For now, I’ll stay out, but let’s see.

Nvidia

Today’s report will be short but important as the king reported this week, with another banger, which shouldn’t be a surprise. I’m not sure who had bearish expectations to be honest, after everything we’ve heard these last weeks...

The most important data this quarter is what I’ve been highlighting for weeks now: as inference arrives, GPUs aren’t the heart of AI demand anymore, networking is - and everything that can help GPUs achieve their task without idle time.

Data Center compute revenue was a record $60.4 billion, up 77% from a year ago and up 18% sequentially. Data Center networking revenue was a record $14.8 billion, up 199% from a year ago and up 35% sequentially.

Data center networking revenue of $15B nearly tripled year over year. InfiniBand has had a very strong quarter growing more than 4x year over year driven by deployments of our next-generation XDR technology. Spectrum-X, our end-to-end Ethernet platform purpose-built for AI, is now larger than all Ethernet network peers combined."

That was the thesis on AsteraLabs a months ago and it played out wonderfully as the stock is now ripping at new highs, and is the actual reason for buying Arista last week on the W50 retest, as shared in the Substack chat. Those two companies are at the heart of the networking demand and leaders in their products, so as Nvidia confirms the direction of hyperscalers’ spending, it also confirms my thesis on both.

The bottom line is always the same but I’ll repeat it: inference requires more than raw compute, it requires a complete optimization and that comes from other constructors; this is the narrative behind photonics, Silicom, and so many others.

This earnings season proved this. Nvidia confirmed it. And analysts don't see it stopping any time soon.

With analysts now forecasting hyperscale CapEx to exceed $1 trillion in 2027 and agentic AI beginning to proliferate all industries, AI infrastructure spending is on track to reach $3 trillion-$4 trillion annually by the end of this decade.

I have covered everything you needed to be convinced on this narrative which remains the strongest today and you guys now my view on the subject: extremely bullish, as long as the market loves the sector.

Small note on SaaS: as agentic AI scales, their products also will. I’ve been patient enough for long but any switch in sentiment on those stocks will have to be bought because this is where the next round of performance will be - this and robotics.

Since the advent of ChatGPT, we have witnessed mainstream AI transition from one-shot inference to reasoning and to now agentic. AI is no longer a nice to have. AI is now a necessity for enhancing productivity across all industries and roles.

Tokens are now profitable, so model makers are in a race to produce more.

Sigma Lithium

Sigma reported earnings late last week; the thesis continues to play out. The most important information being the repayment of 21% of their debt and the confirmation of their credit line and pre-payments to fund their expansion. This is what makes the play so interesting as financials improve, so more confirmations are valuable for the market and its perception.

We have repaid 75% of our short-term bank trade debt in the last year. Those were the trade finance lines that we used to finance our operations throughout the last two years. They've gone from $90 million down to $13 million only. That is a staggering 75% reduction. Not just that, in the last quarter alone, we managed to decrease these lines by 46%. That's a quantification of our ability to generate cash.

Everything was good, with healthy growth, improving margins and cash generation partially due to an increasing commodity price as I expected when I wrote the thesis. Demand is growing and their ESG product is attracting demand at a higher price point while having a lower production point than competition. Management confirmed their guidance of 240,000t/year for 2026. And that’s before they triple their production by the end of 2027.

We had one more great news as Sigma developed a “new” business: lithium fines. Fines are smaller lithium particles whose sizes do not meet the threshold to be manufactured into cells. Most of the times, those are thrown away, but Sigma figured out a way to purify them and… sell them, thanks to their high qualit. This is a net increase in revenues at no added cost as the mining is already done, which yielded $21M this quarter - not negligible, helping to improve margins and growth. This wasn’t a one-off as there is demand for up to 350,000 tons from their buyers.

On the stock itself, the market sold the stock for two reasons, in my opinion.

1. It ran a lot and this quarter “only” confirmed the core case - more the bull case to me well. The stock got expensive, traders took profits, end of story. No big deal.

2. A preliminary demand was filed by a local judge against Sigma’s operations, which he considers “a massive violation of human dignity” due to the potential impacts it has on neighboring cities - noise, tremors, waste piles... This is just a demand, not a ruling, and management released a statement saying they will defend their case and are operating within all regulatory frameworks. Noise.

This was a good moment for traders to deleverage and give the stock the retest it needed, right onto my entry point as shared in the chat. This quarter was in line with my thesis and as demand for lithium isn’t slowing down, especially not “cheap” ESG compliant lithium, I continue to be bullish on the company and am glad to be in.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

This is what a winner looks like. This is what we buy, hold and accumulate, and do so as long as it keeps winning.

The million-dollar question is how to find them? If it were easy, everyone would be rich so it obviously isn’t, but many winners share the same characteristics, meet the same criteria. That’s what we’ll talk about today.

The Winners’ Trinity

Most winners share three key characteristics.

1. A positive narrative within an accelerating sector, with clear catalysts.

2. Improving financials with a path to even more improvements.

3. A growing buying volume on the stock.

Lots of companies meet these criteria at one point in time. But only a few can hold them through months or years, with constant improvements and demand. Those are the ones we look for and even if some will fail - maybe most, every winner starts with those three criteria. So this has to be our starting point, filtering comes later.

So, what about Nebius? Well, it of course met the three criteria - and it still does.

First, narrative. If we were to remember the environment in early 2025, the narrative was to buy as many GPUs as possible to train the best model. Nvidia was king, LLMs were only starting to be real, with no commercial usage yet nor a clear idea of what could be done with them. AI equaled Nvidia.

DeepSeek came and showed the world that training wasn’t only a matter of GPUs, but also a matter of infrastructure and optimization. This changed the perception of the market around two things.

1. Nvidia’s GPUs are necessary, but not self-sufficient.

2. Open-source LLMs will be a thing to boost optimization.

The third key development was usage; we’d need a bit more time to confirm this but it seemed evident that AI was here to stay and would generate ROI to those using it, which meant a growing demand for inference - an unknown beast yet. The thesis was clear, it would be bigger than training.

This is the environment in which Nebius arrived, with an understanding other players didn’t have yet. Their core business wasn’t GPUs, but optimized compute. They built vertically integrated infrastructure for training/inference, optimized for open-source models. It seems obvious today, but it wasn’t early 2025. Their focus was on quality and cost-competitiveness.

This is what set Nebius apart. This, and their financial position.

Second, financials. Nebius got “lucky”. Being an entity of a Russian company forced to be dissolved, they started with a head-start in the form of an extremely efficient and running data center in Finland, and ~$3B in cash plus other business and equities - ClickHouse, Avride, TripleTen…

As their focus was optimized compute, it meant cost-competitiveness. Management focused on cheap energy, racks, hardware... Everything built within Nebius was and still is optimized for cost, which allowed them to be competitive, attract, and grow faster than competition with a control on their margins.

Strong balance sheet, potential for growth acceleration, control on margins, within an accelerating narrative and demand at the start of inference.

Lastly, stock demand. This might have been what lost many investors on Nebius as they didn't understand that the ticker used to be the Yandex ticker, and only became Nebius post split, late 2024. The chart would look disgusting without knowing this.

From this moment, volume has constantly accelerated with stable prices as those who knew bought. I buy on supports, and found Nebius early 2025, so my first purchases were in the mid $30s, while my big purchases were in the low $20s during the April tariff flash-crash.

If you know me, you know I only buy uptrends, stocks above their W50 but again, this chart includes Yandex which means its averages are including previous price action, which has nothing to do with Nebius. I bought the low of the range on a company with an extremely strong narrative, strong financials, with growing volume. The perfect purchase would have been on the $50 breakout assuming we were to follow my rules, and that would have been enough to yield massive returns.

What Then?

Then, nothing. When you find a winner, you hold, occasionally trim, buy on retests, and wait. The hardest in investing is always watching your money compound without doing anything. There is a playbook for this.

The stock gave you two extensions the last year and a half, and two retests. This was when you trimmed, and bought back, with the third extension being given right now.

The hardest is holding as you fear for your profits shrinking.

So far, my system returned 816% on Nebius.

This was how to identify Nebius, early. It met the holy trinity then, and held it since. It wasn’t the only one the last two years, nor the last one as we will see later. Here are other examples I participated in, while you could find many, many more.

Palantir.

Narrative - Artificial Intelligence started to be used with the most obvious use case: to help companies optimize their operations. Palantir’s AIP was released in April 2023 and meets this exact need, focused on governmental contracts and expanding into commercials.

Financials - Strong Balance sheet with ~$4B of net cash, improving operating margins, reaching profitability and a clear path to cash generation acceleration as demand for AIP was rapidly accelerating at higher margins.

Stock demand - The first post-AIP earnings set the story and stock demand exploded, with a massive breakout on volume. This is where the buy happened, at breakout or in the weeks after during the horizontal stabilization, constantly confirmed by earnings.

The rest is history, with four large extensions meant to trim, three clear W50 retests and ~1,200% returns over the 18 following months, at the top. I detailed the entire ride and how to optimize returns with a clear system on my selling playbook.

That system returned 815% on Palantir in 18 months.

Hims & Hers.

Narrative - GLP-1 pills are the new miracle pills and a telehealth company is setting up compounding to meet the current shortage, meeting FDA requirements. Their product is a perfect market fit but their application is also optimized for consumption, ease and discretion.

Financials - Flat balance sheet but rapidly improving margins and cash generation as usage of their platform increases in term of users and spending - pushed by GLP-1 pills. The potential is as strong as the demand and the shortage length.

Stock demand - Without surprises, the stock anticipated and broke out late 2023, with volume increasing after the May announcement. Volume looks small in the screenshot as it compares to what came after, but it was huge early 2024 compared to previous volume: buying pressure was crystal clear.

The $14 retest offered a perfect trinity setup. Narrative was strong, growing; financials were healthy and improving and stock demand was accelerating. One clear trimming signal at the top, two other retests to increase the position, and an obvious close to me ~$62 as the narrative broke.

My system returned 353% on Hims in ~12 months.

As I said, there were many more out there over the past years, especially with AI. But we shouldn’t try to catch them all. Our job as stock pickers is to catch a few of them, hopefully the best ones, with large sizes. Those three names were enough to generate wealth as long as taken with big sizes. You didn’t need other trades to make a killing.

Running towards all new shiny objects doesn’t accomplish anything.

My sole job with this Substack is to identify this trinity, to share them from the core narrative to their financial, including stock demand. To play them and to return as much as I can with a crystal clear system, from stock picking to buying and selling.

Today, I own six positions that meet that trinity.

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The Current Market

I’ve been very bullish over the past weeks, and extremely bullish on AI hardware over the past months, making the sector my biggest position. But we are reaching some high momentum now, in terms of extension and short-term performance.

The S&P 500 is up 16.57% in a month and a half, the Nasdaq is up 26% in the same period. The first trades ~7% above its W21, 9.1% above at the top of the week, and the second ~12% above. This kind of extension is where retracements/stabilizations happen. I was the first one claiming for weeks that this was one of the most hated rallies I’ve seen and that we shouldn’t try to anticipate its outcome, but those words were written two weeks ago now and the situation is a bit different for me.

This is one of the most hated rallies I have seen. Don’t fight it, don’t try to assume it can’t run higher or longer. It can. The game is different when liquidity concentrates into a few names or narratives, and a hated rally can last longer than any bears would have assumed. It will end, no doubt here, but what we need to do is to be ready for when it does, not try to guess when or why.

This is where we think about turning down risk depending on our situations - and I’ll describe mine after.

Extensions aren’t enough to trigger a breather, even at this level. The market needs a catalyst, and even if it ignored it until now, it has one: inflation. Been talking about it for months now. It was - and still is, inevitable.

The Production Price Index jumped 1.4%, the biggest jump since covid’s supply chain disruption. Logical, as we are going through a supply chain disruption again, centered on oil/energy in general.

The PPI reflects price changes for manufacturing goods. Say I produce wooden chairs, I need wood and some other materials; the PPI will reflect the price increase of those goods. PPI usually is a pre-indicator to global inflation as if I, as a producer, have to pay more to manufacture my chairs, I’ll probably sell my chairs at a higher price to compensate.

We are at a month of disruption now, effects on the economy are real and won’t be fixed that easily even if we were to reopen the canal today, and no countries will be immune to the consequences. Even America, which has no/very limited exposure to Middle East oil will see inflation due to globalization. Any product manufacturing process goes through clear steps.

Material extraction → Transformation → Manufacturing → Commercialization.

If any of these steps get more expensive, the final product will be more expensive and as everything - most things, in the U.S. are imported then the life cycle of their products manufacturing will also be impacted by oil spikes.

So without any surprise to me, PPI is increasing, and prices should follow.

To be honest, there are no certainties yet as a temporary inflation could be absorbed by manufacturers who’d accept some hit on their margins in order to keep volume. Either way, cash generation declines for them.

But what matters in the markets is perception, and perception this week was that inflation is back, for real, with the 10Y back close to yearly highs, and that will raise concerns around rate cuts - and potential hikes.

We’ve talked about Kevin Warsh, the new Fed chair that was sworn in this week to take over Fed FED after J. Powell.

The market tanked following his nomination as investors worry Warsh ends up head-to-head with Trump and refuses to cut rates, which is what Trump wants.

I think Warsh will walk in and cut rates. Why? Because it’s the only reason Trump put him there. If Warsh wanted independence, Trump would have found someone else, someone more malleable.

The second problem is that obeying Trump creates even bigger issues as it means the FED independence is gone. If Trump - or any government, controls both monetary & fiscal policy, it’ll push America toward disaster: the last step necessary for collapse. It would take years, but it would be unavoidable as politicians abuse both frameworks and crumble the currency for political (and personal) gains. On the good side, assets would appreciate if that were to happen, but I am not sure what would be best.

The Fed next rate decision will be in June, all eyes on what Warsh will say for his first minutes, but as the Strait is still closed and we’re already seeing the accumulation of a year of tariffs and energy disruption… This kind of disruptions don’t disappear in a week, but in months from the moment flows restart - and they haven’t.

We have another variable with Trump meeting with Xi this week. Not much news yet but this renewed relationship could change lots of things for the world’s economy. The only valuable comments I’ve heard so far concerned agricultural imports.

Back on inflation, the only companies benefiting from this kind of environment are commodity sellers - usually, and we’ve been talking about lots of them over the last months so you guys should have options in terms of accumulation.

This is the market’s situation today. Extension, clear sign of inflation and fear of it. But that is only macro, and the market isn’t only affected by macro.

The AI Dichotomy

This is where things get extremely interesting. As the earnings season is over, we can all reach one clear - and unsurprising, conclusion.

AI is bigger than we originally thought, is generating more cash than we originally thought and will trigger more spending than we origin… You get it.

