure. The Prices Paid index moved to 58.5 from 58, showing that price pressures in manufacturing persisted, while employment weakened to 44 points and new orders fell below 48. This combination, weaker demand, weaker employment, but still elevated prices, is not entirely comfortable for the Fed. It means that the economy may be slowing, but inflation in parts of the economy remains. This reduces the room for manoeuvre for aggressive rate cuts, even if the market would like to see them.

Impact on individual sectors

From a sectoral perspective, the manufacturing PMI is particularly important for industrial companies, some energy segments and transportation. WSJ notesthat sectors such as chemicals, paper products, textiles, apparel and especially transportation equipment have been among the hardest hit in recent months, with transportation also seeing some production shifted abroad due to tariffs.

This may be reflected in weaker profits, pressure on margins and greater sensitivity of these stocks to other macroeconomic shocks. Conversely, companies whose business is more tied to services, software, digital products or healthcare are not as dependent on the manufacturing PMI. This explains, among other things, why in recent years we have seen a situation where the industry is in contraction but indices like the S&P 500 or Nasdaq are still rising. They are just fundamentally containing companies that are not directly affected by the industry downturn.

Conclusion

In conclusion, it is good to come back to the most important point: the ISM Manufacturing PMI is a strong but not absolute indicator. The November 2025 data of 48.2 points says that US manufacturing is in contraction but the overall economy has not yet entered recession. Globally, we see a similar picture. In an environment where the Fed is teetering between inflation concerns and the need to support growth, weaker industry is more of an argument for gradual easing.

For the Fed, the November reading of 48.2 is another piece of the puzzle that says: industry is weakening, the cycle is late in the cycle, but growth persists. And it is often at times like these that decisions are made about who will just passively watch the data in the years ahead and who can invest with a higher chance of appreciation through understanding the macro context and disciplined risk management.

McDonald’s closed the third quarter of 2025 with results that once again highlight the durability of its global operating model. Even as consumers in many markets tightened spending and traded down across food categories, the company managed to expand both revenue and traffic. Its ability to adjust pricing, fine-tune promotions and lean on digital engagement illustrates why McDonald’s remains the benchmark for stability in the quick-service restaurant industry.

Long-running investment cycles in restaurant modernization, digital ordering and loyalty integration continued to pay off. International markets outpaced the US, while the domestic business benefited from higher average spending and sharper cost management. Together, these factors underscore a strategy built on local adaptability supported by a scale advantage that few competitors can match.

How was the last quarter?

The third quarter brought continued, albeit more moderate, revenue growthfor McDonald's $MCD. Global comparable sales grew 3.6%, with all major geographic segments contributing positively. The US moved up 2.4% on higher average spend per customer, while International Operated Markets added 4.3% and International Developmental Licensed Markets added 4.7%. This broad-based growth confirms the brand's ability to generate stable demand across regions and economic cycles.

Total sales reached $7.08 billion, representing a three percent growth. Profitability remained solid, with operating profit up 5% to $3.36 billion and net profit reaching $2.28 billion. Diluted EPS was $3.18, a two percent improvement. Excluding restructuring costs associated with the Accelerating the Organization initiative, EPS would have remained at $3.22.

The company also grew Systemwide sales to over $36 billion for the quarter and showed very strong performance in its loyalty program, which generated over $34 billion in sales over the past twelve months. This confirms the rapidly growing importance of the digital ecosystem, which is at the core of future growth.

• Full presentation with results.

CEO commentary

CEO Chris Kempczinski highlighted that the company has managed to grow across all segments despite the globally challenging environment. He said the key factor is a combination of everyday customer value, affordability and menu innovation, which together maintain stable demand. In addition, marketing campaigns and consistent building of iconic products contribute to high footfall even at a time when consumers are cutting back on discretionary spending.

Kempczinski stressed that the company will continue to invest in digital channels, accelerate operations and develop value propositions to sustain growth momentum even as customers become more price sensitive. Management's message is clear: growth is sustainable through strategic discipline, brand strength and customer loyalty.

Outlook

Management's outlook remains cautiously optimistic. McDonald's expects revenue growth to continue, although it may vary across regions depending on the local economic environment. The company cautions that while inflationary pressures are easing, consumers remain price sensitive, requiring careful work with both value proposition and price elasticity.

Digital will play an increasingly strong role - particularly the growth of orders through mobile apps, loyalty programmes and managed promotions. Systemwide sales should continue to strengthen, driven by franchise expansion, restaurant modernization and a growing share of international markets, including regions that are recovering faster than the U.S. from the pandemic.

Long-term results

Viewed over the past four years, McDonald's shows remarkable consistency. Revenues have grown from $23.18 billion in 2022 to $25.92 billion in 2024. While the rate of growth has fluctuated, the business has maintained high margins - gross margins have remained around 56-58% over the long term, which is exceptional within the industry.

Operating profit in 2024 was US$11.71 billion and remains well above pre-pandemic levels, despite higher operating costs and investments. Net profit for 2024 was $8.22 billion, with EPS of $11.45. These results demonstrate the company's steady ability to generate capital and invest in future expansion, modernization and marketing.

Revenue grew steadily and McDonald's was able to reduce the number of shares outstanding due to its disciplined capital policy, supporting EPS growth. EBITDA remained well above $13 billion, confirming strong cash-flow generation. Thus, history clearly shows the company as a stable leader with high return on capital.

