This series of earnings insights features a significant portion of Big Tech companies. Meta delivered strong results in terms of revenue and profit but plans to increase its capital expenditures even further next year. Microsoft somewhat disappointed investors with its quarterly report, as current investments do not yet match the corresponding returns. Finally, we take a deeper look at the transition recently announced by Tesla.

I hope you find it valuable!

META - Q4

Let’s kick this one of with META. The company above Facebook, Instagram and Whatsapp delivered another set of strong results in the fourth quarter of 2025. Revenue climbed 24% to $59.9 billion, significantly exceeding expectations of $58.4 billion. $58,1 billion is coming from the core activities, being advertising across their different platforms.

Earnings per share (EPS) came in at $8.88, compared to an analyst consensus of $8.19. Growth was primarily driven by the advertising platform, where both the user base and the price per advertisement increased.

The advertising flywheel

Meta is benefiting from an advertising flywheel that is spinning at a high velocity. Over the last few quarters, a clear trend has emerged in the number of ad impressions delivered. In the most recent quarter, these were 18% higher than in the same period last year. This means that advertisements are being seen more frequently by being shown repeatedly to the right consumers, leading to higher ad conversion rates. Consequently, companies are achieving better returns on their advertising spend. The primary driving force behind this increase in impressions is the Asia-Pacific region.

When you couple this with rising ad prices, the result is impressive financial performance for Meta. Last quarter, the average price per advertisement increased by 6%. While this represents a lower year-over-year (YoY) increase compared to previous quarters, the price hike is well-justified; by efficiently integrating AI into its advertising model, Meta is successfully targeting the right individuals. These two parameters combined have pushed the Average Revenue Per Person (ARPP) to $16.60, representing a 16% increase compared to the same quarter a year ago.

In December, daily active users reached 3.58 billion (+7%), while the average ad price rose by 6% compared to a year earlier.

Increasing engagement delivering higher revenue

Meta states that its revenue is primarily driven by two factors: increasing user engagement and improving the way that engagement is converted into revenue. In the fourth quarter, the company made clear progress on both fronts. Instagram Reels had a strong quarter, with watch time in the United States increasing by more than 30 percent. For 2026, Meta expects further growth in both engagement and revenue by building on these optimizations.

CAPEX

Meta is doubling down on artificial intelligence. Capital expenditures for this year are estimated between $115 billion and $135 billion, nearly doubling the $72 billion spent last year. CEO Mark Zuckerberg called 2026 a “pivot year,” in which Meta is betting on “personal superintelligence” via the Meta Compute program, aimed at delivering hundreds of gigawatts of AI infrastructure. In the fourth quarter alone, Meta invested $22 billion, primarily in data centers, servers, and network infrastructure. This underscores how crucial the company considers it to have the right infrastructure in place.

Meta sees significant opportunities in 2026 to further enhance its core activities and is therefore continuing to invest heavily in growth and infrastructure, while preparing for a new product cycle driven by its proprietary AI models. A key priority is ensuring sufficient computing and chip capacity.

For now, the increased computing power is translating primarily into improved ad targeting and user engagement. Zuckerberg is shifting the large-scale metaverse vision to the background; earlier this year, Meta cut 1,500 jobs at Reality Labs. The focus is moving toward wearables and smart glasses as more accessible forms of interaction with digital technology.

For the first quarter of 2026, Meta expects revenue to fall between $53.5 billion and $56.5 billion, well above the market expectation of $51.3 billion.

Microsoft - Q2

Next in line is Microsoft! Microsoft reported strong financial results for the second quarter of fiscal year 2026 (October–December 2025), but investors reacted cautiously due to skyrocketing AI investments and potential capacity constraints within the cloud division. Revenue rose 17% to $81.3 billion, well above expectations, while earnings per share reached $4.14 (+24% year-over-year, exceeding consensus). Azure, Microsoft’s primary growth engine, posted 38% growth, slightly outperforming analyst expectations. The entire Intelligent Cloud segment managed to achieve a revenue increase of 29%. This division has been the company’s growth engine for years, with Azure serving as its primary driver.

Microsoft's More Personal Computing segment isn’t adding to the growth and had steady revenue over recent quarters. It started at $4.7 billion in FY22 Q2, grew to $5.1 billion, hit a high of $5.5 billion in FY24 Q2, stayed near $5.4 billion, then fell to $4.3 billion in FY26 Q2, a 2% drop from last year due to weaker gaming sales, offset by gains in Windows and ads.

Increasing obligations for the future

The Microsoft Cloud division surpassed the $50 billion quarterly revenue mark for the first time (+26%), which CEO Satya Nadella cited as evidence of robust demand for AI services. Remaining performance obligations (RPO), which is representing future revenue yet to be realized, doubled to $625 billion, although 45% of this stemmed from OpenAI orders, indicating high customer concentration.

Investor concerns at first sight

Despite the strong figures, the investor reaction in after-hours trading was negative. These concerns are attributed to the sharp rise in capital expenditures (CapEx), which are expected to reach $37.5 billion, a 66% increase. As a result of previous investments in AI infrastructure, the gross margin declined slightly; however, it remains very high at 67%. These investments align with the broader trend we are seeing. The company stated that it is currently facing higher demand than it can supply. As mentioned during the earnings call, it is a balancing act between making the necessary investments and meeting customer needs. The high level of expenditure indicates that this balancing act is currently tipping in favor of further investment.

Analysts from Bloomberg Intelligence and Morgan Stanley pointed out that Azure’s growth is not rising as fast as investments, possibly due to capacity issues. A significant portion of the new computing power is being used internally for products like Copilot and AI integrations within Office, leaving less capacity available for external customers. CFO Amy Hood confirmed that Microsoft is "working hard on capacity expansion," but acknowledged that the balance between internal and external utilization of AI infrastructure is placing a temporary drag on Azure’s growth acceleration.

TESLA - Q4

Strategic shift

Tesla announced a major strategic shift during its annual results presentation: the company will cease production of the Model S and Model X, its two oldest and most expensive models, next quarter. With this move, CEO Elon Musk signals a clear transformation for Tesla. This indicates the transition from an automaker to an AI and robotics company.

The Model S, which launched in 2012, and the Model X with its distinctive falcon-wing doors were once crucial for making Tesla profitable and financing more affordable models. Today, however, they hold minimal market share, with only about 50,000 units sold globally in 2025. In Belgium, only a handful were sold in recent months. Tesla is making a final attempt to attract buyers by offering free lifetime Supercharging.

The production space freed up in Fremont will be used by Musk for the mass production of the humanoid robot, Optimus. Musk aims to build 1 to 2 million units per year once the factory is at full capacity. Simultaneously, the S/X line will receive a spiritual successor: the Roadster, a new supercar set to launch in April 2026.

This transition requires massive investment. CFO Vaibhav Taneja reported that Tesla will invest over $20 billion in 2026, primarily in AI server farms and Optimus training. Additionally, approximately $2 billion will be allocated to Musk’s AI company, xAI. Part of this funding will likely be raised through new debt.

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The quarterly numbers

Tesla experienced a decline in total revenue. In the fourth quarter, revenue fell by 3% compared to the same period last year. For some time now, Tesla has struggled to reignite vehicle sales; until recently, they managed to maintain quarterly revenue growth through the strong performance of their other divisions. This time, however, those efforts fell short. Despite the energy segment posting a 25% increase and services revenue growing by 18%, total revenue for the fourth quarter still came in lower than last year.

Operational margins also remain under pressure—a trend seen throughout the entire year—and this was confirmed once again. The operating margin stood at 5.7%, also significantly lower than the same period a year earlier. Consequently, earnings per share (EPS) dropped to just $0.24, representing a 60% decrease compared to the fourth quarter of the previous year.

Tesla envisions its next growth phase in autonomous vehicles. Musk confirmed that production of the "Cybercab" robotaxi will commence in the first half of 2026 and that autonomous Model Ys in Austin are expected to be fully self-driving within a single quarter. Depending on regulatory approval, these robotaxis could be active across half of the United States by the end of this year. This shift is also reflected in the figures for cumulative miles driven using FSD (Full Self-Driving), which are showing exponential growth. This trend demonstrates that increasingly superior training data is becoming available to further roll out FSD. This is currently the primary area of focus for investors as they attempt to gauge the company's future performance.

Tesla has never truly been valued as a mere automaker, even though its core revenue has always been derived from vehicle sales. Now that the number of units sold is beginning to decline, this is even less the case. Investors are becoming enthusiastic about the company’s optionality and the transition into robotics, which is now entering a material phase. A few years ago, a goal was set to sell 50 million vehicles annually; at this point, achieving that appears to be a very difficult prospect. Consequently, it has become necessary to shift the narrative and focus on other ventures, such as the Robotaxi and the Optimus robot.

Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

Hi Compounders,

We have entered a pivotal week regarding the results of the past quarter. While several Big Tech earnings are taking center stage, two European giants have already presented their figures. In this series of earnings insights, we examine Europe’s most valuable company and a luxury group with an extensive track record.

I hope you find it valuable!

ASML - Q4

Let’s kick of with ASML; ASML is a global leader in the semiconductor industry, specializing in the development and manufacture of high-end photolithography systems. The company is currently the sole provider of Extreme Ultraviolet (EUV) machines, which are essential for producing the world’s most advanced microchips. As a cornerstone of the global tech supply chain, ASML has established itself as Europe’s most valuable technology company by market capitalization and thanks to an increase of more than 110% since August 2025, it even became the most valuable company in Europe in general.

Q4 summary

ASML has now grown into Europe’s most valuable company, a position that was further solidified following the presentation of its quarterly results. In the fourth quarter, the Dutch company recorded total revenue of €9.7 billion. This represents a 5% increase compared to last year and a 29% surge compared to the previous quarter. According to management, this is primarily due to a shift in consumer sentiment; noting that ASML’s “consumers” are major industry players like TSMC, Samsung, and Intel. This top three dominates the market through their focus on advanced nodes for AI and memory chips.

Alongside this revenue, they also managed to improve their gross margin. They finished the fourth quarter with a gross margin of 52.2%, a 0.5% improvement over the same quarter last year. The net income margin stood at 29.2%, which was roughly consistent with the previous year. This net margin is exceptionally high and demonstrates the company’s underlying strength.

A striking detail in the revenue breakdown is that EUV machines accounted for a significantly larger share of sales in the fourth quarter. These comprised 48% of revenue, compared to 38% in the preceding quarter. EUV (Extreme Ultraviolet lithography) systems are ASML's advanced machines that use extreme ultraviolet light to print ultra-small structures on semiconductor chips. This allows transistors and interconnections to be etched with a resolution below 7 nm, which is crucial for the smaller, more efficient nodes that drive Moore's Law forward. For AI chips, EUV machines are essential because they enable the high density and performance required for complex neural networks and data centers. AI processors, such as those from Nvidia (e.g., Blackwell or later generations), require advanced nodes (3nm, 2nm) with tens of billions of transistors; EUV reduces the number of exposure steps, lowering costs and energy consumption by 30-50% compared to older DUV technology.

Additionally, the fourth quarter showed a geographical shift in sales. Much has been said about sales to China and Taiwan in relation to US policy. The US aims to secure the best machines for itself to maintain a dominant position in technology, particularly in artificial intelligence. This was reflected in the fourth quarter figures: 17% of revenue was shipped to the US, up from 6% in the previous quarter, while the relative importance of Taiwan and China clearly decreased compared to the preceding period.

Net bookings

Another important parameter for evaluating ASML is the net bookings. A total of €13.2 billion was booked in the fourth quarter. This represents a significant increase compared to both the previous quarter and the same period last year, when net bookings amounted to €7.1 billion.

Net bookings at ASML refer to the net value of all accepted system sales orders (including inflation-related adjustments) for which written authorizations from customers have been received. It serves as a forward-looking indicator of demand and future revenue, which has not yet been converted into realized sales. Unlike backlog (which accumulates unrealized orders), net bookings measures new order intake per period after deductions for cancellations or adjustments.

This substantial increase in orders may raise questions about whether the company will be able to keep pace with production. It goes without saying that manufacturing requires an immense amount of work, as EUV machines do not involve mass production in the traditional sense.

Looking ahead

Looking ahead, ASML guides for 2026 sales of €34-39 billion with a 51-53% gross margin, fueled by sustained AI-driven demand and EUV ramp-up, though Q1 is expected softer at €8.2-8.9 billion; the company also announced a €12 billion share buyback through 2028 and a 17% dividend hike to €7.50 per share. This shareholder-friendly stance, paired with organizational streamlining for innovation, signals confidence in long-term semiconductor tailwinds, though execution risks from supply chains and geopolitics persist.

LVMH - Q4

ASML has since become the largest European company by market capitalization, a position long held by LVMH. The French luxury group experienced strong momentum in the post-pandemic period, but the past two years have been more challenging, partly due to tougher macroeconomic conditions. There was significant reliance on growth from the Chinese middle class and its appetite for luxury goods. However, the Chinese economy failed to deliver the expected growth, forcing LVMH and numerous other major global players to temper their expectations for Asia. LVMH reported earnings on Tuesday 27th of January and the results were met with a lukewarm response from investors.

Q4 summary

LVMH closed the year with a revenue of €80.8 billion. On an organic basis, this represents 1% less revenue than a year earlier. The first half of the year was considerably weaker, but this was rectified in the second half, which saw a revenue increase of 1% compared to the same period last year. LVMH emphasizes that it continues to face challenges from ongoing geopolitical tensions and a difficult global economic environment. Nevertheless, the group demonstrated resilience and maintained its innovative momentum.

Revenue is derived for 26% from the US, which recorded a strong second half compared to other regions. Europe is also responsible for 26% of revenue, but there we saw a decline in sales compared to a year earlier. Japan also continues to be a difficult region; over the full year, revenue there fell by 12%, though improvement was noted in the final quarter of the year. Excluding Japan, Asia did show some growth—albeit limited—which is encouraging despite the circumstances. In total, Asia (including China) also accounts for 26% of the total revenue.

In 2025, LVMH’s revenue declined by 4.7% year-on-year in euros, with roughly 3 percentage points due to negative currency effects. On an organic basis, revenue fell by about 1% year-on-year. This reflects a 3% decline in the first half of 2025, offset by a +1% increase in the second half on an organic basis. The early signs of recovery seen in the third quarter (+1% Y/Y) persisted into the final quarter of 2025, also showing +1% organic revenue growth.

A clear divergence is visible across divisions. Watches & Jewelry and Selective Retailing (including Sephora) achieved organic revenue growth of +3% and +4% year-on-year, respectively. Conversely, Wines & Spirits and Fashion & Leather Goods both recorded a 5% decline in organic revenue. Perfumes & Cosmetics, which accounts for around 10% of total group sales, remained stable with flat revenue growth (0% Y/Y)

Despite the challenging market environment, LVMH continues to demonstrate strong operational performance. The group generates robust free cash flow, ensuring stable capital inflows even in times of economic uncertainty. These funds are strategically allocated toward reducing net debt, which has strengthened the company’s balance sheet in recent years. Excess cash flows are returned to shareholders through dividends and share repurchases. For FY2025, LVMH intends to distribute €13.00 per share in dividends, consistent with its payouts in 2023 and 2024.

Looking ahead

Looking ahead to 2026, the company expresses confidence despite ongoing geopolitical and macroeconomic uncertainties. With a market capitalization of €292 billion as of January 27, 2026, the stock trades at 26.8x its 2025 net earnings and 17.0x operating profit. Over the past six months, the share price has risen by approximately 35%, anticipating a recovery in business performance, particularly across key divisions. Developments in Asia remain a key area to monitor in the coming quarters. As stated, the stock moved lower after the results came out. Sellers were on the winning side as the stock traded around 6% lower the next trading day.

The power of family businesses

Something also certainly worth mentioning is that management emphasized the strength of being a family-owned business. Statistics show that, on average, family businesses perform better than companies that are not built and managed by families. By highlighting this, management underscores their focus on the long term and on shareholder value creation. This value is expected to manifest over the long term. Furthermore, it was stated that the company intends to further allocate capital and aims for a stake in the business that will exceed 50% by the year 2026.

Going forward, continued comparison of LVMH’s results with those of other luxury peers will be essential to assess the group’s brand strength and competitive positioning.

Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

Hi Compounders,

I’m sending out this week’s C&C Coverage a bit late. Yesterday, I wasn’t feeling well, so I couldn’t work on the weekly newsletter. Now, on this quiet Sunday evening, I found the time to put things together for you. It was an intense week, highlighted by the World Economic Forum in Davos, where all eyes were on Trump’s speech—with the Greenland issue at its core. The U.S. market was also closed on Monday, making Tuesday a day of sharp market reactions, followed by broad relief on Wednesday after Trump’s appearance. This week, we already saw key updates from Netflix and Intel on their quarterly results, which we’ll dive into in more detail. The week ahead promises to be an exciting one, with a packed schedule.

I hope you find it valuable

The world economic forum in Davos (Swiss)

This week was dominated by the World Economic Forum in the small Swiss town of Davos, where all the major world leaders gathered. In recent years, questions have arisen about whether such forums can still achieve their intended impact, but this gathering was watched with keen interest, after all, if U.S. President Donald Trump makes the trip, the other world leaders follow suit. This promised to be a high-impact summit. The World Economic Forum drew 3,000 participants, including 60 heads of state and government leaders.

Following the incursion into Venezuela earlier this year, Trump has now shifted his focus to Greenland. He seeks to claim Greenland to ensure U.S. security, arguing it is a crucial link in the American missile defense system known as “The Golden Dome.” However, Greenland falls under Danish administration, and Denmark is a NATO member. The U.S. president’s statements thus drew significant backlash from Europe. Trump called for direct negotiations and previously threatened import tariffs on countries resisting, specifically naming Denmark, France, the Netherlands, Norway, Sweden, Finland, the United Kingdom, and Germany for deploying troops to Greenland until a deal is reached. These remarks, made over the prior weekend, heightened tensions leading into Davos.

Trump departed on Air Force One, but aviation enthusiasts tracking the flight saw the U.S. plane suddenly turn back. Speculation ran rife, but it turned out to be a technical issue with the aircraft, requiring a switch to another plane bound for Switzerland.

On Wednesday, it was finally Trump’s turn to speak, captivating the full attention of everyone in the room. They witnessed live the unraveling of a world order… The tension mounted.

Then came the pivot: “I will not use force,” he declared. Trump also dropped his earlier threats of tariffs against European countries that had sent troops to Greenland. Stock markets turned green. The mood in the room shifted too. Fears of witnessing the live beginning of NATO’s end gave way to a sort of “Trump freak show.” He ranted about Somali gangsters in Minnesota, humiliated Macron and Carney, and claimed there are no functioning windmills in China. The audience chuckled occasionally. Afterward, only scattered applause came from the right front, where the U.S. delegation sat, no standing ovation, which is typically the norm for world leaders’ speeches.

A collective sigh of relief followed days of tension. What will ultimately happen or be decided remains unclear. Trump mentioned a “concept of a deal,” but its meaning and any agreements within it are still speculative.

If we look at the chart from the past week, we see that the market was closed on Monday due to a U.S. holiday. This gave the market the entire weekend plus Monday to shake off speculation. It opened strongly negative on Tuesday, only to nearly fully recover the next day.

Of course, Trump wasn’t the only one speaking.

The Canadian Prime Minister delivered what was widely regarded as the best speech. Carney noted that we are not in a transitional period but amid a fracture line driven by crises in finance, health, energy, and geopolitics, which have exposed the risks of overly tight global interconnectedness. Major powers now weaponize this linkage through tariffs, financial pressure, and disrupted supply chains, eroding multilateral bodies like the WTO, UN, and COP. Many countries are thus pursuing greater autonomy in food, energy, minerals, and financial policy—a logical response when rules fail, as self-protection becomes essential. Yet this leads to a world of isolated fortresses that are poorer, more vulnerable, and less sustainable. Major powers cannot indefinitely exploit their leverage; allies are diversifying to spread risks and reclaim sovereignty by resisting pressure.

European leaders emphasized mutual respect in Europe and adherence to established rules. Countries want to join the European Union, something that cannot currently be said of the U.S., China, or Russia.

Mid-sized powers, from which the EU emerged, must collaborate through shared investments in resilience, standards, and complementarity; competing for the favor of the great powers leaves them prey.

Chinese Vice Premier He Lifeng warned that trade conflicts and tariffs “know no winners” and that partial deglobalization would structurally weigh on the world economy through less efficient capital and goods flows, while China shifts focus to domestic demand to stabilize growth.

In economic panels, attention quickly shifted to artificial intelligence and the “industrialization of intelligence”: AI is no longer hype but a core driver of competitiveness, with discussions on agentic AI systems, productivity gains, and new business models, alongside the gap between massive upfront investments (data centers, chips, energy) and slower monetary returns, fueling fears of an AI bubble. A recurring theme was energy as the hard constraint of this AI wave: exploding demand for compute clashes with outdated grids and permitting processes. Leaders like President Macron tied AI and energy transition to an agenda of strategic autonomy, higher defense and innovation spending, and bolstering Europe’s industry, which has struggled in recent years. It outlines Europe’s great challenge: becoming stronger on its own. Von der Leyen hammered that we must stand firmer on our own feet. German Chancellor Friedrich Merz called for more industrial muscle. Carney put it best: “We must rely not only on the strength of our values, but also on the value of our strength.”

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Noteworthy earnings of the week

Netflix (NFLX)

Last week, U.S. financial institutions kicked off this year’s first earnings season. This week, Netflix stole the spotlight with its latest quarterly results. Netflix stock is now about 35% below its peak from mid-last year. Several factors are at play. On one hand, there’s broad uncertainty about AI’s impact on software and creatives, this makes investors struggling to gauge developments. Will advancing AI reduce the need for companies like Netflix, Duolingo, Adobe, Figma, Constellation Software, Salesforce, …?

Additionally, there’s the hot topic of a potential takeover of Warner Bros. Discovery. The proposed Netflix acquisition of Warner Bros., announced in December 2025 at around $82.7 billion, could fundamentally reshape the streaming market. The deal includes Warner Bros. studios, HBO, and HBO Max after spinning off Discovery Global, pending approval. Paramount had earlier bid higher, but Warner Bros. reportedly prefers Netflix and urged shareholders to vote accordingly. However, no approval yet, due to antitrust concerns. The deal would create reinforcing vertical integration, giving Netflix control over Warner Bros. studios and the HBO stable, yielding one of the largest content libraries alongside a dominant distribution platform. Regulators fear Netflix could exclude rivals by withholding Warner content licensing, hiking license fees, or adjusting release windows to structurally disadvantage competitors, weakening consumer choice and smaller streamers/broadcasters.