I’ve written four different earnings reports and covered ~50 companies, and all said the exact same thing: that they didn’t have enough compute, need more hardware, infrastructure, energy, and had so many clients fighting for their services that they ended up with pricing power.

The interesting part is that those companies’ final products are services, not goods; I’d go further as to call them deflationary services. Sure, to deliver those services, they need hardware and infrastructure whose prices are rising due to inflation and supply issues, but those companies have the cash to accept price hikes. Look at Google or Meta. When your core business is advertising, cash generation doesn’t change; clients rotate but cash still flows.

In brief. Companies with massive and constant cash generation can buy hardware at a higher price to sell a deflationary service to companies going through an inflationary spike, so they want to buy it.

So… Why would the AI cycle slow down, even if inflation spikes?

That’s from a business perspective. The issue with stocks is that they are impacted by liquidity. Investors sell during inflationary times not because they do not believe in the companies but because they need cash/are afraid of the market’s reaction/anticipate a correction. Better be the first one selling than the last.

It’s impossible to predict what will happen when it comes to the AI sector. But with potential inflation spikes, AI hardware seems to be the only sector that could thrive, so my conclusion remains the same as months ago: why touch any other sector than AI hardware and defensives?

Impossible to know what will happen, but it is possible to plan for the different potential outcomes. As long as I have a system and a plan, I’ll do well.

My Situation

My portfolio is up 141.20% YTD running at ~60% margins - I have cash outside of my broker so more like ~45% in reality.

Portfolio’s well balanced with 65% tech/risk and 35% energy/materials. This is what diversification should look like, I’ve written about this, you guys should go read this article if you haven’t.

Many investors believe diversification means owning different stocks. That is plain wrong. Diversification means owning assets that are not driven by the same narratives.

If you own both IREN and Nebius, or ASML and TSMC, you aren’t diversified; you are diluted. This is poor capital allocation because these pairs are highly correlated. You’d be better off putting your capital on the highest potential, and then seek for true diversification elsewhere.

I am now in a situation where I’d rather lock in gains and reduce margin to none, even maybe raise some cash. When you hit triple digit returns in five months, you don’t want to take too much risk if conditions aren’t perfect, even with a diversified portfolio. I’d rather chill a bit until the market gives clear directions.

We could have a healthy consolidation now. If so, I’ll have time to buy on breakouts. If we were to continue higher, I’d still be part of it without margin, with the certitude that a breather is coming and that slowing down isn’t a mistake. And if we were to have that breather, then I’ll be ready to go back all-in on key assets at great prices.

So for me, now is about reducing risk and getting ready for the next leg up, whether it happens after a rapid consolidation, or a deeper breather.

Now let’s dig into the specifics; my plan for each of my positions and the ones I want to buy/accumulate, at what price and priority.

Read more

I’ll also take a minute to remind you that there is a launch discount for those interested in the premium content. A 30% discount for the yearly Founding Member plan, giving you access to all current and future services, at a fixed price.

The promotion will end on June 13th.

Now, let’s dig into what matters: earnings!

AI & Compute

Nebius dropped another banger, without surprises after the last months’ news - their Meta partnership and a new $2B financing round from Nvidia, which made me buy back into the stock after my terrible selling mistake.

The cherry on top for this quarter was the above-expectation EBITDA, which means not only their compute service is growing rapidly but it also is generating cash, and this is what sets Nebius apart from most of its competition: its financial efficiency and balance sheet - which was the largest part of the bull case even back in early 2025.

We also learnt that they honored their commitments to both Microsoft and Meta - which is important as their contract with them and their potential expansions depends on deliveries and timings.

This financial position comes from their history but their cash generation comes from their focus on efficiency and vertical integration, confirming once that optimization of the entire compute chain is key. I write the same thing every week now…

Our platform is most efficient when we own the full stack... from bare metal to multi-tenancy to inference to agentic and more.

Then come the classic comments about supply constraints and clients fighting for any compute they can get which means pricing power, at least outside of their core clients which usually come at preferential/fixed rates. Nothing new.

The demand is broadening across industries. Today, we typically see several customers competing for every GPU we bring online.

Strong market demand is translating into pricing gains in our latest deals.

As for the source of demand? inference, with two new contracts with Revolut and Monday this quarter - big players.

Inference is the fastest-growing segment, new segment, in our stack... Token Factory is our primary inference product now.

I could go further on how excellent the quarter was but I don’t think I need to. The bottom line is that everything is either great or better than great and that demand for compute is through the roof, which means there is a need for more of it - you heard that a lot lately. More compute also means more infrastructures, which means more datacenters, more hardware and more energy - we talked about this a few days ago.

Raise our 2026 CapEx guidance to between $20 billion and $25 billion, which is up from our prior range of $16 billion-$20 billion.

Contracted capacity already exceeds 3.5 GW, far surpassing the goal of 3 GW we set for the end of the year. Our execution gives us the confidence to raise our contracted power guidance to more than 4 GW by year-end. We have now secured two gigawatt-scale sites in the US. We broke ground at our Missouri location yesterday; today, we are announcing a new site in Pennsylvania where we have secured power for a deployment of up to 1.2 GW. Owned capacity now accounts for more than 75% of our contracted power. We expect capacity added in Q3 to significantly expand our footprint. We continue to expect 800MW to 1GW of connected power by year-end.

We build very efficiently... what we do around creative use, you know, interesting technological ways of heat reuse.

The difference between contracted and connected power is what is online today and what they plan to bring online in the medium term. Management is telling you they plan to triple/quadruple their online capacities in the next years. And every other hyperscalers/neoclouds said the same.

We’ll see on the premium part the investing implications, and they are as big as a bull could have expected in terms of hardware demand - but not only.

I made a mistake on Nebius. I corrected it and called the stock an obvious buy on the $110 retest. This turned out to be a great decision as this purchase is now up 100% in two months. I hope you guys are still in, and killed it with this trade.

I continue to believe that Nebius is the best neocloud on the market and has room to go much higher in terms of stock price as long as balance sheet and EBITDA margins remain healthy. As long as they can prove they will generate cash from their business, the stock can climb, and is worth holding.

Tower Semi

The photonic fab pure play did great, this is excellent for us and our Global Foundries position which is still considered to be #2 by the market but still comes with massive capacity within a rapidly growing demand.

There are no doubts on the actual demand for optics, what is interesting is the most demanded product which isn’t what social media believes to be - as hinted at by Arista Network and AsteraLabs last week.

We do see extra dense pluggable optics, XPO, being led by Arista with the aim to extend the served generations of pluggables. Forum panel presentation and near package optics, eventually also co-package optics, emerging and coexisting with pluggables for the next several years.

We are already seeing strong demand for NPO products in 2027. Given this strong customer traction, it's our expectation that Tower SiPho will continue to lead in these new optical form factors. NPO is likely to ramp over the next several years and precede a significant ramp in CPO for our primary customers.

Pluggables are not going away at all. Pluggables will stay extremely strong at least through the 2030.

I understand the massive traction behind CPOs, but the real traction should be behind optics globally. Sure, it is almost the same, but not exactly, and it changes our stock picking as some CPO names are key to optics, others are key to CPOs. That’s a big difference in which to buy and which to give time to, despites the hype.

Either way, demand for optics is accelerating, requiring fabs expansions financed in part by clients’ early commitments - which highlights their confidence in their need.

We continue to strengthen our alignment and partnerships with our photonics customers through the execution of long-term customer commitments, contractually representing $1.3 billion revenue in 2027, with significantly larger valued contracts for 2028, backed by approximately $290 million in prepayments already received from our largest SiPho customers.

This is really the only important take-away of Tower: optics demand is growing.

Cisco

I won’t go over the entire quarter but it is important to talk about the resurgence of the 2000’s bubble king who’s finally adapting to AI. This was probably just a matter of time, but it finally is happening.

Given the strong demand, we now expect to take AI infrastructure orders of approximately $9 billion from hyperscalers in FY '26... we've had just probably more design wins and more success than we expected at the beginning of the year.

The overall take-away is positive: it means that buildouts continue and that one more player is necessary when it comes to rack networking connectivity, that the market is so large that there is enough room for multi-20%+ growth players.

Energy & Batteries

Venture Global delivered what I expected in today’s environment: a double beat, a massive 59% YoY growth and an accelerating demand for U.S. LNG as the commodity is disrupted with the Strait of Hormuz blockage.

The real signal is that this disruption isn’t just changing short term dynamics, it is changing long-term dynamics as clients know that this situation could/will repeat and secure 5-year long contracts from U.S. providers, and therefore Venture Global.

Venture is taking advantage of the situation, selling its future capacity at a premium to clients with high demand for safe and regular production over the next years. The cost of a disruption like today is higher than a higher price point for the commodity, so it’s all beneficial for both parties - at least from today’s point of view.

This led VG to raise FY26 guidance from $5.2–$5.8B to $8.2–$8.5B of EBITDA, showing the market that growth leads to cash generation, and the market loves that.

So, all is great - except for Europeans.

On the battery side, EOSE gave two “positive” signals this quarter.

First, they secured financing. When you generate $57M revenues for a gross loss of $44M and burn ~$150M in a quarter, you kinda need financing, especially to please the market. Their problem is lack of scale, as batteries are expensive to produce and require factories to do so, and investing in factories is also expensive.

That’s why they set up a joint venture called Frontier Power USA with Cerberus, a private equity firm which signed a 2GWh order for EOSE’s batteries.

Second, this financial agreement implies that Cerberus has a final buyer for this capacity, they wouldn’t put their equity and cash on the table to own part of EOSE through a joint venture and order for 2GWh of batteries without a client. As to who that is - or if they really have it, we have no idea. This is where speculation starts, the bet is that they have AI data center demand - as the order is for their Turbine-X product. That order would start in 2027 for a three-year length. For a bit more perspective, this deal is for 2GWh over the next 3-years while EOSE’s total production capacities are ~2GWh in 2025.

I stand by my conclusion on EOSE and others that I shared on my detailed review on datacenters' infrastructures.

Intuitive Machines

The stock ran a lot in anticipation of the earnings, now up ~45% since entry was shared a month ago. There were no surprises on these earnings, with all new contracts already announced, including one yesterday with the U.S. force for space surveillance.

Like Firefly, they subtly announced that they weren’t expecting new NASA contracts right now, but also confirmed the agency’s wish to accelerate missions’ pace - which is what matters. They also confirmed that IM-2 was on track and that IM-3/4 are 90% complete, no delays expected, and shared a record $850M backlog. Lots of positives with the confirmation that both hardware/communications are now generating healthy revenue stream, which is a great bonus.

The global space narrative is pushing higher, as expected, on the continuous need to control this new region for resource and geopolitical reasons. I see no reasons for this to slow down in the near term, meaning I see every reasons for contracts to continue flowing and holding our positions, at least for now.

China & Asia

Alibaba’s reports wasn’t that bad but I will hold onto my previous opinion as to why I sold my position.

My thesis was simple: AI revenues would rapidly increase as Alibaba is a vertically integrated provider - the only equal to Google, within one of the most populated countries of the world and its politics are trying to shift towards consumerism. One can see the bull case rapidly here, use consumption and advertising cash generation of your core business to fuel and accelerate AI spending.

But e-commerce in China became a competitive nightmare and Alibaba was forced to invest in its retail platforms to maintain growth. Sure, AI services revenues are rapidly growing and generating cash but in the meantime, global cash generation is falling off a the cliff and potentially slowing AI investments.

Now, don’t get me wrong. I believe Alibaba is an excellent company and maybe an excellent opportunity. But the market is punishing every stock with lower cash generation, I don’t see it rewarded a Chinese name with decreasing cash generation. I think my current positions all have a much higher upside than Alibaba short/medium term, so I’d rather buy more of those.

The potential is still here. But we’ll have more opportunities if Alibaba were to really become Google’s equal and trigger comparable returns. There’s no rush for now.

I’ll also rapidly comment on both Sea and JD as I posted my view on Sea and it made lots of people unhappy.

The bottom line, as sad as it is, is that every e-commerce/fintech or “everything app” player is investing in their growth while consumption is not trending up which means the market is doubtful on the return on those investments.

The only one this quarter who did well and increased its margins was JD, proving that past investment increased margins and cash generation. Guess what happened? Stock went up. Still wouldn’t touch a stock within an extremely weak sector, but the reaction tells you what the market wants, as usual: increased cash generation potential.

You can use every metric you want, from revenues growth to low multiples compared to historical ones, the conclusion remains the same. Today and for the short/medium-term, those companies will be spending, reducing margin and cash generation, for a return that is impossible to anticipate. This situation is comparable to SaaS - who aren’t spending but on who the market doubts future profitability.

That’s all it is. We are officially in a stock picking market, where everything doesn’t go up anymore and if you pick uncertain cash generation names with no immediate tailwinds, you’ll get bitten. You can of course accumulate and believe it will work out long term, you’ll probably be right when it comes to those two. It’s just not what I do nor would want to do.

To each our methods.

Other Interesting Earnings

I also want to rapidly talk about Hims and On Running.

Hims is finally showing what I was concerned about ~9 months ago when I closed my position. The issue with hypergrowth stocks is that it is very easy to look back and assume the future will be like the past, which is what so many did. The future isn’t the past.

Not gonna be hiding, this is a “I told you so” commentary. It doesn’t really matter what we believe, when the data goes against our thesis, we get out. This is how we invest and how we avoid becoming bag holders. You have no value added building a community of diamond hand that end up losing money.

Hims will be an example I will use for years, having lived through the up and down and all the stages of this stock. The company will continue to operate and is legit, not going against that - at least until proven to the contrary. As for the stock, there’s nothing for us there anymore. Hims was a GLP-1 company. Not sure it can transform itself into something else, only time will tell.

On Running is just a guilty pleasure as I love the company and their products. We’re looking at a very healthy company with declining growth, logically as those products aren’t the most appealing to consumers lately. Sure, On is a premium brand but premium buyers aren’t accelerating their purchases…

Hopefully, a time will come when those products will be in high demand again but as for many other sectors lately, we’re better off far away from them. Focusing on what works, on strength, but still keeping an eye on great companies.

Now, let’s pass to the premium part and the comments on how we can use these information to our advantage in terms of investing.

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Electricity & Datacenters

This won’t be a surprise if I were to tell you that data centers run on electricity, right? Hardware must be plugged into a power source, while GPU consumption is usually higher than average hardware consumption. As a rack will include dozens of GPUs and a data center dozens of racks plus cooling systems, ventilation, etc… Well, an AI data center will consume more than a traditional data center.

It’ll actually consume a sh*t ton of electricity, pardon my French.