News

• Company continues restructuring initiative Accelerating the Organizationto improve the efficiency of global processes and optimize costs.
• McDonald's has seen exceptionally strong growth in its loyalty ecosystem, which is becoming a major source of repeat visits.
• Some markets, notably Germany, Australia and Japan, are driving global growth through local campaigns and higher visit frequency.
• Pricing strategy is being adjusted in response to changes in customer behaviour and competitive pricing pressures.

Shareholding structure

McDonald's has a very strong institutional base, with more than 75% of shares held by institutional investors, confirming the stable confidence of professional capital. The largest shareholders are Vanguard Group (10.06%), JPMorgan (9.61%), BlackRock (7.31%) and State Street (4.92%). Insider ownership is minimal, around 0.23%, which is consistent with the nature of a mature global corporation.

Analysts' expectations

According to the latest analysis UBS the bank affirms its rating on McDonald's Buy and a target price of $350. UBS expects 2026 to bring a recovery in operating margins due to lower labor costs in the U.S. and accelerating growth in key international markets, particularly Germany and Australia. The firm stresses that digital will remain the main growth driver: according to their model, sales generated through mobile app and loyalty program could exceed USD 40 billion in 2026 , significantly increasing visit frequency.

UBS also points out that MCD has one of the most stable cash flows in the QSR sector, which has enabled it to grow its dividend above the rate of inflation over the long term. Analysts also appreciate the firm's ability to pass on inflation to prices without a significant decline in visitation - which they see as a key factor in an environment of geopolitical and macroeconomic uncertainty.

Fair Price

Japan is accelerating its attempt to reclaim a strategic position in the global semiconductor race, and Micron has emerged as the central pillar of this push. According to reporting from Nikkei, the company plans to invest 1.5 trillion yen ($9.6 billion) into a new manufacturing plant in Hiroshima, designed to become one of the most important global hubs for producing high-bandwidth memory (HBM). These chips have become critical infrastructure for AI models, hyperscale data centers and accelerator platforms, making Micron’s expansion a direct response to the rapid global escalation in AI compute demand.

Construction is expected to begin as early as May next year, using Micron’s existing Hiroshima site as the foundation for the new facility. The first HBM shipments are projected for 2028 — aligning precisely with the next major build-out cycle in global data centers and next-generation memory architectures. Japan’s Ministry of Industry is prepared to contribute up to 500 billion yen in subsidies, underscoring the government’s determination to re-establish the country as a major semiconductor power after decades of decline.

Japan wants chip sovereignty back

Japan's chip industry once dominated the world, but the last two decades have brought a gradual loss of influence. That's why the government is now investing tens of billions of dollars in projects to attract global players and return the country to strategic control of advanced technology manufacturing. This strategy includes:

• Subsidies to foreign companies, including Micron and TSMC $TSM
• joint projects with IBM aimed at producing advanced logic chips
• support for the domestic firm Rapiduswhich aims to develop 2nm manufacturing by 2027-2028

Micron's $MUfactory thus becomes not only an investment in the local economy, but also a key element of national security - a reliable source of HBM chips is now as crucial to tech superpowers as energy supply.

HBM as a cornerstone of the AI boom

Demand for HBM memory is growing explosively. Every modern AI accelerator - from Nvidia to AMD - uses HBM as the main source of high data throughput, without which today's models would not be able to train or function.

Increasing production capacity is therefore one of the most critical tasks for the entire AI sector. Micron has accelerated its HBM product development in the last two years and wants to move closer to the market leader, SK hynix $HY9H.F, which controls more than 50% of the segment.

The new Hiroshima plant is intended to provide Micron with:

• Diversification outside Taiwan
• a more stable supply chain
• greater competitiveness against SK hynix and Samsung
• a strategic position in Asiawhere the majority of HBM component production is located

Geopolitical dimension: less dependence on Taiwan

Tensions between the US and China, as well as concerns about possible destabilisation in the Taiwan Strait, is leading chip companies to shift some production to other regions. Japan is becoming a preferred destination due to its stable political environment, strong industrial infrastructure and generous incentives.

Micron is thus following a "friend-shoring" strategy where production is shifted to partner countries. This:

• reduces geopolitical risk
• protects long-term memory supplies for US AI chipmakers
• strengthens the US-Japan technology security link

Competition: Micron vs. SK hynix vs. Samsung

While SK hynix dominates the entire segment, both Samsung and Micron are aggressively trying to increase investment. In fact, HBM is becoming a strategic product where not only price matters, but more importantly:

• energy efficiency
• data throughput
• reliability under heavy load

With Hiroshima, Micron wants to accelerate the adoption of its next generation of HBM chips and expand in a market where demand often outstrips supply.

• Don't overlook: Micron Technology beats expectations in 4Q FY25!

What this means for Japan

If the investment comes to fruition as planned, it will be one of the largest foreign technology projects in the country's modern history. Benefits:

• Thousands of new jobsboth direct and indirect,
• strengthening the regional economy in Hiroshima,
• technology transfer and know-how enhancement,
• Japan's strategic position in the global chip competition.

HBM may become a segment in which Japan will gain global relevance before conventional logic chips.

Shares of $MSTR have lost a large part of their value in recent months and are now about 60% below their all-time high. It's definitely risky, but I'm thinking about opening a small speculative position now because the valuation is really interesting.

Is anyone else buying shares of $MSTR right now?