The deal’s benefits must be weighed against drawbacks. The stock reaction suggests investors lean toward the negatives. Here’s a quick pros-and-cons overview:

Pros:

• Expanded content library: Access to iconic titles like Harry Potter and Game of Thrones, enriching offerings for current subscribers.

• Increased engagement: Premium content attracts new members and boosts viewing time, driving revenue growth via higher retention and ad-supported tiers.

• Vertical integration: Full control from content creation to distribution eliminates middlemen and costly licenses, cutting costs and optimizing release windows.

Cons:

• Antitrust risk: Approval process could drag on, incur costs, and end negatively. Regulators scrutinize consumer impact—a consolidated offer under one player might enable price hikes. Consumers suffer, though a $2 subscription increase may not outweigh the expanded, higher-quality library; where’s the line?

• High price and debt burden: An all-cash $82.7 billion deal would explode Netflix’s balance sheet debt, pushing debt/EBITDA to 3.7x and adding $2-3 billion in annual interest. This pressures margins, though Netflix eyes $11 billion free cash flow in 2026 and $2-3 billion synergies from year three.

• Operational challenges: Merging two massive, storied companies looks great on paper but is rarely seamless from day one.

The quarterly results:

• Revenue: +18% YoY

• Operating income: +30% YoY

• Operating margin: 24.5% vs. 22.2% in Q4 2024

• Net income: +29% YoY

• Free cash flow: +36% YoY

• Subscribers: >325 million

Full-year revenue rose 16% to $45.2 billion vs. 2024, with operating margin at 29.5% (31% excluding one-off Brazilian tax costs).[qz +1]

Netflix posted another strong quarter. Yet shares fell post-presentation as Q1 2026 and full-year guidance missed analyst consensus by 6%, signaling slowdown tied to Warner acquisition costs.

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Intel (INTC)

Intel reported better-than-expected Q4 revenue of $13.7 billion, but investors soured on the outlook. CEO Lip-Bu Tan highlighted production issues from faltering new technology, preventing the company from meeting surging demand—especially for AI chips. Q1 guidance is $11.7-12.7 billion, below the $12.6 billion analyst average. Tan admitted yields are too low and many chips fail quality standards. Drawing down inventories in Q4 signals persistent bottlenecks. This stings, given billions invested to modernize capacity and compete with TSMC et al. Data center and AI revenue rose 9% YoY. That is a modest gain underscoring Intel’s long road to catch TSMC in manufacturing and Nvidia/AMD in design.

Investors had driven shares up 50% this year on recovery hopes, but optimism deflated: the stock plunged 17% on Wall Street the day after results.

The quarterly results:

• Revenue: $13.7 billion (-4% YoY)

• Gross margin: 36.1%

• Net income: -$0.6 billion

What to look out for next week?

Big earnings week ahead

Next week brings a packed earnings slate, including four MAG7 reports closely eyed by global markets. As seen above, Netflix and Intel dipped post-earnings. Netflix’s were solid, but Intel’s disappointed after its rally and deserved the punishment, in my view. The MAG7 always command attention as AI evolution drivers, pouring billions into data centers and compute, which is fueling chip designers’ strong performance. Meta, for instance, is AMD’s biggest customer for AI-dominant compute power.

No growth expected from Tesla: Q4 deliveries fell 15% YoY. Analysts forecast $25 billion revenue, a slight contraction. Shares now hinge solely on Elon Musk’s vision for robotaxis and humanoid robots; an upbeat appearance could placate fans for another quarter.

European heavyweights ASML and LVMH report too. LVMH is climbing from a trough, including weak China sales. Barclays sees Q4 organic revenue down 4%, but 2026 fashion growth. A less-bad result could boost shares; expectations aren’t sky-high, honestly. ASML’s are higher: €7 billion order book eyed, thanks to Samsung/TSMC orders. TSMC’s strong results already sent shares to all-time highs; I expect ASML’s rally to continue.

Key/interesting earnings:

• Monday: Ryanair (RYAAY)

• Tuesday: UnitedHealth Group (UNH), LVMH (MC.PA)

• Wednesday: ASML, Microsoft (MSFT), Meta (META), Tesla (TSLA), Starbucks (SBUX)

• Thursday: Apple (AAPL), Visa (V), Mastercard (MA), SanDisk (SNDK)

• Friday: SoFi (SOFI)

FED meeting

Beyond earnings, a Fed meeting looms Wednesday. Economists expect rates steady at 3.50-3.75% after three cuts. Inflation per the Fed’s preferred gauge hit 2.8% in November versus a 2% target. Watch Powell’s response to Trump’s recent threats.

Finally, odds are rising for another (partial) government shutdown by month-end—lack of agreement could sway markets this week

The start of the new year calls for a slight refinement of my approach. I have decided to rebrand our weekly review, which will now be known as C&C Coverage. With ‘Coverage,’ I aim to highlight the broad range of topics I intend to address in this weekly newsletter. While the content won’t be strictly fixed, the core elements you’ve come to expect remain. This is the second edition of the C&C Coverage.

In this week’s edition, we take a deeper look at the trade agreement signed between the US and Taiwan, while also highlighting TSMC’s strong quarterly results. These impressive earnings and the positive outlook for the coming quarter triggered a rally across various chip-related stocks. Additionally, we cover the 'winners of the week,' examine the decline in Porsche’s sales volume, and preview our 'one to watch,' which reports its quarterly figures next week.

I hope you find it valuable!

General macro events

US-Taiwan trade deal

The week was largely dominated by TSMC’s strong financial results, but equally significant is the signing of a major trade deal between Taiwan and the US. This new trade agreement carries both economic and political weight. The US is reducing import tariffs on Taiwanese products from 20% to 15%, granting Taiwan the same trade terms as Japan and South Korea. In exchange, Taiwan has pledged substantial investments in the American technology industry.

In total, Taiwanese companies, including TSMC, will invest $250 billion in US-based chip, energy, and AI projects. This is in addition to the $100 billion TSMC had previously committed to its facility in Arizona. Furthermore, Taiwan is providing $250 billion in credit guarantees to support further investments in American chip manufacturing. US Secretary of Commerce, Howard Lutnick, stated that the long-term goal is to shift 40% of Taiwan’s production and supply chain to the United States.

TSMC is the world’s leading chip manufacturer, a fact the US is keenly aware of. President Trump has repeatedly emphasized his desire for the US to remain the world’s preeminent technological power. The ultimate objective is to match every imported chip with one produced locally. A key benefit of this deal is the expansion of TSMC’s manufacturing capabilities on American soil, creating additional jobs and boosting domestic production. These factors undoubtedly played a decisive role in finalizing this trade agreement.

Winners of the week

TSMC

TSMC reported exceptionally strong quarterly results and significantly increased its capital expenditure for 2026 to expand capacity for the exploding demand for AI chips. This wave of investment not only boosts TSMC’s own growth story but also triggers a chain reaction throughout the supply chain: suppliers of manufacturing equipment, materials, and software stand to benefit from years of high spending. I published an analysis of the results earlier this week. You can read it here:

TSMC - Some more comments from the earnings call

We continue to work closely with our customers to plan our capacity while sticking to our disciplines to ensure a healthy overall capacity utilization rate through the cycle.

Our customers continue to provide us with their positive outlook. In addition, our customers, and many of the cloud service providers, are also providing strong signals and reaching out directly to request the capacity to support their business. Thus, our conviction in the multi-year AI megatrend remains strong, and we believe the demand for semiconductors will continue to be very fundamental.

These comments demonstrate that the company is actively investigating the current state of affairs and how their consumers are responding. Their envisioned investments are based on real-world developments and are fundamentally well-founded. When a global leader at the heart of the industry makes such statements, who are we to contradict them?

ASMI - ASM International

While ASM International (ASMI) might be less of a household name, it belongs in the same league as Besi and ASML, the latter now being Europe’s largest company by market capitalization. ASMI specializes in Atomic Layer Deposition (ALD). This technology allows for the deposition of extremely thin, uniform layers of atoms onto chips, which is critical for manufacturing advanced nodes below 5 nanometers used in AI, smartphones, and data centers.

ASMI supplies top-tier chipmakers such as TSMC, Intel, and Samsung, placing it at the heart of the supply chain driving the AI-fueled chip rally. Without ASMI’s machinery, manufacturers like TSMC would be unable to produce the complex 3D transistors required to keep Moore’s Law alive. Because it supplies all the major players and benefits directly from the AI boom, ASMI’s role in the ecosystem is indispensable. It is therefore no surprise that ASMI had a strong week following TSMC’s exceptional financial results.

The technicals

In recent weeks, we have seen a positive pattern emerging on ASMI’s weekly chart. Since the beginning of 2025, the company has been making new higher highs and has now succeeded in breaking through two key resistance levels. The next resistance level can be identified around €740, with a potential subsequent pullback toward the €630-640 range.

SanDisk - SNDK

SanDisk had a monumental year in 2025. The company was listed on the stock exchange in February 2025 following its spin-off from Western Digital. This spin-off specializes in the design, production, and sale of flash memory and related storage products, such as SSDs and memory cards. They design and manufacture advanced 3D NAND stacking, where layers of memory cells are stacked vertically to achieve greater storage capacity in smaller spaces. SanDisk’s technology enables low-cost, high-density storage that is essential for AI data centers and consumer electronics, ensuring that data storage remains scalable and affordable.

It goes without saying why the company has experienced such a massive price surge in recent months. SanDisk ended 2025 with a return of nearly 600%. In 2026, the company continues to enjoy a strong tailwind, with the stock already up approximately 50% year-to-date. This explosion in share price is nothing short of extraordinary.

Earlier this week, I published the first article in a series of ‘quick scans,’ which also featured a company active in the memory chip sector.

Other notable mentions

Porsche

German sports car manufacturer Porsche AG has come off a weak year, with sales falling by 10 percent to 279,449 vehicles. This marks the first time since 2020 that deliveries have dropped below the 300,000-unit threshold. The company attributes this decline to supply issues for the internal combustion engine versions of the 718 and Macan (driven by EU cybersecurity regulations), “persistently weaker demand for exclusive products in China,” and “value-oriented supply management.”

Last year, the Macan SUV remained Porsche’s best-selling model. Regionally, sales plummeted by 26 percent in China, 16 percent in Germany, and 13 percent across the rest of Europe. Notably, sales in North America remained stable despite the import tariffs imposed by President Donald Trump.

Looking ahead to 2026, Porsche is warning of “realistic” volumes as it continues to phase out the ICE versions of the 718 and Macan. This outlook aligns with the weak performance recently reported by competitors such as BMW, Mercedes, and Audi.

Visa & Mastercard

President Donald Trump announced via Truth Social that, effective January 20, he intends to impose a 10% interest rate cap on credit cards for one year to protect Americans from rates of 20–30% or higher. This announcement triggered a sharp sell-off on Wall Street for Visa and Mastercard, companies long considered ‘quality stocks.’

Investors fear that higher interest rates on high-risk customers are necessary to offset potential losses; a cap could lead to these individuals being excluded from credit entirely. This would result in a decline in total credit volume, leading to fewer transactions processed by Visa and Mastercard. With $1.1 trillion in debt at an average interest rate of 21%, such a cap could potentially halve industry profits. However, analysts consider the implementation unlikely due to expected resistance from Congress and heavy lobbying. Furthermore, consumers might shift toward Fintech companies utilizing the ‘Buy Now, Pay Later’ (BNPL) model, such as Klarna and PayPal.

One to watch

Netflix - NFLX

The world’s most famous streamer is currently on a losing streak, with seven consecutive weeks of negative returns. The stock is currently trading 35% below its most recent high. In November 2025, the company executed a 10-for-1 stock split to make shares more accessible to retail investors after the price climbed above $1,000 pre-split; however, it has essentially been downhill ever since.

Late last year, Netflix made a bid to acquire Warner Bros. Discovery. While the deal initially seemed poised for a quick resolution, Paramount entered the fray. The Ellison family is also prepared to offer a significant sum. Approval by regulators and President Trump remains uncertain, further fueling the negative sentiment surrounding the stock. Add to this the gradual saturation of the streaming market, and it becomes clear why this downward trend has persisted.

Nevertheless, Netflix remains a company that delivers quality and benefits from massive economies of scale regarding its production. They have shown in the past, think back to the 2022 period, that they can reverse a weak period. While the fundamental figures back then remained solid, the market’s reaction was vastly overblown, as later became evident. When such a discrepancy occurs, opportunities arise for quality investors. Those who dared to go against the grain at that time were richly rewarded.

The fundamentals currently remain strong. This Tuesday, the company will provide insight into its fourth-quarter results. It is certainly a company to keep a close eye on.

Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

Earnings season has kicked off once again. In this post, I will walk you through the quarterly reports of three different companies. Traditionally, financial institutions get the ball rolling, which is why this overview features two major banks. However, we begin with a leader in the semiconductor industry; a report the market has been eagerly anticipating to see if the AI momentum can be sustained.

I hope you find it valuable!

TSMC - Q4 25

Last week, TSMC released its revenue update for the month of December. The figures were already positive, showing a year-on-year increase of more than 30%. On Thursday, the Taiwanese company subsequently presented its Q4 report. In current market conditions, investors are always looking for dominant players that are driving the evolution of artificial intelligence.

TSMC is the world’s largest pure-play semiconductor foundry. It manufactures advanced chips based on designs from customers such as Apple, Nvidia, and AMD, without designing or selling chips itself. TSMC maintains a dominant position with an estimated market share of 90% or more for the most advanced chips. This refers to nodes ranging from 2nm to 3nm, which are currently the smallest chips available on the market. It goes without saying that the company significantly influences overall market sentiment.

While there are various designers on the market, TSMC distinguishes itself by focusing purely on the manufacturing of these designs. They generate immense economies of scale, giving them a competitive edge over potential rivals. Well-known chip designers are heavily dependent on the finished chips delivered by TSMC. This business model is clearly reflected in the company’s financial results.

Key Figures from the Report:

• Revenue: $33.7 billion

• Gross Margin: 62.3%

Advanced nodes account for 77% of quarterly revenue. On a year-on-year basis, the 3nm share rose from 18% to 24%, while the 5nm share increased from 34% to 36%, confirming the shift toward leading-edge technology. Looking at end markets, High Performance Computing (HPC) remains the largest platform, representing 55% of total revenue.

Guidance

We have just guided our first quarter gross margin to increase by 170 basis points to 64% at the midpoint primarily driven by continued cost improvement effort including productivity gains and a higher overall capacity utilization rate partially offset by continued dilution from our overseas fabs.

Rising margins, driven by the aforementioned internal improvements, are a result of both the company’s operational efficiency and the significant economies of scale it enjoys compared to its competitors. As a dominant player, you have the leverage to expand your margins. While high margins naturally attract competitors in the long run, TSMC currently has the leeway to maintain its dominance given the present supply-and-demand dynamics.

Establishing an infrastructure capable of producing the highest-performance chips is a time-consuming process, time that works against you in such a fast-paced environment. By the time competitors’ investments become operational and meet current standards, the technology may already be obsolete. This often leaves rivals perpetually struggling to catch up.

TSMC also continues to invest aggressively. For 2026, they have planned capital expenditures (CapEx) between $52 billion and $56 billion, underscoring their strategic focus on AI infrastructure.

A higher level of capital expenditures is always correlated to the high growth opportunities in the following years. With our strong technology, leadership and differentiation, we are well positioned to capture the multi year structure demand from the industry megatrends of 5G, AI and HPC

We are confident we can continue to outperform the industry growth. We expect 2026 to be another strong growth year for TSMC and forecast our full-year revenue to increase by close to 30% in U.S. dollar term

Financial institutions

Traditionally, financial institutions kick off the earnings season. This week, we saw several major American banks report their results.

JP Morgan - Q4 25

• Revenue: $46 billion

• EPS: $4,63

For the full year 2025, net income amounted to $57.0 billion ($20.02 per share), with an ROE (Return on Equity) of 17%. CEO Jamie Dimon highlighted strong execution, customer growth, and a resilient economy, though he cautioned against geopolitical risks and inflation. At the divisional level, Asset and Wealth Management performed particularly well.

While the figures were inherently strong, this was largely not reflected in the stock price reaction following the announcement. With a 30% price gain over the past six months, these robust results had already been largely priced in. It is common to see investors use a positive earnings update as an opportunity to take some profit off the table.

Citigroup - Q4 25

• Revenue: $19,9 billion

• EPS: $1,19

• Payout ratio: 133%

Revenue grew by 2% year-on-year, driven by growth across various divisions. Revenue in the Services segment rose by 15%, while the Banking department saw a very strong increase of 78% year-on-year, reaching a total revenue of $2.2 billion. This was primarily driven by the strong performance of the investment banking division. Despite these gains, total revenue only increased by 2% because the company recorded a pre-tax loss of $1.2 billion. This was caused by the held-for-sale accounting treatment related to the planned sale of AO Citibank in Russia to Renaissance Capital. Citigroup’s board recently approved the sale as part of its strategic restructuring. Excluding this item, Citi’s revenue rose by 8%.

Citi also reported a high payout ratio. This ratio is calculated as the portion of capital returned to shareholders via dividends and share buybacks relative to net income. This indicates that Citi distributed significantly more than it actually earned during the period. This is something to monitor closely. Historically, the ratio has never been this high, which is generally a positive trend for shareholders. If this is a one-time outlier, it poses no problem; however, if it becomes structural, it could lead to issues.

Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

In this series of articles, we will perform a "quick scan" of companies that may hold significant potential. While not a full deep dive, it is a solid fundamental analysis of potential compounders. These quick scans are primarily aimed at getting to know the company and identifying the key drivers of its (potential) success. We are kicking off this series with a company active in an emerging market, which nevertheless plays a vital role in the global system. The company has a market capitalization of 350 billion USD and experienced an immense run in 2025, with its share price increasing by more than 280%.

I hope you find it valuable!

The company we are discussing is a South Korean global leader in the semiconductor industry and serves as the world's second-largest manufacturer of memory chips. The company is at the heart of the current technological revolution as a critical supplier of High-Bandwidth Memory (HBM), which are the specialized chips essential for Nvidia’s GPUs used to train AI models.

Let’s find out about which company we are speaking:

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The start of the new year calls for a slight refinement of my approach. I have decided to rebrand our weekly review, which will now be known as C&C Coverage. With ‘Coverage,’ I aim to highlight the broad range of topics I intend to address in this weekly newsletter. While the content won’t be strictly fixed, the core elements you’ve come to expect remain.

We will continue to analyze macro sentiment and noteworthy events from the past week, as well as highlight the week’s standout winners. Furthermore, I plan to introduce new categories of articles in the near future. I will share more updates on these additions in the coming weeks. I hope you find this new direction valuable!

General macro’s

The first trading days

The first full trading week of the year is in the books. The year's opening often sets the tone for what's to come. Below, I’ve shared an overview of statistics showing how the rest of the year typically performs based on the S&P 500’s performance during its first five trading days. Historically, when the first five days end in the green but with a gain of less than 1%, the median annual return sits around 13%. Naturally, these are just statistics, and the median is a normalized figure. Based on these metrics, the performance seen in the first five days of 2026 points to an 83% chance of a positive year-end return. That might sound like a lot, but history shows that about 3 out of every 4 years (75%) end in positive territory anyway. On a broader note, we’ve already enjoyed three consecutive years of strong gains; 2023, 2024, and 2025 were all excellent years for the S&P 500. It remains to be seen if the statistics will be confirmed by year-end

American job report

The U.S. economy added only 50,000 jobs in December, compared to 56,000 in November. Economists had predicted a gain of 70,000 jobs. Furthermore, job growth figures for the previous two months were revised downward. The unemployment rate fell unexpectedly by 0.1 percentage points to 4.4%, primarily due to a shrinking labor force. The figures indicate a cooling labor market with downward revisions caused by reporting delays from the government shutdown. However, stable consumption and annual wage growth of 3.8% suggest there is no immediate risk of recession.

The weak employment data for December 2025, with only 50,000 new jobs and a 4.4% unemployment rate, reinforces the likelihood that the Federal Reserve (Fed) will keep interest rates unchanged in January. Market expectations that there will be no rate cut in January have now risen to 95%.

Additionally, there was controversy surrounding an action by Trump, who shared several figures on his social media platform, Truth Social, before the official data was released.

Debasement trade pushing through

Gold has overtaken U.S. Treasuries as the world’s leading reserve asset for the first time in three decades. Fueled by central banks’ ongoing gold buying spree, this move represents a symbolic shift at the top of the rankings.

I recently wrote about the structural shift in silver. The massive gold accumulation by central banks was one of the key drivers behind the recent rush into silver. An essential indicator to track here is the gold-silver ratio. In April 2025, that ratio spiked over 100, well above its long-term average of 50 to 60. For the ratio to normalize, silver either had to rally or gold had to drop. Given today’s macro climate and market uncertainty, silver playing catch-up was the more likely scenario—and that is exactly what played out over the last few months. Even with gold’s strong performance, silver successfully pushed the ratio lower. Read the full article here below.

Winners of the week

Defense sector in general

Following last weekend’s U.S. incursion into Venezuela, aimed at capturing Maduro, the stock market saw a ‘logical’ reaction on Monday: defense contractors saw their share prices surge.

Although we saw images of President Maduro trending across the internet in a Nike Tech tracksuit, it failed to serve as a marketing win for Nike.

I previously covered Nike earlier last year, and the current analysis remains unchanged. The stock is still in a downtrend, and a breakout is required to confirm a reversal. A move toward the $67–$69 range would be necessary for that confirmation.

However, as the week progressed, President Trump lashed out at these same defense companies. Trump argued that these firms pay out excessive dividends and engage in too many share buybacks, which he claims comes at the expense of investments in manufacturing, technology, and weapon systems. He announced an executive order prohibiting companies from issuing dividends or conducting buybacks as long as they fail to deliver ‘superior products’ ‘on time and under budget.’ Additionally, he stated that no top executive should earn more than $5 million without ‘measurable productive progress.’

It remains unclear, however, whether Trump can legally enforce this, as executive orders typically only apply to government agencies. While the stock prices of prominent U.S. defense firms—such as Lockheed Martin, RTX, and Northrop Grumman—initially plummeted following his remarks, they recovered quickly the next day when Trump announced a massive increase in the defense budget. The budget is set to rise from $1 trillion to $1.5 trillion by 2027.

Energy providers on META deal

Meta has secured agreements with energy companies Vistra, TerraPower, and Oklo to provide nuclear power for its Prometheus AI supercluster. The cluster is currently under construction at a data center in New Albany, Ohio, and is expected to be operational by 2026. These partnerships, announced on Friday, January 9, 2026, involve funding for Vistra’s existing nuclear plants in Ohio and Pennsylvania to extend their operational lifespans, as well as the development of new reactors by TerraPower and Oklo, with initial production potentially starting as early as 2030. By 2035, these projects are expected to generate a combined additional capacity of up to 6.6 gigawatts.