If you want some comparison, a U.S. family of four consumes ~13,000 kWh per year on average, slightly more than 1,000 kWh per month, and they do not consume 24/7 as kids go to school, parents to work and all of them sleep at night - keep this in mind as it’ll create a problem.

Hardware doesn’t sleep, it is on 24/7. Today’s AI data centers have a need for triple-digit MW and we are already building GW data centers. Today’s assumptions for AI data centers are between 175 and 200 TWh per year - not just including AI but all data centers, which is ~5% of total U.S. generation or ~13.85M families of four.

With the new GW monsters, some assumptions talk about doubling to tripling this consumption by 2030, consuming between 12% and 17% of total U.S. electricity.

This is our first problem: we do not have enough. If you wonder how that’s an issue, I’ll frame the situation differently.

Electricity generation is limited. If AI data centers take it, someone else doesn’t have it. When there is a fight for a commodity, it usually goes to the one who pays the most for it, increasing the commodity price for everyone else. And Mr Dupont won’t be able to compete with Microsoft, so global electricity prices will rise due to demand/supply market mechanisms.

AI isn’t the only reason for electricity costs to rise, let’s not generalize, but it is part of it and will grow in proportion as the new monsters are built.

Now, we have to talk about the grid. I covered the topic and how that works here, you should take a quick read to understand this concept - it’s important. In a nutshell.

Going a bit further into electricity now. The grid is the name given to the electrical system of a city or a country, from producers to end-users. It is an incredibly complex piece of engineering, constantly hanging by a thread as its production has to equal consumption at any time. The entire infrastructure could overheat & burn if this weren’t the case - or at least be damaged.

As I shared earlier, data centers are online 24/7 but the grid doesn’t have the same demand 24/7. The need for electricity fluctuates depending on the month but also the hours, with a base load - constant demand, and variable consumption - households or temporary needs like climatization or cooking.

This is our second problem, electricity generation has to fluctuate during the day and increase at peak load while grids are meant to generate more than this peak load, having new giants plugged to it, adding massively to the base load, might reach production limit and create supply issues. This kind of is related to our first problem, so let’s call it a first and a half issue.

The second half of this issue would be that the U.S. grid hasn’t been upgraded for decades and uses inefficient/outdated infrastructure, for production and transport. And you guys know we don’t like inefficiency when it comes to AI lately, where everything must be optimized.

Because most data centers are plugged into the common grid, they use the same infrastructure and compete for the same electricity as Mr Dupont, and this is a major problem, one which data centers try to resolve for two main reasons.

1. They want access to reliable and cheap electricity without external impacts, to be able to manage their operations as they see fit.

2. Political pressure is growing as it cannot be tolerated for data centers to consume more than 10% of U.S. production and impact households’ prices.

Our third problem comes from electrical engineering and the AC/DC currents. I won’t go into the details, but the overall concept is pretty easy to understand - as is the problematic it creates.

The difference between alternating and direct current is how they flow; the first alternates directions based on frequency while the second is flowing straight from A to B. What matters to understand is that DC is more stable and optimized for electronic usage - data centers need DC. AC used to be easier to manipulate and transported over long distances, and our infrastructure was built using it and is too expensive to change now, which leaves us a legacy system while new technologies like HVDC could replace it, but won’t - that’s political.

Current can be converted between AC/DC with specific hardware – rectifiers/inverters, but there is a tax to it in the form of lost energy which is estimated to be between 10% and 15% by specialists. Every time current is converted from one form to another, energy is lost. When we talk about GW data centers, a 10% conversion loss cannot be tolerated in terms of added costs – we are talking tens of millions of dollars easily, not including the systems required to cool the heat generated by this loss.

In a nutshell, the problem is simple: we do not generate enough energy today to meet AI’s needs, current infrastructure is old and inefficient and has to be optimized just like compute has to be. This can be fixed in three ways.

1. Generate more electricity.

2. Store energy outside of peak load.

3. Build auto-sufficient systems for AI data centers.

But our biggest problem is different and justifies the accelerating spending on new energy solutions today. It isn’t technical, but temporal. Data centers need an efficient solution now, today. Not in two years. They need to power their expansions which aren’t being built at a bureaucratic pace but at a private company pace, and cannot wait for grid upgrades.

And that’s what we are going to talk about today. The narratives, the technical, the opportunities and how to capitalize on them, right now.

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Tons of information, but only valuable information - and mostly bullish.

The Hardware Saga

As usual, I will treat hardware names as one as they are all part of the same narrative, one of continuous demand for optimized architectures to improve GPU computing capabilities.

To spoil it, this week confirmed what we knew from the first and second earnings’ week. Demand is not slowing. No point in doubting anymore.

AI Core Infrastructure

Let’s start with core AI hardware first, with a quote from Arista’s management, to put you at ease on the current state of hardware demand.

The supply, however, is a slightly different and opposite tale. We are experiencing industry-wide shortages across the board, be it wafers, silicon chips, CPUs, optics, and of course, memory that I referred to last quarter, coupled with elevated costs to procure these. I think the supply chain problem is not a one or two quarter phenomena. We now think it’s a one or two year phenomena.

This quote is already extremely bullish, and SMCI confirmed this shortage in their own earning call. When all key actors tell the same thing, we should listen. Their knowledge is thousands of times better than ours…

Now, earnings were great but the stock still tanked, for two reasons.

1. As components are in shortage, price increases could hurt margins. The market doesn’t accept lower margins lately, for any company, not even AI hardware stocks apparently.

2. They shared they’d continue to focus on XPO for scale-up while the market is focused on photonics and CPOs - not the perfect narrative.

   Within a rack and scale-up, there’s still a number of choices. I think within short distances of 2 m- 3 m, you’re still gonna see a lot of co-packaged copper. I think XPO in terms of density will be another alternative. I don’t rule out open CPO as well over there if they’re really looking to maximize their density in a minimum amount of space. I think XPO will be particularly prevalent in scale-out and scale-across, and will be one of the choices in scale-up.

   Arista is one of the key giants in the industry so again, we should listen. If they say XPOs are in high demand and will be the most demanded hardware until 2027, before CPOs, they know better. Also worth noting that Astera Lab’s management said the same thing and confirmed growing demand for XPO. If necessary, XPOs are copper-to-optic pluggable while CPOs are optic-to-optic ones.

But earnings were excellent; management increased growth guidance and confirmed that scale-out/across was healthy and growing, while they’d work on scale-up from 2027 with copper solutions first, optic later. This isn’t bearish on photonics, but we have to keep in mind that the technology will take time to be finalized and scale, and shouldn’t rule out copper until then.

Arista is down 19% since earnings and buyers aren’t really stepping in. There is a case to buy the W50 ~$130 for a trade. The chart is wonderful but we are trading at a high valuation with declining volume and margins concerns - which seem a bit overblown but the market is always right, so…

This cannot become a core position, but a trade is possible with a tight stop-loss.

On CPUs, AMD and ARM confirmed that more of them will be needed to orchestrate GPUs compute for inference.

I personally was a bit bearish on AMD as the narrative was that their GPUs would overtake Nvidia as a cheaper alternative. Always called this bullshit, but I missed the bigger picture: CPUs. AMD had everything to be a massive player within this narrative, and I missed that.

The take-away from this quarter is simple and comparable to what I’ve been writing almost every day for months now: AI infrastructure is focused on customization as GPUs need support to be used at 100% of their capacities.

Data center is now the primary driver of our revenue and earnings growth, and as AI adoption scales, demand is increasing not only for accelerators, but also for the high-performance CPUs that power and orchestrate those workloads.

Inferencing and agentic AI are increasing the need for server CPU compute, as these workloads require additional CPU processing for orchestration, data movement, and parallel execution, in addition to serving as the head nodes for GPUs and accelerators. As a result, we are seeing both stronger near-term demand and deeper engagement with customers on long-term capacity planning.

At our Financial Analyst Day in November, we outlined the server CPU market growing at approximately 18% annually over the next three to five years. Based on the demand signals we are seeing today and the structural increase in CPU compute requirements driven by agentic AI, we now expect the server CPU TAM to grow at greater than 35% annually, reaching over $120 billion by 2030.

While we are still in the early stages of the AI infrastructure cycle, the pace and scale of deployments we are seeing today reinforce both the magnitude and durability of the opportunity ahead. As inferencing and agentic AI deployments scale, they are fundamentally increasing compute requirements, driving both larger scale accelerator deployments and significantly more CPU compute.

You know, it’s very hard to call exactly, but we certainly see the movement where in the past the CPU to GPU ratio was just as a host node, you know, in like a 1- to- 4 or 1- to- 8 configuration, now changing and getting closer to a 1-to-1 configuration; you can even imagine if you get lots and lots of agents that you could have more CPUs than GPUs.

AMD expects its CPU branch to grow 70% YoY. This quarter was also bullish on Silicom as AMD confirmed a growing demand for FPGAs for inference architectures.

Design win momentum grew by a double-digit percentage year-over-year with billions of dollars in new wins across markets, reflecting the continued expansion of our embedded business from a primarily FPGA-focused portfolio. Our semi-custom engagements also expanded in the quarter as data center, communications and other embedded customers leverage our broad IP portfolio and high-performance expertise to build differentiated solutions.

This confirms my bull case, although Silicom already received an inference PoC order so the bull case was already confirmed, but more confirmations never hurt. And we had one more with ARM as management confirmed that SmartNICs - not just FPGAs, were also accelerating in demand for AI inference purposes.

It’s hard not to be overly bullish on this inference PoC and Silicom.

ARM estimate CPU demand will quadruple by 2030, confirmed their architectures will be part of all hyperscalers’ next designs and that demand for their AGI CPU doubled in a few months to ~$2B run rate for the next year.

Market’s problem was the same as for Arista; management confirmed they secured the components for ~$1B of orders only and that the rest would come at a more expensive price point - if they were to find supply, while the transformation from 100% licensing to manufacturing will reduce margins long term. Extremely bullish on the market’s dynamics, but if you do not have the components to meet demand and reduce margins by doing so…

I chose to close my trade with a nice ~20% gains post earnings as ARM is valued for perfection and the promises of a quadruple demand volume for the next three years is great, but execution remains a question mark at this valuation.

Lastly, Lattice also reported great numbers. I look at it as a proxy for Silicom as they are a pure FPGA play, key component of Silicom’s SmartNICs. The quarter beat expectations with record revenues, growth and margins, and highlighted the bull cases for FPGAs with different partnerships; inference but also the future bull case: robotics.

The story is centered around AI data center and compute because of the current bottlenecks FPGAs and SmartNICs can – and will, help with, but robotics will be built around FPGAs. It won’t be here to help, it will be designed around them.

Coming back to partnerships, Lattice announced one with Nvidia’s robotics programs and TXN for the same reason. If those constructors need FPGAs, even if not sold within NICs by Silicom, it means that demand is real and others will need complete and personalized hardware including FPGAs.

Photonics

Global Foundries, one of my core holdings. The quarter showed what I wanted: healthy enough core business with an explosive vertical, its AI data center business growing 32% YoY and expected to grow ~100% FY26 - including its SiGe business which is oversubscribed until 2027. The market continues to treat it as a slower giant because of its other verticals, which aren’t that sexy.

I believe those verticals are what makes Global Foundries a great pick. Management is optimistic on their trajectory for 2026, except for their smartphone vertical - although they highlighted a growing demand from AI wearables which could balance lower smartphone demand and is a great indicator for my Nordic Semi thesis. Second, those verticals are the source of cash generation allowing expansions without dilution, an advantage compared to Tower semi.

The company is winning designs, 50% more wins than last year at the same period, is oversubscribed on photonics/SiGe demand for data centers, forced to increase CapEx to meet a growing demand for higher-margin products… This is a great position to be in, having the cash to expand while expecting a ~100% growth from an accelerating vertical on which management announced its new CPO technology, not only meeting clients’ expectations, but exceeding them.

We shouldn’t expect explosive returns, but slow and steady gains as core business bounces while higher-margin photonics grow in volume. Guidance came at $1.76B Q2-26 and management recommitted on its $1B run rate from photonics by FY28, up from ~$200M last year and planned to double this year.

Last interesting note, management had a $500M buyback plan and bought back for $400M worth of shares, almost consuming entirely their program. This shows what management thought about valuation – just like I did.

On optics, the signs are crystal clear: supply is just not keeping up with demand.

Coherent reported accelerating growth and margin expansion, hence pricing power.

On track to double internal InP output by year-end and more than double again by 2027.

Applied Optoelectronics reported the same. Revenues grew 12.5% sequentially with a 154% growth for their datacenter products, guidance is planning a 19.2% sequential growth for Q2 and management confirmed this trend should accelerate.

Looking ahead, we continue to anticipate a strong volume ramp of our 800G products starting in Q2 and we anticipate sequential revenue growth throughout this year, with significantly larger growth expected starting in Q3 as additional capacity comes online.

And Lumentum said they were short of supply of everything and are fully booked for what they have.

Those three report confirmed two things.

1. The increasing demand for optic hardware to scale scale-out and scale-across.

2. The increasing demand for optic hardware for scale-up through photonics.

3. A crystal clear supply shock for most of the required components, from InP substrates (Axt and IQE are two great names to buy in this vertical if given the opportunity) to lasers, and more.

AAOI’s management expects this supply shock to continue until at least mid-2027 and plan to ship ~900,000 monthly 800G/1.6T optic transceivers then, from ~100,000 today with most of the new production within U.S. fabs - a great bonus for hyperscalers who do not want to rely on geopolitics and complex supply chains.

This is the size of the demand and the infrastructure expansions happening to meet it.

Few bonus, AAOI management also talked about reaching profitability early this year which means not only accelerating growth but also improving cash generation. This is the double re-rating situation we’ve been talking about and the golden standard for investing. This is what we want to own, even if in AAOI’s case it will take a few more quarters to materialize.

For the broader market, this indirectly confirms the growing demand for Soitec’s wafers and Global Foundries’ capacities to manufactured finished CPOs.

As for market reactions, most names ended up green after some volatility; keep in mind that most of them ran 1,000%+ and need to breathe a bit, while being priced for nothing less than perfection - and more. The narrative just strengthened after this week and I’ll buy any dips on the key names of those verticals - if given.

I also had a look at Fabrinet (hardware packaging company) and On (semiconductor fab), both reported excellent earnings. The first one is expanding its capacities to meet increasing demand - optics are the star of the show while CPOs haven’t started to scale. The second yielded 30% sequential growth on its AI vertical and is expecting to double revenues this year, following TXN’s example as AI infrastructures expand. Also interesting to note a growing demand for storage related hardware, which plays into my SolarEdge thesis and its B2B new business - more on this a bit later.