One of the most striking shifts in today’s market is how quickly investor attention is moving toward companies that operate outside the spotlight of giants like Nvidia, AMD, or Qualcomm. In a landscape flooded with AI-related names, it is increasingly rare to find a company where the central question is not only growth, but the sustainability of its business model. This is why the firm in focus has become one of the most watched small-cap players — not for its size, but for a technology that analysts believe could disrupt how chips consume power across the entire edge-AI ecosystem.

The company is built on a crucial premise: the future of edge AI will not be dominated by the most powerful processors, but by the most energy-efficient ones. Its platform combines meaningful compute capability with ultra-low-power architecture — a requirement for devices that must run for days or weeks without recharging. This specialization explains why analyst price targets span such a wide range and why expectations imply a potential upside of more than 65%.

Top Points

• Analytical target prices range between 32-50 USD. The current share price is USD 24.
• Needham and Stifel have ratings Buy/Strong Buy, UBS and BofA remain at "Hold".
• 2024's revenue rose to 76 million. USD (+16%) after a previous decline in 2023.
• Gross margin improved from 29% to 32%which is a positive signal for the young chip business.
• However, the operating loss remains deep: -40.6 million. USD.
• The company significantly increased its share count - strong dilutive momentum for existing shareholders.
• Building its future on ultra-low-cost energy chips in the IoT, wearables and edge AI.
• The key question is whether the company can scale production and reduce operating costs faster than competitors.

Company Profile

Ambiq Micro $AMBQ is a company that has avoided direct competition with the giants of the AI world and instead has carved out its own, narrowly defined territory: ultra-low-power chips for devices that must rely on minimal power consumption. It's an area that doesn't make headlines as often as the GPU market, but its importance is growing exponentially as the number of smart devices in the home, healthcare and industry increases.

The company has built its business on its own technology SPOT® (Subthreshold Power Optimized Technology)which enables microprocessors to operate in extremely low voltage mode. This opens up opportunities for wearables, medical sensors, IoT devices, smart locks, security sensors or portable AI platforms that do not need high power but long battery life. Ambiq has long presented itself as an alternative to traditional ARM-based microprocessors, which have higher power consumption and are not optimized for edge AI inference in ultra-mobile devices.

The market opportunity is huge - the world of IoT and edge devices will grow at double-digit percentage rates for the rest of the decade. But Ambiq is still at the beginning of its journey to mass scaling, and while it has strong partners in healthcare and wearables, its growth profile is still very uneven. 2023 was a significantly weaker year, but 2024 has already shown some improvement in margins and revenues. The main question is whether the company will be able to move out of the "promising idea" phase and into the "profitably scaled product" phase.

• The company's full product portfolio.

Highlights

Ambiq only filed for listing in July this year, and BofA Securities and UBS participated in its IPO as lead underwriters. The company is one of the specialists in ultra-low-power chips and its business has so far been built mainly on wearable electronics, especially smartwatches. This is confirmed by the revenue structure: more than 85 percent of revenue comes from three big customers - Google, Garmin and China's Huawei.

Founder and chief technology officer Scott Hanson said Ambiq's latest generation of chips is targeting an even more ambitious segment, namely smart glasses capable of locally processing voice and image algorithms on miniature batteries. According to Hanson, the company is poised to seize this opportunity thanks to more than a decade of development that has taught it to build chips with extremely low power consumption. "The transistor doesn't care what problem it solves - whether it was security features before or AI models today," he explained, hinting that Ambiq is looking to transfer its know-how from wearables to the fast-growing field of AI devices.

Why SPOT® is a gamechanger

Ambiq Micro doesn't build processors to compete in performance rankings, but in something even more important - energy efficiency. SPOT® (Subthreshold Power Optimized Technology) enables microprocessors to run deep in subthreshold voltage, a mode where conventional ARM or RISC-V chips are unable to operate stably. This approach can reduce power consumption by up to tens of percentwhich is a critical feature in segments such as wearables, medical IoT devices or security sensors.

A key advantage of SPOT® is that it does not require compromises in computing power at the architecture level. Ambiq uses familiar instruction sets but builds them on extremely optimized transistor and voltage structures. In practical terms, this means: a customer can switch from an ARM M4/M33 to an Ambiq SoC without a major software change, but gets double or triple the battery life. This is an argument that wearable device and medical sensor manufacturers hear very well.

Developing subthreshold architectures is extremely difficult technologically - tuning stability at extremely low voltages is one of the biggest challenges of modern low-power design. And that's why this technology is not easy to replicate. Silicon Labs or Nordic can compete on performance or software, but not every manufacturer has the know-how to design a full-fledged sub-threshold SoC. This technological barrier explains why Ambiq is gaining attention in professional circles, even though the financial results are not yet compelling.

Where can Ambiq really succeed?

Ambiq is in an area that doesn't generate headline records like the GPU market, but is one of the fastest growing areas of the semiconductor industry. The company's chip platform fits where devices cannot be charged frequently or where power consumption is critical for operational reasons.

The biggest growth opportunities today lie in three segments:

1. Wearables and smart accessories

The market for smartwatches, fitness bracelets and medical monitors is shifting from basic functions to continuous measurement of health parameters. In order for a sensor to be on 24/7, it needs just an Ambiq chip. This is a segment that can generate steady demand and where Ambiq already has significant partners.

2. Healthcare IoT devices.

These are not just sensors in hospitals, but personal diagnostic devices, monitoring devices for the elderly or patients with chronic diseases. Here, battery life and reliability determine adoption - and Ambiq may be the platform of choice.