Following the news, companies including Vistra (VST) and Oklo (OKLO) saw a positive boost in their share prices. Meta signed a 20-year power purchase agreement (PPA) with Vistra for energy from two existing nuclear facilities. Meanwhile, the contract with Oklo focuses on the continued development of its small modular reactors (SMRs), which have not yet been commercialized. Investors have been betting heavily on nuclear energy for some time; in 2025, Oklo’s stock surged by a staggering 200%. Vistra saw a more modest 17% climb last year, though the stock had already tripled in value during 2024.

Housing manufacturers

Never a dull moment with Trump around. The President announced on his social network that he intends to purchase $200 billion in mortgage-backed securities (MBS), aiming to lower mortgage rates and improve housing affordability. Following this post on Truth Social, the average 30-year fixed mortgage rate dropped by 22 basis points on Friday to 5.99%, its lowest level since February 2023, according to Mortgage News Daily.

This move could lead to a sustained decline in rates, fueling demand for both new and existing homes. Such a shift would be beneficial for the housing market and homebuilders alike. Mortgage lenders also surged on the news, with UWM Holdings and Rocket Companies rising 12% and 8%, respectively. However, caution remains warranted, as this step does not solve the underlying issues of housing shortages and inflation. This initiative aligns with Trump’s broader push for housing affordability ahead of the 2026 midterm elections.

Notable mention: Paypal and Microsoft partnership

PayPal and Microsoft have teamed up to launch Copilot Checkout—a new feature within Microsoft Copilot that allows users to discover, select, and purchase products without leaving the Copilot environment. The entire payment and checkout process is powered by PayPal, including ‘buy now, pay later’ options. This partnership combines Microsoft’s AI-driven discovery capabilities with PayPal’s trusted payment solutions to create a seamless shopping experience.

For merchants, this means their product catalogs are automatically converted into shoppable pages via PayPal’s new ‘agentic commerce services,’ designed to help businesses reach customers in the era of AI shopping. According to PayPal and Microsoft, this integration offers increased efficiency and trust for both consumers and sellers. Users receive personalized, purchase-ready results and can complete their transactions instantly via PayPal. Companies already utilizing this feature report that shopping via Copilot leads to higher engagement and conversion, with respective increases of 53% in purchases and 194% in conversion rates.

This marks yet another noteworthy partnership for PayPal. However, the announcement did not trigger a positive reaction in the share price, which one might typically expect from such news. For now, patience remains the key to a successful investment in PayPal.

What to look forward to next week?

Last week, TSMC released an update regarding its revenue for December, which was up 20.4% compared to the same month last year. With December’s figures finalized, we can now draw a conclusion for the full year: the company recorded a 31.6% increase in annual revenue. This demonstrates a strong year for semiconductors, driven largely by the demand for AI-supported products.

On January 15, the company will provide full insight into its Q4 earnings. All eyes will be on the narrative they present and whether demand is expected to remain high throughout 2026. Investors are counting on an acceleration in growth to sustain the current momentum.

Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

The first article of the new year is here. In this edition, I dive deeper into the evolution of silver prices and the key drivers behind them. We will explore the wide range of applications and the robust demand currently being generated. Within these fields of application, I highlight a company that is a global leader in its specific industry and has succeeded in growing its revenue by more than 20% annually since 2020.

I hope you find it valuable!

The crazy rally of silver

The remarkable rise of silver has been discussed several times in Cash & Compound’s weekly review. In 2025, the price of silver surged by more than 150%. This price action is extraordinary, to say the least, especially considering we are talking about a precious metal. To put this into perspective: if you had invested in silver at the end of February 2013, you would have had to wait until May 2024 to see your first positive return. We are not talking about a memecoin here, but a scarce commodity; the amount of silver that can be mined globally is finite.

The price is driven by fundamental economic laws: supply and demand. Meeting current demand appears nearly impossible due to a structural deficit. In 2025, silver experienced its fifth consecutive year of global supply shortages, with estimated annual deficits exceeding 200 million troy ounces and declining liquid inventories.

Demand for silver has surged due to its numerous industrial applications, which we will discuss in more detail later. Currently, industrial use accounts for approximately 60% of total silver demand.

Beyond industrial demand, the climate for precious metals has been highly favorable:

• Interest rate cuts: The U.S. Federal Reserve lowered interest rates, making precious metals more attractive as a store of value. While fixed-income products become more appealing when rates are high, falling rates reduce the opportunity cost of holding non-yielding assets like silver.

• Currency weakness: This trend was further supported by the decline of the U.S. dollar over the past year.

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Debasement trade

Finally, silver has become a focal point for the so-called "debasement trade." This is an investment strategy where investors flock to hard assets to hedge against the expected devaluation of fiat currencies—most notably the U.S. dollar over the past year. In this context, silver serves as a hedge against currency debasement caused by government deficits, monetary expansion, and inflation. It is a modern response to a historical phenomenon where the precious metal content in coinage was systematically reduced.

The source: silvermining

Silver is primarily extracted from ores where it occurs as a by-product of other metals such as lead, zinc, copper, or gold. The production process involves extraction, processing, and refining. Approximately 70-80% of silver production originates from this by-product mining, which makes the supply relatively inelastic and unresponsive to price changes.

Zinc, lead, and copper represent the primary ores from which silver is derived as a by-product. The amount of silver mined globally is distributed roughly equally among ores of zinc (sphalerite), lead (galena), and copper (chalcopyrite). Additionally, a small portion of global silver production is recovered as a by-product of gold mining.

Comparison with 1980

Between 1979 and 1980, the price of silver exploded from approximately $6 to a peak of $50 per ounce, which meant an increase of over 700%. This was largely driven by the speculative maneuvers of the Hunt brothers, two Texan oil tycoons convinced of the hedging value of precious metals against double-digit inflation, which was around 13-14% at the time and a weak dollar following the end of the Bretton Woods system. Starting in 1973, they began accumulating massive amounts of silver through physical purchases and futures contracts, financed by heavy leverage and oil profits. By the end of 1979, alongside Arab partners, they controlled approximately 200 million ounces, nearly half of the world’s identifiable supply, stored in Switzerland and held through interests in mining companies. This created a classic short squeeze on the COMEX, as short sellers were forced to make physical delivery.

Geopolitical tensions, such as the Iranian Revolution and the Soviet invasion of Afghanistan, further boosted safe-haven demand. However, the Hunts’ dominant position drew public criticism (notably from juweler Tiffany & Co.) and led to COMEX regulatory changes, such as “Silver Rule 7” (January 1980), which restricted leverage. On Silver Thursday (March 27, 1980), the price plummeted by 50% in a single day due to margin calls and Fed intervention, resulting in billions in losses for the brothers and the implementation of stricter market regulations.

The Current Market Rally

The surge in silver prices we are currently experiencing is not driven by central figures like the Hunt brothers, but rather by structural deficits where supply simply cannot keep pace with demand. That said, a short squeeze has played a role in pushing prices higher. A short squeeze in silver occurs when short sellers are forced to close their positions as prices rise, creating additional buying pressure that drives prices even higher. In this instance, the catalyst was physical shortages, which further intensified demand for the metal.

Despite the massive surge we have seen in the silver price, it is important to note that 1980 and 2025 cannot be compared directly. When we factor inflation into the calculation, rather than looking strictly at the nominal price per ounce, we see that silver is actually not that expensive today compared to its 1980 levels.

When you view this through the lens of today’s significantly expanded industrial applications, it becomes clear why the price has risen so sharply. Unlike in the past, current demand is underpinned by essential modern technologies, making the current price action fundamentally different from previous speculative peaks.

Central banks are on the buying side

Central Bank diversification and de-dollarization

Since the early 2020s, central banks worldwide have significantly increased their gold reserves, with annual purchases exceeding 1,000 tonnes, which is double the volume of the previous decade. Consequently, gold’s share of total reserves rose to approximately 27% in 2025, while the share of U.S. dollars and Treasuries fell from over 30% to 23%. This resulted in a historic reversal, where the total value of gold reserves surpassed the value of U.S. Treasuries for the first time since 1996.

This shift toward gold is primarily driven by a desire to reduce dependence on the U.S. dollar (de-dollarization). This trend is fueled by geopolitical risks, such as sanctions and the freezing of Russian assets, as well as concerns over U.S. fiscal deficits and monetary instability. Furthermore, central banks value gold’s intrinsic worth as a neutral hedge against inflation, currency devaluation, and the weaponization of finance. Emerging markets, most notably China, Russia, India, and Turkey, have emerged as the most significant buyers in this transition.

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The sharp rise in gold reserves held by Russia and China reflects a broader goal: reducing dependence on the U.S. dollar. In response to Western sanctions, Russia has intensified its de-dollarization strategy, turning to gold as a safeguard against potential asset seizures or currency devaluation.

China’s approach is equally calculated. Amid ongoing trade frictions with the United States and an ambition to elevate the yuan’s global role, Beijing has quietly built up its gold reserves—often through subtle central bank purchases and reported transfers from domestic mining operations.

This development underscores a global realignment of currency reserves: as the dollar's share in official reserves declines, the share of gold continues to rise as a neutral, non-sovereign safe haven. These central bank purchases have naturally driven gold prices higher. Historically, the gold-to-silver ratio had been steadily increasing, suggesting that a significant rise in silver was necessary to bring the ratio back toward its long-term average.

In April 2025, we saw the gold-to-silver ratio peak above 100 once again, reaching levels not seen since 2020. Back then, we also witnessed a sharp decline in the ratio shortly after, which implied a significant appreciation in the price of silver. Given the current sentiment, where macroeconomic conditions continue to cause uncertainty, it seemed unlikely that the gold price would drop anytime soon.

Consequently, for the gold-to-silver ratio to revert to its long-term average, the price of silver had to rise. When taking both this ratio and the industrial applications of silver, which we will discuss afterwards, into account, a price surge was, in many ways, to be expected.

Historical performance

Since 2008, gold has outperformed U.S. equities and government bonds during the most notable market crises. This reflects gold's role as a hedge against financial risks amidst uncertainty. However, potential risks include prolonged periods of rising real interest rates, shifts in central bank policies, or sustained strength in the U.S. dollar. All of which could weigh on gold's long-term performance.

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When the world slows down a little during the Christmas season, it often provides the ideal moment for reflection—a time to look back at what the past year has brought us in order to prepare for the year ahead. The major investment firms have finished their homework, closed out positions that failed to meet expectations, and drafted their strategic plans for the new year.

For this reason, this is not a standard weekly review. Instead, we are expanding it into a Yearly Review to look back at everything that transpired on the markets over the past year

I hope you find it valuable!

P.S. Thank you for reading along in 2025, I will continu to provide valuable insights in the upcoming year!

The story of 2025

To kick off 2025, we first look back at the conclusion of 2024. For investors, it was generally an excellent year. The S&P 500 delivered an annual return of over 26%, following a 25% gain the previous year.

Time for President Trump

2024 was an election year, and in November, it became clear that Donald Trump was set for his second term in the White House. Trump’s victory over Harris sparked immediate market optimism, fueled by expectations of tax cuts, deregulation, and trade tariffs. This triggered a powerful rally, with the S&P 500, Dow Jones, and Nasdaq all reaching new record highs. On November 7, the Fed followed with a 25-basis-point interest rate cut, which caused yields to dip temporarily and further bolstered the equity rally.

By the end of 2024, concerns regarding potential market overvaluation began to emerge as election-driven optimism pushed prices higher. The S&P 500 hit several new all-time highs, largely driven by the strong performance of the ‘Mag 7’.

A shift seemed to be on the horizon, as global investors began looking for alternatives to highly valued U.S. equities. European stocks, which are typically more attractively valued, received increased attention after flying under the radar for a long time. t is worth noting, though, that European innovation is falling behind its American counterpart, where a true spirit of entrepreneurship serves as the primary economic driver. Since valuation plays a crucial role in achieving long-term returns, the search for lower-valued companies was certainly justified. However, U.S. momentum regained its strength during the first two months of the year.”

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The trade war

In March, momentum began to shift. Surveys indicated a decline in consumer confidence, sparking uncertainty, while the framework for import tariff policies started to take shape. Trump is implementing these tariffs to protect and strengthen the U.S. for the future, yet their impact is palpable.

Import tariffs raise the cost of imported goods, leading to higher prices for consumers and businesses, which in turn can stoke inflation. While they may protect domestic producers by making foreign competition more expensive, potentially preserving or creating jobs in specific sectors, this often comes at the expense of efficiency and higher costs elsewhere in the economy. Over the long term, tariffs can trigger retaliatory measures from trading partners, harming exports, slowing global trade, and weighing on overall economic growth.

Investors reacted decisively, and a sell-off followed. Looking at the bigger picture, markets appeared ripe for a cooling-off period and a justified correction, considering the preceding rally and valuation levels. The period surrounding the tariff announcements was marked by heightened uncertainty, further colored by the complex relationship between China and the U.S. Markets suffered a so-called ‘flash crash,’ with the S&P 500 (SPX) plunging 20%. Amid this rising volatility, yields on 10-year U.S. Treasuries even to almost 5% at one point.

Dollar devaluation

The summer months of June and July saw a continuation of this turbulence, with macro headwinds weighing on the markets. These included stagflation risks and a shift in Fed policy toward lower interest rates later in the year. Although AI-driven optimism temporarily supported equity markets through concentrated gains in tech, broader sectors, such as small caps and cyclicals, lagged behind, while bond markets fluctuated due to liquidity concerns.

Due to Trump’s policies and the accompanying uncertainty, the U.S. dollar also faced significant pressure. The dollar tumbled by more than 10% in the first half of the year, marking its largest decline in over 50 years, specifically since 1973.

The combination of import tariffs straining trade relations and a weakening U.S. economy, characterized by a cooling labor market, drove this depreciation of the USD.

For investors diversified in non-U.S. equities, this is generally positive news, as their holdings in other currencies increase in value through currency appreciation; profits in local currencies then translate into more dollars. Conversely, for European investors with exposure to dollar-denominated assets, this resulted in lower returns for the same reasons. Currencies typically move in cycles and within certain ranges that tend to revert over the long term. While short-term fluctuations generally have little impact on long-term outcomes, they can significantly weigh on the short-term returns of European investors holding U.S. assets.

Precious metals living up

A decline in the USD also causes precious metals to rise in value, as there is an inverse correlation between the two. Because precious metals are priced globally in dollars, a weaker USD makes them more affordable for buyers using other currencies (such as the euro or yen), which drives up demand and, consequently, prices.

It was a banner year for precious metals. Gold, the most prominent of them all, surged by more than 70%. This was partly due to dollar weakness, but it also reaffirmed gold’s status as a safe haven. Furthermore, central banks have been eager to expand their gold reserves, with China leading the charge. As the world’s largest gold producer and consumer, their aggressive purchasing behavior is pushing prices even higher. However, many analysts are currently questioning the official data being released; the Chinese are buying through multiple channels without committing to full disclosure.

Silver was the standout performer in the sector. The silver price skyrocketed in recent months, decisively breaking through the psychological barrier of $50/oz. This rally is being fueled by a combination of factors: robust physical demand (particularly from India and the solar energy sector), stockpiling in the U.S. amid fears of potential import tariffs, industrial applications, and a thin, less liquid market that reacts more sharply to speculative inflows.

References to 1979, when the silver price jumped from $7 to $50, are not entirely accurate in this case. Back then, demand was not nearly as high as it is today; that period was characterized by a derivatives play. Today, however, there is simply insufficient supply to keep pace with current developments.

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The chart below illustrates that inflows have fluctuated significantly in recent years: periods of outflows (indicated by negative bars, particularly around 2022) alternated with periods of inflows. However, a spectacular peak is visible in 2025 and early 2026: the final bar on the right reaches nearly $11 billion in a single week. Furthermore, the headline emphasizes that total inflows over the past 10 weeks have reached $34.2 billion, which is an all-time high.

The message is clear: recent months (late 2025/early 2026) have seen an unprecedented, record-breaking rush of investors into gold and silver ETFs. This indicates strong demand for precious metals as a safe haven or inflation hedge amidst the prevailing market conditions.

The price volatility has been equally remarkable. On the monthly chart, we have already observed that the surge in silver prices over the past month is noteworthy, to say the least. The chart below displays the daily price fluctuations in BGN. There, we recently see one of the most significant outliers on record, which clearly illustrates the intensity of the current market momentum. This points to a spectacular single-day silver price surge in BGN on December 26, 2025. By far the largest daily jump in the chart’s entire history.

Walking a tightrope

The AI narrative pushed markets slightly higher after the summer, albeit without choosing a clear direction. In the third quarter, Nvidia once again presented very strong figures, which brought some much-needed peace of mind to the exchange. Despite solid results from many players linked to AI developments, investors began to scrutinize whether the future value would justify the immense capital expenditures. At that time, a deal with OpenAI seemed to be the perfect catalyst to support a company's share price; consequently, a flurry of partnerships was formed across the board, some more notable than others.

Oracle, in turn, experienced a bizarre trajectory in its stock price. During its first fiscal quarter, the company’s shares shot into the stratosphere, rising approximately 30% in a single day due to a massive increase in reported RPO (Remaining Performance Obligations). Such a surge is highly unusual for a company of that scale and acted as fuel to the already burning AI fire. Just one quarter later, however, sentiment had shifted, and Oracle had surrendered all those gains. While the RPO figure rose strongly again in the following quarter, the financing of these investments began to worry investors. For the first time in a long while, Oracle reported negative free cash flow—a telling sign of investor anxiety. Currently, there is no clear trend; investors are balancing between hope and fear. Hope that the investments will be well worth it and bear fruit in the near future, and fear that the expenditures are not yet proportional to the gains in efficiency.

The final quarter of 2025 was further driven by two major macro events. On October 1, the U.S. government entered a shutdown. While not unique, becauseTrump’s previous term also saw a shutdown, it nonetheless introduced uncertainty. The shutdown led to delayed reports from the Bureau of Labor Statistics regarding inflation and unemployment. Additionally, thousands of federal employees faced furloughs, and the estimated economic loss reached $11 billion, heightening volatility and dampening consumer confidence.

By December, a third interest rate cut in 2025 was almost fully priced in. However, the data available to the public was skewed by the aftermath of the shutdown. The Federal Reserve was essentially flying blind, and for a moment, the market assumed the rate cut would not materialize, weighing heavily on equities. Sentiment even plunged into the ‘extreme fear’ category—a remarkable development considering U.S. indices were only a few percentage points below their all-time highs. This incident speaks volumes about the current state of the markets. The Fed had to make a decision in a situation where the labor market was starting to show cracks, yet inflation was not yet fully under control. Ultimately, the policy rate cut that investors had long anticipated was indeed delivered.

What a year!

Reflecting on the events of the past year, it is fair to say it has been a volatile journey. Numerous macroeconomic factors have significantly impacted corporate operations. This past quarter, U.S. sporting giant Nike reported that import tariffs have had a $1.5 billion impact, a staggering figure by any measure! This is especially notable considering Nike saw its quarterly profit plunge by 32% compared to the same period last year, closing the quarter with $792 million in profit, down from $1.2 billion a year earlier. Other companies with production facilities outside the U.S. are also feeling the clear effects of these policies.

With President Trump at the helm, there never seems to be a quiet moment. Despite trade tensions, a cooling labor market, and inflation that remains outside the target range, equity markets posted their third consecutive strong year. The S&P 500 and the Nasdaq are trading 18% and 22% higher, respectively, than at the start of the year. European markets also performed well, with the Euro Stoxx 50 climbing 17%, while a year-long Chinese rally propelled the Shanghai Composite Index up by 25%. If you hadn’t checked your portfolio all year, you would call it an excellent year; however, those who followed the markets closely would describe it as a tumultuous period, regardless of the final returns.

Which lessons do I take from 2025

1. Volatility matters: the first lesson directly reflects the narrative of the past year. It feels as though an immense amount has transpired on the stock markets, and indeed, it has. Equities experienced significant volatility, and there were countless reasons that might have tempted one to sell: a trade war, a government shutdown, and sharply rising valuations, to name but a few. Yet, ultimately, the major indices are up by more than 15% since the start of the year, marking the third consecutive year of strong gains.

   When investing in indices or ETFs, you choose to capture the broad market performance or the performance of a specific sector or geographic region. Within this strategy, external factors should ideally have no influence on your purchasing behavior. The core conviction of long-term investing is that external noise should not dictate your decisions. This year has once again proven that principle to be correct

2. The market is not always efficient: generally, we are seeing high valuations for popular companies that are not only performing strongly in their operations but are also delivering the most robust returns on the stock market. At the start of this year, Alphabet, the parent company of the Google search engine, could be picked up at a relatively low valuation. In March, it was trading at just 18 times earnings. At the time, market sentiment was against the company, but following several strong quarterly earnings reports, that sentiment shifted. This was a justified correction when compared to the valuations of its peers. The company, once perceived as a laggard in the AI race, transformed its image into that of an AI leader.

   On an annual basis, the stock surged more than 50%, and since its lows in April, it has climbed a staggering 130%. It is difficult to believe that the company’s internal operations alone justify such a meteoric rise. Consequently, the increase is largely the result of multiple expansion and, therefore, an increased valuation. At current levels, you are now paying more than 30 times earnings. In relation to the broader market, this re-rating was justified.

3. The Buffett-indicator: by the end of last year, there were already talks of market overvaluation, and with this year’s gains, one could argue that valuations have stretched even further—despite the generally strong performance of the companies driving the market indices. A look at the Buffett Indicator confirms that we are indeed dealing with a significantly ‘overvalued’ market. The Buffett Indicator represents the ratio of the total stock market capitalization to a country’s annual GDP.

   • When the ratio is around 100%, it suggests the stock market is roughly the same size as the annual economy, which is generally considered ‘fairly valued.’

   • When it falls below 100% (e.g., 70-80%), stocks are often considered cheap relative to the economy—potentially a good time to buy.

   • When it significantly exceeds 100% (e.g., above 150-200%), the market is ‘expensive’: stock prices have risen sharply compared to actual economic output. This may signal a bubble, implying that future returns could be lower or that a correction is imminent.

   

   Looking at this ratio for the U.S. market today, we see the highest deviation from the historical norm on record. Valuations can always climb higher until proven otherwise, but personally, I always place great importance on the valuation of an asset. In the short term, buying low-valuation stocks that lack market attention can be underwhelming; however, I feel significantly more comfortable with that approach than blindly following hype-driven stocks with unjustifiable valuations.

4. The AI-narrative: expectations surrounding AI are sky-high. Indeed, the future possibilities seem endless, and I believe we cannot yet begin to fathom the full extent of where this will lead. While high expectations are certainly justified, investors also want to see these expectations fulfilled step-by-step—and history has taught me that patience is a virtue held by only a minority of investors.