Compute Providers

Few words on CoreWeave and Iren who follow the path of hyperscalers with the same trend of demand outstripping supply, especially for CoreWeave and its Google-like RPO growth, reaching ~$100B with an average contract length ~5 years.

Gone are the days - or should be, where the market doubted compute demand or clients’ capacity to pay; this backlog isn’t just OpenAI, it includes Meta, Microsoft, Jane Street, Mistral, Perplexity, Anthropic… Some concerns still exist but the market should open its eyes on compute demand and financial commitments, especially as token price is getting cheaper and usage is accelerating as clients find new economically viable sources of consumption. Consumption isn’t slowing, on the contrary.

The market continues with the same narrative though, “neoclouds don’t make cash”. Margins decrease and explosive RPOs mean more spending, not less, which comes with more depreciation, lower margins, etc…

This is why Meta was punished, why I believed Nebius would also be, what CoreWeave is struggling with today and why I prefer to invest in hardware despite the potential in compute providers and my bullishness on token consumption, and AI at large.

Cash generation is what matters the most for a stock.

Iren is Iren, not my personal favorite as I consider it a great energy/infrastructure player but not a neocloud, like most of the Bitcoin miners reconverting in compute - I might be wrong here but I’ll be fine with this. Still, they received a partnership with Nvidia which helped the stock, while missing on market expectations for both revenues and earnings.

The partnership is classic, Iren will be a privileged partner to Nvidia who will rent part of their compute once installed, plus have the right to buy up to 30M of shares at $70 in the next five years. This is a net positive for Nvidia who get orders for its hardware, compute it needs and in exchange, gets the right to own a portion of the company who took all the risk. Iren will have a guaranteed client for its compute which derisks the investment for the next years, but will still need to fund the hardware as Nvidia isn’t helping here.

Sure the market likes it, and it’s not a bad deal. It’s just clear who wins the deal and who needs it badly. There are better fundamentals out there - Nebius notably.

The Software Saga

In this bloodbath, one irresistible Gaul resists, and his name isn’t Obelix, but Palantir. We have rarely seen such companies on the market outside of AI hardware – even within there aren’t many with such execution.

So I’ll be brief, another quarter, another masterclass.

More acceleration, more cash generation, more deals, more demand, just… more. That’s all there is to say and that shows how important AI enhanced services will be in the future. Can’t forget that as a day will come where performance will be in those assets, not hardware anymore.

But. Because there is a but. The market isn’t reacting, the stock is down 7% since the print and I see excellent reasons for that.

1. The stock front ran earnings. This always happens in growth, and this is why investing based on multiples never works. As the market anticipates, multiples rocket and then stabilize, giving time to the stock to catch up. This is where we are with Palantir. This stock will go higher, but the probability of nothing happening or it going lower first is much higher than others.

2. The market has new shiny toys. Excitement is not in AI models or Palantir anymore, it shifted to new hardware technologies with photonics, CPUs, memory, etc… As I’ve said a few times now, liquidity is thinner and concentrating, leaving the old toys to go towards the new shining ones. Liquidity makes stocks move.

What I know is that a stock not running after a beat and raise revenues means there is no demand for it. However amazing the company is, I’d rather be in other stocks.

To comment rapidly on Duolingo, well… AI services aer still a niche with only a few massive winners. Management said monetization would slow down in exchange for user growth and a focus on retention and acquisition. Can’t say it isn’t working.

But as usual, the market cares about cash generation. It’s great to grow users but if it is just to add more users who do not pay, well… what’s the point? So until cash is generated, the stock won’t see any progress.

Shopify is in a different boat but with the same kind of reactions as the stock sold off 15% after strong earnings. What matters is the future and not the past and guidance is looking a bit slower. Any SaaS with slower growth isn’t worth a premium, this is the market’s current rules.

In a market where Palantir is down 7% after such a quarter, I wouldn’t look at any SaaS as potential plays… Just accept it. Their time will come. The only winners this week were Fortinet and Akamai, two cybersecurity oriented services. Not surprising at all to see cybersecurity being the first sector pushed higher by AI, and I will keep a close eye - and maybe propose some trades, on Palo Alto and Crowdstrike earnings, as those could follow.

Defensives

Starting with SolarEdge which delivered healthy earnings considering Enphase’s results a few days ago - which confirms my choice of picking SolarEdge. Revenues and guidance were in line with expectations with strong demand from Europe, as expected now that interest rates are lower and the Iran situation is pushing energy prices with no end to this in sight. Europeans who are stuck between Russia - fom whom they refuse to buy oil, and the U.S. who overcharges for LNG. Energy prices won’t go down and many Europeans know that.

In the U.S., residential remains slow but the narrative is on commercial and AI datacenters whose energy consumption is through the roof and constantly growing, looking for cheaper and grid-compatible alternatives while their new platforms are meeting interest.

I didn’t see anything wrong with this quarter, nothing which would go against my thesis and the market sold the stock for no specific reason but maybe the EPS miss which was due to a one time bad debt write off, while overall the company’s margins are getting much healthier.

I personally sold more puts on the W50 at $36 and bought a ~70% position in shares, I’d buy more on the W50.

Now I want to talk about Fluence Energy on which I bought a position today pre-market. I invested in SolarEdge partly for their future AI datacenter batteries they are developing as we know the grid cannot support many more data centers and those want - or will be forced, to use alternatives not to impact global electricity prices. Batteries have a great potential to help.

But they need to be adapted to the grid and datacenters, to be the bridge between two different electrical structures which is technically complex, which is why I am bullish on SolarEdge developing their new hardware.

Thing is, Fluence Energy announced yesterday having signed MSAs with two hyperscalers for their batteries and said they were the winner of a 25+ provider study.

The selection process for both of these MSAs was subject to multiple rounds of review. In each case, Fluence was chosen after meeting criteria specific for each customer. In one case, the customer's process began with 26 different best vendors. Fluence was the first to complete all qualifications to sign a global MSA. In the other case, the customer had requirements which made it hard for many competitors to comply with. In both cases, we believe Fluence's understanding of customer requirements, rapid response time, and differentiated products were key in driving this engagement. These MSAs established Fluence as a qualified supplier, positioning us to bid on expected near-term data center projects for both hyperscalers.

MSAs are technical reviews and purchase agreements for their solution, without financial commitments. Meaning their batteries will be bought but we do not know for how much and this commitment isn’t represented in the company’s financials.

Talking about the financials, Fluence increased its backlog by 40% over the last six months to $5.6B, without including those two hyperscalers - while one is expected to sign the financial contract and disclose its purchase by Q3-26. In brief, demand is accelerating without including on hyperscalers.

The company is valued at $3.5B at the time of writing, at 1.3x sales. I bought a position even after a 60% jump in two days. It is scary to buy after such pump; there is a part of speculation since MSAs still have to translate into financial orders, but I have shared many times that I am bullish on batteries for datacenters and this kind of event is exactly my bull case. If my thesis is materializing while the stock is still cheap, I want to be a part of it as it also is plausible that SolarEdge’s batteries were tested and didn’t meet requirements.

It is risky, but the potential is here.

Nutrien also reported earnings on Wednesday and numbers are good. The take-away is simple: demand for fertilizers is growing while supply is tightening and prices are rising. Not great for inflation outlook, but great for defensive names.

We increased production from our low-cost North American assets and positioned our supply chain to reliably supply our customers amid tightening global fertilizer supply and demand fundamentals.

Global potash demand remains strong and we have maintained our previous forecast range for global potash shipments of 74 to 77 million tonnes in 2026. We anticipate relatively tight potash fundamentals throughout 2026 with demand trends expected to test existing global operating and supply chain capabilities.

This is bullish for my Intrepid Potash position at least in terms of market trends, as the company remains more speculative than giants like Nutrien and will require good execution to yield returns. But this at least confirms the global thesis.

The Space Narrative

RocketLab delivered a record quarter filled with confirmations of the growing and accelerating demand for space launch, systems and services, which is my thesis. We are talking about record launches backlog and the largest ever Neutron contract, which is a great confirmation as it is a direct competitor to SpaceX.

I closed my trade opened and shared on the Substack chat today at $98, returning 25% in three weeks.

Firefly also released a correct quarter with good demand, revenues and backlog but the market did not like comments about no NASA contract coming for the next three to six months… Except RocketLab, most of the sector relies mostly on public contracts so no new ones means no increased expectations and no re-ratings.

The bottom line remains positive for the sector as the interest continues to grow and I continue to be bullish, but still less than the AI hardware sector, meaning my liquidity will continue to go there more than anywhere else.

Transmedics’ Fiasco

I shared on my monthly review that I opened a trade on Transmedics; My thesis was that the margin narrative due to fuel prices was overblown and that I expected revenues to beat expectations. I was wrong.

Revenues fell in line with expectations but operating margins fell to 7%.

On a narrative that fuel prices would crush margins and cash generation, any misstep hurts badly, whatever the reasons. In this case, margins decreased as investments continue - on their clinical trials and expansion. Normal and healthy business is being punished. I talked about this potential scenario during my last quarterly review, and it materialized.

There are no valid reasons in my opinion and we’ve seen that the market bought the stock today, passing from -7.5% to -0.9% at time of writing. There’s demand at today’s price and that’s what I’ll conclude later. But it’s important to remind ourselves that our opinion just doesn’t matter.

And we have to remain factual and keep our feet on the ground. The market, even if it sees the positives, focuses on the negatives. And there are two.

1. The margin pressure is real and will persist through 2026 as detailed above.

2. The company has execution risks: the trial results are still pending, even if the first feedbacks are positive, OCS Kidney is in development, European expansion will require expenses before yielding results - even if it takes only one semester.

TransMedics has execution risks which comes with shrinking margins in the meantime. The market is not punishing the stock, it is simply acknowledging the risks, the “what if it doesn’t work?”.

I called that trade an everything or nothing trade. It’ll be nothing. I sized it to be minimal and not hurt me, so it won’t. I played and I lost, moving on!

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

Not just in terms of returns, but in terms of significance. It proved that my system works and helps avoid mistakes, it proved that focusing on strength is how money is made, it proved that leaving your personal bias at the door improves your returns.

It proved that this Substack has value.

If you were to look at the last months of content, since I refocused myself in January, I was bearish on 95% of the market and extremely bullish on the few names which had a strong price action and demand.

I highlighted liquidity and stock selectivity issues from the market in February, focusing myself on defensives; proven right in March as most of the stocks I did not want to be in fell off the cliff and are still underperforming today, which didn’t make me more bullish - with reasons. I got a bit more balanced in April as even though I called a potential bear market, I also highlighted that at least one sector was worth buying: photonics.

Everything wasn’t perfect, I won’t claim the contrary. But over the months, my content was crystal clear: focus on the names and sectors which would yield the most returns at the best risk/reward. Following those regardless of my personal opinion led me to share defensive assets until March - while social media were buying falling knifes, and buy the strongest sector then, yielding wonderful returns in April.

Everything is written, black and white.
Everything is timestamped.

I started to quantify returns based on my articles and alerts shared in the Substack chat - which you should join as I share both my long-term and swing plans, creating two equal-weighted portfolios. You’ll find the logic behind both strategies here. I believe this to be the best representation of my stock picking and therefore this Substack’s value.

The long term portfolio, which buys and holds my positions at healthy valuation and price action, is up 57.59% YTD generating 53.64% alpha.

My swing portfolio, which buys interesting assets based on price action and market strength with a pre-defined plan, is up 62.43% YTD, generating 52.40% alpha since opening.

My personal portfolio is up 107.58% YTD at the time of writing, a performance to be proud of for a public bear. Mistakes were made and it could have been better, but the markets are a place of constant improvement, so I’ll continue to improve my writing, my investing and my trading.

Leaps have already happened since I started writing less than two years ago. Many more are coming. There are no limits to what can be done in the markets if one accepts to learn. There are good and bad times, but no real limits. So, let’s keep grinding, improve the system, and always generate more alpha.

Before we start, if you haven’t read those articles yet, I really advise that you do so. I will try to have a consolidated write-up in the coming weeks with my entire investing process revisited, but until then, this is what you should read.

• The Art of Selling

• Systems, Stock Picking & Diversification

• The SaaSpocalypse is Justified

Once again, I started to share some of my swings and price action alerts on Substack chat, and I don’t think all of you are aware/present. So if you are interested in those real-time alerts, this is the place to be and the next step on this service.

Now, let’s review the month, and plan for the next.

Today’s Market

I have no concrete answer on what happened this month - no one does, but I can try to share my thoughts. The market is forward-looking and cares about future cash flow generation. Today’s situation isn’t better than the end of March, it is actually worse. The Strait is closed, oil is not flowing, its price is rising and the consequences are concrete, real and will be long. We’ll talk about this later.

On the contrary, we have seen the first steps of peace talks, and this is what the market focuses on. Stocks sold off as the war started, even before it. Stocks ripped off before its end. Markets’ anticipate. What they see is a conversation between the two main actors. The U.S. was able to reduce Israel’s aggressiveness towards Lebanon while Iran accepted to pause its nuclear program.

The takeaway is that parley is possible, concessions can be made.
They aren’t made yet, but they can, and the market anticipates it.

This is one part of the market’s excitement; the anticipation of a soonish return to normal as mom and dad could discuss their issues like adults and make the best decision for the kids. Seems like the discussion is a bit more complex than the market originally thought, but it is happening.

The second part of the trigger is the market’s realization that demand for AI services and hardware is really strong and will continue, strengthen, and is simply necessary, not because companies like to spend but because they must spend; something I was already sharing months ago, but the market doubted it.

But once again: AI demand is through the roof.

The necessary next step is optimized, more efficient compute, to help providers deliver more with less. This grows revenues and margins by reducing costs & will reassure the markets about the financial soundness of their expansion.

This next step requires scaling up AI infrastructure. The companies providing this hardware - like ALAB, are not impacted by the CapEx risks that Oracle and others suffer from. Their business is simply manufacturing hardware, selling it at high margins and generating cash right away.

Maximizing compute per unit of space & energy is core for any provider’s profitability. Demand for the hardware capable of doing so will grow because providers have no choice but to buy it. They are in a race against their own leverage & need efficiency to generate cash as fast as possible.

Every data set of the last months suggests this take was accurate. Last week’s and this week’s earnings confirm it - and you should read both reviews to understand why AI hardware is the place to be. Hyperscalers need to spend on more efficient hardware to help GPUs compute. We simply don’t have enough, and today’s infrastructure cannot meet demand.

A number of AI companies, including Anthropic, have faced a capacity crunch for computing in recent weeks, leading to price increases for access to AI processors, outages, and rationing.

The market finally realized this and pushed AI hardware names higher, setting a new ATH on Nvidia, a significant move which quarters of jaw-dropping results did not achieve. Very hard for me to be bearish on the sector considering this as I ask myself.