3. Industrial and safety sensors.

Smart locks, monitoring systems, smoke detectors, pressure or vibration sensors in industry - all need low power consumption, long endurance and often cryptographic security. Ambiq is already profiling itself as a supplier to manufacturers of security systems, which can be an important long-term segment.

Go-to-Market Strategy: What's holding back and what's helping growth

Ambiq uses a model based on a combination of partnerships, integrations and design wins. This is not the classic startup approach of "hype first, sales later", but a model typical of B2B semiconductor companies - getting a design win means several years of integration and subsequent order growth.

However, the IoT market has long cycles - typically 18-36 months from partnership to mass production of devices. This explains why Ambiq's revenues are growing in leaps and bounds instead of a smooth trend. Meanwhile, the company is building its position in several verticals and is looking to acquire large medical and consumer electronics manufacturers.

The main constraint is the capacity to scale. B2B customers want a volume guarantee, and a small player like Ambiq can only deliver that through partners. That's why the company has partnered with chipmakers and sister design firms in recent years. These moves are gradually increasing the chances of a more massive commercialisation of the technology.

A significant problem that still remains is the high volatility of sales and the dependence on a few products. If Ambiq manages to diversify its clients and acquire large IoT brands, its growth will be much more predictable. At the moment, however, investors still rate the company as a "story on the way" rather than a stable semiconductor title.

Financial roadmap to profitability: What Ambiq needs to prove

To get to sustainable profitability within a few years, Ambiq must meet three conditions:

1. Increase revenues above a critical scaling threshold.

According to the available data, the company should exceed at least $120-150 million per year to dilute operating costs enough that an operating profit can be made. The current growth from 65 million to 76 million is a step in the right direction, but not enough.

2. Maintain improving gross margins.

The shift from 29% to 32% is positive, but Ambiq needs 40%+ margins to make the technology viable long term. This is not unrealistic - if the company can increase production and optimize its chip portfolio, margins can improve.

3. Stop extensive stock dilution and manage operating costs.

The biggest problem today is not losses, but extreme share count growth. The company has been funding operations through issuances, which negatively affects the value of existing investors. Long-term returns are only possible if:

• revenues grow
• OPEX starts to decline relative to sales
• the firm stabilizes its share count

Competition

Ambiq operates in a segment that is technologically complex but not as overwhelmed by competition as the high-end GPU market. The primary competitors are:

• Silicon Labs $SLAB - very strong position in IoT chips and low-power microcontrollers.
• Nordic Semiconductor - dominant supplier in Bluetooth Low Energy and wearables.
• NXP $NXPI and STMicroelectronics $STM - big industry players that have deep portfolios in embedded systems.
• Qualcomm $QCOM (in a small way) - in wearables it is making inroads through its own SoC platforms.

Ambiq stands out by not trying to compete on raw performance, but energy efficiency per unit of computing powerwhich is a rare specialisation. At the same time, it carries a risk: the big players may eventually partially replicate the low-voltage technology, although subthreshold mode (subthreshold voltage) is neither trivial nor cheap to develop.

Management

Management has deep technical roots but also the typical weaknesses of younger semiconductor companies.

• The company's CTO Scott Hanson is one of the key minds behind SPOT® technology, a real competitive differentiator.
• CEO Fumihide Esaka (see photo) has a background in scaling B2B technology partnerships.
• CFO Jeff Winzeler faces a difficult task: Deliver revenue growth and reduce operating costs, because continued losses of this magnitude are not sustainable over the long term.

Management is trying to reduce operating expenses (-8% in 2024), but the rising share count suggests the company is funding growth largely through issuance, which investors are watching closely.

Analysts' predictions: what to expect from the market today

Latest updates from Stifel shows that sentiment toward the company is starting to stabilize, though valuations across the semiconductor sector remain under significant pressure. Stifel lowered the price target from $45 to $40, but kept the Buy rating unchanged . While this is nominally a downgrade, in the context of the current price of around $24, this target price still implies approximately +65% upside potential.

The reason for cautious optimism is a combination of several factors: Ambiq beat expectations in Q3 2025, delivering revenue USD 18.2 million, which was 2.3% higher than Stifel's forecast. It also improved its net loss, as EPS of $ -0.22 was $ 0.10 better than the expected $ -0.32. In addition, management raised Q4 revenue guidance to USD 19 million, implying a further gradual acceleration in growth.

Analysts particularly appreciate the improvement in gross margin, which jumped to 44.8 %which is unusual for a company at this stage of its development. At the same time, they point out that the EBITDA loss of around -$30 million over the last twelve months still points to a long road to profitability. Stifel has therefore factored in lower multiples across the AI and semiconductor sector in its model, deriving the new target price from 9.6× EV/Sales for 2026.

Why is the spread so wide?

Ambiq's analyst consensus is not unanimous, and for a very logical reason: this is a company that stands at both the technology threshold and the financial edge. Needham analysts emphasize that Ambiq has unique technology and the potential to become a major player in the low-power edge AI segment. In their eyes, the lower market cap is an opportunity, not a threat - which is why they come in with a target price of around $45-48.

More conservative houses like UBS or Bank of America, however, point to a long road to profitability, continued stock dilution and volatile market dynamics. Their target prices are near the $32-42 range and recommendations remain maintenance.

