u/AggressiveAd9058

According to empirical studies on the time horizon of stock portfolios, the probability of a negative return in the U.S. market drops from nearly 30% over a one-year period to less than 5% over a three-year period, and approaches zero beyond 10 years, mathematically validating the need for a long-term perspective to assess the validity of an investment thesis.

I believe the dynamics are even more favourable in the PSX because we are a growing economy and the market is nowhere near its mature phase

Given how rapidly we've seen residential and commercial solarization across Pakistan, I think electric vehicle transition is the next logical outcome over the next decade or so, because people with solar energy at home would definitely consider their next car to be an EV or PHEV

I don't know much about HUBC, and was wondering if anyone here has the stock on their portfolio, and if they know more about it than me

Google's entire bull case has been resting on the idea that they are "compute-constrained, not demand-constrained" and every dollar they spend closing that gap is high-ROIC dollar. The argument is basically that they're the only company that owns the entire stack from silicon to distribution.

Of course, whether or not this thesis actually plays out is going to be the key question this quarter (and probably the next few quarters)

Generally, if we see management continuing its narrative that "we could've sold more if we had it." that means the thesis is still going strong, and they might keep their CapEx trend at a similar trajectory.

I'm tracking 24 milestones into this quarter (sharing here) for anyone interested. I'll also be breaking down earnings on my Substack following Google's earnings on Wednesday, if anyone wants to follow along with me ( earningintel.substack.com )

Did I miss anything here? Would appreciate if someone would let me know if I should add something else.

https://preview.redd.it/91perj1f97eh1.jpg?width=1240&format=pjpg&auto=webp&s=8c85ad42cd8843325d0c9e934cfa89ef2a63b4e8

Satya Nadella recently wrote a short article on what he calls the reverse information paradox, which can be read here.

https://x.com/satyanadella/status/2076323181154230284?s=20

Does this not seem like he is uncannily describing the infrastructure that Palantir's Ontology already provides, which is a trust boundary where enterprise data, traces, evals, adapted weights, and institutional memory accumulate and compound inside a hard perimeter that the model vendor cannot cross.

His five C framework (Control, Capability, Choice, Cost, Compound) is essentially a feature checklist for what AIP and the Ontology claim to deliver today.

If Microsoft decides to really go this route, it would likely be far more capable at achieving this than Palantir, with its mountain balance sheet and cash flows, its unparallaled distribution system, and its strong brand standing.

Please correct me if I'm wrong.

Here's why I think this lawsuit's a joke, and not a serious risk to the company:

1️⃣ this is a civil antitrust class action, not a DOJ criminal investigation or a regulatory enforcement action.

2️⃣ The plaintiffs are consumers and small PC assemblers,

3️⃣ the case is in its earliest stage ( a complaint has been filed, nothing has been adjudicated, and no discovery has occurred yet.)

4️⃣ The historical citation to the 1999-2002 DOJ price-fixing case (which was a real, proven cartel with actual fines) is doing a lot of rhetorical work in the complaint to imply pattern behavior, but citing a 20+ year old case is also a sign the plaintiffs don't yet have direct evidence of coordination in this cycle (they're inferring intent from the outcome (price increases) rather than presenting proof of collusion.)

I would still watch this closely because if this lawsuit gains traction, or if it triggers a DOJ or FTC look. The worst case scenario (which I doubt would play out, since this has no legs to stand on) is that it could force public disclosure of internal capacity allocation decisions that would otherwise stay confidential.

This is a major point of friction for many, and I was wondering if there is any fix for this?

The issue seems to only be there for mobile users, and desktop users don't seem to be prompted to install the app.

Management's main thesis (that bulls are heavily buying into) is that the shift to agentic computing is inevitable, and Microsoft is perhaps the best positioned to capture value at every layer amid this transition.

The argument runs like this.

1. Agents are becoming the dominant enterprise workload
2. Every company will eventually need infrastructure to run them, (as well as data to ground them, applications to deploy them, and governance to control them.)
3. Microsoft owns all four layers (Azure for infrastructure, Fabric and Foundry for data and model orchestration, M365 and GitHub for applications, and Agent 365 for governance.)
4. No competitor has that full stack.

That's of course very tempting to buy into, on paper. Management continuously points to the $37 billion AI ARR figure which grew at 123% YoY, and the fact that Microsoft Copilot Paid seats grew by 250% YoY to 25 million users.

All that is great. If you believe management, Microsoft WILL inevitably become that operating system of the agentic enterprise, just as it did in the dot com era.