Why would investors buy Nvidia higher today, without any news, while those jaw-dropping quarters didn’t make them blink?

I have two answers. Either they didn’t believe it then and believe it now - my opinion as the market is also pushing new hardware verticals and not just trading winners. Or this is only traders centralizing liquidity on a name before making their final profit.

Tomorrow’s Market

If you look at the market closely, you’ll notice that one risk sector alone is responsible for most of the gains this year: AI hardware. The only other sectors outperforming are defensives - energy or materials. The rest is either flat or down. Selectivity isn’t the sign of a bull market.

From a macro perspective, the Strait is still closed, damages is growing each passing day and the pressure to reopen it must be stronger than ever. It is hard to imagine countries like China not pressing Iran’s government - or whatever is the chain of command in the country, to accept a deal and move on.

Still, the entire world is taken hostage by both Iran and the U.S. and a moment will come - sooner rather than later, where pressure will make one - or both, break. This situation cannot continue or it will push major world actors to take drastic measures which would have fewer consequences than continuing with the blockade.

What is obvious today is that damages will be consequential. I’ve already talked about them, and we must be ready for when they show up. Don’t be surprised when/if inflation picks up and risk assets nosedive as the market anticipates economic slowdowns. The chances of this happening are high after two months of disruption - and counting. Another example – besides the last one about fuel prices in Portugal, is Airlines in Europe canceling some of their flights due to fuel costs. Reserves and future purchases are now depleted or not sufficient to maintain normal business.

I continue to be bearish on most of the market. Nothing changed, or maybe, a lot has changed for the worse, macro-wise; despite the S&P 500 being at an all time high, I see no reason to be less bearish than I was a month ago.

But I know two things for sure.

1. I cannot be 100% confident in my bias. Macro is too hard to anticipate and there is a possibility for nothing to happen, for economies to absorb this disruption or only have limited impacts. Even if my confidence in inflation is sky-high, I cannot know when/if that will happen.

2. If I were right and it were to happen before the end of the year, I still couldn’t predict how the market will react and what the situation will be like. AI hardware names might continue to rocket with massive spending while the rest tanks. Who knows?

So I continue to follow my system, and buy strength.

As long as the assets I look at hold their W50 and bounce on it, with strong narratives and fundamentals, I will buy/hold. I have no reason to behave differently.

The only thing I do differently is liquidity attribution. There is strength in defensive assets and I started pushing more liquidity towards them. Those hedge my portfolio short-term and would yield results long-term if I were to be right. It’s all about finding a balance between concentration, performance and safety.

But always focused on strength.

Portfolio & My Focus

Today, I see strength in three verticals and own 9 positions (Soitec, Global Foundries, ARM, Silicom Ltd, Rocket Labs, Intuitive Machines, VG, Intrepid Potash and SolarEdge). I usually hold 5 positions max but Rocket Lab/Intuitive Machines and SolarEdge/VG have combined the size of one which really makes 7 positions, while my account is running ~50% margin, which justifies more diversification, while 100% of my margin is set up on trades with stop loss, to mitigate risk.

Overall happy with my portfolio, but I will continue to rotate liquidity as the market moves and creates new opportunities, if necessary.

AI hardware, my favorite.

Strength is undeniable and broad. Winners keep winning, with TSM and Nvidia at all time highs after years of constant demand growth and cash generation while new technologies have a clear tailwind as the market is realizing that compute is and will be limited for years by physical constraints – you can’t generate more energy with a snap, the only way forward is optimized compute.

This creates many new narratives, or “bottlenecks”, the new favorite word on social media, and many new opportunities as some technologies must be built from scratch, from optimized energy sources to optimized semiconductors, etc… Everything is new.

I do not think retail investors realize the opportunity in front of us. This is one of the best times ever to make life-changing returns, if you focus on the revolution in front of you… Ignoring this sector today is a stock picker mistake.

Let’s break down the winners and my view of each.

1. Photonics. We’ve been over the technology and its key players, this is a must-read, not to buy today but to be aware of the players and their fundamentals for when opportunities are given. To be ready.

   There are tons of ways to invest in photonics but most of those stocks have run too much to be safe risk/rewards so I’d personally wait for pullbacks, and I would make sure to buy only the good ones - the ones cited in my write-up. Poet taught us that many of them, the least necessary ones, will die slowly and be forgotten. Only invest in those who cannot be replaced. If photonics were to become the new normal, Soitec and GlobalFoundries cannot be avoided. They aren’t the only ones, but those are the right focus.

   As for buying, the rule is always the same: be patient and keep a close eye on the W50. That’s where I’ll buy mine, and that’s where most of my liquidity will be going if given the opportunity - especially in Soitec, but not only. And if there are great swing plays, I’ll share them on the Substack chat.

2. Optimizers. Photonics is a wonderful technology, but it isn’t ready, lots of R&D is ongoing and volume production hasn’t started. This is the future, but AI inference needs to be optimized today. Which opens other verticals.

   1. Engineering and design. Whether for photonics or not, everything starts by engineering. I have two names worth looking at on different verticals. Marvell for its focus on networking architectures, in high demand as bandwidth and latency are the current bottleneck; and ARM which is focused on optimized CPU architectures, also in high demand to orchestrate GPUs.

   2. Hardware optimizers. AI inference needs to be optimized today, that comes with solutions which already exist. My favorite remains Silicom Ltd and their Ditto hardware, but I also need to talk about AsteraLabs which I had to close due to price action, but proved my thesis right a few weeks later. I’d gladly buy back into that one on a healthy pullback. Credo is also on my list, while I also look at current leaders with MU, Sandisk and the likes.

3. Compute providers. Besides hardware, as compute is constrained, neoclouds have a major role to play. I was wrong on thinking Nebius would be punished for slower growth due to physical constraints - although the market is still punishing others for the same reasons, but I was also right to buy back in on price action signals - even if that trade was closed to concentrate liquidity into others a bit later. Both Nebius and CoreWeave are excellent buys in my opinion, on healthy pullbacks.

There are many more excellent names, great buys and great holds, some I haven’t had time to look at and others I know but cannot focus on. I’d love to buy them all but never will, concentration makes returns. Never forget that 80% of your returns come from your sizing, not your picking. You do not need to buy everything, you need to be laser-focused on a few and execute perfectly with large positions.

Putting 50% of your net worth into a safer risk reward which returns 30% will yield more than a 2% allocation into a moonshot pushing 200%. You can pick a 10x and make no money. It’ll give you a great dopamine rush but it won’t make you rich, and dopamine isn’t really going to change your life. If you want dopamine, play sports. Don’t chase it in investing, it isn’t the right place.

All stocks aren’t meant to be bought, and you shouldn’t always run behind the shiny new ones. I made multiple times more money in a month with a large allocation on Soitec than in a year and a half holding Palantir from $17 to $180.

If that doesn’t inspire you to focus on what really matters: sizing, nothing will…

Space, the rising one

I shared my thesis a few days ago so I won’t go over it again, nothing changed since except that most of those names gave strong pullbacks. I did accumulate LUNR and RKLB as shared in my chat, but they now need to confirm and push higher, otherwise those will just be fake breakouts and force me to close my positions.

I have a smaller attribution on this sector, I believe in it and in its potential, but I prefer AI hardware. I only own two names and both combined are worth a full position ~20% of net liquidity; I do not intend to grow it much further as long as the AI trade continues. But I do not want to have all my eggs in the same basket so this vertical gives me an interesting risk diversification.

Defensives, the real hedge

The real diversification is here, with a much bigger portion of my portfolio at ~40% net liquidity, concentrated in VG and Intrepid Potash, with a smaller allocation on SolarEdge.

This isn’t only about my personal bias on macro, this is also because both names have a very strong price action, and did bounce on interesting regions to accumulate. My bias helps but I am still following my system here, with IPI bought on a strong volume breakout retest close to its W50.

I believe those three are the best candidates as many others names like Halliburton or Schlumberger, and defensive ones like Darlings or Smith & Wesson have already returned what I expected them to. I also keep a close eyes on material names, with my favorite being Sigmal Lithium and would gladly buy a pullback, as the stock ran 53% since presented, two weeks ago...

My focus remains on AI, the next step to look up to is the resolution of the Middle East conflict which shouldn’t be long, and will be resolved before the consequences show up on macro, which would give a window for the market to focus on tech earnings and AI buildouts. Until things change. Hopefully, they won’t, but I will not ignore strength in defensive names.

This is the market as I view it today. Price action confirms that the leaders are in AI so that is where most of my liquidity is, while keeping my portfolio balanced with other narratives, including a defensive one.

My Guilty Pleasure

I opened a trade this week, one I shouldn’t have as it doesn’t fit my system. But sometimes, breaking the system can work and I accept to take this risk because of the interesting risk/reward profile, and the position my portfolio is in today.

Transmedics, again. I’ll make the thesis short. The company is excellent, with almost perfect results for a good year now, an excellent Q4-25, and yet the stock is down -18% year-to-date and no one cares about it anymore. I did close my position as I never hold weakness - and was right not to.

So why look at it? Because it is a name I follow since two years now, and one I know very well. The narrative today is that as fuel prices spike, Transmedics’ margins will tumble while management shared multiple times that they were passing most of the added costs to customers. The market is expecting $174.4M in revenues while Q1-26 was record-breaking in terms of flights and Europe is starting to scale; I personally estimate the floor to be ~$172M only in U.S. so revenues should be a beat - or so I believe. Margins won’t hurt in Q1 and management’s comments should help the market understand the fuel pricing dynamic.

The stock is trading close to its lowest multiples ever while getting ready to share what could be its best quarter ever, show Europe expansion, reassure the market on fuel costs and give information about their ongoing trials.

For once, I trust my gut more than the market, but I trust it with a reasonable position in July’s $150 option calls. My bet is that the market realizes its mistake and reprices the stock properly post Q1-26 this Tuesday.

To be crystal clear, if I am wrong, those calls are going to $0.

This isn’t a trade for the faint of heart. This is a highly speculative position based on my knowledge of the company and its dynamics - which I could misunderstand. I am well aware of the situation and accept to take the risks, but this is an everything or nothing earnings play.

Let’s see how that works out.

Looking Ahead

We are still in the heart of earning season and there will be much more to say, with an extremely busy week coming, important for the portfolio: Firefly Aerospace, Palantir, On, Fabrinet, Lattice, Global Foundries, SuperMicro, AMD, Transmedics, AsteraLabs, Arista, Lumentum, SolarEdge, Nutrien, ARM, COHR, CoreWeave, RocketLab, Iren… And those are only the portfolio-impacting ones, not including the ones I have an interest in.

Going to be busy and you can expect one or two reviews this week. I know those are less read but keep in mind that following sectors and competition/partners is key in tracking our positions. I wouldn’t write about earnings if they didn't matter, it certainly would save me tons of time!

To conclude,

This is it for me, there wasn’t much news this month nor subjects to dig. The market is the same, the conditions are the same, the risks and opportunities are the same. It doesn’t always have to be complicated, sometimes the best thing to do is just to continue doing what worked.

So that’s what I’ll be doing. Look at the names I mentioned in this write-up, open the positions on those retesting key supports, rotate liquidity by cutting losers fast if I have some, trim weakening winners... The usual.

With Nvidia pushing higher, I wouldn’t be surprised if this market had more juice in it for new records as liquidity concentrates into the most obvious trade: infrastructure. Once again, with today’s news and dynamics, I do not see reasons not to have most of our portfolios invested in this vertical. If you missed the train or don’t feel comfortable buying, just let it be, wait for your turn. There’ll be more occasions. Just remember for the next times. Why play the game in hard mode? Focus on strength at healthy price levels and let the market do the rest.

This is one of the most hated rallies I have seen. Don’t fight it, don’t try to assume it can’t run higher or longer. It can. The game is different when liquidity concentrates into a few names or narratives, and a hated rally can last longer than any bears would have assumed. It will end, no doubt here, but what we need to do is to be ready for when it does, not try to guess when or why.

I’ll continue to follow my system, share it with you regularly with articles, reviews and chats. Join us not to miss anything!

Another month starts. Let’s kill it.

I’ll spoil it for you, everything went well. Jury’s still out on the last question and today was not good, but the others are nothing but a big yes.

It is a great time to be invested in hardware, which remains the best way to capitalize on this technological revolution as other verticals come with headaches about ROI, growth, demand, disruption… while selling hardware means producing a piece and selling it, generating cash directly, and demand is massive. Simple and efficient, while so many investors wish to complicate it…

The Cloud Kings

AI Demand & ROI

I could write 10,000 words going over each data point, but I’ll just illustrate my point with a single graph and a few comments. This is Google Cloud’s backlog and YoY revenue growth.

This chart should be enough to answer questions about AI compute demand and ROI, although the market will look at ROI in terms of cash generation, not just revenues but I’ll make that point a bit later. While I use Google to illustrate, we have already seen comparable charts from Microsoft and Oracle with the bearish argument that most of it came from OpenAI, which isn’t the case for Google - although it comes partly from Anthropic. All hyperscalers are seeing a rapid and large increase in RPOs/revenues.

That should answer AI compute concerns, but I’ll also give you some quotes.

Obviously, we are compute-constrained in the near-term. As an example, our cloud revenue would have been higher if we were able to meet the demand. We are working through that moment and... we are investing, but we have a robust... long-range planning framework. — Sundar Pichai, Google CEO

We are seeing strong deal momentum, doubling the number of $100 million to $1 billion deals year-on-year and signing multiple $1 billion+ deals. — Sundar Pichai, Google CEO

Broad and growing customer demand continues to exceed supply, and we continue to balance the incoming supply we can allocate here against our other high ROI priorities, first-party applications, R&D, and end-of-life server replacement. — Amy Hood, Microsoft CFO

Even with these additional investments and continued efforts to bring GPU, CPU, and storage capacity online faster, we expect to remain constrained at least through 2026. — Amy Hood, Microsoft CFO

“Trainium2... is largely sold out. Trainium3, which just started shipping at the start of 2026 and is 30%-40% more price performant than Trainium2, is nearly fully subscribed. Much of Trainium4... has already been reserved.” — Andy Jassy, Amazon CEO

Our experience so far has been that we have continued to underestimate our Compute needs, even as we have been ramping capacity significantly as the advances in AI have continued... — Susan Li, Meta CFO

Besides cloud, if you look at Google, you will see that advertising revenues are also accelerating while other verticals are flat at worst but most importantly, both gross and operating margins are increasing, meaning the company is growing both revenues and cash generation and therefore could continue doing so as efficiency improves. Amazon and Meta are also both using AI internally with impressive results - confirming my thesis that AI is by design deflationary.