   In mid-November, it was once again up to Nvidia to keep the narrative alive at a time when fear was starting to creep into the market. ‘Fortunately,’ they managed to live up to their reputation as an ‘earnings crusher.’ Had they failed to do so, a sell-off would undoubtedly have followed. This highlights the awkward position—a virtual ‘split’—in which investors currently find themselves. Consequently, it remains to be seen how much further this AI rally can be stretched.

What I will do in 2026

I continue to search for companies that offer an attractive valuation relative to their growth potential and the quality of their underlying business. I don’t adhere to a rigid threshold for when a valuation becomes ‘too high’; instead, I weigh all factors to achieve a compelling risk-reward ratio.

Beaten-down companies naturally pique my interest, businesses that once commanded much higher share prices and premium valuations. Currently, firms like PayPal and Novo Nordisk, both of which I covered earlier this year, come to mind. In my view, the investment cases for these companies remain intact. Their current valuations do not align with their long-term prospects. PayPal, for instance, is implementing significant internal improvements and securing strategic partnerships that will yield future benefits. Their recent application for a banking license also unlocks new avenues for growth.

I mentioned both in an earlier article this year:

Novo Nordisk received approval last week to offer its weight-loss drug, Wegovy, in pill form in the U.S. Clinical trials indicate that patients using the oral version lose an average of 16.6% of their body weight. Until now, obesity medications were only available via injection. Novo Nordisk’s core markets, which areobesity and diabetes, are projected to reach a total size of one billion people within a few years. Currently, the company treats fewer than 50 million. Despite several headwinds over the past year, the price remains attractive to me. Indeed, the stock jumped 10% immediately following the Wegovy pill approval.

Recently, I also published an analysis of Duolingo. The stock has plummeted over 70% from its recent peak, which immediately caught my attention. What causes a company’s valuation to drop by 70% in just a few months? Duolingo scores exceptionally well on quality metrics: it is virtually debt-free, the founder remains at the helm, and growth remains highly attractive. You can read the full analysis here.

Meta captured my attention in a similar way back in 2022. At the time, the stock also cratered by more than 70%. Despite massive investments with no immediate return, the core business remained incredibly strong and was more than capable of funding those expenditures. At one point, the valuation simply didn’t make any sense. I accumulated shares in stages, bringing my average cost basis to around $140. There were moments of doubt as the price continued to slide, but rationality eventually returns to the market. I will never forget the ‘Year of Efficiency’ announced by Mark Zuckerberg. The share price performed a complete 180-degree turn, helping Meta become one of my best-performing positions ever. The path was paved with uncertainty, but it ultimately paid off. Not every company will achieve such a dramatic turnaround, but significant opportunities arise when you have a strong management team and a sound business case.

In 2026, I will continue to seek out opportunities that offer the potential for strong returns. I provide the analysis; it is then up to the individual investor to decide if the case fits within their personal portfolio.

Cash & Compound substack in 2026

I recently introduced a paid subscription tier to my Substack. I have established exclusive partnerships with the largest crypto education community in Belgium and the highest-rated alternative investment education platform in the Benelux. I write analyses and articles for both communities. Since they pay for this content, it is only fair to the members of these communities that I place certain deep dives behind a paywall. This shift is also a logical step given the significant amount of work I pour into these comprehensive reports, which are entirely based on my own primary research. My goal is to inspire you and create value through my unique analytical lens.

As Lead Public Equity for MarketVision Capital, an alternative investment fund, I strive to identify market opportunities by applying common sense and avoiding unnecessary complexity. Moving forward, I will be rebranding the ‘Weekly Review’ and will also begin sharing the transactions from my personal portfolio. I look forward to continuing this journey of knowledge and investing with you throughout 2026.

Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

Merry Christmas to all of you!

In this series of articles, I will present several stocks that I believe are exceptionally well-positioned as we head into 2026. In this first installment, I am introducing a platform giant that has recently been somewhat overlooked by the broader market, alongside a market leader in an emerging economy that has delivered a staggering 28% CAGR since its IPO.

I hope you find it valuable!

In this series of articles, I will be identifying companies that are well-positioned as we head into 2026. The first company I want to highlight had an excellent year in terms of returns, even though market perception shifted throughout the year. At the time of writing, the stock is up approximately 35% compared to January 1, 2025. I believe most investors would be more than satisfied with a 35% annual return. However, current sentiment has turned somewhat negative, with the stock having lost 20% since its peak this year. Nevertheless, I believe the company is very strongly positioned for 2026. Contrary to the negative sentiment fueled by recent developments regarding potential alternatives in their operational segment, I am convinced that current trends actually offer significant future opportunities for the company. The business I would like to highlight with the start of 2026 in handsight is: Uber Technologies, Inc.

1. Uber Technologies, Inc. (UBER)

Most people know Uber for its ride-sharing platform, which matches drivers with passengers. Uber was long considered the primary disruptor of the traditional taxi system.

Uber Technologies Inc. operates as a global technology platform that provides mobility, delivery, and freight services. They describe it as to power movements from point A to point B. Its business model is characterized by a platform-based approach, leveraging network effects, algorithmic pricing, and asset-light operations.

Recently, however, the market seems to believe that Uber itself is being disrupted by the rapid rise of autonomous vehicles.

I am not entirely convinced of this yet. In fact, I believe that autonomous vehicle providers could eventually be integrated into a platform like Uber. Furthermore, Uber has diversified beyond ride-sharing; it is now a major player in delivery services and is increasingly involved in freight transport. Let’s look at the numbers of last years:

2024 Revenue Breakdown Uber concluded 2024 with a total revenue of nearly $44 billion, divided as follows:

• $25 billion from the Mobility division

• $14 billion from the Delivery division

• $5 billion from the Freight division

Mobility

Uber’s Mobility segment is the foundation of its business model, operating as a digital marketplace that connects riders with independent drivers. All in the function of helping customers to go anywhere they need. The company leverages a dynamic pricing algorithm, adjusting fares based on demand, traffic conditions, and real-time availability of drivers. Uber generates revenue by taking a commission, typically between 20-30%, from each ride

Delivery

The Delivery segment, primarily represented by Uber Eats, extends Uber’s platform-based model into food, grocery, and retail deliveries. Revenue is generated through restaurant commissions (15-30%), customer delivery fees, and advertising placements, with the latter emerging as a high-margin growth area. Uber Eats benefits from an operational synergy with its Mobility business, as many drivers switch between rides and deliveries based on demand, optimizing asset utilization. The delivery ecosystem has expanded beyond restaurants to include grocery and pharmacy partners, positioning Uber as a broader logistics provider.

Freight

Uber’s Freight business applies the company’s marketplace model to the logistics sector, connecting shippers with carriers in a digital freight brokerage platform. The segment generates revenue through transaction-based fees, leveraging real-time pricing to match supply with demand efficiently. Unlike traditional freight brokers, Uber’s technology enables automated load matching, route optimization, and dynamic pricing, reducing inefficiencies in the supply chain.

Furthermore, there are various new avenues for expanding the company’s service offering. Fitting within the broader mission of moving people and goods from point A to point B, Uber is now including the delivery of ski equipment in its portfolio. This initiative is set to launch this winter.

The Power of the Network Effect

The company primarily benefits from the network effect it has built. According to its most recent financial statements, Uber is active in 15,000 cities and serves millions of people daily. This generates a massive stream of data, allowing the company to deploy its technology highly efficiently to optimize demand forecasting, matching, and pricing. These synergies form the core of the company’s deep technological advantage, enabling them to launch new services quickly and continuously optimize existing ones.

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Platform synergies

Uber’s platform synergies are built on its network effects, technological infrastructure, and cross-platform user engagement, enabling it to scale operations efficiently across its Mobility, Delivery, and Freight segments. The company benefits from an integrated ecosystem, where data, algorithms, and operational expertise enhance each service offering. Its massive network of drivers, consumers, merchants, shippers, and carriers ensures liquidity across services, optimizing supply and demand matching. For instance, the shared driver pool between Mobility and Delivery improves asset utilization, reducing downtime and increasing earnings potential for drivers, which, in turn, enhances service reliability for consumers.

A key element of Uber’s synergies is cross-platform user engagement, where customers who utilize both Mobility and Delivery tend to generate significantly more transactions per month than those who use only one service.

For example, in Q4 2024, users of both services averaged 11.4 trips per month, compared to 5.2 trips per month for single-service users.

This higher engagement drives revenue growth, reduces customer acquisition costs, and strengthens brand loyalty.

Risks & opportunities

The primary risk at this stage is, of course, the continued expansion of autonomous driving. Waymo, the self-driving subsidiary of Google’s parent company Alphabet, is becoming operational in an increasing number of states, and its daily trip volume is rising sharply. Its approved launch in London in 2026 can be seen as a major milestone for the company.

Furthermore, we cannot ignore Tesla’s Robotaxi. Tesla CEO Elon Musk has long hinted at a full operational rollout, though the company is still facing significant regulatory hurdles. Nevertheless, test cases are currently being deployed, and the results appear positive. Traditional automakers are also likely to bring autonomous variants to market. Many of these providers will want to introduce their own proprietary systems to maintain control over how their vehicles are matched and utilized.

If this trend persists, Uber’s current competitive advantage, which is its ability to efficiently match drivers and passengers, could be significantly eroded. By eliminating the middleman in the driver-passenger equation, costs for users could drop substantially, creating a major incentive for consumers to switch.

Opportunity: Uber as a strategic orchestrator

Personally, I believe there are significant opportunities hidden within this shift. Ride-sharing demand is subject to extreme fluctuation; there are clear peak hours, but demand drops sharply once people are at work. One can assume there is a predictable “baseline demand” for transport services, which Uber can accurately map thanks to its vast data reserves. During peak hours, this baseline can be supplemented by human drivers, who can also cater to specific customer needs that AI might not yet handle.

The financial aspect is also crucial. Autonomous vehicles (AVs) are capital-intensive assets. For providers, any time a vehicle sits idle represents a direct loss. Uber’s market insights can help deploy these autonomous fleets more efficiently. Therefore, I see a potential role for Uber as a manager or aggregator of various providers.

While Waymo and Tesla could theoretically form a duopoly, I expect a much more crowded field. Amazon is already working on autonomous delivery; if they master delivery, the step toward passenger transport is a logical one. Additionally, Chinese players are becoming increasingly prominent, taking market share from traditional automakers. While some traditional brands will undoubtedly disappear, others will likely successfully make the transition to autonomous technology.

The financials

Last quarter

In its latest earnings report, Uber delivered an exceptionally strong earnings report. For the third quarter of 2025, the company recorded 3.5 billion trips, resulting in total gross bookings of nearly $50 billion. These figures represent a year-over-year increase of 22% and 21%, respectively. The growing importance of the delivery segment is further evidenced by its performance in the most recent quarter, where bookings value (gross bookings) surged by 25%. These are figures characteristic of a high-growth company. Although Uber has already moved through several stages of its corporate lifecycle, its sustained growth continues to offer significant potential for the future.

It wasn’t just the most recent quarter that was strong; over a longer time horizon, Uber has consistently managed to report impressive growth across its key performance indicators (KPIs). This is evidenced by the steady upward trend in both monthly active platform consumers (MAPCs) and the total number of trips.

Valuation

At the time of writing, the stock is trading at a price-to-earnings (P/E) ratio of 16, which corresponds to approximately $80 per share. The company has already successfully completed its transition to consistent profitability. A closer look at the free cash flow (FCF) reveals a valuation of roughly 20 times FCF. In absolute terms, the free cash flow is showing consistent and positive trends. Due to strengthening internal fundamentals and the recent share price pull-back, we are currently seeing a relatively low valuation based on free cash flow.

At the current price, assuming a 12% required rate of return, the market is currently pricing in an FCF growth rate of approximately 6%. This is modest when compared to the growth trajectory the company has maintained over the past few years. In my view, the fair value of this stock currently sits around $120 per share, implying an undervaluation of approximately 33%.

This $120 price target is based on fairly conservative estimates. It is, of course, derived from a valuation model and is not necessarily a reflection of future reality; the market can be unpredictable. Instead, it serves as an indicator of market expectations. Currently, the market expects growth to be significantly lower than the 13% growth rate used in this analysis. A valuation always depends on the assumptions an investor makes about the future, which is why determining a valuation range is often more valuable than focusing on a single price level.

Execution and Management

The key question remains whether Uber can sustain the growth of recent years while maintaining its margins. Ideally, we would like to see margins expand further as the company matures. Historically, Uber has experienced significant volatility, which is consistent with its current stage in the corporate lifecycle. Its transition to consistent profitability is still in its early stages.

If management remains focused, I believe this represents a long-term opportunity that is being significantly underestimated, particularly for investors who are comfortable with platform businesses that are only now beginning to flex their financial muscles. Naturally, there are risks involved, but that is true for any kind of investment.

The next one

The next company I believe is well-positioned for the year ahead offers significant exposure to emerging markets. While such investments typically carry a higher inherent risk, this company has proven itself to be an established player over the years. It is also focused on building an ecosystem designed to simplify life for its users and consumers.

Year-to-date (YTD), the stock has delivered a return of approximately 17%, considerably lower than the previous company. However, it is also currently trading about 25% below its 2025 peak. Let’s dive deeper into the details.

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There was a great deal of anticipation surrounding the past week on the stock market. With Christmas fast approaching, major investment firms are making their final year-end portfolio adjustments. While last week was marked by growing uncertainty regarding AI demand, this week was dominated by the release of U.S. CPI figures, which had been delayed by the government shutdown earlier this year.

Additionally, tensions ran high leading up to the interest rate decision by the Bank of Japan; on previous occasions when rates were hiked, the markets reacted quite negatively. In this update, we will also delve into Micron’s strong earnings report and the disappointing figures from Nike.

I hope you find these insights valuable.

General macro economics

US CPI numbers

U.S. inflation fell to 2.7% in November, coming in significantly lower than the anticipated 3.1%. Core inflation also trended lower than projected at 2.6%. While these figures provided a brief boost to European stock markets, skepticism remains regarding the reliability of the data. The recent government shutdown has introduced “statistical noise,” as many price data points could not be physically observed by employees of the Bureau of Labor Statistics.

Instead, many figures were estimated or based on historical data, raising doubts about their current accuracy. Consequently, economists at JPMorgan and Barclays expect inflation to resurface in the coming months. Although the market initially reacted positively, caution ultimately prevailed as investors are wary of the data quality concerns.

Despite these doubts, the report reinforces the narrative of a cooling economy. Wage growth is slowing as the number of unemployed individuals now exceeds job vacancies in the U.S., which could further dampen inflation in the critical services sector. This paves the way for the Federal Reserve to implement further rate cuts in 2026.

Bank of Japan rate hike

The Bank of Japan (BOJ) has raised its policy rate, marking the first hike since January and the first under the administration of Prime Minister Sanae Takaichi. Takaichi advocates for aggressive fiscal policy and monetary easing. This step is part of the ongoing normalization of monetary policy following the BOJ’s decision to end its negative interest rate policy in March 2024.

The departure from negative rates originally sent shockwaves through the financial world, resulting in a massive spike in the VIX Index. The subsequent rate hike also caused a surge in the VIX, though less extreme than the first, it was still significant. Market sentiment was tense this week as a rate increase to 0.75% was widely expected; however, broad equity markets managed to end the week on a positive note.

The central bank previously raised rates in July 2024 and January. Since Takaichi took office, the Yen has devalued sharply due to concerns over her expansionary policies and Japan’s deteriorating fiscal health, leading to a sell-off in both the currency and government bonds. The yield on 10-year Japanese government bonds hit 2%, its highest level since 1999 which indicates a significant psychological threshold. Markets now expect another rate hike in mid-2026, which would bring the rate to 1%. This reflects the BOJ’s search for a balance between supporting economic growth and maintaining inflation near target levels.

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Carry trade impact

Previous Japanese rate hikes often triggered volatile reactions in asset markets due to the “carry trade” principle. In a carry trade, investors borrow money in a currency with low interest rates (such as the Japanese Yen) to invest in higher-yielding assets elsewhere. The goal is to profit from the interest rate differential, or the “carry.” As long as exchange rates remain stable or move in the investor’s favor, the trade is profitable. However, when policy shifts cause the currency to appreciate, investors can suffer heavy losses, especially when high levels of leverage are involved.

ECB to keep rates steady

The European Central Bank (ECB) has decided to leave its base rate unchanged at 2% for the fourth consecutive time, unlike the BOJ earlier. The decision was unanimous. According to President Christine Lagarde, there were no discussions regarding potential rate hikes or cuts.

There was positive news regarding growth, as the Eurozone GDP forecasts for this and next year were revised upward. The initial growth projection of 1.2% has been raised to 1.4%. For 2026, the growth forecast was adjusted to 1.2%, up from the 1% projected last September.

A point of concern arising from the ECB’s decision is that while headline inflation is near the 2% target, services inflation remains stubbornly high at 3.5%. Lagarde expressed surprise that these figures remain so far above the general target, attributing this primarily to unexpectedly strong wage increases. The ECB now expects inflation to settle at 1.9% in 2026, a slight upward revision from the previous estimate of 1.7%.

Winners of the week

Micron (MU)

On Wednesday, Micron managed to dispel some of the lingering doubts surrounding AI demand. For Q1 2026, revenue surged by an impressive 56% compared to the same period last year. Additionally, the company saw a significant improvement in its gross margin, which came in more than 11% higher than the previous quarter.

The memory chip specialist projects revenue for the second quarter of its fiscal year to range between $18.3 billion and $19.1 billion, far exceeding analyst expectations of just $14.4 billion. Similarly, the estimated earnings per share of $8.22 to $8.62 is considerably higher than the analyst estimate of $4.71. Micron’s success is driven largely by high demand for HBM chips (High Bandwidth Memory), which are essential for training and running complex AI models. This upward revision of the forecast signals strong demand, offering reassurance to investors that there is still significant momentum in the market for these types of investments.

Oracle (ORCL)

Last week, we discussed Oracle following the release of its quarterly results. Those figures were met with skepticism from investors who questioned the financing of the company’s massive capital expenditures. As a result, the stock took a significant hit last week, continuing what has been a turbulent ride on the stock exchange over the past year.

This week, however, news emerged that investors found much more palatable. The social media app TikTok has reportedly signed an agreement to sell its U.S. division to a consortium that includes Oracle. Under this deal, 80.1% of the shares will be owned by the new joint venture, while the Chinese parent company, ByteDance, will retain just under 20%.

The joint venture will operate as an independent entity with full control over U.S. user data, algorithms, content moderation, and software security. ByteDance will remain responsible for global product compatibility and specific commercial activities, such as e-commerce, advertising, and marketing. U.S. investors reacted positively to the news; after long-standing threats of a TikTok ban due to concerns over data privacy and Chinese oversight, this deal appears to offer a viable solution, allowing Americans to keep scrolling without further interruption.

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The fallen angel

Nike (NKE)

On Thursday, Nike reported its second-quarter earnings. The company is currently navigating challenging times, a reality that has been clearly reflected in its share price. The sportswear giant is operating in a highly competitive environment while simultaneously dealing with weakening consumer sentiment. In response, decisions made by previous management are being reversed as the focus shifts to a new strategic approach aimed at restoring sustainable growth.

After several quarters of significant contraction, the company returned to a very modest revenue growth of 1% compared to the same period last year. However, this was offset by rising expenses, which caused profits to plummet by approximately 32%. Total quarterly profit amounted to $792 million, down from $1.16 billion a year ago.

The path to sustainable growth is through our Win Now actions, accelerated by our Sport Offense. We've seen growth in the NIKE Brand and Running, with North America leading the way. However, each brand and geography is at different stages, with China having the longest road ahead.

Margins were under pressure due to the impact of import tariffs, which are projected to have a substantial annual impact of $1.5 billion. Furthermore, the Chinese market remains a significant headwind, with revenue there declining by 16%. While turnaround efforts in the U.S. market appear to be yielding positive results, China continues to be the primary source of concern for the company.

In my opinion, the impact of tariffs is currently being overlooked far too often. An annual hit of $1.5 billion for a company like Nike is substantial and weighs directly on corporate margins. While companies aim to pass these costs through to the consumer, there eventually comes a breaking point where the consumer no longer accepts the price hikes and begins seeking alternatives.

The technicals

From a technical standpoint, we previously identified a dominant downtrend in Nike’s stock that had already been tested. This downtrend remains active and was tested once again; however, Nike has so far been unable to break through. A decisive breakout is required before we can speak of a true turnaround, and that has yet to materialize. For this to happen, positive fundamental news will be needed to support the share price. Unfortunately, the information shared during the recent earnings call failed to reassure investors or restore confidence in the stock.

Meanwhile, Nike continues to trade at a premium valuation. You are currently paying roughly 30 times earnings for the company. For a business that has posted several quarters of negative growth and has only just managed a modest 1% return to revenue growth, this is still a very expensive valuation.

Those who decided to invest in the footwear giant five years ago have been left empty-handed, as the total return over this period is currently negative. This is certainly not the performance one would expect from a “value play” or a contrarian position in a portfolio. This stands in stark contrast to our analysis of Walmart last week, where we observed a significant outperformance relative to the Nasdaq index.

What to look forward to?

Christmas break and data

With Christmas on the calendar next week, we typically expect a significant drop in market activity. Major investment firms have already positioned themselves for the coming year, and many are already looking forward to the holiday break. Since stock exchanges will be closed for several days around Christmas, trading volumes are expected to remain thin.

Nevertheless, there are still a few key items to watch. On Tuesday, the U.S. Department of Commerce will release third-quarter economic growth figures. This publication comes much later than originally scheduled due to the recent government shutdown. Economists anticipate that the U.S. economy grew at an annualized rate of 3.2%, a slight deceleration from the 3.8% recorded in the second quarter.

This slowdown is primarily attributed to weaker net exports. In the second quarter, imports dropped sharply as companies aggressively reduced their high inventory levels. U.S. businesses had previously imported more goods than usual and built up stockpiles during the first quarter in anticipation of potential hikes in import tariffs.

Looking Toward 2026

Finally, I am currently reviewing several stocks that I believe deserve extra attention in 2026. I will be sharing my insights on these in a series of articles and posts as we approach the end of the year. Be sure to stay tuned for those updates.

Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

This week was dominated by the FOMC meeting. Expectations were that the interest rate would be cut, which was already largely priced into the markets. The tone of Chairman Powell’s speech was expected to provide more insight into the state of the economy than an isolated rate cut. Additionally, there were some notable quarterly reports that crowned major players as the “losers of the week”. Finally, we will highlight our stock of the week.

I hope you find it valuable.