Long-term results: a company between two worlds

Ambiq's financial development could be described as moving on a sinusoid. The years 2021 and 2022 showed that the company can grow rapidly when it hits a demand cycle - that's when revenues shot up to $91 million. But a deep slump followed a year later, caused by a combination of weaker demand for consumer electronics, excess inventory at customers and deferred orders in the medical device segment. This volatility is typical of young semiconductor players who do not yet have a stable base of long-term contracts.

However, 2024 shows that the situation could gradually stabilize. Revenues are again growing at a double-digit rate and gross margins have improved by several percentage points. This means that the company is not only on its way to higher volumes, but is also starting to get production costs and price per chipset under control. Importantly for the investor, the improvement in margins came even in years when production was not at full capacity - suggesting that SPOT® technology has room to scale further without dramatically increasing fixed costs.

The operating loss remains high, but here too there has been a shift. Ambiq was able to reduce operating costs year-on-year, indicating a drive to move closer to the path taken by other IoT sector stars today: technological dominance first, financial discipline second. The problem, however, is significant stock dilution. The number of shares has risen by almost 30% year-on-year, a logical but painful consequence of financing growth through issuance. This strategy is common in semiconductor startups - but the question is how long the market will tolerate it if the break-even point is not approached.

The fundamental picture

Ambiq is a company that looks paradoxical in the numbers. On the one hand, it has better margins than expected for such a young player. On the other hand, it is still generating significant losses as development, certification and technology partnership costs are among the highest in the segment.

Valuation

• P/E: -8,91
• P/S: 6,21
• P/B: 2,63

Returns

• ROA (Return on Assets): -19,50 %
• ROE (Return on Equity): -21,45 %
• ROIC: -22,19 %

The valuation of the company is thus not based on traditional P/E ratios, but rather on two factors: the size of the addressable market and the confidence that SPOT® technology will have a clear position in the future. A low P/S ratio suggests that the company is not overvalued, but such a low valuation also reflects the risk associated with the uncertainty of future growth and the ever-present need to raise capital.

Ambiq's liquidity is sufficient for the firm to survive another period of growth without dramatic interventions in its liability structure, but at the same time too stretched to afford aggressive investment expansion. The balance sheet underscores a simple reality: Ambiq is not at risk, but neither is it a "safe bidder." It is right in the middle - the place where both the greatest opportunities and the greatest risks arise.

Investment scenarios

Optimistic scenario (12-18 months)

• Ambiq acquires a large OEM partner in wearables or medical sensors.
• Gross margin grows above 35%.
• Operating expenses grow slower than sales, company approaches break-even.
• SPOT® technology confirms scalability and the need for new share issuance is reduced.
• Price expectation: $45-50.

Realistic scenario (most likely)

• Revenue grows at a double-digit rate of around 10-18%.
• Gross margin stabilizes in the 31-33% range.
• Operating loss declines only gradually, liquidity remains ample.
• Technology adoption is taking place more with smaller players than with mass buyers.
• Expected price development: USD 34-42.

Pessimistic scenario

• IoT and wearables growth slows down.
• New generation chips are delayed or have weaker demand.
• The company has to make new financing and there is further dilution of the stock.
• Competitors like Silicon Labs or Nordic Semiconductor launch more efficient alternatives.
• Price expectation: $24-30.

Extreme scenario (low probability)

• Ambiq acquires a strategic partner in healthcare or large wearables.
• Company announces first profitable quarter or fast track to break-even.
• Edge AI becomes a strong investment trend with capital inflows.
• Price expectation: $55-60 and up depending on contract strength.

What to take away from the article

• Ambiq Micro is a small but highly technology specific company focused on ultra-low power chips for edge AI, IoT and wearables.
• Analyst views are extremely split - target prices range between $32-50, reflecting an unusual level of uncertainty.
• The company is improving gross margin (from ~29% to ~32%), but operating loss remains high and the path to profitability is not short.
• The biggest risk is significant shareholder dilution - share count is growing faster than revenue.
• Ambiq is on the cusp of IoT and edge AI market growth, but needs to prove it can scale its manufacturing and business model.
• The key question: will the SPOT® technology advantage translate into a business advantage, or will the big players gradually catch up?
• For investors, this is a typical "high-risk, high-option upside" title - the potential is there, but the path will be volatile.

As 2025 draws to a close, global stock markets stand at a crossroads: strong annual gains meet rising uncertainties over rates, valuations and economic data. This December could mark either a powerful push to new all-time highs or a sharp, unexpected pullback — depending on how central banks, macro signals and investor sentiment align. In this analysis we dig into historic December seasonality, recent analyst forecasts and key risk triggers to map out what’s really in stock for the final weeks of the year.

December has an almost mythical reputation in the stock markets. Moreover, this December comes at a particularly interesting time. The US S&P 500 index is up around 17% after a tougher year, Wall Street is entering the final month with expectations that the Fed will cut rates, and at the same time a possible overheating of technology titles around artificial intelligence is being addressed. What can we expect from this December, how does it fit into historical context, and what do the current projections of major banks and analysts suggest?

Historical statistics

Looking back in history, December has indeed been one of the statistically stronger months, but its reputation is often skewed. If we take the long horizon of the last fifty years or so, various analyses arrive at similar numbers: The S&P 500 averages a return of around 1.0-1.2% in December, and the month is profitable around 70-75% of the time. One of the fresh seasonal EquityClock studies for example, reports that over the past decade, the average December return for the S&P 500 has been about 1.2%, and in 72% of years, December has been a profit month for the index. While this is no miraculous feat, it is a relatively robust statistical advantage. Seasonal tablescompiled by Barchart, for example, further confirm that December has long been one of the top half of months in terms of average appreciation and success in growth.