People no longer search in fragments. They search conversationally and share more context. We launched AI Max to help advertisers adapt to this new way of searching. — Philipp Schindler, Google Senior VP

Traditional search really started with 10 blue links. Now we have AI Overviews and AI Mode. They have made Search more intelligent than ever. They let you ask far more complex questions. — Philipp Schindler, Google Senior VP

Normally that would've taken 40 or 50 people about 1 year to do, and we took five really smart people, AI forward-thinking people building on agentic coding tools, and those five people rebuilt it in 65 days. — Andy Jassy, Amazon CEO

We are seeing more and more examples where one or two people are building something in a week that would have previously taken dozens of people months. — Mark Zuckerberg, Meta CEO

Looking at Meta more closely, as it is a different beast from the others - not renting part of its compute but using it all internally, you’ll see how AI has impacted its business, as plain as the nose on your face.

Both ad impression and ad pricing growth continue to accelerate as their models get better at predicting what users will interact with and improve the chances to convert potential buyers into buyers. This is AI; it doesn’t show as clearly as others with massive RPOs, but this is what Meta has been capable of doing with its AI models; and it showed as the company grew 33% YoY this quarter, its fastest growth rate in the last five years.

Without dragging this out much longer, the conclusions here are simple.

1. Demand for AI is through the roof and all compute providers are using 100% of their capacity with demand for more, today - resulting in quarters of pre-bookings with financial commitments.

2. CapEx spent the last years is generating revenue growth at an accelerating rate. This isn’t an isolated event but a global revolution.; all companies are seeing their cloud, core and AI businesses accelerate.

3. Investments into AI aren’t slowing down; from a management perspective, this results ask for more investments. They have to continue pushing as the results are really convincing.

Now, everything isn’t perfect, as we’ll see now.

The Less Good

There is actually one “negative” point to those quarters, one we already talked about and knew would generalize. The market looks at ROI from a cash generation point of view, not revenue growth, which means as long as spending doesn’t generate increased income, it isn’t a success. The first step to increased cash generation is increased revenues, we’ve covered that. The second is increased margins, and the third one is decreasing spending.

This is where Google is an anomaly this quarter as all others have stable/declining operating margins, while Google’s are rising.

Even if this quarter was great for everyone, most have a tendency to see their costs grow faster than their revenues which signals problems for the next few quarters as this dynamic is not going to reverse. Decreased spending is not going well, not helping margins, and cash generation won’t be any better as all of them confirmed they’ll increase - once again, their investments.

However, in times of very high growth like now, where the CapEx growth meaningfully outpaces the revenue growth, the early years free cash flow is challenged until these initial tranches of capacity are being monetized — Andy Jassy, Amazon CEO

The market continues to have the same worries; AI is in high demand and revenues are growing but if it ends in increased CapEx and costs, cash generation decreases and you guys know that the market only cares about future cash generation. This is what needs to grow for the market to continue rewarding the stocks.

So the market might not reward those stocks as much as we’d like, except for Google which comes from another planet and is certainly helped by its vertical integration which mitigates costs and proves once more that optimization is everything in this new era. Which brings me to my next point: AI hardware and how bullish those earnings are for the most important vertical of the market.

Silicom Ltd

Silicom crushed earnings, and improved my bull thesis. The stock jumped a massive 38% today, with good reasons, and is now up ~115% since my investment thesis.

My thesis was simple; the company’s business is to resolve networking bottlenecks with adaptable hardware called SmartNICs. Networking is one of the main issues with inference today and hyperscalers work at optimizing their infrastructures as much as possible while focusing on hardware diversification so eventually… SmartNICs will be an answer.

Not only is my bull thesis still holding as management is still working with hyperscalers to meet their needs - two of them, and confidence seems pretty high as management vocabulary isn’t about “maybe” or “if”, but “when”.

I think probably it's more 2027 rather than 2026 in terms of significant revenue for AI inference. We may see some this year, definitely making some good progress, as I said before. Hopefully we can share more in future, as we meet more milestones. I would say significant probably in 2027.

While the company’s core business is re-accelerating after winning 4 new contracts in one quarter - while guiding to win seven to nine this year, without AI inference designs yet.

1. A networking and security service leader doubling its run rate from $4M to ~$9M.

2. A long-time cybersecurity partner with an initial $1M order and an engagement to double that, plus develop other products.

3. An encryption and communication leader with a $3M per year design we already talked about.

4. A streaming infrastructure provider with a $12M run rate during five years.

Business is booming while my bull case hasn’t materialized yet.

Above-expectation growth and margin improvements, helping the company stabilize its balance sheet - although it doesn’t need much help with $63M net cash but a slower cash burn is always better. And this quarter isn’t a fluke, it is the new normal for the company as Q2-26 guidance is set at 40% YoY growth; constant acceleration.

The bull thesis is even stronger after this quarter.

I Am So Very Bullish

But only on hardware. There are other great names in AI and in the market, but AI hardware is the best place to be, without any doubts. The strongest vertical.

If you are invested in companies selling AI services, you have to understand that the market will continue to doubt future cash generation as monetization and margins for AI services are still unclear. This is why SaaS are getting killed - with reason, and why this kind of quarter doesn’t shoot hyperscalers stocks up 20% higher while many assume it should - except for Google which did show margin improvements.

This is normal. We don’t know how much cash will be generated in the future; we can have opinions and speculate, but until the numbers show increasing margins and cash generation, we won’t be sure, and the market will be skeptical.

The economic model has to evolve - is evolving, but the market is waiting for numbers.

The basic transformation of, I’ll say, any per-user business of ours, whether it’s productivity, coding, security, will become a per-user and usage business... At the end of the day, it’ll come from some eval and outcome that a business has, where these agents have created value. — Satya Nadella, Microsoft CEO

“When I think about that model, I start to think about it as a license business plus a consumption business... you’ll just bill for usage, and if that usage has great value to customers... then you’ll keep spinning and you’ll keep using those agents. — Amy Hood, Microsoft CFO

There is one business we know how it works: hardware. Companies sell hardware in exchange for cash going directly into the bank, and move on to produce the next piece, or engineer their next generation. This is where liquidity goes today because demand is rocketing and the market knows how cash is generated.

As long as demand for hardware is here - and we know volume is dictated by end customers, the market will reward these safe and growing cash generating beasts. Do not overcomplicate investing, look at the safest/potential growing cash generation vertical and buy those names. Those verticals will one day be SaaS and AI services providers, we will buy them then. Until then, keep it simple.

Now, what our favorite CEOs told us yesterday is that the future of AI runs on diverse and custom hardware to answer thousands of different agentic use cases, which require different optimization patterns as the ultimate goal for them is to answer a rapidly growing demand, which can only be done by optimizing compute per unit of space and energy.

We’re optimizing every layer of the tech stack, from DC design to silicon to systems software, the model architecture, as well as its optimization... We delivered a 40% improvement in inference throughput for our most used models across Copilot. — Satya Nadella, Microsoft CEO

We expect Trainium will save us tens of billions of dollars of CapEx each year and provide several hundred basis points of operating margin advantage versus relying on others’ chips for inference. — Andy Jassy, Amazon CEO

While the largest number of AI chips we’re bringing in are Trainium, we continue to have a deep partnership with NVIDIA... we will always have customers who want to run NVIDIA on AWS. We will also have a very large chips business ourselves. Customers always want choice. — Andy Jassy, Amazon CEO

We made advances in the model architecture and co-designed the system with the underlying silicon so it maintains the sub-second speed that is required to serve ads at scale. — Susan Li, Meta CFO

What else should I say from here?… The world continues to increase its spending for AI hardware and isn’t only spending on Nvidia’s GPUs anymore as it realized that more wasn’t the answer for everything: better is, which means spending is now directed towards solutions capable of optimizing those GPUs, or towards new and entirely custom silicon - which plays in my thesis of diversified hardware.

That’s where my entire portfolio is today, between current needs with companies like Silicom or ARM and future needs with companies like Soitec and Global Foundries.

Before moving on, I want to talk about both Viavi and AEHR who both released extremely positive earnings - or followed by positive announcements in AEHR’s case. Those two companies are designing testing platforms for optical hardware, which reinforces my thesis that Soitec, Global Foundries and the entire photonics space has a very bright future. Companies do not invest in testing platforms if they do not intend to produce at scale.

We can also talk about Sandisk which delivered a monster quarter tonight, beating on all analysts’ expectations and proving once again the massive demand for hardware with some customers locking in future supply with financial commitments. Memory is in a clear supply shock but this still highlights the need for hardware and plays into my narrative and portfolio positioning.

And this all comes after last week’s earnings which confirmed more of the same with TSM and Intel. Why would anyone be bearish or refuse to be involved in this sector?

Smartphone & Other Hardware

I have an interest in the smartphone market as it is a large demand for both Soitec and Global Foundries’ core business, and a stabilization or return of growth would improve the bull case - which relies on photonics for me today but the market would love to have this explosive new vertical coupled with a re-accelerating core business. I also have an interest in wearables as I shared Nordic Semiconductor with you in February - the stock is up 45% since my buy recommendation.

On the smartphone market, let’s start with some comments from Qualcomm which is expecting a bounce in the smartphone market as demand for its chips powering Chinese systems is apparently increasing with a bottom expected this, or next quarter. This is just one small signal in a very large market, but Apple is also doing well lately with return of growth in its iPhone sales.

More than a year of healthy and accelerating growth now, a pretty healthy sign that consumption is bouncing, and even if it might not be broad yet, and if some brands might still struggle, there are signs of a renewed appetite for smartphone.

As for Nordic, revenue continues to accelerate as the market recovers from its post-Covid inventory building while margins are also improving.

The main thing which we clearly see is that the market is continuing to improve, and we do see our customers selling more end products. That’s clearly... truly what we see a lot of, and we see increases and increasing forecasts because of that. — Vegard Wollan, Nordic CEO

And their new flagship product is gaining traction, slowly as we expected, but steadily.

It has been a clear priority for us to regain traction in the broad market, and it is encouraging to see that growth is now picking up in this segment. We see an increasing number of customers, former customers returning, new products entering the market. — Vegard Wollan, Nordic CEO

The design activity and the way we measure design-ins is still continuing very strongly with both key customers and the broad market... It is very clearly supporting our expectations for the nRF54 Series, that with these very leading market-leading products, that will be a very key long-term growth driver for Nordic Semiconductor. — Vegard Wollan, Nordic CEO

Nordic was never meant to be an explosive beast, but a great and stable play on a return to normal for Bluetooth hardware combined with the democratization of AI wearables, which hasn’t really started yet - or very slightly. The thesis is still alive and well, nothing to do but hold.

Energy Earnings

Two interesting verticals to look at here.

Enphase reported bad earnings, there are no other words and the households’ solar market is not bouncing yet, at least not for their premium products which are also less competitive after a few years of competition - which is why I chose SolarEdge. The market hasn’t punished the stock too much as its price is already in the gutter. This is a positive as we know where the bottom-ish is if a turnaround in demand were to happen.

On the contrary, Bloom Energy delivered another excellent quarter, the company selling energy providing solutions to datacenters is going through immense demand, which proves that demand for alternative sources of energy is through the roof and that shouldn’t slow down as more datacenters are planned, not fewer.

Somehow, this makes me bullish on SolarEdge as the bounce in household demand is going to their hardware and they are also pivoting towards B2B, large corporations with a need for alternative source of energy. Not to say their technologies will be used for AI datacenters, but a classic B2B business would already be interesting, coupled with a bounce of domestic demand - to be confirmed.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

AI Compute & Hardware

The strength in this sector is unmatched and has been the source of most of investors’ returns year to date - combined with some defensive names. We finally are in a stock picking period, which requires investors to be involved with strength if they want to overperform.

It would be a mistake to ignore it. This is where performance is, and returns are confirmed by fundamentals. Do not ignore strength.

ASML & TSM

Both companies, which are the starting points of AI hardware, have reported good earnings and confirmed that demand is overwhelming supply. Three years into AI scaling and we are apparently still pretty far from the top.

ASML gave a bit more of the same: stable growth, healthy margins, returns to shareholders; a dream, although I wouldn’t be a buyer today. Demand for its systems continues to be through the roof and its market will remain supply-limited for a few more quarters at least, with no stabilization in sight as clients’ expansions continue while manufacturing is constrained.

Many of our customers, TSMC, Samsung, Micron, SK hynix, to mention only a few of them, have both announced major investment, major fab construction. This is still happening. There was even this morning some more announcement from SK hynix of additional investment. Despite all those investments, despite this unprecedented wave of fab buildup, of capacity buildup, we are most probably still going to look at a supply-limited market for the years to come, meaning everyone in the next two-three years is going to try to build up capacity as much as possible.

ASML is also investing to meet that demand and manufacture more, faster, and they are doing so because they are confident in the future.

The complexity with hardware cycles is that demand comes from the final client, which triggers a supply chain manufacturing increase. If you start buying all of your hometown bakery’s bread, then the bakery will start to increase its flour purchases to make more bread, right? They do so because you started buying more bread (that’s a very French analogy of me). Imagine you move out tomorrow; the bakery is left with materials it paid for to meet your demand, which just disappeared.

Any product cycle is the same; it starts with final demand. Looking at ASML’s or TSM’s commitments to judge the health of the current hardware cycle is a mistake; we have to look at the top, at hyperscalers. And those are insatiable now, which is why this cycle is slightly different from many others: final buyers commit in advance, which is a significant difference. You wouldn’t pay for six months of bread if you were going to move out.

Our customers are really telling that actually for the first time, they're really looking at longer term contracts with their customers, right? Their customers, they are entering into longer term contracts with both volume and price. Of course, that dynamic gives them a lot more confidence

It shows confidence and allows manufacturers to invest. So when hyperscalers publicly state they never have enough, privately commit to multi-million or billion-dollar deals, and have/find the financing for it, the cycle is still pretty healthy - despite what most social media was telling you six months ago.

It doesn’t mean everything will continue to push higher for decades, but it shows that for now, demand is strong, with no signs of slowing down. We’ll need to get out when we see those signs, as the market will rapidly anticipate and price in normality when it happens - not if.

TSM is the same - maybe even better. Continuously explosive growth and increasing operating margins, hence their highest multiples ever as cash generation is reaching new highs and guiding to even higher highs. The market is struggling to figure out until when this will remain true - it could be a long time, as TSM will be at the heart of any AI innovation, including photonics.

Its business is going through the same, maybe even a bigger supply constraint than ASML, as they are the go-to for most semiconductor production and are sold out for quarters, expanding their fabs as fast as possible to meet demand and improve their technology. The 2nm chips are now ramping up and are the reason for improved margins and growth, while their new 1.4nm node is still under development with great expectations.