The problem is that the market isn't buying this at face value, and that's worth looking into. The stock has fallen to $370 (almost the same price it was at in November 2021), and its PE ratio of 21x is nearly a historical low for the company.

If management's thesis is so rock solid, why would we be seeing sucha discount on the stock?

Here's my two cents.

First (and the main one really) is the FCF problem, which i think is the loudest concern. Microsoft generated $15.8 billion in FCF on $82.9 billion in revenue this quarter (a 19% FCF margin). Historically that number was closer to 30-35% for Microsoft. This margin is depressed because of $31.9 billion being spent this quarter on CapEx alone, and the the market is being asked to trust that this massive quarterly CapEx will eventually earn its return. Until FCF recovers meaningfully and consistently, I'm pretty sure the multiple will stay compressed because you cannot value a company on ARR growth alone forever. Investors want to see the cash show up.

What makes this even more troublesome is that hyperscalers like Google and Amazon aren't standing still. Both are investing at comparable CapEx levels, both have credible AI infrastructure stories, and Google in particular has a strong argument around model quality with Gemini. Microsoft's narrative implies that enterprise AI workloads will consolidate onto just one hyperscaler. Instead, it's a very real possibility that enterprises run multi-cloud AI strategies and Microsoft captures a third of the opportunity rather than half. That is a very different valuation outcome.

Second, I think management is being weirdly vague about some of the metrics its sharing. Its spoken quite a bit about the 20 million Copilot seats, but I would appreciate some more granular details like revenue per seat, and if consumption revenue is materializing on top of it. Some of us fear that seat growth is real but the monetization depth is a lot more shallow than they would have us think. By this I mean that enterprises are buying Copilot but not using it intensively enough to drive the consumption revenue that justifies the growth multiple. Management not revealing this is suspect because its central to the entire thesis they are selling us.

Third is declining gross margins. I think this is something the market is seeing as a structural deterioration, and needs to be addressed.

Fourth, Microsoft has a very weirdly complex relationship with OpenAI contractually, structurally, and competitively. This is problematic because it brings a major dependancy risk to Microsoft's AI ARR story. I imagine there are a numebr of things that could cause OpenAI to shift its trajectory. This could be a competitive setback, commercial agreement restructuring, or a deterioration in model quality relative to Anthropic or Google.

Finally, we need to keep in mind that enterprise software buying cycles are long. If the economy softens, large-seat Copilot commitments are exactly the kind of discretionary spend that gets pushed to the right. So the market may also be pricing in some probability that the Q3 seat growth numbers represent a pull-forward rather than a run rate.

I'm not saying I'd bet agaisnt Microsoft, or even for it right now. My point is that the market may have a point, and those who think this is simply a case of "the market is being dumb" could not be factoring in everything about the stock.

Anyway, the stock is on my radar. I'm neither long nor short at the moment. I'm watching about 20ish milestones to play out, and then I'd decide if management's thesis is actually close to playing out.

Nike will be releasing earnings next week. Management already prepared us to not expect any major wins

A lot seems to have gone wrong with the company in recent years, and the worst part is that this seems to mostly have been self-inflicted.

1. Went all in direct to consumer, cut wholesale partners, destroyed those relationships

2. Flooded the market with AF1, AJ1, Dunks, and killed the heat on some of their best franchises

3. They chased lifestyle revenue, and pretty much abandoned the sport performance identity (major strategic blunder imo).

4. One of their worst moves was to build a fixed-cost infrastructure for a digital business that never ended up reaching the scale management projected.

5. Misread China's channel dynamics and let inventory pile up across digital and wholesale simultaneously

6. Its EMEA markets showed structural mismanagement, so the management's response was to paper over it with volume, rather than addressing structural causes of weakness.

7. Tried to fix all of it at once from a position of weakened brand equity and elevated inventory everywhere which just worsened things for itself.

Management now insists that they are working to correct these misteps. The main thesis they're trying to push is that the company never lost its fundamental advantages (athlete relationships, innovation capability, brand equity, wholesale infrastructure, global scale, etc.) and all wrongs actually related to discipline.

In prior earning calls, they seem to be pretty explicit that the timeline is longer than they initially suggested and some geographies are messier than initially diagnosed. China and EMEA have structural weaknesses compared to North America, and require more time.

They have guided Q4 revenue to fall between 2% and 4% of last year Q4's total of $11.1 billion. If the reported revenue is below $10.6 billion, that's going to be really negative for the Nike. They're betting on the North American market showing strength, and if that does not play out, their thesis is breaking down.