General market environment

FED rate cut

On Wednesday, the Federal Reserve held a notably dovish press conference following the expected rate cut, with Chairman Powell emphasizing that after 75 basis points of cuts since September, the policy rate is now in neutral territory, and the Fed is well-positioned to wait and see how the economy develops further. He called the current policy choices difficult because the risks of both higher unemployment and persistent inflation are present, but that the gradual cooling of the labor market justified yesterday’s cut. At the same time, he indicated that the wage figures are likely to be significantly overestimated and that the labor market faces considerable downside risks, while the high interest rate, in his opinion, still causes the largest share of the inflation overshoot.

The Fed announced it would begin purchasing $40 billion of Treasury bills in the next 30 days, followed by further purchases to keep bank reserves at an ample level. This can be seen as a form of reserve management without being labeled as new QE (Quantitative Easing). The economic projections were revised upwards (stronger growth, lower inflation), and the market is currently pricing in 2 rate cuts for the upcoming year. However, analysts ultimately expect more easing (around 100 basis points in 2026) because job growth is anticipated to cool significantly without inflation flaring up again.

All in all, the message conveyed a cautious, almost hawkish undertone: the Fed is prepared to keep the rate high for longer than the market currently believes. Therefore, no clear, stated direction has been given for investors to latch onto.

The market priced in the rate cut, but that didn’t significantly turn the sentiment around. The week concluded with a sell-off wave in AI-related stocks. The S&P 500 closed more than 1% lower on Friday, and the Nasdaq saw even sharper declines. Market sentiment remains in the territory of Fear, even though we are still close to all-time highs on the stock exchanges. The markets are currently having difficulty choosing a direction. Various economic signals contradict each other, causing investors to hover between optimism and pessimism.

Approval to sell Nvidia chips to China

On Monday evening, US President Donald Trump announced on Truth Social that he personally informed Chinese President Xi Jinping that Nvidia is once again permitted to export its powerful H200 chips to approved customers in China and other countries, provided that this does not jeopardize US national security and that Nvidia surrenders 25 percent of the proceeds to the US government. Similar deals with Intel and AMD are currently being finalized. Nvidia CEO Jensen Huang had been lobbying for this for some time due to the billions at stake, as the H200 GPUs are essential for training advanced AI models; until now, only the less powerful H20 was allowed into China, but that export failed because Beijing encouraged its companies and researchers to use their own alternatives.

Trump emphasizes that he is protecting national security, creating American jobs, and maintaining the leading US position in AI, with the absolute strongest Blackwell and Rubin chips explicitly excluded from the deal.

The decision fits into Trump’s broader attempt to de-escalate the trade war through direct negotiations with Xi, against the wishes of China hawks in his own party who prefer a strict export ban to prevent China from winning the AI race—a strategy that, however, carries the risk of China doubling down on its own chip development, as it proved earlier this year with the efficient DeepSeek model.

It would have been too easy for Trump to make that announcement without a counter-reaction from the Chinese side. China is about to restrict access to the advanced Nvidia models, precisely because they want to focus more on their own, locally made alternatives. The country is strongly committed to becoming self-sufficient in semiconductors. Buyers of the chips would reportedly first have to go through an approval procedure. The initial ban on sales in China prompted the Chinese mainland to produce its own high-performance chips.

“Losers” of the week

No winners this week

Normally we discuss the winners of the week. This week, there were few winners to identify in the market, and we mainly dealt with negative outliers. Therefore, this week we will highlight a few losers of the week because it also indicates the extent to which the market is currently reacting. As mentioned above regarding the FED’s rate cut, there are many contradictory messages, and a bit of negative news can trigger a panic reaction.

Oracle and Broadcom, two prominent players in the AI narrative, had a rough week. Both released quarterly earnings, and since few other companies are reporting figures at the moment, these are closely watched to get some indication of the economic and company-specific backdrop. The reaction in both share prices following the release of the quarterly results was weak. Despite both companies recording strong growth, they both dropped by double digits this week. This once again shows how high the expectations are for certain companies playing a key role in the development of AI.

Oracle (ORCL)

On Wednesday after the US market closed, Oracle announced its second-quarter earnings. Naturally, everyone was watching to see what the numbers would reveal, as expectations were high after the company’s stock made a quantum leap last quarter. The company’s RPO was the key focus back then. RPO stands for Remaining Performance Obligation. This is a crucial financial metric that represents the total future revenue from already signed customer contracts for which a company has not yet delivered the performance or recognized the revenue as earned. RPO combines both billed (deferred revenue) and unbilled (backlog) amounts, giving investors a clear insight into future financial obligations. It is essentially the company’s contracted revenue pipeline, showing concrete future income from promised but yet-to-be-delivered products or services. The RPO for Q3 rose to $523 billion, representing a 438% increase compared to the same period last year.

Other metrics:

• Revenue: +14%

• Cloud Revenue: +34%

• Software Revenue: -3%

• EPS: +91%

Despite the strong results, the stock went down almost 15% the following day. This is quite remarkable for a company that recently had a market capitalization of $1 trillion. This had everything to do with the tech company’s capital investments (CapEx). Not only were they significantly higher than expected in the second quarter, the CapEx came in at $12 billion versus an expected $8.25 billion, but the announcement that even more would be added next year was too much. After the first quarter, Oracle had announced it would invest $35 billion next year, mainly in expanding extra cloud capacity to fuel the AI revolution. Just three months later, that figure has already risen to $50 billion. This sharp increase reignited the doubt that had been creeping into the markets in recent weeks. Investors are questioning whether the hundreds of billions being poured into AI computing power through every possible channel in the coming years can be recouped.

JPMorgan cut its price target from $270 to $230 and maintained a Hold rating. Analyst Mark Murphy stated that the sales estimate for the third quarter is below consensus and that the margin contribution also appears limited. He added that the market wants the increase in capital expenditures to lead to a faster increase in revenue, “But that is not the reality right now.”

From a technical perspective, ORCL is approaching a potentially interesting juncture. A previous resistance zone has transformed into a support zone here, which could lead to a possible bounce in the stock in the relatively short term. Additionally, the price is moving on the weekly SMA 50, which in this case can also be viewed as support if this level can be held.

Broadcom (AVGO)

Broadcom published strong quarterly figures that were initially better than analysts had expected: revenue increased by 28% to $18 billion, and earnings per share came in at $1.95, against expectations of $17.5 billion and $1.87, respectively. For the current first quarter, the company forecasts revenue of $19.1 billion (above the $18.5 billion analysts projected). The AI division, in particular, grew explosively: revenue from AI chips surged by 74% year-over-year, and CEO Hock Tan expects it to double in the current quarter to $8.2 billion.

The stock initially opened more than 3% higher in after-hours trading, but sentiment completely reversed during the analyst call. Investors were disappointed because Tan only mentioned a “minimum” of $73 billion in AI orders for the next six quarters (less than some had hoped for) and because he refused to give a concrete full-year outlook for 2026. While he emphasized that more orders could be added and that lead times are 6 to 12 months, it was not enough to restore confidence.

What is Broadcom known for?

Broadcom owes its strong AI position primarily to its specialization in ASICs (custom-made AI chips), which are more efficient and cheaper than Nvidia’s general-purpose GPUs. Among other things, the company assists Alphabet/Google with the development of its TPU chips, which power the Gemini AI model. The rapid reversal in the stock illustrates how sensitive the market currently is to any signal about the sustainability of the AI investment wave among the major hyperscalers.

Or maybe one winner

Lululemon (LULU)

LULU reported quarterly earnings yesterday and added that their CEO is stepping down after a year of disappointing sales, especially in the United States. McDonald, who had been at the helm since 2018, will remain connected as a senior advisor until the end of March 2026 to ensure a smooth transition.

The announcement coincided with the publication of the quarterly results, which showed a 2% decline in revenue in the Americas (versus a 33% increase internationally) and a 13% drop in profit. The company is struggling with higher costs due to President Trump’s tariffs, fiercer competition from brands like Alo Yoga, and persistent criticism of the strategic direction from founder Chip Wilson.

Analysts point to a weakened athleisure market, stronger competitors, and execution issues as the main causes of the slump. Sales at Lululemon have been sputtering for a while. The company is facing competition from new firms like Alo Yoga and from private labels that mimic the style and are significantly cheaper. Chip Wilson, Lululemon’s founder, was reportedly frustrated with the company’s marketing and was considering forcing a boardroom battle.

The stock reacted paradoxically positively: +9% to +10% in pre-market and after-hours trading following the news of McDonald’s departure.

We previously saw similar announcements, such as the departure of a current CEO when results are disappointing, having a positive impact on the share price at companies like Starbucks and Nike. I wouldn’t want to be the CEO when the market reacts like that, haha.

Other stock news

Walmart is a tech play now

On Tuesday, Walmart shifted its listing from the NYSE to the Nasdaq. The retailer is thus becoming part of the world’s largest technology exchange. While the company is active in e-commerce and currently derives its growth from there, it primarily remains a supermarket.

The reason for the shift? Under CEO McMillon, Walmart has grown more than ever into a cash machine. Over the first nine months of this fiscal year, which runs until the end of January, cash flow increased by one-fifth to $27.5 billion.

In the most recent quarter, nearly all of the 4.5 percent revenue growth, whereof 4.4 percentage points, to be precise, was attributable to e-commerce.

The shift is sometimes justified by referencing AMZN, but I believe I don’t need to elaborate on the fact that the differences are quite clear. Amazon has AWS under its hood. AWS is the market leader in providing cloud infrastructure, and Amazon’s listing on the Nasdaq is self-explanatory. I personally find Walmart’s listing less obvious.

The growth trajectory is already largely factored into the share price: with a market capitalization of over $900 billion, investors value Walmart at 45 times its expected net profit for the current fiscal year. This is one-third more than the roughly 30 times net profit for the average stock in the Nasdaq 100—the globally popular Nasdaq tracker listed under the ticker QQQ—which will soon be trading at an even higher valuation, including Walmart.

This brings its profit-based valuation close to that of the other major retailer, Costco, which is currently trading at almost 50 times earnings.

Stock of the week

Figma (FIG)

Earlier this week, I shared an analysis of Figma. Figma is a cloud-based design and prototyping tool that allows teams to work on UI/UX designs simultaneously, similar to Google Docs but for design work. The company thus primarily targets product teams, designers, and developers within businesses. Figma only went public earlier this year and was close to being acquired by Adobe in the past, incidentally, a company that has also been heavily troubled on the stock market lately. That acquisition was not approved by authorities due to competition concerns. The company itself went public at the end of July. Beyond the last two quarterly reports, there is almost no public information available. Therefore, I based the analysis on these two reports to form a picture of the company, which is trading more than 70% below its peak price from earlier this year. The IPO hype seems to have vanished, and now appears to be a good time to objectively look at the company.

Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

Figma experienced one of the most high-profile IPOs ever this year. On the first day of trading, the stock price skyrocketed. It was, therefore, a highly anticipated IPO that was closely monitored by many investors and fund houses. The stock soared by hundreds of percent, only to be trading, at this moment, more than 70% below its rapid peak a few months later. There is not a vast amount of internal information available, only the figures from the two most recent quarters, yet I have conducted an analysis of the company based on the available data. In this analysis, we will review the business model, the management, and the company’s key financial figures.

I hope you find it valuable.

Business model

Figma’s business model is primarily a Software as a Service (SaaS) model, based on a freemium and tiered subscription structure, targeting individual designers and, crucially, large-scale collaboration within teams and enterprises. The core value lies in the cloud-based, real-time collaboration platform for interface and user experience (UI/UX) design. The free tier (”Starter”) functions as a powerful acquisition strategy, allowing individuals to learn and use the tool for free, which ensures wide adoption and strong bottom-up diffusion within organizations.

Monetization occurs through paid subscriptions, where the price per user per month progressively increases with the functionality offered and the scale of collaboration. This shifts the value proposition from a pure design tool to an essential platform for product design workflow management, where the switching costs for larger teams significantly increase, ensuring high retention and predictable, recurring revenue (ARR).

Overall, this revenue model positions Figma as an efficient player in the design software market, focusing on value creation through collaborative tools that surpass competitors like Adobe XD in ease of use and team integration, contributing to sustained growth.

Revenue model

Figma’s revenue model is primarily based on a freemium SaaS structure, where the company offers a free basic version to attract users and subsequently upsells them to paid subscriptions via a product-led growth strategy, which stimulates organic adoption and viral spread within teams. This is comparable with the land-and-expand strategy of Gitlab that we discussed in earlier posts. The core of the revenue comes from seat-based pricing, where customers pay per ‘editor’ seat. An editor seat refers to a user who actively creates or modifies designs.

This model ensures scalable recurring revenue, with high gross margins ranging from 86% to around the low 90s of percentages, as the marginal costs for additional users are low due to the cloud-based architecture.

Additionally, Figma generates revenue from enterprise licenses and potential add-ons, while the freemium aspect serves as a low-friction entry point that promotes conversion to paying customers, resulting in a strong net retention rate and expansion within existing accounts.

Subscription formulas

Figma utilizes a tiered subscription model with four main categories: Starter (Free), Professional, Organization, and Enterprise. Each subscription targets different user groups, from individual designers to large enterprises, and offers scalable options via ‘seat’ types. All plans include basic functionalities such as multiplayer collaboration, unlimited viewers, and export options, but higher-tier subscriptions add advanced tools for teams, security, and AI integrations.

Starter

This entry-level tier is ideal for individual users, students, or small personal projects, serving as the freemium entry point to try out Figma at no cost.

• Price: Free

• Number of Seats: Unlimited for individual use

• Limitation: Limited to basic functionalities

Professional

Designed for professionals or small teams needing unlimited files and projects, focusing on advanced prototyping and dev-handoff. It encourages collaboration within a limited team and offers a balance between flexibility and affordability through monthly billing.

• Full-Workplace Price: €16 / month

• Number of Seats: Flexible for teams, unlimited number of viewers

• Limitations: Ideal for starting teams, but limited scalability for growing organizations

Organization

This subscription is tailored for mid-sized companies that design products across multiple teams, emphasizing unlimited teams, basic security, and centralized assets such as libraries and workflows. It promotes scalable collaboration with annual billing for cost control.

• Full-Workplace Price: €55 / month

• Number of Seats: Unlimited for teams + supports multi-team structures

• Limitations: Suitable for growing companies, but not for complex multi-brand environments

Enterprise

For large enterprises designing for multiple products or brands, offering enterprise-level security, scalable design systems, and simplified admin management. This plan maximizes compliance and extensibility via APIs and advanced analytics.

• Full-Workplace Price: €90 / month

• Number of Seats: Fully scalable to customized workspaces and unlimited teams

• Limitations: Higher cost, but the most robust option for Fortune 500 companies with strict requirements for data and collaboration.

The IPO

The first trading days of Figma after its IPO on the NYSE under the ticker symbol FIG on July 31, 2025, were nothing short of spectacular, characterized by extreme volatility and a massive influx of capital. The shares were priced at $33 a share, already above the expected price range of $30–$32, but actual trading opened much higher at $85. The price evolution during the first trading day, Thursday, July 31, was explosive: the stock surged by over 250% compared to the IPO price and reached daily peaks exceeding $124 per share, closing above $115. This made it the best first day for a multi-billion dollar venture-backed IPO in years, surpassing the $20 billion valuation that Adobe had offered in 2022, with a market capitalization reaching nearly $55 billion in the first hours. However, the period from July 31 through August 5 was also marked by a certain correction following the initial euphoria; although the shares did not maintain their parabolic rise from the first day and dropped by over 20% on Monday, August 4, the price still remained multiple times higher than the original IPO price. The overall evolution during this first week showed a pattern of very strong investor demand, which subsequently gave way to some profit-taking and market speculation, resulting in a price that fluctuated but stabilized at a significantly higher level than the IPO opening price.

The extremely high valuation, driven by scarcity and overwhelming investor demand, quickly proved unsustainable for a durable trading price, leading to sharp profit-taking and a retreat.

This correction continued in the following weeks: the stock steadily declined from the peaks above $120 to consolidate in the $70 to $80 zone by mid-August. The price drop accelerated after the company reported its first quarterly earnings as a public company on September 3, 2025. Although Figma’s revenue growth and profitability were strong, the projected guidance for the following quarter was lower than the extremely high market expectations, resulting in a further drop in the stock price of over 20% in the days following the publication.

In the autumn months of September and October, the price continued to erode, partly pressured by broader uncertainty in the technology markets and the approaching end of the lock-up period for early investors and insiders, which implied a potential increase in the supply of shares. The stock declined to the $40 to $55 zone. By December 2025, the price stabilized in an even lower range, close to $39, representing a drop of over 70% from the all-time high of the first day, although it still traded above the original IPO price of $33. This correction reflected a normalization after the IPO hype, with investors shifting their focus from the initial excitement to the long-term valuation based on fundamental growth and profitability outlooks.

Management

CEO & co-founder: Dylan Field

Dylan Field, the co-founder and CEO of Figma, began his professional career with an early look into the tech industry and a remarkable choice to drop out of his studies at Brown University after receiving a Thiel Fellowship in 2012, a $100,000 grant to focus full-time on starting a company. Field, who studied Computer Science and had previously impressed as an intern at LinkedIn, saw an opportunity with his classmate and co-founder Evan Wallace to revolutionize the design world. They launched Figma in 2012 with the radical idea of making design software completely cloud-based and real-time collaborative, similar to Google Docs, in an era dominated by traditional, desktop-based tools. After four years of development, they released the product publicly in 2016. Field’s main professional accomplishments with Figma include transforming the market by centralizing design systems and streamlining the workflow between designers, product managers, and engineers. This led to enormous growth and corresponding high valuations. Although a $20 billion acquisition by Adobe was announced in 2022, the deal failed in 2023 due to regulatory concerns, after which Field successfully led the company to an IPO at the end of July 2025.

Most recent quarters

Operational

Figma is strategically positioning itself at the forefront of the AI revolution, viewing it as a significant tailwind. The company’s thesis is that AI excels at content and asset creation, shifting value “up the stack” where design becomes the key differentiator. Figma’s platform is designed to improve as frontier AI models advance. A significant development is the acquisition of Weavy, which will join as Figma Weave. Weavy’s technology allows users to compose AI model outputs with professional editing tools on a single browser-based canvas, enabling higher craft and more sculpted results from AI-generated content. This acquisition reinforces Figma’s belief that the initial AI prompt is merely a starting point, and true value lies in the subsequent design and refinement.

Figma Make, launched in beta earlier this year and generally available in July, is gaining significant traction, with approximately 30% of customers spending $100,000 or more in ARR using it weekly by the end of Q3, and this number continues to grow. Figma Make allows users to turn text prompts or existing designs into workable prototypes or web apps, now with the ability to integrate existing design systems for on-brand consistency. This is expanding Figma’s reach to new personas like product managers and user researchers, enabling faster idea validation and prototyping.

Q2 2025

Revenue

Figma is a company that is recording strong growth. In Q2, revenue came in at $250 million. On an annual basis, this represents an increase of 41%. Since Q2 2023, this corresponds to a CAGR of 45%. Revenue has thus more than doubled since Q2 2023, when revenue stood at $118.7 million.

Net Dollar Retention Rate (NDR)

It measures the percentage change in recurring revenue from a specific, existing cohort of customers over a defined period, and completely excludes revenue from new customers. The NDR provides a deep insight into the health of the existing customer base and the product-market fit by assessing the extent to which revenues from expansion, think about the upsells, cross-sells, or more licenses, outweigh the revenues lost due to churn (lost customers) and downgrades (customers moving to a cheaper plan). An NDR above 100% means that the revenue growth generated by existing, satisfied customers is greater than the revenues lost due to customer attrition, indicating a highly efficient and sustainable growth engine that is crucial for a high company valuation in the tech sector. It is the ultimate measure of customer lifetime value and the stickiness of a product.

In the second quarter of 2025, the NDR stood at 129% for paying customers spending more than $10,000 in ARR. This is a very high percentage and demonstrates the extent to which Figma successfully manages to sell more of its licenses and services to current existing customers. This shows that users are satisfied with the product and truly see its added value.

Q3 2025

Paying Customers

The image below illustrates the strong and consistent expansion of Figma’s customer base, with a specific focus on the most valuable segments, measured by ARR. On the left, the chart shows the number of Paying Customers with more than $10,000 in ARR, which evolved from just above 8 thousand in Q1 24 to almost 13 thousand in Q3 25. This represents an impressive growth of 32% in the quarter ending Q3 25 compared to Q3 24. This demonstrates the effectiveness of Figma’s upsell strategy towards mid-to-large teams.

Even more importantly is the evolution in the segment of paying customers with more than $100,000 in ARR, a crucial indicator for adoption within enterprise organizations. The chart is displayed on the right. This segment grew from 701 in Q1 24 to 1,262 in Q3 25, indicating rapid acceptance as the standard product design tool within the largest companies. The 44% growth in this top segment in Q3 25 underscores Figma’s successful shift from a pure design tool to an essential, scalable platform for workflow and design system management for large enterprises, a development that supports the company’s previously discussed high NDR.

Non-GAAP Gross Margin

The company’s gross margin is very high. Q3 2025 closed with a non-GAAP gross margin of 86%. This margin was slightly lower than previous quarters but was attributed to increasing costs incurred to support their AI-driven products.

Such margins are naturally attributable to the nature of the business model. A SaaS company naturally does not have the large investment needs to keep current operations running. The magnitude of the margins indicates a highly scalable model, which is naturally what Figma aims for.

As a result, Figma can invest a large portion of its money in non-product related functions. Research & Development (R&D) and Marketing are then areas where more money can be spent. This leads to internal product innovation and gives the company the ability to attract more customers through targeted marketing. Finally, a high gross margin is seen as a good indicator of the company’s future profitability. A company still in its early growth phase is therefore often attributed a higher valuation by investors.

Adjusted free cash flow

In Figma’s case, the Adjusted FCF is calculated by starting with the net cash flow from operating activities, subtracting capital expenditures and capitalized internal-use software development costs. This yields the regular FCF.

Subsequently, this is further adjusted by deducting the termination fee received from the abandoned merger with Adobe, and by adding the transaction costs and other related expenses associated with that abandoned merger. Then, the estimated income taxes related to that merger are also added to the total. This is how Figma derives the adjusted free cash flow. The adjustments are understandable from Figma’s operational standpoint because the matters related to the failed merger with Adobe somewhat distort the figures.