Compared with N2, A14 will provide 10%-15% speed improvement at the same power, or 25%-30% power improvement at the same speed, and close to 20% chip density gain... Volume production is scheduled for 2028.

Compute power per unit of space and energy is the most important metric in the coming years for hyperscalers, and it is the only solution to scale AI and inference further. Compute providers have no choice but to buy better hardware, as we’ll see now.

TXN & Intel

Very brief comments on TXN, as I do not cover the company. It focuses on other types of semiconductors - not focused on compute optimization, which have not been in high demand lately as AI required new compute architectures, not new power managers and the like. But we reached the point in the cycle where even demand for this kind of semiconductor is through the roof. Inventories - which have been building for years now, are starting to deplete as new specifications emerge. This is a new vertical for the sector and another confirmation of the constantly growing demand for hardware to populate data centers.

Intel, on the other hand, is a pure AI play. We’ve gone over the differences between CPUs, GPUs, ASICs, and FPGAs, and how they all treat data differently with their own optimizations. AI runs mostly on GPUs and ASICs optimized for parallel computing, and CPUs had been left behind as seemingly less necessary - as if parallel computing was enough and compute didn’t need orchestration. That assumption was of course wrong.

If you look at training solutions, they're generally running in the kind of seven to eight GPUs to one CPU. As we look into inference, it's probably getting into the three to four to one kind of level. As you get into agentic and multi-agent, it's... potentially even flip in the other direction a little bit.

That is all there is to know to be bullish, but not necessarily on Intel itself. What these results and quotes tell us is that as inference scales, GPUs will need more optimized orchestration to know how to process information. This doesn’t really exist today; Intel is working on its next generation and demand is through the roof for its latest AI-oriented products.

A year ago, the conversation about Intel was about whether we could survive. Today is about how quickly we can add manufacturing capacity and scale our supply to meet enormous demand for our products.

This means demand is through the roof for any hardware capable of helping GPUs compute efficiently and orchestrate inference; and I have two other companies capable of doing so in mind:

1. Arm: A company designing and licensing proprietary CPU architectures for different usages - notably used by Apple, on which we opened a trade this week as the stock broke out a 2y+ resistance.

2. Silicom: A company designing SmartNICs - hardware designed to offload compute, storage, networking, or other tasks from the main components.

This Intel quarter is just another proof that our AI data centers are far from their final form, that any hardware capable of helping optimize energy consumption and compute quality will be used - as expected six months ago, which makes me even more bullish on Silicom than I originally was… And on the entire AI hardware sector at large, including photonics, optimizers, neoclouds…

The market - and the world, continues to underestimate AI, the compute needs for efficient inference and the market’s strength. It isn’t our place to doubt any of it; our job is to ride the trend until it stops. Not until we believe it stops.

Until. It. Stops.

In Brief

Everything points to more. More compute, more optimization, more hardware, more spending... More AI. This was my assumption at the end of 2025 already, while most of the market was starting to call hardware names expensive, or even a bubble. It is finally starting to be accepted now, which makes me confident we will see another strong leg up for those names.

Maximizing compute per unit of space & energy is core for any provider’s profitability. Demand for the hardware capable of doing so will grow because providers have no choice but to buy it. They are in a race against their own leverage & need efficiency to generate cash as fast as possible.

It doesn’t mean a straight line; there will be pullbacks and breathers. And the cycle will end as it usually does: with high inventory and an end triggered by lower demand from hyperscalers and compute resellers.

But we aren’t there just yet.

Space & Iridium

Iridium disappointed the market with lower earnings mostly due to rising costs, clear signs of Starlink competition with lower broadband revenue growth, and lower hardware sales, which raises questions about future subscription sales. On the positive side, cash generation remains really strong, growth is healthy, and most of the negative points are attributed to competition, not to a structural issue in the business model or service demand.

It was a tough week for space names; between the failure of AST SpaceMobile’s BlueBird 7 and the “meh” quarter for Iridium, the sector has taken a pretty large breather. That doesn’t change my thesis, though. The names ran hot and are now having a healthy pullback, which will give us great accumulation prices if we come down and retest key supports and trends. There’s nothing more to do than to be patient.

Tesla

I won’t spend much time on it. Its EV business is back to growth, helped by easier comps as H1-25 was the bottom. Also worth noting that production of the Cybercab has started. But what is interesting with Tesla is FSD, robotics and energy.

On the first front, subscriptions are picking up with 1.28M active subs today, up 51% YoY and 16% sequentially. This is a direct reflection of consumer demand for physical AI - which is a very big question as the leap to use this technology is pretty massive in terms of psychology. They also announced a partnership with Intel for their Terafab project, which once again highlights the value of their new hardware series and the need for more than GPUs for compute.

No interesting news on Optimus except to say that production - to start this year, will be longer and more complex than expected. Surprising comments from Elon.

On energy, revenues and demand have been a bit sluggish. It is also hard to judge as Musk has always said deliveries were impacted by various delays, so the vertical’s revenues would fluctuate. I believe most of the market would have expected fluctuation with an uptrend while this quarter comes with 15% decline in GWh delivered. They confirmed demand for residential in the U.S. was still slow, while grid-scale batteries are very strong, which also validates SolarEdge’s move to transition from households only into the B2B business.

I do not own Tesla but the company is present in so many verticals that it is always interesting to see what they do.

SaaS & ServiceNow

As you know, I do not follow SaaS nor ServiceNow, but I believe it is my job to rub salt in the wound as I write about stock picking and believe buying SaaS in an environment where AI hardware is ripping with fundamental confirmations is one of the worst mistake a stock picker can make.

Our job is to pick performers. Not what feels good or we think is great.

Those companies come with real risks and reasons for their stocks to fall, and ServiceNow is a perfect illustration of it, even if social medias are full of “Look at this great quarter!” and “The market is stupid to sell this name!”.

A stock is not a company. A stock’s price is the representation of the market’s trust in a company’s future cash generation years into the future, not just next quarter. If you look at the company today, everything looks good enough. Revenues are growing, operating margins are flattish but healthy, the company is increasing its buyback programs, and overall beating expectations while multiples decrease.

An easy buy!

In the meantime, gross profits have been under pressure for quarters and will likely continue to be in the next ones. The market is skeptical about their delays due to “geopolitical concerns” and RPOs are not accelerating, which isn’t normal in the AI era. The market wants to see concrete results that AI will generate either acceleration or margin expansions, and so far, it is doing neither while companies like Palantir or Anthropic continue to accelerate their growth at unreal artes, which raises the question of whether AI is really a tailwind for SaaS…

And don’t give me a “but those companies are different”. Of course they are, but they also prove that AI can be leveraged to boost your financial profile and increase demand of a value added product.

So the real question is: Why aren’t we seeing an acceleration in SaaS when AI is now advanced enough to do so, and ServiceNow has had long quarters to implement it by now? And why would the company deserve more than 6x sales if its margins and revenues aren’t going to accelerate?

ServiceNow is the perfect representation of SaaS issues today. Be factual and reasonable; don’t fall into the “but it’s cheap compared to earlier multiples” trap. Performance comes with buying winners. Hopefully ServiceNow will be a winner in the future and I’ll gladly buy it.

Today, SaaS are losers. Leave them behind.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

I have been bearish publicly lately, since the end of last year where most of my focus went towards defensive names like Halliburton or Schlumberger, with valid reasons as they overperformed most tech still today. I also highlighted clear changes on the market in February, a clear rotation to defensive assets in March and another bearish but more nuanced take early April, highlighting that even if defensives were the go-to for liquidity, there was strength in some pocket sectors – AI hardware/photonics and space as you guys know.

I did not have a 100% success rate, but it isn’t the goal of an investor. Outperforming is, and my defensive names did great until March 2025 while higher-risk/reward names I focused on later have rocketed during April. The equal-weighted performance of my stock picks has delivered 50% alpha YTD - pretty significant for a bear.

But this write-up isn’t meant to be a performance review, this introduction is just here to highlight that my view of the market today is biased and bearish, and even if there is strength in some risk sectors, I’d still expect some pain during the year.

Why So Bearish…

I don’t like being bearish. I rarely am. My work here is the entire opposite of a bear; what I look for all day long is strength, sectors where liquidity is flowing so I can ride uptrends. But sometimes strength is found in sectors which are structurally bearish for the economy and the risk assets in the market.

Oil, first. I went through it in length on my last monthly report, so I’d advise you to read it. The Strait of Hormuz has been closed for two months; impact on economies is real, increasing exponentially each passing day. What was a slower production or a reserve depletion which could be managed is either becoming a shutdown or a forced purchase of oil at quasi double usual prices.

And as the world is globalized, inflation in China hurts the U.S. If local production prices are higher, sale prices are also higher. Oil triggers worldwide inflation when it comes to goods, but not necessarily equally everywhere.

As energy prices differ around the globe, an explosive oil price inflation in Asia will affect local manufacturing more than in a region with lower energy prices inflation, the U.S. in our case - who do not depend from Middle East’s oil compared to Asia, meaning U.S-manufactured products should get more competitive.

Inflation takes time to spread through an economy. The effect won’t be seen before manufacturing cycles on new purchase oil end, which can take up to months in some cases - meaning today’s disruption will be felt in real inflation in months. To illustrate - even if this was a different situation, the post-covid inflation, triggered by massive stimulus, took a year from the stimulus start to real economy price increase.

But there is more to it. As oil prices affect virtually everything, directly or indirectly, there is another key sector which relies on it: agriculture. Not just running tractors on the fields but also manufacturing chemicals; one of them used for almost any kind of agricultural production: fertilizers. Guess what is happening to the commodity price?

Energy is only one side of the coin, there are many others and when it comes to fertilizers, price increases mean more expensive food. It also means a more expensive commodity to be sold by those who produce it.

The Chemical Bull Run

If my bearish bias were to be confirmed, risk assets wouldn’t be the best place to be. Although that being said, trying to forecast macro and market’s reactions are a fool’s errand, but statistically, the chances for defensive assets to outperform is high - and a nice edge would be appreciated in such times.

In this kind of event, only a few sectors thrive; those who profit from the mess – usually first-necessity products producers, and those who protect you from it – usually currencies or precious metals. Useless to say energy and food are in the first category.

And there is strength in this sector: growing volume, breakouts and retests happening right now, meaning liquidity is flowing into them, probably trying to edge portfolios with at least one defensive narrative.

I found three companies worth looking at in this sector: Intrepid Potash, CF Industries and Nutrien - which we already talked about here.

Intrepid Potash

Here’s a brief review of the company.

Intrepid Potash, Inc. (IPI) is the sole domestic producer of muriate of potash in the United States, operating securely outside the volatile geopolitical supply chains that currently disrupt global fertilizer markets. While its core business provides a structural advantage in U.S. food security, IPI is actively pivoting to capture a stake in the domestic energy transition. Flush with cash from a recent $70M divestiture of non-core assets, the company is accelerating its "White Silver" lithium project in Utah. By proving the viability of extracting battery-grade lithium directly from its existing industrial brine, IPI is pitching a highly lucrative, "dual-sovereignty" narrative to the market: a completely localized U.S. supply chain for both agriculture and batteries.

The core of the thesis is its muriate of potash business - a potassium fertilizer to enhance plant growth and improve crop yield and quality, with a production in the U.S. allowing the company to benefit from price increases while being competitive compared to foreign exporters - also reducing shipping costs.

That’s defensive bull case, but it gets better; a $70M cash injection from selling non-core assets which helps their balance sheet and allows investments in another key vertical: lithium. I have already talked about this with Sigma - whose stock is up 50% since shared, and IPI would share comparable qualities - in terms of geography not ESG compliance. This is an ongoing project which comes with execution risks, but the potential is real.

At 1.61x sales, we are in the company’s average which isn’t cheap, but not expensive either assuming a potential bearish economy, growing demand, prices and potential lithium production in the next years.

The market is already optimistic with a clear breakout after the news of both the $70M cash-in and lithium plans, now close to giving the perfect ~$33 retest on its W50.

This isn’t an overly exciting position to take, but it would be an excellent edge against a potential pullback or slowdown in the global economy as not only its product would be more expensive and more demanded, but IPI would be given a premium for its local production.

CF Industries

A much bigger name with different tailwinds, still involved in fertilizers with an energy vertical, not lithium.

CF Industries Holdings, Inc. (CF) is a leading global manufacturer of nitrogen-based products, specifically ammonia, granular urea, and urea ammonium nitrate (UAN), essential agricultural fertilizers applied to soil to maximize crop yields. They also produce diesel exhaust fluid (DEF) to reduce industrial emissions. CF is a highly critical asset on two fronts. First, its North American manufacturing footprint provides a secure, highly profitable supply of fertilizer to the global agricultural market. Second, CF is repurposing its core product for the clean energy transition. Because ammonia is an incredibly efficient way to store and transport hydrogen, CF is scaling “blue” ammonia to be used as a zero-carbon alternative fuel for heavy-polluting industries like global marine shipping and power generation.

The company’s last earnings proved its cash generation stability, but the real stock price catalyst came from geopolitics and the advantage CF has over competition in a complex situation with higher energy and fertilizer prices - local production hence lower costs.

Just like IPI, the stock isn’t necessarily cheap today after pushing to a new ATH in March, but value is here, especially in the scenario where today’s geopolitics make a mess in the next months.

Just like IPI, price action is interesting with a new ATH and currently a healthy retest, far from perfect as we’d love to see low triple digits again to buy - and we might, depending on the Iran/U.S. negotiations this week, but interesting enough to keep an eye on it.

Once again, not an overly exciting investment but one which could protect capital, even yield interesting returns in case the economy went south.

Final Words

There are more fertilizer-related companies like Mosaic, for example, but the market hasn’t shown love to those and you know I only look at strength; those two are the best defensive/fertilizer-related names I could find on the market, and two great defensive opportunities.

Now, we have no idea what will happen and it is possible that energy prices end up being absorbed in the months to come and inflation never really shows up, or maybe just with a small spike, not hurting growth stocks. If it were to happen, it would take a few more months to do so, probably post-summer vacations or so; this would be the minimum holding period for those positions. And it would need to be sold if the risk were not materializing.

But just like I presented Halliburton, Schlumberger and talked about Dollar General or Dollar Tree - which all returned 50%+ in the next six months, there can be value in having a safer asset, an edge, within a risk portfolio. In the best-case scenario, this edge is not yielding much return and only consumes a bit of your cash while the market pushes risks higher. In the worst, this edge can be the difference between seeing your portfolio crushed, and having one healthy position generating returns to buy back strength on risk when it comes back.

Everything always looks easy when risk rockets, and we have a tendency to forget that a 50% return, whether on risk or defensive, yields the same amount of money. The only difference is the risk profile of your pick; and safer returns are always a better investment than riskier ones.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

Stock picking, buying and selling are the trinity of investing.
And social media only focuses on two of them.