This seasonality also underlies the well-known term "Santa Claus rally" - a term for the market's tendency to rise in the last five trading days of December and the first two days of January. This phenomenon was not taken seriously for a long time, more as journalistic shorthand, but in recent years it has become the subject of serious academic scrutiny. A study published in the Journal of Financial Planning in 2015 shows that, over a given seven-day period, global stock market returns are statistically significantly higher than at normal times of the year, and that this is an anomaly that cannot simply be explained by chance. An even more detailed analysis is provided by "The Santa Claus Rally in U.S. Stock Market Returns" from 2023, which examined data from 1926-2014 and concluded that the Santa Claus rally is most pronounced for smaller companies (small caps) and to a lesser extent for large caps.

At the same time, it is important to stress that seasonality is not something that always applies either and investors should not make decisions based on it alone. More recent quantitative studies are beginning to relativize the Santa Claus rally picture. Thesis published in the Journal of International Financial Markets, Institutions & Money in 2024, which looked at sectoral anomalies in the US stock market between 2000 and 2021, found no convincing evidence that the Santa Claus rally occurred systematically across sectors during this period. The authors note that the earlier effects may have been largely the result of a different institutional environment, a different form of monetary policy, and a lower dominance of passive funds. In other words, what may have worked in the 1970s or 1990s may not work as well in an environment of ETFs, algorithmic trading and markets dominated by a few mega-cap titles.

Source: https://charts.equityclock.com/sp-500-index-seasonal-chart

This is also reflected in practice. Examples include December 2018, when the S&P 500 plummeted and ended the month 9.4% lower, or some recent years when the Santa Claus rally completely failed. And that's what's crucial for 2025: historical seasonality tells us that the odds of a plus December appreciation are above 70%, but that doesn't at all mean that the market can't end up in the red, especially after a strong year like this one and in an environment of heightened uncertainty.

Current situation

Going into December 2025 is very specific in terms of data and investor sentiment. The US stock market enters the last month of the year after a period of strong growth: the S&P 500 is 17% in the black year-to-date, despite volatility in the technology sector and repeated sell-offs linked to concerns around AI investments and tariffs. At the same time, however, the question of whether the market is leaning too heavily on a narrow group of companies, particularly big tech and AI, comes into play.

The key factor that most analysts believe will determine December's performance is the Fed's monetary policy. Market expectations, reflected in Fed funds contracts, give a high probability of a rate cut (over 80%) in some form in either December or early 2026. These expectations are largely already priced into current stock prices. Investors are betting that a combination of a slightly weakening economy, slowing inflation and political pressure will lead the Fed to cut rates. If this scenario plays out, December may be supported not only by seasonality but also by fundamentals. Bond yields could fall further, the value of companies' future cash flows would rise, giving risk assets a new injection and markets a boost.

On the other hand, there is a real risk that the Fed will take a more cautious stance than the market expects today. This has happened several times in the past. The central bank made it clear that it needed more data, and the market, which had previously priced in overly aggressive easing, was caught off guard by the correction.

Source: https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

Predictions of the big banks

It is also interesting to look at what the big banks are forecasting over the next few quarters, as their long-term targets implicitly include a view of developments in the coming months. Deutsche Bank, for example, in a recent outlook set a target of 8,000 points for the S&P 500 by the end of 2026, which would still imply solid growth (17.6%) from today's levels, with earnings growth and continued investment in AI and related infrastructure at the core of that price growth. Other banks, such as Morgan Stanley, UBS and JPMorgan, have targets more in the 7,500-7,800 point range, a more conservative but still high yield of around 14%. These projections don't speak directly to what will happen in any one particular month, but they do suggest that the base case scenario of the big players assumes that current valuations are not completely out of whack with reality, assuming that corporate profits actually grow and the economy doesn't fall into recession.

We discussed these projections in a recent article, so don't overlook it: https://bulios.com/status/242157-s-p-500-miri-na-8000-bodu-podle-jpmorgan-toho-muze-dosahnout-jiz-pristi-rok

If we combine these medium-term projections with short-term seasonality, we get a rough picture for December 2025. The market is entering a historically favorable period with relatively strong annual performance, expectations of monetary easing, and still high but not necessarily extreme valuations. This is an environment in which, under normal circumstances, one would expect a slightly positive rather than a significantly negative month. After all, StoneX analysis from 2024 showed that Decembers after a significantly strong first eleven months (i.e., when the S&P 500 was up more than 20% at the time) tended to be above average over the past 40 years as investors were willing to support growth into the end of the year.

But when we look more closely, December is not homogeneous. Some studies show that the first half of the month tends to be relatively weaker, while the second half, especially the period after Christmas, tends to be by far the most profitable part of the year for indices. Analysis by Schaeffer's Research from December 2024 broke the months into two halves and found that the second half of December has historically had the highest average return, the highest proportion of positive results, and the lowest volatility of all the "halves" of the year.

However, this December 2025 brings another important dimension. That is the role of AI and tech giants. Markets are extremely sensitive to news related to the profitability of AI projects of large companies such as Nvidia $NVDA, Alphabet $GOOG or Meta $META. Although the AI boom has been behind a significant portion of index returns in recent years, it is no longer the only vehicle for growth today. We are seeing broader adoption in healthcare, consumer discretionary and select industrial sectors. This is positive from a growth sustainability perspective.