The table below shows the evolution of the adjusted free cash flow over the past quarters. The impact of matters related to Adobe was applicable until the end of 2024. As of Figma’s pivot to the IPO, there was no longer any influence from transaction costs related to the failed merger. In the third quarter, an operating loss was recorded due to a one-off expenditure concerning stock-based compensation. This is a significant cost, causing the operating loss to weigh heavily. Stock-based compensation is quite common in growth companies, especially when they have only recently gone public. This allows employees to gain co-ownership in the company. For existing shareholders, this naturally leads to the dilution of their existing shares. The evolution of this is something that should certainly be monitored. The quarters of 2025 show a declining adjusted free cash flow. In Q1, it was still $94 million, only to come in at ‘merely’ $49 million in Q3. This is inherent to the growth phase the company is in. The path to consistency is still long, but the building blocks and foundations to evolve towards consistent and growing free cash flows are certainly present.

Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

Last week, I took the time to look back at the past few years to use this as a foundation for the future. I included a brief review of the S&P 500 (SPX) returns over the last few years. Furthermore, this week, the main focus is on the FOMC meeting of the US Federal Reserve and their decision regarding US interest rates. The market is anticipating a rate cut and has been pricing this in on the stock exchanges over the past two weeks. Additionally, I spent the last two weeks researching Duolingo. I wrote a full analysis of it. You can find this analysis in this newsletter. I hope you find it interesting.

General market sentiment

The S&P 500 has risen by +68% over the past 36 months, which is the best three-year performance since 2021 and the second strongest period since the Dot-Com bubble around 2000, even stronger than the recovery following the 2008 financial crisis. The last time the market saw a higher and more powerful three-year rise was in the 1990s. Since 1930, this is only the 16th time that the rolling three-year returns have been more than 1.5 standard deviations above the long-term average, while the market has not had a negative 36-month period for 13 years.

To put this 3-year period into context, I will briefly go back in time. This 3-year period coincides with the start of 2023, a strong stock market year that followed 2022, in which the stock markets had cooled down after the enormous, rapid recovery we saw as an extension of Covid.

Following the massive recovery that occurred after the Covid crisis, the stock market experienced a general correction in 2022, with the SPX closing the year with a loss of over 21%. 2023 was then driven by efficiency gains at big tech companies. After overspending and being punished in 2022, companies had to downsize, and this was reflected in the stock markets. In 2022, many established names saw their market capitalization cut in half. 2023 became a year of recovery and very good returns for the general stock market. The SPX continued its upward trend into 2024, and that’s when a fear of heights began to set in. Investors were already talking about overvaluations of the general indices.

Currently, the SPX is trading at an indicatively high price-to-earnings ratio of 27, while the average over the past 20 years has fluctuated between 19 and 21. After reaching all-time highs, a welcome correction seemed to occur with the announcement of “Liberation Day.” Panic increased, and the markets seemed ripe for a cooldown. However, Trump employed his now-familiar tactic of aiming high and then backtracking little by little. The markets reacted positively to this and saw an unprecedented reversal. The tariff crash was historically quickly recovered, and by the end of May, it seemed as if “Liberation Day” had never happened. And now we are once again near new all-time highs. The rebound and recovery after “Liberation Day” was remarkable even though the uncertainty had not really been removed from the market.

The Market Ahead of the December 10 FOMC Meeting

The Federal Reserve’s Federal Open Market Committee (FOMC) is scheduled to meet on December 9th and 10th, 2025, for its final planned meeting of the year, with a focus on monetary policy adjustments. Central to the discussion is the potential lowering of the federal funds rate, which currently stands at 3.75-4.00%; markets are pricing in an 80-90% chance of a 25-basis-point rate cut, although Fed Chair Jerome Powell has indicated this is “far from guaranteed.”

A couple of weeks ago, there was fear in the market due to the delayed publication of economic figures caused by the shutdown that had affected US government services. Without insight into the economic situation, it’s like sailing blind for investors and policymakers—an uncertainty that investors prefer to avoid. They made this known in the markets, too, by pressing the sell button en masse. At that time, very low odds were priced in for a rate cut. Expectations around this have now strongly reversed. As described above, the chances are now more than 80%, which was also the impetus for the recent strength recorded in the market.

The chart below shows the bitcoin (BTC) price from September to early December 2025, with three FOMC moments marked. A strong upward movement is visible around each FOMC meeting before the decision, followed by a short correction or consolidation.

Bitcoin chart below to indicate the runup and sell off afterwards:

Belgian savings accounts reach new record

The savings account is back, having never truly gone away. According to figures from the National Bank, deposits in regulated savings accounts rose by €1.4 billion in October to reach €301.9 billion. The previous record stood at €301.4 billion, dating back to February 2022. Since the beginning of this year, savings account balances have increased by a massive €24 billion.

This enormous influx primarily comes from maturing term accounts (or time deposits), which often had a duration of six to thirteen months. Belfius, ING, KBC, and several other banks launched term accounts with high interest rates in September 2024, when the tax-friendly government bond (staatsbon) reached its maturity date. By doing so, they aimed to recover the €22 billion that had been invested in the government bond in September 2023.

The comeback of savings accounts is remarkable, as the return is generally insufficient to compensate for inflation. According to the National Bank, the average interest rate on savings accounts in October was 0.73%.

Belgians are known for hoarding their money. However, many savers seem to overlook the fact that the money in their savings accounts is losing value. Inflation makes life more expensive, causing stagnant money to depreciate. It is therefore important to put your money to work so that it can retain its value and even generate more for you.

Learning to invest with a good assessment of risk and opportunities is an ideal way to put your money to work. That is my personal conviction, and I therefore want to share as much knowledge as possible with you so that you too become familiar with investing in the stock market and can generate returns. Once you start succeeding at this, you won’t want anything else.

Winners of the week

META

Meta’s stock is up over 3.4% today following a Bloomberg report that CEO Mark Zuckerberg intends to cut costs at the Reality Labs metaverse division—responsible for Horizon Worlds and the Quest VR headsets—by up to 30% next year. According to sources, layoffs could begin as early as January, although no final decision has been made.

Since the beginning of 2021, Reality Labs has accumulated losses of more than $70 billion without the general public massively adopting virtual worlds, leading investors to view the metaverse as a bottomless pit for some time now, hence their relieved reaction today.

The announced savings fit into a clear change of course: while Zuckerberg renamed the entire company to Meta in 2021 to emphasize the metaverse vision, he is now mainly focusing on Artificial Intelligence (AI), with significant investments in models like Llama, Meta AI services, and AI products such as the Ray-Ban smart glasses—a shift that analysts have long advocated for by scaling back or discontinuing loss-making metaverse projects.

Furthermore, late this week, META acquired the AI-wearables startup Limitless, the creator of a small, pendant-shaped wearable that records and transcribes real-time conversations and creates searchable summaries via an accompanying app. With this acquisition, Meta strengthens its efforts to develop AI-driven consumer hardware, aligning with its recently announced vision to make “personal superintelligence” accessible to everyone.

This, incidentally, ties in with the fear that caused the drop in DUOL.

General stock news

Netflix (NFLX)

On Friday, Netflix announced that it will acquire Warner Bros. Discovery (WBD). The acquisition price amounts to approximately $82.7 billion, which seems like an immense amount. This also led to a sharp appreciation in the WBD share price over the past few weeks. Since the first rumors of an acquisition in September, the stock has risen by more than 110%. Well-known names and franchises that fall under Warner Bros. include Friends and Harry Potter.

The transaction, valued at $27.75 per WBD share, consists of $23.25 in cash and $4.50 in Netflix stock per share, including a collar mechanism to absorb fluctuations in the Netflix share price. The acquisition follows the planned spin-off of WBD’s Global Networks division (Discovery Global) into a new publicly traded company, including channels like CNN and TNT, which is expected to be completed in Q3 2026. The deal will then close in 12–18 months, subject to approval by shareholders and regulators.

Netflix co-CEOs Ted Sarandos and Greg Peters emphasize that the combination offers more choice, higher engagement, and better storytelling for subscribers, while David Zaslav, CEO of WBD, speaks of a “commitment of two of the greatest storytellers” to continue delivering entertainment for generations.

The deal is the apotheosis of a remarkable U-turn. Just a few months ago, Netflix CEOs Sarandos and Greg Peters were somewhat dismissive of the many multi-billion dollar mergers in the American media landscape, arguing that they had produced few winners. ‘We’re builders, not buyers,’ Peters summarized the company philosophy in October.

Oracle (ORCL)

On September 10, Oracle’s stock soared a historic 36 percent higher following a particularly spectacular quarterly report. The big surprise was the 330 percent increase in the order book to $455 billion. Orders from OpenAI for Oracle’s cloud business played a major role in this.

However, the stock is currently trading lower than it was on September 9th. The rapid rally was remarkable, but the decline over the past few weeks is equally noteworthy. It has gone from immense belief and hype to a certain fear among investors, and that fear may well be justified.

Based on the order book, Oracle should grow into one of the major hyperscalers in the coming years, alongside Google Cloud, Amazon Web Services, and Azure (Microsoft). But investors are asking how Oracle will finance the expansion of its data centers. On Wednesday evening, the corporate software giant will release its figures for the second quarter of the fiscal year 2025–2026. Analysts expect a further increase in the order book to $506 billion. However, they also anticipate a negative free cash flow of $5.5 billion.

For comparison: up to the fourth quarter of the fiscal year 2023–2024, Oracle achieved a free cash flow of $3 to $5 billion every quarter. Due to its bet on AI data centers and massive investments, Oracle has therefore become a completely different company. Net debt is expected to reach $87.6 billion. This inherently makes Oracle the riskiest hyperscaler.

Duolingo (DUOL)

Last week, I worked hard to finalize and share my analysis of Duolingo with you. The company has been severely punished on the stock market. Due to increasing fear that Artificial Intelligence (AI) would make personal language proficiency obsolete, the stock fell about 70% from its most recent all-time high.

Despite the fact that real-time translation has existed for some time, the fear still arose due to the rapid resurgence of companies like Alphabet. Nevertheless, Duolingo continues to present excellent figures. The number of monthly active users rose to more than 135 million. The engagement of daily active users is increasing through the highly effective application of the gamification principle. The company has almost no debt on its balance sheet and is currently trading at its relatively lowest valuation since its IPO.

The full analysis can be found here.

What will next week bring us?

FOMC meeting

The US Federal Reserve (Fed) will discuss on Wednesday whether a further interest rate cut is necessary to support the labor market. According to the money market, there is more than a 90 percent chance that the Fed will cut rates for the third time in a row. Economists are less certain: about two-thirds expect a rate cut, while one-third anticipates a status quo.

Assessing the labor market is a challenge because the indicators contradict each other. US companies shed 32,000 jobs in November. However, the number of initial claims for unemployment benefits dropped last week to the lowest level in three years, according to the Department of Labor. An additional complication is that no recent, official employment figures are available due to the recent shutdown.

Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

Duolingo is the most well-known application in the world for learning languages. The little green owl is a strong mascot for the company, which ensures good branding. The company has over 135 million Monthly Active Users (MAUs) and knows how to engage users with its gamification.

The company’s stock price has been severely punished due to increasing fear that the company could lose its position in the future. Severely punished companies can offer great opportunities. We will investigate this in this analysis.

In this analysis, we will review the company’s business model and revenue model. We will examine the company’s CEO and founder, as well as its competitive position. On the stock market, you do not want to overpay for a share. Therefore, it is important to understand a company’s financial situation. We will delve deeper into that and link it to the current valuation of the stock.

Hopefully, you will gain many instructive insights and get to know Duolingo better as a company.

Business model

Mission

Company Mission: To develop the best education in the world and make it universally available.

Duolingo, Inc.’s business model is primarily based on a freemium model, with the core mission of developing the best education in the world and making it universally available. The flagship app offers courses in over 40 languages for free to more than 100 million Monthly Active Users (MAUs) as of December 31, 2024, ensuring there is no paywall for learning resources. Operational activity is focused on attracting a very large user base (116.7 million MAUs and 40.5 million Daily Active Users (DAUs) in Q4 2024) by creating an engaging and effective learning experience that feels like a mobile game. This leads to organic growth via word-of-mouth and brand buzz.

Duolingo targets a massive market of approximately two billion potential language learners worldwide. This figure stems from an estimate by HolonIQ. The crucial element is that all learning material is accessible for free, allowing anyone unlimited use of the app. Consequently, Duolingo reached over 100 million MAUs by the end of 2024. This growth continued into 2025, clocking in at over 135 million monthly active users in Q3.

Revenue model

Revenue is generated through two main channels:

• Paid subscription

• Other revenue (including advertising)

The core of the business model is freemium, but Duolingo also generates revenue through advertisements. In the past fiscal year, 7.3% of revenue was derived from ads.

Subscriptions

Subscriptions include Super Duolingo, which offers extra features and an ad-free experience. Since 2023, the Duolingo Max subscription tier has been available, representing a premium level with features powered by generative AI technology. As of December 31, 2024, approximately 9% of MAUs were paid subscribers, resulting in subscription revenue of $607.5 million in 2024.

Other Revenue

This consists of advertising sales to free users (accounting for roughly 7.3% of total revenue in 2024), In-App Purchases (IAPs) of virtual goods (such as Streak Freezes), and the Duolingo English Test (an on-demand English proficiency assessment, which generated approximately 6.1% of total revenue in 2024).

The company utilizes two reinforcing flywheels:

• The learning flywheel: Greater scale leads to more data, which improves effectiveness and engagement.

• The investment flywheel: User scale enables capital investment in product innovation and AI, rather than relying on paid marketing.

Product diversification has been expanded with courses for mathematics and music, which are integrated into the Duolingo App.

Advertising & DET Details

Duolingo generates revenue from free users via the sale of display and video ads, where proceeds depend on the number of free users and their completed lessons. Additionally, the Duolingo English Test (DET) charges a one-time fee and is accepted by over 5,600 educational programs worldwide, including prestigious American universities, as proof of English proficiency.

Operations

The company employs a freemium business model where users have free access to learning content, but:

• Free users see an advertisement at the end of every lesson.

• Users who purchase a paid subscription (Super Duolingo or Duolingo Max) enjoy an ad-free experience.

For the year ending December 31, 2024, approximately 7.3% of Duolingo’s total revenue came from advertisements.

The primary operational focus is offering all learning content to everyone for free. This lowers the barrier to entry and enables massive user acquisition and organic growth through word-of-mouth and the viral nature of the brand. In the past quarter (Q3 2025), Duolingo reached 50.5 million Daily Active Users. On a monthly basis, the number of active users was 135 million.

The operational engine behind Duolingo’s effectiveness and engagement is their advanced technology platform and a constant cycle of testing and improvement:

• The learning flywheel (data moat): With over a billion exercises completed per day, Duolingo generates a massive dataset (”data moat”) for language education. This data forms the foundation for developing new AI models and product features.

• A/B testing: The company continuously runs hundreds of A/B tests per quarter on new product features. This operational speed is a core competency and ensures rapid optimization of the learning experience and key metrics such as DAUs and paid subscribers.

• AI and machine learning: AI models are used to personalize and optimize the learning experience. They predict the probability of a user answering an exercise correctly, enabling the app to construct lessons adaptively so the difficulty level is always “just right” for the individual learner.

Operations are expanding beyond the core of language education to increase the Total Addressable Market (TAM):

• New subjects: The operational structure supports the integration of new subjects (such as math and music) within the existing Duolingo App, utilizing the same gamified, mobile-first, and data-driven development model.

• Duolingo English Test (DET): This is a separate, online assessment service for English proficiency. It is a high-stakes, computer-adaptive test accepted globally by over 5,600 educational programs.

External dependencies

Duolingo’s operations are fundamentally dependent on external platforms:

• Mobile distribution: Products rely almost exclusively on the Apple App Store and Google Play Store for distribution and processing in-app payments.

• Cloud hosting: Technological infrastructure, including data storage and processing, is hosted by a limited number of cloud computing providers, such as Amazon Web Services (AWS) and Google Cloud. The reliability and continuity of these services are crucial for the app’s daily operation.

Risks

Duolingo’s business model stands or falls with attracting new users and retaining existing ones. If the company fails to maintain this, growth will decelerate. Existing users utilizing the free version may switch to the paid, more comprehensive version. Naturally, it is initially important to attract a large target audience, and subsequently, once free users are engaged with the offering, the goal is to convert a portion of them to the paid offering.

Attracting new users can be achieved in various ways:

• Expanding the offering to attract new demographics to the service.

• Changes or innovations that trigger new users to purchase the existing offering.

Competition

Duolingo distinguishes itself from other providers through the interaction they create with their audience. School and teaching are generally viewed as boring, something students often attend reluctantly. Duolingo’s approach appears different, as they succeed daily in voluntarily bringing millions of people to their application and creating interaction there.

Gamification

Gamification is a term often used to describe Duolingo’s operation. Gamification can be defined as applying elements and principles from games in a non-game context, such as teaching and studying in this case. The goal is to motivate and create engagement—something the green owl clearly seems to succeed at. It is not about making a full game, but adding game mechanics to everyday or mandatory tasks to make them more fun, challenging, or rewarding.

Key gamification components of Duolingo include:

• Reward system: Users earn points and unlock new levels when they perform well in the app. Additionally, the competitive spirit is fueled by leaderboards with various other users. This encourages the student while providing satisfaction.

• Streaks: Duolingo uses streaks to track the number of consecutive days a user completes a lesson. This creates a sense of achievement and an incentive not to break the chain. Looking at streaks, engagement is indeed high. As of December 31, 2024, approximately 32 million daily active users had a streak of 7 days or longer, and about 10 million daily active users had a streak of 365 days or longer.

• Engaging content: They use humorous content that sticks better and makes learning more memorable. This invites users to return to the app for an enjoyable moment amidst their daily hustle. Lessons are designed to be served in bite-sized chunks, significantly lowering the barrier to actually start learning.

Furthermore, the content is available for free, making the alternative of paid language lessons much less attractive. The paid subscription provides the company’s largest revenue stream but is essentially optional for the user experience.

Duolingo dominates the language app market thanks to a unique, hard-to-copy combination of advantages: in the US, brand awareness is 54% (more than double the average of competitors), and it is a trusted, playful, and accessible household name in over 190 countries. The playful, mission-driven culture, featuring the famous owl and humorous tone, ensures enormous virality and strong user loyalty.

With millions of users, Duolingo benefits from massive economies of scale: costs are spread out, billions of unique data points are collected daily to continuously improve the AI, and investments in new content and features can be made efficiently. These are advantages smaller competitors cannot match.

This creates a powerful flywheel effect where more users lead to better AI, which in turn attracts more users. With approximately 60% global market share, Duolingo has become the standard language app. Daily streaks, rewards, and psychological mechanisms make the app extremely “sticky,” while built-up progress and emotional investment create high switching costs.

Finally, Duolingo possesses a unique mountain of proprietary data points and a proven gamification engine that enable infinite new subject areas and products, making long-term growth potential virtually unlimited.

Augmented engagement

The chart below illustrates user engagement and involvement. This ratio expresses the percentage of Daily Active Users (DAU) relative to Monthly Active Users (MAU). In Q3 2025, there were over 50 million active users on a daily basis and approximately 135 million active users on a monthly basis.

We observe a clear upward trend in this metric, indicating rising engagement. Relative to monthly active users, a higher percentage of users are now accessing the app on a daily basis. This trend demonstrates that the concept and business model are working, as users are triggered to shorten the intervals between their interactions with the app.

More frequent interaction is positive for the company’s growth. Advertisements can be displayed to users more often, significantly increasing visibility. Additionally, increased interaction naturally creates more opportunities to convert users to a paid subscription. The fact that users interact with the app on a daily basis demonstrates that it has secured a significant place in their lives, thereby increasing the likelihood of a willingness to pay for specific features.

Growth opportunities

Duolingo has a clear and ambitious growth strategy extending beyond just adding languages. Internal strategy presentations (2024-2025) reveal five major pillars for growth:

1. Grow gsers: Reach more learners worldwide. Increase accessibility in emerging markets (India, Africa, SE Asia) and aim for 1 billion active users via viral social features and partnerships.

2. Teach better: Invest heavily in AI to not only retain users longer but actually bring them to advanced proficiency levels (B2/C1), increasing perceived value.

3. Grow subscribers: Make Duolingo Super and Family more attractive via exclusive features (unlimited hearts, ad-free, AI coaching) to boost conversion rates, especially in Western markets.

4. Become the proficiency standard: Establish the “Duolingo Score” as a global standard (comparable to TOEFL) via scientific validation and partnerships.

   TOEFL stands for Test of English as a Foreign Language, a standardized test that assesses non-native English speakers’ academic English proficiency. It is primarily used for admissions to universities and for professional and immigration purposes.

5. Expand beyond language learning: Following Math and Music, the goal is to become a platform for high-quality, universally accessible education in subjects ranging from science to programming.

Competitive landscape

Duolingo operates in a highly competitive language learning market characterized by diverse players serving various niches and employing different methodologies. The competition can be broadly divided into three categories.

First, there are the direct and most substantial competitors within the digital learning space, such as Babbel and Rosetta Stone. Babbel focuses on conversational proficiency for adults and utilizes a subscription model, while Rosetta Stone employs a more traditional immersion methodology. These apps compete directly for paid subscribers by positioning themselves as platforms offering a more in-depth learning experience than Duolingo’s free basic offering.

Second, there is competition from platforms specializing in specific skills or formats, such as Memrise, which focuses on memorization using spaced repetition, and HelloTalk or Tandem, which facilitate peer-to-peer language exchange and practice with native speakers.

Finally, traditional educational institutions, private tutors, and free resources such as YouTube channels and open-source educational platforms constitute a persistent, diffuse competitive pressure, as they offer alternative pathways for serious learners.

Status of competitors:

• Rosetta Stone: Acquired by IXL Learning in 2020; now a private company.

• Babbel: Planned an IPO in Frankfurt in 2021 but postponed it; currently private.

• Memrise and others: Private companies funded via Venture Capital.

The diversity and number of niche players offering online and app-based platforms for language education is therefore very large. Duolingo, however, seems to stand out as a global player due to its large user base. In addition, there are, of course, functions like Google Translate or other translation programs that are often part of larger corporations. For instance, Google Translate represents only a fraction of what Alphabet, the parent company above Google, is in total. Meta, the parent company above Facebook, Instagram, and WhatsApp, is currently working on hardware glasses supported by artificial intelligence to enable real-time translations. The same applies to Apple and its AirPods, which can also provide live translations. These are the largest companies in the world, also having the most capital available for investments. However, a translation app is not immediately part of the core business of these companies. Nevertheless, it is a valuable addition for the users of these companies’ products.

Due to the rapid development of artificial intelligence and the tangibility that has increasingly been put forward in recent months, the Duolingo stock has also taken a serious hit.

Since the recent all-time high in the April-May 2025 period, the stock price has now lost nearly 70% of its market capitalization. We see that the stock is now clearly in a downward spiral. In recent weeks, the price broke below the 50-week SMA (Simple Moving Average), and the decline accelerated again. Furthermore, there is currently no clear structure of bottom formation. Lower highs and lower lows can be observed, from which no confirmation of a bottom can currently be read.