I'm tracking \~24 specific milestones for the company in the upcoming earnings, and will be sharing updates if anyone is interested in them. Right now, shareholders will want to see that Nike can address past failures, and stick to the clean up thesis they are framing.

Personally, I think the stock is expensive right now at 28x forward earnings, especially since the best signal we could be given is that the fundamental decline is slowing, not reversing. I think that's a pretty thin foundation for a 28x multiple.

A lot seems to have gone wrong with the company in recent years, and the worst part is that this seems to mostly have been self-inflicted.

1. Went all in direct to consumer, cut wholesale partners, destroyed those relationships
2. Flooded the market with AF1, AJ1, Dunks, and killed the heat on some of their best franchises
3. They chased lifestyle revenue, and pretty much abandoned the sport performance identity (major strategic blunder imo).
4. One of their worst moves was to build a fixed-cost infrastructure for a digital business that never ended up reaching the scale management projected.
5. Misread China's channel dynamics and let inventory pile up across digital and wholesale simultaneously
6. Its EMEA markets showed structural mismanagement, so the management's response was to paper over it with volume, rather than addressing structural causes of weakness.
7. Tried to fix all of it at once from a position of weakened brand equity and elevated inventory everywhere which just worsened things for itself.

Management now insists that they are working to correct these misteps. The main thesis they're trying to push is that the company never lost its fundamental advantages (athlete relationships, innovation capability, brand equity, wholesale infrastructure, global scale, etc.) and all wrongs actually related to discipline.

In prior earning calls, they seem to be pretty explicit that the timeline is longer than they initially suggested and some geographies are messier than initially diagnosed. China and EMEA have structural weaknesses compared to North America, and require more time.

They have guided Q4 revenue to fall between 2% and 4% of last year Q4's total of $11.1 billion. If the reported revenue is below $10.6 billion, that's going to be really negative for the Nike. They're betting on the North American market showing strength, and if that does not play out, their thesis is breaking down.

I'm tracking ~24 specific milestones for the company in the upcoming earnings, and will be sharing updates if anyone is interested in them (available on my profile). Right now, shareholders will want to see that Nike can address past failures, and stick to the clean up thesis they are framing.

Personally, I think the stock is expensive right now at 28x forward earnings, especially since the best signal we could be given is that the fundamental decline is slowing, not reversing. I think that's a pretty thin foundation for a 28x multiple.

This is my take on what the company is planning to achieve by 2030, based on my reading of the thesis the management is trying to convey to shareholders. Please let me know if I've somehow missed something obvious

https://preview.redd.it/odjtgeaedk9h1.png?width=1693&format=png&auto=webp&s=61e02272acff1163fc15127f16affb0855d5a68d

Reddit efficiency is wild for a hyper-growth tech co:

• Revenue growth: 60%+ for 7 straight quarters
• Gross margins: 90%+
• GAAP Profitable
• Q1 CapEx: Only ~$1M

It's a lightweight, high-cash-flow machine trading at an EV/EBITDA (forward) of only 20x, while boasting extraordinary forward growth metrics.

Three things are driving Reddit's earnings growth right now, in order of magnitude.

1. Ad stack maturation (better ML and ad technology extracting more value from existing traffic, driving ARPU up 44% YoY.)
2. active advertisers up 75%+ YoY, more competition for inventory pushing prices higher.
3. revenue growing at 60%+ while costs grow in the mid-teens, flowing incremental revenue through to earnings at an unusually high rate.

https://preview.redd.it/3sq9ra4gvh9h1.png?width=1024&format=png&auto=webp&s=2022243cc4e82c89b87b3755497af31060bfa333

Between its Q2 and Q3 results, MU stock surged 160% from $464 to around $1200. We can be confident based on the performance momentum that the stock can easily deliver another massive run up into the next earnings print, especially considering that it's only trading 16x its forward earnings

I know some would point out the company could be at a peak right now but I don't think that seems to be the case at all. Greenfield fabs take years. HBM trade ratios worsen with every generation. Technology nodes are delivering fewer bits per wafer, not more. Most importantly, the management seems very. Lear that the structural forces compressing the HBM supply are actually getting tighter, not easing.

In fact I've personally been tracking 25 management milestones across the last two quarters, and Micron actually achieved 23 of them.

Micron has an almost open-ended pricing power, no supply relief in sight, and a customer base that is legally committed to purchase volumes through 2030.