But to be honest, the concentration of risk in AI still exists. Expectations around future earnings are set high, and any major disappointment in the form of weaker quarterly results or the postponement of large contracts would very quickly seep into valuations across the sector.

In a negative scenario where the Fed disappoints the market, inflation or the labor market sends a signal that rates need to stay high, or there is some major geopolitical escalation, it is entirely realistic that December ends in the negative and some of this year's gains are erased.

Summary

To sum it all up - historical statistics play slightly in favor of growth in December, seasonal studies suggest an increased likelihood of a positive month, the big banks see room for further growth in the years ahead, and the current environment (expectations of a rate cut) is still relatively favorable for stocks. A correction may surprise the markets, but at the current juncture, the markets look confident. If there is indeed an interest rate cut at the December central bank meeting, the path for markets could be mostly green by the end of the year. However, if there is no cut, which the markets are not currently anticipating, we could see a sell-off in the markets.

AMD enters the second half of the year with momentum that goes far beyond a routine rebound. The company has turned uncertainty around export restrictions into an opportunity to strengthen its standing in the global semiconductor hierarchy. The latest quarter confirms that AMD can translate AI‐driven compute demand into tangible financial performance, posting strong top-line expansion and improving margins — all while Chinese GPU sales remain largely absent.

What is becoming increasingly clear is that AMD is no longer defined by a single product line or competitive rivalry. Instead, it is assembling a multilayered compute ecosystem that spans data-center accelerators, hyperscaler partnerships, high-end PCs and embedded architectures. This diversification gives AMD multiple engines of growth, even as it commits to heavy investment cycles in AI infrastructure and next-generation development.

How was the last quarter?

Q3 2025 was a recordquarter for $AMD in terms of both revenue and profitability. Revenues reached $9.25 billion, up 36% year-over-year and a solid sequential growth rate of 20%. Driven primarily by EPYC datacenter processors and Instinct AI accelerators, but also by the client and gaming business, which is returning to growth mode after a weaker period. Importantly, the company was also able to significantly improve margins - GAAP gross margin rose to 52%, while non-GAAP gross margin held at a very comfortable 54%.

At the earnings level, you can see how quickly AMD's results stabilized after the "export control" intervention in the second quarter. GAAP operating profit jumped to $1.27 billion, non-GAAP operating profit to $2.24 billion. GAAP net income of $1.24 billion and non-GAAP net income of $1.97 billion represent tens of percent year-over-year growth, with adjusted earnings per share of $1.20 up roughly a third from last year. The contrast to the second quarter, where inventory and related costs associated with the US restrictions on MI308 GPUs were still showing up, is also impressive - now the company is showing not only revenue growth, but a return to standard profitability levels.

A look at the segments shows a clear dominance of datacenter and a very dynamic turnaround in the client and gaming business. The datacenter segment earned $4.3 billion, up 22% from a year ago, and benefited from strong demand for fifth-generation EPYC processors as well as MI350 accelerators in AI clusters. The client and gaming segment brought in $4 billion, up a dramatic 73% y/y. Of that, the client business generated $2.8 billion (+46% y/y) thanks to record Ryzen sales and a richer product mix, while gaming surged to $1.3 billion (+181% y/y) thanks to higher sales from semi-custom console chips and demand for Radeon GPUs. The only weaker part is the embedded segment with sales of $857m (down 8%), where demand is still normalising after the previous boom.

Interesting detail: the third quarter results do not include any revenue from MI308 GPU shipments to China. Still, AMD managed to achieve record numbers, which acts as an important signal to investors - the business is less dependent on sensitive markets and export restrictions are not fatal to the company's growth momentum. At the same time, the product mix appears to be shifting towards higher-margin and more capital-intensive AI solutions, which will increase sensitivity to datacenter investment cycles in the years ahead.

• Full presentation with results.

CEO commentary

Lisa Su comments on the results unequivocally: AMD is entering a new phase of growth driven by the "expanding compute franchise" and the rapidly growing datacenter AI business. She emphasizes that this is not only a y/y jump in revenue, but also a qualitative change - EPYC processors and Instinct accelerators are becoming a solid part of large hyperscale and enterprise platforms, not just an "alternative" to the dominant players. Combined with a record quarter and strong Q4 outlook, management is talking about a "clear shift" in growth trajectory.

At the same time, it points out that AMD is not just putting wind in the sails of a single product or GPU generation. The portfolio is expanding across the board - from server CPUs, to AI accelerators and Helios, to high-end desktop and HEDT Ryzen Threadripper 9000 processors for makers and pros. CFO Jean Hu adds that the company is generating record free cash flow despite investing aggressively in AI and high-performance computing. That's a combination that gives management room for both further investment and long-term shareholder value creation.

Outlook

The outlook for Q4 2025 confirms that AMD is not counting on "breathing room." The company expects revenue of around $9.6 billion, plus or minus $300 million. The midpoint of the outlook implies about 25% year-over-year revenue growth and about 4% sequential growth. Non-GAAP gross margin should be around 54.5%, slightly above third-quarter levels. AMD also notes that even the Q4 outlook does not include MI308 GPU revenue for China, which again underscores that the key growth scenario is based primarily on the US, Europe and other "safe" markets.

In the medium term, the datacenter and AI business is expected to be the main driver. Partnerships with OpenAI, Oracle, DOE, large cloud providers and enterprise customers show that AMD is systematically reserving slots in future AI infrastructure. Planned deployments of tens of thousands of GPUs in Oracle AI superclusters, multi-gigawatt deployments for OpenAI, or AI supercomputers for the US Department of Energy give the company visibility of orders through 2026 and beyond. From an investor perspective, it is important that these are not one-off contracts, but long-term projects in several waves.