Management

CEO - Luis Von Ahn

Luis von Ahn (Guatemala City, 1978) is one of the most notable figures in the edtech world, but his path to the CEO role of Duolingo was anything but predictable. Before founding Duolingo, he already had an impressive academic and entrepreneurial track record: he earned his Ph.D. in computer science from Carnegie Mellon, where he became one of the youngest tenure-track professors at the age of 29, and together with his advisor, he invented CAPTCHA and later reCAPTCHA—the system that billions of people use daily to prove “I am not a robot.” In 2009, he sold reCAPTCHA to Google for an undisclosed but significant amount, making him financially independent.

This very experience with “human computation” (getting people to do useful work unnoticed) formed the seed for Duolingo: he realized that the millions of people who were trying to learn Spanish or French at the time through expensive courses or bad software could simultaneously be leveraged to translate the internet.

Thus, Duolingo was born in 2011: free language courses in exchange for crowdsourced translations, a model that was later largely abandoned in favor of gamification and the freemium structure.

Von Ahn proved surprisingly effective as CEO, not so much because of classical management skills, as he himself admits he had no idea how to hire people or run a company for a long time, but through a rare combination of visionary product intuition, extreme user focus, and the ability to translate complex technical insights (such as AI and behavioral psychology) into something that feels addictively fun for hundreds of millions of people. Critics sometimes note that his academic background and lack of traditional business experience initially made him vulnerable to operational chaos and that he only truly grew into the CEO role when he surrounded himself with strong operational and financial leaders; yet, it is hard to deny that his unconventional mix of idealism, data-driven obsession, and personal authenticity (including his willingness to make fun of himself and the famous owl) has been crucial in turning Duolingo into the cultural phenomenon and dominant player it is today.

Read more

This week takes a slightly different approach for the weekly overview. There is a lot of discussion about the current evolution of the markets. There is talk of an AI bubble, yet we saw a very positive reaction on the stock market last week, as the chances of a December interest rate cut have increased significantly compared to the week before. Therefore, this week I have chosen to share my thoughts on this statement with you. This forms the first section, followed by a discussion of 2 winners of the week, and we will conclude with a stock to watch. I’ll give a sneak peek into the Duolingo analysis I am currently finalizing.

I hope you enjoy the set-up.

General thoughts

Last week, the stock market was dominated by a negative sentiment. The fear and greed index closed in the extreme fear area, and many popular stocks were sold off to secure profit-taking. This negative sentiment was driven by the fact that investors feared the hoped-for rate cuts would not be implemented. The decision on whether the US central bank will lower the interest rate falls on December 10. Due to the government shutdown, the publication of much macro-economic data is delayed. This means a decision might have to be made based on incomplete information, which causes distrust and uncertainty among investors—and uncertainty is precisely what investors prefer to avoid as much as possible.

The sentiment shifted somewhat in the last days of this week. Leading up to Thanksgiving, a traditional American holiday when the stock markets are also closed, the US indices achieved strong consecutive trading days. It was the best streak of four consecutive trading days since the recovery in May following the “Liberation Day” troubles. An important element in this recovery after last week is the growing hope for a rapid monetary easing by the Fed, the US central bank. Now that a few central bankers have hinted at a rate cut in December, investors estimate the chance of a new rate cut next month at around 80 percent, which is significantly higher than last week. Furthermore, the money market expects three more rate cuts during the course of 2026. This interest rate optimism temporarily pushes concerns about the high valuations in the AI sector to the background.

The “correction” of last week came in response to comments that an AI bubble is forming and could burst at the slightest headwind. To speak of a general AI bubble might be too simplistic. There are certainly companies whose valuations have risen unjustifiably high. Think of companies still in the early phase of the business lifecycle that are being attributed enormous future profits. Such companies experience enormously volatile periods. If I extend this to broader sectors, I arrive at companies in quantum computing. At the moment, the majority of these companies are not profitable and are heavily loss-making. One week it’s ‘hosanna,’ the next week the sentiment is extremely negative, and this is reflected in the stock prices. Fluctuations of several tens of percent are by no means an exception. I find this calls for caution. In my view, such companies are only eligible for potential swing trades, and certainly nothing more. I prefer to stay away from them altogether, considering the general stock market climate where the direction is currently difficult to determine.

Besides the extreme volatility of a few individual companies, there are also companies that manage to deliver good figures and actually generate revenue and profits from everything related to artificial intelligence. It’s easy to name Nvidia here, but there are also other players experiencing justifiable increases on the stock exchanges. Alphabet recently experienced a positive impulse. Alphabet, the parent company of the Google search engine and YouTube streaming platform, is currently about 70% higher than at the beginning of this year. If we take the lows of April into account, the stock has more than doubled. This is partly due to a turnaround in sentiment, but it is equally driven by positive internal evolutions of the underlying company. Alphabet presented very strong quarterly figures a few weeks ago, showing that they clearly benefit from developments in artificial intelligence. Additionally, there were tailwinds in the form of Berkshire Hathaway taking a position and the launch of their latest language model, Gemini 3, respectively.

Unlike companies in the early life stage, Alphabet is indeed able to pair rising valuation with revenue and profits. Don’t get me wrong, I’m not saying you should invest in Alphabet now. I am using this example to show that the company’s increased valuation is supported by the company’s internal evolution (and also a slight reversal of market sentiment towards Alphabet). Therefore, comparing the AI bubble to the dot-com bubble feels a bit too simplistic to me. For certain companies, the comparison certainly holds, undoubtedly. But I believe that as long as the underlying companies continue to perform well, rising stock prices remain justified to some extent. If there were to be a slowdown or reversal in that performance, then it would naturally become a different story. Last week, all eyes were on Nvidia, and comments circulated that a clear overperformance was necessary to prevent the bubble from bursting. Nvidia is not the only one responsible for the economy, but it is sometimes perceived that way. Nevertheless, they continue to exceed expectations time and again. A caveat I want to make is that I do agree with comments from Alphabet’s CEO, Sundar Pichai. He said that if the perception of the bubble were to burst, no company would escape it. The market can react maniacally; we all know that. Short-term emotional reactions often win over the rational.

Winners of the week

Silver price to a new ATH

The price of silver made a remarkable upward leap on Friday. The price shot up by about 5% to a new all-time high. Earlier this year, I made an analysis of why silver could form an interesting position, partly as a counterbalance to stocks and extra diversification in your portfolio, and because a discrepancy was occurring between the gold price and the silver price. The average long-term ratio fluctuates between 50 and 80. This means that the price of gold is between 50 and 80 times more expensive than the price of silver. The 50-year average is around 55. The initial case was made when the ratio was around 100. Based on that ratio, there was certainly upward potential to be found for silver because this was a rather high ratio in favor of gold. This was mainly driven at the time by the sharply rising price of gold and silver’s lack of reaction. Meanwhile, the silver price has somewhat caught up with gold, but the ratio still remains on the high side. At the time of writing, the ratio is 80, which still offers further upward potential for the silver price or a correction in the gold price to lower the ratio. However, I think a correction in the gold price will occur, whereby the silver price itself is not subject to a correction. If the ratio evolves back to the long-term average, I think it will have to come from an upward movement in silver.

However, the caveat must also be made that precious metals have performed very well this year. Normally, they move contrarily to risky markets such as stocks or crypto. Stocks have had a turbulent but, in terms of return, also a good year this year. It could therefore be that precious metals will be seen less as a safe haven when a correction occurs. Something that will have to be monitored further.

Intel (INTC)

According to an analyst (Ming-Chi Kuo), Apple is considering having its cheaper M-chips for the Macbook-Air and iPad Pro, among others, produced by Intel instead of by TSMC starting in 2027. He bases this on inquiries in the sector. This is not confirmed news yet, but the stock shot up about 10% based on this news. For 2026 and 2027 combined, Apple expects to need 15 to 20 million of these low-end M-chips, which is less than the 20 million MacBook Air and iPad Pro units sold in 2025 – a decline Kuo attributes to the arrival of a new, more affordable MacBook model likely running on an iPhone processor.

With this, Apple seems serious about using Intel as a second chip manufacturer for its budget segment. We previously saw the pressure exerted by Trump to acquire an interest in the American chip producer. The American president wants the US to become the main supplier of high-performance chips in the future. TSMC has by far the most dominant position there. Despite the fact that TSMC also produces in the US and is setting up a new production facility, it is originally still from Taiwan. This does not fit with Trump’s America First policy. There have already been several meetings between Trump and American top CEOs. It is no secret that the president wants significant investment in the US. The largest and most capital-intensive companies are located in the US; they can afford those investments. I would not be surprised if this is a first step in the steering of the US. The picture would also be perfect, of course. Intel benefits, the share price rises (the stock has almost doubled in value this year). The US government also benefits, and it fits within Trump’s policy. He thus seems to have a firm grip on the reins.

One to watch

Duolingo (DUOL)

Last week, I was busy with the analysis of Duolingo (DUOL). The company took a beating on the stock market this year and lost almost 70% of its market value since its peak. I plan to publish the analysis next week. However, I do want to give a sneak peek in this newsletter about what I found remarkably positive during my research. It concerns the chart below. The chart shows the ratio of the number of daily active users (DAUs) relative to the number of monthly active users (MAUs). The chart is evolving in an upward line and shows that the number of daily active users currently represents about 37% of the total number of monthly active users. For me, this points to a strong engagement users have with the application. The fact that this is on an upward trend is equally positive and nicely demonstrates that Duolingo is succeeding in engaging more people to interact with their application daily.

The rise of artificial intelligence is seen as the biggest risk for the company. Logically, because the question can be asked to what extent it will still be necessary to be able to speak different languages yourself in the future. There are now several tools on the market that provide real-time translations and make it possible for people who speak different languages to communicate with each other. Language models are developing quickly—just look at the resurgence of Alphabet and its newest version, Gemini 3. The rapid evolution and future possibilities seem endless. So, this brings great uncertainty for Duolingo investors at the moment. If you want to know my view on the company and the future, I would keep an eye on the analysis this week.

Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

Welcome to your weekly briefing on the global markets. This past week delivered a mix of earnings surprises, unexpected job data, and continued uncertainty surrounding the Federal Reserve’s next move. From Nvidia’s AI triumph and subsequent drop to key shifts in corporate strategy, we break down the developments that drove the major indices and shaped investor sentiment.

General stock and market sentiment

Where a significant number of shares were bought up at the end of last week to close the final trading day on the US stock market flat, we saw the selling wave resume slightly on Monday. The S&P 500 (SPX) closed more than a percent lower. The market continued to drift until the world’s largest company, Nvidia with a market value of $4.5 trillion, provided insight into its third-quarter figures. Nvidia once again managed to exceed the sky-high expectations. Continue reading to see the more detailed results!

The broader market and individual investors breathed a sigh of relief on Wednesday evening after the closing bell. It seemed as though the AI concerns could be temporarily shelved. Nvidia rose by more than 5% after-hours. The market also opened strongly, but sentiment reversed again on Thursday. The mega-stock surprisingly closed the trading day with a 3% loss. This enormous swing in value and reaction was triggered by the September jobs report, which was released after some delay.

The unemployment rate unexpectedly rose to 4.4%, marking its highest level in four years. Conversely, more than twice the expected number of jobs were created in September. The expectation was 50,000 newly created jobs, but the actual total came in at 119,000.

These mixed employment figures make it more difficult for the US central bank to determine the true strength of the labor market. Consequently, it is harder to ascertain whether Fed governors will vote for or against a rate cut at the December meeting. The US Department of Labor confirms that it will not publish inflation figures for the month of October. As a result of the shutdown, it was unable to collect the necessary data. This also means that no more recent inflation figures than those from September will be available before the US central bank meeting on December 10th. The November inflation figures will only be published on December 18th.

The rising unemployment rate could be an argument for a rate cut, which would give the economy extra breathing room, something the markets would cheer. However, the strong job creation argues against this. On Friday during the trading day, sentiment partially reversed again. Although the uncertainty over a rate cut heavily weighed on the market on Thursday, the possibility of that potential rate cut was viewed slightly more positively on Friday. This also ensured that the stock markets closed out another volatile week on a positive note.

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This marks the fourth consecutive week that the SPX has closed negatively. At its lowest point this week, the weekly chart touched the EMA20. On the daily chart, the SPX even breached the boundary of the 50-day moving average. This is often a negative signal and a change in momentum. Nevertheless, I find it more conclusive to look at longer-term trends. For me, the weekly chart is far more decisive for making mid-term estimations. The Fear & Greed Index dropped into the single digits this week—even lower than the fear score that prevailed during the April lows. This is highly indicative of sentiment, even though the SPX is only a few percent below its All-Time High (ATH). One can question whether this sentiment is justified or if investors have been too spoiled in recent months. As was also mentioned last week, a correction is healthy in the market in order to evolve back towards higher levels over time. Corrections also justify the risk premium associated with investing. If the stock market only moved in a straight line up, there would be no risk, and everyone would make a return. Investors must be rewarded with a decent return over time for the (considered) risk they take.

The British economy

• Retail sales in October came in 1.1 percent lower than in September. This is the first month-on-month decline since May. Compared to October 2024, retail sales were 0.2 percent higher, while economists had expected a 1.5 percent increase.

• British consumer confidence fell further in November. The GfK barometer dropped from -17 to -19, which is slightly worse than what economists had expected according to Reuters (-18) and the lowest figure since May. Sentiment was much worse in April at -23. That was then caused by higher household expenditures and the heavy import tariffs announced by US President Trump.

Winners of the week

Walmart

Walmart presented strong results. While all eyes were on NVDA, Walmart (WMT) might be a better indication of consumer strength. The major AI companies can be viewed in isolation from the average person’s economic standing, but Walmart is a superior indicator for the latter.

• In Q3, revenue rose by 5.8% and 6% in constant currencies.

• Operating income remained constant, indicating stable margins.

• EPS jumped by 35%, primarily driven by a gain on an equity investment. Excluding this gain, EPS would have been $0.62, up from $0.57.

• The average bill became 2.7% more expensive, and the number of transactions increased by 1.8%. This shows that growth is not just due to pricier products; volume is also contributing.

• The retailer’s market share continues to grow, something investors expect given the high valuation of the stock. Investors reacted very positively, pushing the stock up about 6% after the figures were announced on Thursday.

WMT Nasdaq Move: Walmart announced that it will transfer the listing of its shares from the New York Stock Exchange (NYSE) to the Nasdaq effective December 9, 2025. Shares will continue to trade under the ticker symbol WMT. According to CFO John David Rainey, this move aligns well with Nasdaq’s technology-focused vision and marks a new chapter in the company’s growth.

Nvidia Q3 earnings

Wednesday’s after-hours earnings report from Nvidia was highly anticipated amid growing speculation and the narrative of an AI bubble. It was therefore up to Nvidia to debunk that notion and keep the momentum going with a strong report. And the report was once again strong enough to beat the high expectations. It was up to Nvidia to counter this and maintain momentum with a strong report.

• Q3 Revenue: $57 billion (+62% YoY), beating analyst estimates of $55.2 billion.

• Data Center Sales: Climbed to $51.2 billion (+66%), beating analyst estimates of $49.3 billion.

• Gross Margin: 73.6%, slightly below expectations.

• Earnings Per Share (EPS): $1.32, higher than the $1.26 forecasted.

• Q4 Forecast: Revenue of $63.7 to $66.3 billion is significantly above the consensus estimate of $62 billion.

CEO Jensen Huang reiterated that the demand for Nvidia’s GPUs remains immense and shows no signs of cooling off.

Other company news

Netflix (NFLX)

The streaming giant announced a stock split. Shareholders will receive 10 shares for every 1 share they currently own, with the price being adjusted accordingly. The company stated this is often done to keep the stock accessible to the general public and for employees participating in the option program. This marks the third time the company has split its stock (following 7-for-1 in 2015 and 2-for-1 in 2004).

Alphabet (GOOGL)

Following the news late last week that Berkshire Hathaway had purchased shares in Alphabet (GOOGL), the stock saw a nice rise today. This appears to be an atypical trade for Berkshire, as they have historically not invested heavily in tech stocks outside of Apple, where the physical and hardware side is still very important—an aspect less present in Alphabet.

Berkshire bought approximately $4.3 billion worth of shares in Google’s parent company last quarter. It is notable that the investment conglomerate is taking a position now, given the stock has already experienced a significant upward push, having doubled in value since the April lows. This may cause one to question the efficient operation of the market, as it seems unlikely that GOOGL’s internal value has doubled over this period. This makes it an even more striking trade from Berkshire.

With Buffett announcing he will be less involved in the daily operations of the company, this move might suggest a partial shift under the new (old) management. However, the company culture is not expected to change, as Greg Abel has been with Berkshire since 1999 and knows the company inside and out.

Umicore (UMI) plungs on Belgian market

On the Belgian market, Umicore tumbled after GBL, a prominent Belgian holding company, sold off half of its stake. This occurred under the direction of Johannes Huth, who succeeded Ian Gallienne as CEO of GBL this spring, accelerating the clean-up of the Brussels holding’s portfolio.

GBL sold 19.6 million Umicore shares, equating to a stake of nearly 8% in the materials group. The sale to major investors via investment bank Goldman Sachs generated €300 million and was first reported by Bloomberg on Monday evening. The new CEO’s focus is shifting more toward investments in unlisted companies, and sales like this clearly align with that strategy. Umicore’s stock dropped by about 14% following this announcement.

To conclude, I would like to briefly return to the AMD stock. The company has been mentioned a few times in the newsletter already. The reason for this was the fact that I felt the stock was lagging behind the rest of the AI-related stocks, despite the company delivering very good work internally. Due to this, I expected the stock to be able to catch up. This catch-up actually materialized faster than I had anticipated. Following an announcement that the company had entered into a partnership with OpenAI, the stock shot up significantly. Subsequently, the stock rose again after the quarterly figures were presented, which were also impressive. Initially, I thought the quarterly report might be the trigger for the catch-up, but it happened earlier. After that rise, the technical chart showed a gap that the price could return to. This return also happened sooner than I expected. I will include a post from X (formerly Twitter) where I highlighted this.

https://x.com/CashandCompound/status/1989731689967346163?s=20

DUOL research

Next week, I am trying to finish my research on DUOL (Duolingo). The stock is slaughtered after a dragdown of 70% from the highs. If this could give you an buying opportunity, I will dive into it and share it here on substack!

Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

Hi friends,

Welcome to your weekly market update. This week, global markets reacted significantly to the resolution of the longest-ever US government shutdown. With government services resuming, the investment community is bracing for a flurry of delayed economic data, which will be crucial for the Federal Reserve’s upcoming policy decisions. We also analyze the recent market correction, delve into the technical setup for the S&P 500 and Gold, and review major earnings announcements and strategic updates from AMD, Adyen, and ON Running. Finally, we look ahead to Nvidia's highly anticipated earnings report and the curious case of Michael Burry's sudden exit.

Generals and macro-economics

End of the US government shutdown

The longest US government shutdown in history concluded on Wednesday. It took 43 days before an agreement was finally reached. The continuing resolution for an interim budget, effective until January 31st, was approved and signed by President Trump, allowing federal employees to return to work. Due to the extended halt of government services, a significant amount of economic data has been delayed.

Last week, we saw a market turnaround following the end of the shutdown. Investors had already factored in the resolution in the days prior, leading to a sharp decline in indices on Thursday. Markets are now bracing for an influx of economic figures as the shutdown ends and statistical agencies resume their work. However, there is concern that this data may not be sufficient to prompt the US central bank (Fed) to cut interest rates again in December. Fed Chairman Jerome Powell indicated at the end of October that a rate cut is not yet a foregone conclusion. The yield on the 10-year US Treasury note rose by 3 basis points to 4.10 percent.

On Thursday and Friday, we observed broad indices decline significantly. While this refers to the index level, the drops felt much larger for many investors. Companies that have experienced a strong rally in recent months were the first victims, with investors opting to take profits. By Friday evening, the US stock market ultimately closed almost flat. The Nasdaq gained a few basis points, and the S&P 500 closed flat. Many shares were eagerly bought back before the end of the week.

Personally, I believe such a correction is certainly justified after the market's run-up over the past months. Since the lows in April, the market has moved almost in a straight line upward. Corrections are not abnormal and are even necessary for the healthy continuation of the market. Profit-taking is now occurring due to the uncertainty surrounding the state of the economy caused by the delayed reporting of economic figures, such as unemployment data. For the FED's decision-makers, it is now a matter of maneuvering without a compass. It remains to be seen whether the data from the past month will be released and, if so, when.

On this weekly chart of the SPX, a clear negative divergence is visible between the price movement and the RSI (Relative Strength Index), which is an indication of market strength, as seen by the diverging purple lines. While the index has been in a powerful upward trend since the October 2022 bottom, forming higher highs and higher lows within a rising trend channel along a blue trendline (derived from the long-term monthly chart) and recently reached a new peak, the RSI exhibits the opposite pattern: the indicator is making lower highs, with a recent peak around 63.85, significantly below previous highs above 70. This bearish divergence arises because underlying momentum is waning despite rising prices, indicating weakening buying power and an increased chance of the bull market being exhausted. Historically, such a negative divergence on a weekly basis often leads to a correction or trend reversal towards lower support levels.

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Gold price

The gold price per ounce (XAU/USD) displays a classic bearish reversal setup on the daily chart following a powerful uptrend that began in early 2025, with the price recently testing the 61.8% Fibonacci retracement of the entire rally (from the low around $2,700 to the peak near $4,400) and being sharply rejected at exactly $4,199.475 with a decisive rejection candle. This rejection forms a lower high within a descending channel structure since the all-time high, reinforced by a bearish engulfing pattern and an RSI that, after reaching overbought levels (above 75), is now clearly diverging and falling back to 63.60, confirming loss of momentum. The price is also trading below the declining SMA line, has already broken through the 50% retracement, and the current pullback to the 61.8% zone shows no convincing bullish follow-through but instead reveals volume-driven selling pressure. This points to a high probability of further downside continuation, with an initial target around the 38.2% retracement (~$3,800) and potentially extending toward trendline support near $3,394. In conclusion: the 61.8% Fibonacci retracement is acting as dynamic resistance within a bearish trend reversal; a breakout above this level would be required to resume the uptrend, but as long as the price remains below it with waning momentum, downside risk remains dominant.

Winners of the week

Advanced Micro Devices (AMD)

On November 11, 2025, AMD unveiled its long-term strategy at its Financial Analyst Day to lead the $1 trillion compute market, with a strong focus on AI and high-performance computing, aiming for accelerated revenue growth, profit expansion, and optimal capital allocation. The company is building the broadest portfolio of hardware, software, and solutions, strengthening partnerships with cloud providers and enterprises, and investing in chiplet technology, advanced packaging, interconnects, and open ecosystems like the 5th generation AMD Infinity Fabric.