Long-term results

The history of the last four years shows AMD as a company that can grow in waves, but is also very sensitive to investment and product cycles. Revenues have moved from roughly $16.4 billion in 2021 to $25.8 billion in 2024, which corresponds to very solid double-digit annual growth. After a sharp jump in 2022, there was a slight revenue correction in 2023, but AMD was able to overcome this in 2024 and build on the next growth phase. It can be seen that the expanding datacenter business can offset the fluctuations in the PC and gaming segment.

Profitability has been much more volatile in recent years. Gross profit has been above $10 billion for a long time and has been rising gradually, but operating profit has undergone visible fluctuations - AMD generated an operating profit of over $3.6 billion in 2021, only $1.26 billion in 2022, and stagnated at a relatively low level of around $400 million in 2023. Only 2024 brought a more significant turnaround, with operating profit climbing to $1.9 billion, almost four times the 2023 level. This development illustrates well how challenging the transition from "classic" PC and gaming cycles to the capital- and technology-intensive AI and datacenter world has been.

Net income shows a similar story. AMD's record year in 2021, when it earned over $3.1 billion and EPS exceeded $2.5, was followed by a gradual decline, with net profit falling to about $1.3 billion in 2022 and even lower to $854 million in 2023 before returning to growth in 2024, reaching $1.64 billion. Earnings per share followed a similar pattern, hovering around $1 in 2024. So the long-term trend shows that AMD has the ability to monetize technology leadership quickly, but also bears the risk of steeper profit declines when it is just flipping its portfolio or going through costly new product generation phases.

From an investor perspective, the upside is that despite these fluctuations, AMD maintains decent cost control. While operating costs have risen over the years - from roughly $4.3 billion in 2021 to more than $10.8 billion in 2024 - their growth primarily reflects the expansion of research, development, and marketing for next-generation GPUs, CPUs, and accelerators.

News

Recent months have brought a flood of strategic announcements at AMD that illustrate very well why management is talking about an "AI factory" and a new phase of growth. A key milestone is Strategic partnership with OpenAIunder which AMD is to deliver up to 6 gigawatts of GPU power for the next generation of AI infrastructure. The first gigawatt, in the form of the Instinct MI450, is scheduled to be deployed in the second half of 2026, a long-term contract that firmly anchors AMD at the very center of the generative AI ecosystem.

Equally important is the shift in the cloud. Oracle Cloud Infrastructure plans to be the first to offer a public AI supercluster based on the "Helios" rack design with MI450 GPUs, EPYC "Venice" CPUs and Pensando networking, with an initial deployment of 50k GPUs starting in Q3 2026. Alongside this, other large AI clusters are emerging - such as the Lux AI and Discovery supercomputer project for the US Department of Energy, or large deployments of MI355X in Cisco and G42 clusters in the UAE. These projects are emerging in parallel with the expansion of cloud partners such as AWS, Oracle, IBM and DigitalOcean, which are expanding their offerings of instances based on EPYC processors and Instinct GPUs.

On the "classic" product side, AMD is not slacking off in the PC and workstation space either. The new Ryzen Threadripper 9000WX and PRO 9000X deliver extreme multi-core performance for makers and professionals and are designed to strengthen AMD's position in the most powerful part of the desktop and workstation market. The gaming segment is supported by FSR 4 technology, which extends support across dozens of games and helps lift framerate and visual quality without the need for massive investment in new hardware. The embedded business, in turn, benefits from the portfolio expansion with EPYC Embedded 4005 and Ryzen Embedded 9000, which target industrial, edge and security applications with an emphasis on performance per watt and long life cycles.

Shareholding structure

AMD's ownership structure matches the profile of a mature technology blue chip company. Within the company, only about 0.45% of the shares are held by insiders, so decision-making is not controlled by a single dominant founder or a narrow group of managers. The rest of the free float is clearly in the hands of institutional investors - who hold around 70% of the stock, signaling the strong confidence of large funds and index players in AMD's long-term story.

Major shareholders include Vanguard with roughly 9.6%, BlackRock with over 8% and State Street with over 4.5%. They are complemented by Geode Capital and other large asset managers.

Don't overlook: AMD and OpenAI partnership could shake up chip market

Analysts' expectations

The market views AMD's current results primarily through the prism of the AI supercycle. After a record third quarter and an ambitious Q4 outlook, analysts generally expect the datacenter and AI business to remain the main driver of double-digit revenue growth in 2026. The combination of strong growth in servers, gradual monetization of large AI contracts, and a return to normalcy after export constraints creates room for further profitability expansion - especially if gross margins can be maintained around current levels and pricing discipline is not lost.

At the same time, however, the consensus is that AMD is no longer a "cheap bet" on AI. Valuation is well above the long-term average for the semiconductor sector, and the stock price incorporates much of the optimism about future AI contracts, the ROCm ecosystem, and the ability to compete with established players in GPUs. As such, analyst commentary often focuses on the sensitivity of the story to a potential slowdown in AI infrastructure investment, the evolution of export constraints, and whether AMD can maintain the pace of innovation for MI4xx generations and beyond. For investors, this means that AMD remains an attractive growth story - but also a story that may be much more volatile in the future than traditional "defensive" technology titles.

Fair Price