AMD is targeting an overall revenue CAGR of over 35%, more than 60% in data centers, and over 80% in data center AI, with goals such as over 50% market share in server CPUs and over 40% in client revenue. Product highlights include the rapidly scaling Instinct MI350 Series GPUs, future Helios rack-scale systems with MI450 and MI500, and a 10x growth in ROCm downloads for open-source AI development. The Ryzen line supports over 250 platforms, and new Gorgon and Medusa processors promise up to 10x better AI performance, while embedded solutions have generated over $50 billion in design wins.

CEO Dr. Lisa Su emphasized that AMD, with its end-to-end ecosystem and deepening partnerships, is uniquely positioned for sustainable, industry-leading growth in the AI era.

"AMD is entering a new era of growth, fueled by our leadership technology roadmaps and accelerating AI momentum. With the broadest portfolio of products and our deepening strategic partnerships, AMD is uniquely positioned to lead the next generation of high-performance and AI computing. We see an enormous opportunity to deliver sustainable, industry-leading growth. We have never been better positioned."

A few weeks ago, AMD was already featured in the newsletter as a “stock to watch.” The reason at the time was the series of strong gains in AI-related stocks, particularly those operating in infrastructure and data centers. Nvidia is the obvious name in this space, but for example, Oracle also saw a significant surge after closing a deal with OpenAI. In the newsletter, I pointed out that AMD was unjustly lagging behind many of these companies that had experienced substantial rises. Ultimately, AMD’s “Oracle moment” arrived sooner than expected, with the company also securing a deal with OpenAI for future investments and product purchases. This boosted positive sentiment around AMD, and that momentum has continued nicely in recent times. Since the lows in early April, the stock has risen by nearly 250%; truly staggering figures that have also pushed AMD into overbought territory according to the RSI indicator. Moreover, AMD still has a gap that will likely need to be filled sooner or later, spanning a range between $215 and $185.

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Adyen (ADYEN)

During its Investor Day in Amsterdam, Adyen confirmed its growth targets: 20–25% revenue growth in 2026, followed by approximately 20% per year, with an EBITDA margin of >50% in 2026 and >55% in 2028, and capex ≤5% of revenue. CFO Ethan Tandowsky sees significant opportunities for market share gains with large international merchants, driven by a merchant-first platform, operational leverage, and AI applications for conversion, fraud prevention, and customer experience. Growth stems from higher volumes on the unified platform, while margin improvement follows from economies of scale, cost control, and more efficient infrastructure. Investments remain disciplined, focused on capacity, security, and product innovation. The strategy emphasizes predictability with room for a rapid market response, despite risks such as competition, regulation, and macro volatility.

I am personally a fan of Adyen. It is a company that manages to check many quality boxes. It is still managed by the founder. CEO Pieter van der Does still owns a total of approximately 922,539 shares in the company, representing a total of 2.96% based on the 2024 annual report figures. Founders typically have a long-term vision, and this is no different for Van der Does. The company consistently manages to meet its stated goals without much fanfare. Furthermore, the customer is central to its operations. Adyen has one payment platform that is fully vertically integrated, which allows them to act quickly and adaptively to customer needs. The company is also active in an attractive sector where strong growth figures are expected in the future. And within this sector, they can grow without needing to make large capital investments. They substantiate this by keeping their long-term Capex from exceeding around 5% of their revenue.

ON Running (ONON)

ON Running reported record results for the third quarter of 2025, with a revenue increase of 24.9% to CHF 794.4 million (34.5% at constant currency), driven by strong demand in both DTC (Direct-to-Consumer) and wholesale channels and global growth across all regions. The stock soared around 18% after the announcement of the figures, which were indeed very strong. The optimistic outlook of the Wall Street-listed On contrasts sharply with investors' general caution towards the sector. The tariff battle involving US President Donald Trump is making investors uncertain about the growth prospects of sportswear brands.

The apparel category grew by 86.9% (100.2% at constant currency), while Asia-Pacific showed a triple-digit growth rate for the fourth consecutive quarter of 109.2% at constant currency. The gross profit margin reached a record high of 65.7%, partly due to operational efficiency, lower freight costs, and strong premium positioning, which led to an adjusted EBITDA margin of 22.6% and a net profit margin of 15.0%. The company celebrated athletic successes such as its first gold medals at the World Athletics Championships and Hellen Obiri's record in New York, while collaborations with Zendaya and Burna Boy strengthened its cultural relevance. New stores in Palo Alto, Zurich, and Tokyo underscore the global expansion of its premium retail network. Following this strong performance, On raises its full-year 2025 guidance: revenue growth of 34% at constant currency (CHF 2.98 billion reported), gross profit margin around 62.5%, and adjusted EBITDA margin above 18.0%. CEO Martin Hoffmann and co-founder Caspar Coppetti emphasized the success of the premium strategy, innovation, and operational excellence, reinforcing confidence in long-term growth. Traditional players such as Nike and Adidas are suffering under the strong performance of emerging brands like ON Running and Hoka, which is part of Deckers Outdoor Corporation (DECK).

Back to Burry

Last week, I wrote about the short position Michael Burry had taken through the purchase of put options on well-known names Nvidia and Palantir. These are companies that can be seen as the exponents of the revival of companies related to the development and evolution of artificial intelligence. By purchasing a put option, Burry is speculating on a decline in the share prices of these companies. He drew attention because he, of course, made billions during the financial crisis by betting against the masses and against subprime mortgages. Many therefore see this as a comparable move now.

That was last week. All the more remarkable is that Burry has now announced that he will liquidate his hedge fund, Scion Asset Management. In a letter to investors, he states that he is liquidating his fund and will return their capital, except for a small retention for audit and taxes, by the end of this year. On Thursday, it became known that Burry had canceled his fund's registration with the US securities regulator, the SEC. In the letter to his investors, he writes that his own valuation of securities has "not been in sync with those of the markets for quite some time." He provides no further explanation as to why he is closing his fund.

What to look forward to?

Nvidia (NVDA) earnings

Nvidia, the leading chip manufacturer from Santa Clara, California, specializing in Graphics Processing Units (GPUs) and Artificial Intelligence technologies, has made a stunning ascent in recent years, driven by the explosive demand for AI chips and data center infrastructure. The company recently became the most valuable in the world, with a market capitalization exceeding the $5 trillion threshold, making it the first in history to reach this milestone. The company successfully expanded its GPUs, originally designed for gaming applications, into the most powerful chips now used for processing within data centers. This unparalleled growth has delivered a compound annual growth rate of nearly 40%since 1999. This underscores Nvidia's dominant position in the tech sector, where innovations in machine learning and gaming have transformed the company from a niche player into an indispensable entity in the global economy.

It is therefore with great anticipation that the investment world looks forward to the quarterly earnings that Nvidia will publish next Wednesday, November 19th. These results will provide crucial insights into the ongoing AI boom, potential supply chain challenges, and future revenue growth, which investors will closely follow to anticipate stock price fluctuations and strategic positions in a market increasingly dependent on Nvidia's technological superiority. Nvidia's performance also has a significant impact on the broader economy, especially considering that CEO Jensen Huang's company has the heaviest weighting in many indices where investors passively invest.

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Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

This week’s newsletter takes leads us into the US macro environment, dominated by the longest government shutdown in history and the high-stakes political drama surrounding it. We explore the mounting social and economic consequences, and how the markets reacted with a late-week recovery, hinting at potential optimism for a resolution.

On the corporate front, we analyze the mixed bag of earnings reports, where Advanced Micro Devices (AMD) posted strong Q3 results, while Duolingo and Uber experienced post-earnings pressure despite solid underlying performance. Finally, we look at two major headline-grabbing stories: Michael Burry’s high-profile short bet against AI leaders Nvidia and Palantir, and the controversial approval of Elon Musk's unprecedented $1 trillion compensation package at Tesla.

Generals and macro economics

Longest government shutdown in US history

The US federal government has been shut down since October 1, 2025. As Republicans and Democrats fail to agree on the 2026 budget. The core conflict: Democrats want to preserve healthcare subsidies (ACA) and food assistance (SNAP), while Republicans demand significant cuts and refuse to release extra funds while the government remains closed.

President Trump, who already presided over a 35-day shutdown during his first term, has largely remained aloof this time: he travels extensively, spent a long period at Mar-a-Lago, and barely negotiates. On Wednesday, during breakfast with Republican senators, he called for the abolishment of the filibuster, the traditional rule requiring 60 out of 100 votes, to allow the Republican majority (53-47) to overrule the Democrats. Senators, including leader John Thune, categorically refuse: “That is not going to happen.”

Tuesday’s elections marked a turning point: Democrats convincingly won the gubernatorial races in Virginia and New Jersey, as well as the mayoralty of New York. Senate Democratic Leader Chuck Schumer stated, “This is a lightning bolt for Trump: finally come to the table and talk.” Progressive Democrats refuse to concede an inch, while moderate colleagues are quietly seeking a way out.

The consequences are mounting:

• 800,000 federal employees are working without pay or have been furloughed.

• Fewer flights in major cities starting Friday due to understaffed FAA.

• Millions of Americans are temporarily losing SNAP assistance, childcare, and other programs.

• Food banks are reporting empty shelves.

Centrist senators from both parties continue informal talks, but as long as Trump and House Speaker Mike Johnson (R) refuse to move, the door remains shut. Johnson called the 36 days “a sad milestone” on Wednesday and sent the House home for recess back in September. Thune, returning from the White House, questioned: “Have the American people suffered enough now? Can this please be over?”

Friday, the last trading day of the week, saw a notable session on the stock market. During the trading day, the S&P 500 dropped by more than 1.2%. At an index level, that is a serious decline. However, the index recovered during the day, closing nearly flat. The dip, and the decline of recent days, was eagerly bought up before the weekend. This could potentially suggest that an end to the shutdown is closer than we might suspect. The end of the shutdown combined with the cessation of quantitative tightening could act as a catalyst for a year-end rally, to the extent that one is still needed after the immense recovery since the April lows.

Investors taking profits

The week will conclude negatively for the US stock market. While we are still in the middle of earnings season, and about 70% of companies that have already reported show an outperformance of expectations, the past week primarily saw investors taking profits. Stocks experiencing volatile performance were adjusted downward this week. Declines of more than 10% on a weekly basis were not uncommon for companies with high trading volumes in recent weeks. For example, popular names of the moment like Palantir, Nvidia, and Rigetti dropped by 15%, 12%, and 22% respectively on a weekly basis. In times when markets seem to only move up, such developments are good for the healthy functioning of the market. The realization that stock prices don't only go up seems to have been lost lately. A couple of weeks ago, we saw the fear and greed index move between fear and extreme fear when the Nasdaq and S&P 500 were only 2% to 3% below their all-time highs.

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Winners of the week

Chipmaker Advanced Micro Devices (AMD) saw its third-quarter revenue rise by 36 percent year-over-year to $9.25 billion, surpassing analysts' expectation of $8.74 billion. Quarterly revenue figures were also strong, increasing by 20% compared to the preceding quarter. Earnings per share rose by more than 30 percent to $1.20, beating the expected $1.17. All of the company's different segments performed strongly. The Data Center segment almost inevitably had a good quarter following current market sentiment and the large investments being made by key AI players. Revenue in this segment grew 22% year-over-year. The other major segment, the Client and Gaming division, performed significantly better than expected, recording a 73% year-over-year increase. For the fourth quarter, CEO Lisa Su projects revenue of $9.3 billion ($9.2 billion expected) with a gross margin of 54.5 percent. Nevertheless, the stock dropped 2 percent in after-hours trading. Investors had very high expectations and are possibly waiting for the Investor Day on November 11 for more news.

AMD has already been one of the big winners in recent weeks following the announcement of the deal with OpenAI. The stock jumped about 37% when that news broke. AMD now confirms this momentum with a strong quarterly report.

Noteworthy mentions

Duolingo (DUOL)

Duolingo plunged as much as 20 percent in after-hours trading following the publication of its quarterly results on Wednesday evening. At the market opening, this meant the stock price had dropped by over 60% compared to its peak earlier this year. The forecast for subscription growth in the fourth quarter fell short of expectations. The company now targets $329.5 million to $335.5 million in bookings (the value of sold subscriptions), while analysts had anticipated $344 million. The rest of the report was more positive. The language app now has over 50 million active users, profitability improved, and the full-year revenue guidance was raised. Duolingo now expects 38 percent revenue growth, higher than the previous outlook of 36 percent. The average revenue per user increased by 7 percent, mainly due to the premium formula Max (€30 per month), which offers an AI video coach to alleviate speaking anxiety. According to management, Max bookings doubled year-over-year, and Apple's live translation in AirPods, the brand’s wireless earbuds, poses no threat. This potential threat had earlier triggered the massive decline in August. Still, Duolingo's stock remains under pressure.

Uber (UBER)

The US ride-hailing app Uber Technologies dropped more than 5 percent after the release of its quarterly results. The figures were, however, better than expected. Revenue rose 20 percent to $13.47 billion. The number of trips increased 22 percent to 3.5 billion. Net profit surged from $2.61 billion to $6.62 billion, boosted by a tax windfall and investment gains. The CEO was satisfied with the past quarter, reflected in the quote:

Uber’s growth kicked into high gear in Q3, marking one of the largest trip-volume increases in the company’s history.

I am personally a fan of Uber’s approach and the business they are building. The business model is systematically being expanded with new segments that complement the core business. Examples include delivery services and freight transport. Advertisements are also starting to play a larger role as a source of income. Furthermore, there is attractive optionality present. If self-driving cars become involved and Uber can offer a platform to bundle this, the company is well-positioned. The current growth relative to its valuation is also appealing.

Novo Nordisk (NVO)

The company lowered its full-year forecast for the 4th time this year. Where revenue growth in the previous forecast was estimated at 8-14%, it has now been adjusted to 8-11%. Operating profit was also lowered, from a last expectation of 4%-10% to 4%-7%. The most important thing for investors was that the lower bound was not lowered again. This speaks volumes about the current sentiment associated with the stock. With a lowering of the forecast, you would expect the stock to drop further, but this was not the case here. At one point, the stock even rose by about 3% during the trading day. The pessimism is largely factored into the current share price. Restructuring is taking place, which should eventually lead to significant cost savings. These cost savings will be necessary to shore up margins if lower prices are set in the US market, which is the most profitable market for Novo Nordisk and many other pharmaceutical players. I wrote a separate article about the current status of the Q3 figures. You can find it here.

https://open.substack.com/pub/cashandcompound/p/novo-nordisk-nvo-quarterly-update?r=6dv2z1&utm_campaign=post&utm_medium=web&showWelcomeOnShare=false

Michael Burry’s put options against Nvidia (NVDA) and Palantir (PLTR)

Michael Burry, the famous investor whose life was chronicled in 'The Big Short', has once again made a bet against the market. Burry is a notorious grouch who has missed the mark more often than he has hit it since his moment of glory. He bet heavily against the US stock market in years when it performed quite well. According to Burry, the AI frenzy is reminiscent of the housing market before 2008, where cheap capital and high expectations artificially reinforce each other. He is betting that the 'compute bubble', being data centers, chips, and AI infrastructure, will eventually burst, and that Palantir, as an extremely highly valued player, will be hit the hardest. His fund Scion Asset Management is betting on a decline in two of the most popular stocks of the moment: the chip giant Nvidia and the data processor Palantir Technologies. New filings with the US stock market watchdog SEC reveal put options on Nvidia and Palantir. A put option is a financial contract that increases in value if the price of a stock falls. By buying a put, one speculates on a decline. In Burry's case, this means he expects Nvidia and Palantir to fall significantly. According to the documents, his fund holds puts on Palantir underlying about 5 million shares, and puts on Nvidia, accounting for 1 million underlying shares. How much Burry exactly staked on a decline in both stocks cannot be inferred, as it depends on the value of the put options. The filing does not provide an explanation for this. The SEC filing only shows the market value of the underlying shares of Palantir and Nvidia, $912 million and $187 million respectively. This is a notable shift. In the previous quarter, Burry held no position in these companies. The new bets come at a time when both stocks are leading the race around artificial intelligence. Nvidia became the first company ever with a market value of $5 trillion last month. The stock rose another 54 percent this year, on top of three years of spectacular growth. Palantir, which provides data analysis to, among others, the US military, has skyrocketed 174 percent in 2025.

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Regarding Burry's disclosure, I came across an interesting view on X questioning the timing of the announcement. I share the tweet below: https://x.com/jackprescottx/status/1986162016227106904?s=61

The early submission of Michael Burry's 13F form on November 3, a clear departure from his consistent decade-long pattern of doing so around November 14, has sparked speculation about strategic timing, especially as it coincided with Palantir's quarterly results. Burry's large short position against the company appears to have played a role in the subsequent stock price drop, a move that was part of a broader AI sector sell-off on November 4, wiping out over $730 billion in market value, amplified by his disclosure of put options on Palantir and Nvidia shares. Despite Palantir reporting record revenues of $883 million on November 3, a 30% year-over-year increase, the company still suffered a $51 billion loss in market capitalization after Burry's move. These events were further intensified by the fierce reaction from Palantir CEO Alex Karp to Burry's short position, underscoring the personal tension between the two in the context of the current AI hype.

Musk gets his $1 trillion compensation package approved

Despite opposition from shareholder activists ISS and the Norwegian oil investment fund NBIM, shareholders approved the controversial new bonus plan for Elon Musk on Thursday evening. The proposal passed easily with a majority of over 75 percent of the votes. This was largely due to the fact that the CEO, with his current 15 percent stake, was allowed to vote on his own bonus. That Musk was allowed to do this is thanks to the relocation of Tesla's headquarters from the classic establishment paradise of Delaware to Texas. In Delaware, Musk would not have been allowed to vote on his own bonus plan. Now that shareholders have approved the package, Musk has sight on a stock option plan worth $878 billion (€760 billion). Together with a previously granted bonus, which has not yet been paid out due to legal proceedings, it could bring him an options package worth more than $1,000 billion (or $1 trillion): an unprecedented record. As a condition for the bonus, Musk still receives zero dollars in salary. To qualify for the billion-dollar bonus, he must also ensure that Tesla sells at least 20 million cars per year within ten years: twice as many as the current global number 1, Toyota. Additionally, Tesla must have sold at least 1 million Robotaxis by that time, achieve a gross profit of at least $400 billion annually, and reach a market value of at least $8.5 trillion (compared to about $1.5 trillion today).

One to watch

HIMS

Hims & Hers runs a high-margin, subscription telehealth model: async doctor visits, AI-driven personalization, and direct pharmacy shipping drive 82% retention and 80%+ gross margins. It’s on track for $2.3B revenue in 2025 with customer payback under 12 months. Ahead, specialty expansions in weight loss, hormones, and longevity, plus UK/Brazil launches, target $6.5B by 2030 and 10M+ subscribers. Owning labs and peptide production locks in supply and fuels cash-flow profitability.

Technicals

The HIMS stock closed the week at the lower edge of its weekly uptrend and at the bottom of the Bollinger Band. This could trigger a fresh upward move next week, provided the uptrend remains intact.

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Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.

This is also the first time the figures have been announced under the leadership of the new CEO, Mike Doustdar. He was recently appointed to steer a new course. The company is undergoing a significant restructuring, focusing on efficiency and the core business: diabetes and obesity treatment. To improve efficiency, around 9,000 employees were laid off earlier. This restructuring naturally brings costs with it now. This is expected to amount to around DKK 9 billion in costs, but that investment should pay off in the long run. They expect to save DKK 8 billion by 2026 and even more in the years that follow.

Regarding the focus on the obesity and diabetes market, the Wegovy pill, expected to launch in the first half of 2026, is set to be a catalyst. The results of a latest test phase seem also very promising. Novo Nordisk’s oral 25 mg semaglutide achieved weight loss comparable to injectable Wegovy in the OASIS 4 trial, with consistent results across menopausal stages. The pill also improved glycemic control, cardiovascular risk factors, and physical functioning. These findings support its potential as a needle-free alternative for broader patient access. However, the Danish market leader is losing market share. Competition is strong, with Eli Lilly as the most dominant player in the US market. The US market is, of course, the most profitable for pharmaceutical players because prices are highest there. Furthermore, compounding medicines still play a negative role in Novo Nordisk's story. These dilutions and adjustments of specific products are labeled as illegal by Novo Nordisk, while their producers label them as personalization.

The company itself mentioned during the earnings call that they are not happy with the loss of market share. However, they did state that they are very positive about everything still in the pipeline to help future patients. The positivity is primarily linked to the International markets, where they are trying to tap into new markets and gain a high market share. China, for example, is one of those markets where they want to play a significant role. Within the international markets, Novo Nordisk talks about serving twice as many patients as the competitors.

What is also noticeable is that the figures are slightly positively skewed. They stretch their reporting over the first nine months of the year and barely go into detail about the figures for the past quarter. The first six months of the year still showed attractive growth, which is why the nine-month figures still appear relatively acceptable. If Q3 were more isolated, I think the figures would be more disappointing. A small manipulation that took place there towards the general public.

Taking these figures into account, and even considering the outlook which has been lowered again, I believe that the worst is currently behind us. The last two quarters can be regarded as dramatic for Novo Nordisk. The company has gone through turbulent waters, and the share price is the perfect reflection of this.

The sentiment and the valuation

To elaborate on the price: The sentiment surrounding the stock is clearly poor; otherwise, you wouldn't lose 60% of your market value in such a short period. In such cases, you must try to separate sentiment from reality and the effective operation of the company. If you were to enter the company at this moment, without knowledge of the history and what the company has gone through in recent months, you could now invest in a company valued at 12 times earnings.

In exchange for 12 times earnings, you get a company that is still the market leader and is active in a growing segment where the Total Addressable Market (TAM) has only been addressed by a fraction. Worldwide, 1 billion people suffer from obesity or diabetes. Currently, Novo Nordisk serves 46 million of them. This shows that there is still immense room to help new patients.

The company has competition, but every company does. Despite the competition, the company can still grow revenue between 8% and 11%. This, combined with an interesting pipeline, can ensure that revenue can grow even further in the future, and interesting new international markets can be tapped. Furthermore, the Wegovy pill should become a game-changer.

Every company has its price to be a good investment. If you look objectively at the figures, possibilities, and valuation, you should conclude that your risk-reward is certainly okay at this moment.

Let me know what you think about Novo Nordisk and the current situation and valuation.

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Disclaimer

All content on this blog is for informational and educational purposes only. The opinions expressed are solely my own and should not be construed as financial advice. I am not a financial advisor, and all information shared is based on my personal research and understanding, which is subject to error. You should not make any investment decisions based on the information on this blog. It is essential to conduct your own due diligence and consult with a qualified financial professional before making any investment.