There is a reason for this, something called the sunk-cost fallacy.

It is a psychological phenomenon triggered after studying the same subject for hours, days sometimes; spending so much time and effort on it that we become emotionally attached. In plain English, this is falling in love with your stock. This happens to most investors who end up so caught up that they’d rather just hold through thick and thin instead of building an exit strategy to secure their gains when the time has come.

One of the most blatant examples I’ve seen of this effect was Hims; fundamentals were clearly deteriorating but the Hims community just kept encouraging each other to hold through it, because that is what investors should do. The stock plunged 78% right after and is down 56% since. The same happened with Duolingo and so many others.

The ugly truth is that selling a stock hurts us, emotionally, to the point that shrinking returns feel better to us - seems crazy and yet…

Selling is key. But it has to be made emotionless not to fall into the traps of human nature, which can be to never sell just as to sell too early thinking “I don’t believe we can go higher even if I don’t know why”. Selling has to be made mechanical to avoid these traps, and that is why it has to be part of a well-oiled cycle, just like stock selection and purchase.

My Process

As with everything in investing, a system is personal.

Traders will sell once their targets are reached. Some investors never sell. Some sell on fundamental changes, others on technical… There are no rules to what a system should look like, but we all need to have one. To buy, hold and sell.

I have two categories of positions:

1. Core positions, assets bought at a healthy price after market’s confirmations.

2. Swings, shorter-term positions bought to extract pre-defined performance.

I look at the same kind of assets for both, but I treat selling very differently.

Swings

My swings always come with a crystal-clear plan. I already know the narrative and the fundamentals, I look to buy on a key support and know where I want to sell. I usually use margin for those positions so my focus isn’t on the position’s potential risk but on my capital’s potential loss.

I don’t care if a name ran 2,158% and trades at 181x sales; if I can risk 1% of my net worth with high probabilities to return 10% with margins, it is a good deal. I do not intend to build a position for the next decade, just to extract a defined performance with a defined risk.

Let’s look at my Axti swing as an example. I bought the name because I follow the photonics vertical and am aware of the fundamentals and narrative behind each of its leaders - Axti being one without any doubts. I wouldn’t swing a name I do not know.

Since its bull trend started, the stock pushed on constantly accelerating volume and has never lost its D50, which makes it a logical entry point. Statistically, buyers and algos should step up on this level (they did).

Entry is set, position is built on margin, which makes its risk higher than a normal cash secured position so stop loss follows - in this case a 5% flat below entry price. And as I did not want to overdo it, I set up a take profit slightly below all-time high at $69.

This is a swing. Clear entry in terms of narrative, fundamentals, trend and support with a non-negligible probability of success, tight stop loss as capital preservation is the #1 rule when using margin, and profit targets to avoid greed. Yes, sometimes - like here, the name breaks out after your profit, leaving you behind.

But this trade, bought on margin (cash I didn’t have in my account), returned 64% in six sessions while risking 5%. This is a net bonus on an investing account. It is better to cut a margin position after a great trade than let it run and fall into our human nature traps like greed or FOMO, for the stock to reverse and burn you. Margin is a dangerous tool, to use only within a clear system.

If I were to complain about potential gains, I’d do so with IQE which had the exact same setup but ended up running 104% after I took my profit at the previous ATH.

Selling is a plan for swings, not a reaction. Every entry comes with an exit and there is no coming back. The trade works or doesn’t, no in-between.

Core Positions

I treat my core positions very differently because of the conditions they were bought in: healthy prices at the start of an uptrend; their run should span through months at least and go through many ups and downs, which as long as key levels are respected, I will gladly stomach.

Selling the position only happens for two reasons.

1. My thesis is broken, which is what happened on Hims for example. I had a reason to buy and own the stock and this reason wasn’t true anymore; I it stock go and moved on.

2. The uptrend breaks, which means even if my thesis is still holding, the market is not buying it anymore. This is usually a sign of weakness which can happen for many reasons - from the market’s stupidity to mine as I could have missed something on the narrative or fundamentals. I’d rather not take risks; I always respect the market.

As long as my thesis and key support/trendlines hold, I have no reasons to sell even if the stock seems “expensive”. Just like “cheap”, those words mean nothing in the stock market. Palantir was judged “expensive” post $40, went on to run to $207 and broke down its W50 at $140.

What were the reasons to sell before? System-wise, none. Psychologically speaking, well, the stock had run a lot, was trading at 100x sales, an even stupider P/E and the entire social media sphere was calling it an obvious sell because of how “expensive”. Yet, the company continued to accelerate revenue growth and to push multiples, and those who sold or trimmed at $40 - like me, felt pretty stupid, missing out on a fortune maker.

Selling a position shouldn’t be done because of bias, external conditions, pressure or to secure gains because “it has run too much”. Trimming is possible, but it also has to come with rules. I have three indicators I look at to trim.

1. Notice those small red flags on the chart above? Those are a homemade extension alert, based on a few conditions. It isn’t a perfect indicator - none are, but it is a good start to know when things get hot.

2. Second, volume. A great stock is a stock which goes up on high volume or explosively up on low volume. That either means a large amount of buyers accept to pay more for the stock, or that there are no sellers for this stock at this price. Both mean the wish to buy/hold is stronger than to sell.

3. Lastly, momentum, an indicator about stocks’ progression pace; it gauges the strength of the uptrend. With the passing months, a stock will logically attract less and its momentum will slow down. If its price continues to go higher on a decreasing momentum, it usually means the stock is slowly losing its aggressive buyers, and will either stabilize or decline.

Taking Palantir’s example once again.

Let’s ignore the first red flag on the extreme left as it was triggered during the breakout - which logically comes with an extension. The ones in the center of the chart were triggered on growing volume and accelerating momentum, an extension fueled by aggressive demand for the stock. The fifth one was triggered on a lower momentum spike but still healthy volume.

There is a case to be made to trim on those flags, even if volume and momentum are still healthy. My buying alerts triggered at ~$10 so a first trim after an 8x on clear extension can be judged healthy.

Things get interesting on the ~$180 flag in August 2025. We are now up ~70% since the previous flag, momentum is not following anymore, meaning the strength of the move is slowing down, confirmed by an ever-decreasing volume. The signs are here this time with the three indicators. From here, the chances of significant returns are low statistically and it might be time to rotate liquidity. As for trimming or selling, it is up to each of us, but the system is clear then: something must be done.

In the entire run, Palantir gave two system-wise periods to trim, until the sign to close the position was given when it broke its W50 ~$140. Sitting on our hands and doing nothing while our portfolio grows is the hardest thing to do in the market, but also the most important not to cut compounding too early and without reasons.

The Palantir trade following my system would have triggered an entry between $11.5 and $15 depending on buying the breakout or the retest. Two trims, ~$90 and ~$185, and a position closed ~$140.

How many of those who bought in the ~$15s did generated these kinds of returns? I’d say almost none, most sold out of fear of losing their gains, pressure, the “too expensive” or “unsustainable run” narrative, or any other psychological reason. The exercise is always easier after the fact, but it remains valid nonetheless as a system based on clear indicators can be tracked back.

That is why so many have the right pick but have never made life changing money, they do not let their winners run. And why I run a concentrated portfolio and cut my losers rapidly. It allows me to let this kind of position run; cutting losers means more liquidity going to structural compounders.

There aren’t many winners like Palantir in the market, owning one is enough for significant outperformance and life-changing gains. As long as we let the run.

The Taxes Situation

This is different for everyone as it depends on where you live but at the end of the day, we are all taxed. Living in Europe, most of us have a flat tax on profits triggered when selling a stock. This should be part of our selling process.

If you wish to trim a core position without fundamental changes - meaning one you could buy again lower, do the math based on your tax system to be sure it is interesting. The higher the gains, the bigger the drawdown you’d need before buying back for the trimming to make sense. Here’s a small table assuming a 30% flat tax.

If the pullback you are expecting isn’t large enough for you to buy back significantly more shares post taxes, then you’d be better off just holding.

Timely Use Case

The market ran, a lot, and I already start to see talks about closing positions… Because they are up. That’s not really serious in my opinion; I understand the “fear” of losing profits - and share it. After a 70% return in two weeks, I can assure you I’d love to close some - I did with my swings which is also why those are so important as they also act as a psychological buffer.

Maybe I should close core positions as well. After all, I do not know what will happen on Monday, maybe a black swan, maybe another war… Maybe nothing.

If I were to plan every weekend for a Black Monday, I would take profit every time a position turns green. This isn’t reasonable and would hurt long term; black swans are rare and systems should be built based on the most frequent situation: healthy uptrends.

Let’s look at Soitec, my biggest position built sub $50 on the previous higher high retest and after a W50 breakout on volume, now up more than 100% in two weeks.

What do we see?

1. We have a red flag. Logical as it comes on a violent breakout and extension.

2. Volume is massive. This week saw the highest volume spike of the stock’s history, demand is historic and combined with a 54% push, it’s safe to conclude that buyers were overwhelming sellers and accepted paying a higher price for the stock.

3. Momentum is very strong, logical as well as this is the first singnificant push for this stock.

This setup is not a trimming setup, the only reason for me to trim here would be “because my stock ran 100%” which isn’t a system, but a bias. Maybe it’ll fall 30% on Monday, I cannot be sure of anything but Soitec is structurally starting a strong uptrend here, not ending it, so any pullback should meet buyers at the right price - mine being the previous high as usual ~$70.

This is why I buy these specific setups, because they indicate the start of a bull trend. If that bull trend fails, I will sell and not look back. But Soitec is giving me every green light I could dream of, which usually is what we want, right? This is a “get ready to buy more” setup, not a trim setup. I have all the confirmations I need to go heavy on the next retest, assuming it happens on healthy fundamentals.

If a black swan happens, so be it. I will lose today but in the course of my investing life, I will win more often by assuming that tomorrow will be normal and let my winners run than by assuming the exceptional.

That’s what systems are for. Consistency over time.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

As you guys know, I have been running my screeners for a few weeks and besides photonics/AI hardware - both of which we talked about at length, another recurring theme the last three weeks has been space related names, with ~10 stocks the last two weeks only.

So instead of doing one write up per opportunity, I will summarize the bull case in terms of both fundamentals and narratives and list the names I found to be the most interesting. There will be more in the next weeks as the bull run on this sector seems to only be starting so I will just use this write up as a support to recap the bull case when new ones show up.

Space tickers are ready to rocket.

The Growing Narrative

It isn’t new but it is accelerating, for valid reasons. First, let me add a disclaimer right away as most space-related names have massive CapEx and no commercial source of revenues - most not all, there are some exceptions - some we’ll see today. Still, they overall mostly rely on governmental contracts and burn cash, and it is normal.

Space exploration and exploitation isn’t going to happen commercially tomorrow, it will take decades to reach its peak. Today, we are going through the R&D phase with companies receiving governmental contracts to set up the stage for commercial exploitation in the future. So I wouldn’t call those companies long term investments yet, but narrative driven positions - and narrative matters more than fundamentals in the markets; it is possible that one of these becomes a fundamental winner in the next decade, but it is impossible to foresee today.

But the narrative is certain with key events happening over the last few months and accelerating lately, with more space missions and enthusiasm, focus even around the sector, also driven by technological improvements and most importantly, competition as there is a relatively new player in the game: China.

The race for the stars is factually a race. There was no rush without competition post-Cold War and USSR collapse, but this is changing now.

First… Why?

This is a core question for many around the world - especially ecologists, tearing their hair out watching rockets go and come… There are reasons to launch those rockets, you can agree or not with them but space discovery and exploitation is important for humanity, for different reasons.

1. Humanity needs to be interplanetary. We do not realize this because we - personally, will be long dead when the need comes; but a species cannot survive without escaping its home planet. This isn’t a fantasy, the Earth will go through another ice age/hot age, our civilization might destroy our climate or the earth itself with weapons/wars, the sun will eventually die, and that is only what comes at the top of my mind. The need to leave could not materialize for the next million years but it will, and IF our species is still alive then, we will need to leave. One of the best movies of all time explains this very well; it isn’t fantasy.

   

   Now if you start from the premise that it doesn’t matter because our species won’t survive or because you personally won’t be there, fine by me, and then all of this can indeed look pointless.

2. Known & new resources. Not only are other planets full or resources that we could use for hardware but they also have different structures which could help us manufacture hardware we cannot on earth because of its gravity. We are already manufacturing semiconductors or doing healthcare research in space because of this lack of gravity and having access to more space/different ecosystems would create opportunities - if only because materials would behave differently. The same movie also shares this.

   

3. Today’s space usage. Shorter term, space is interesting for many verticals.

   1. Earth Observation. Most of the satellites in low orbits have one objective: retrieve data. They allow scientists to observe and collect datasets from weather to animals passing by natural disasters and farming… The amount of valuable data collected from space is unimaginable.

   2. Communications. Many hardware can be integrated into custom satellites and communication has been a focus for years now, for commercialization with ASTMobile or SpaceX but also for emergency services and remote connectivity. Some are even talking about datacenters in space.

   3. Warfare. Whether we like it or not, the reality is that space is used in warfare with intercontinental missiles leaving our atmosphere to travel faster at a lower energy expense. Control of space means control of the next warfare generation, just like controlling the ocean or the skies a few decades and centuries ago.

Those are already solid arguments and whether I personally agree with them or not is somehow irrelevant. This is where we are headed and this means capital will be allocated to those research and sectors which after all is what we talk about on this Substack as it will create opportunities.

The Race Acceleration

The race for space dominance started years ago, during the Cold War, and slowed down after the Eastern block collapse as the U.S. ended up the clear winner with no serious competition and focused shifted.

But there is a new adversary today, not a small one: China, which on the contrary has been accelerating spending over the last decade.

Today's Chinese successes are proving that the U.S. either needs to accelerate or be left behind - and they will not accept to be left behind. Here are some of the Middle Kingdom’s achievements over the last decade, starting from virtually nothing three decades ago…

1. The Chang’e Program (2019 - 2024) - Chang’e-4 is the first-ever soft landing on the lunar far side; Chang’e-5 drilled into the lunar surface and returned samples to Earth, Chang’e-6 landed in the South Pole-Aitken basin on the lunar far side, scooped up material, launched an ascender back into lunar orbit, and successfully returned those far-side samples to Earth.

2. Tianwen-1 & Zhurong Rover (2021) - the first nation to successfully enter orbit, land, and deploy a rover on the Martian surface on its very first attempt.

3. Tiangong Space Station (2022) - launched and fully assembled modular and permanently crewed space station in Low Earth Orbit (LEO), comparable to the ISS with a continuous human presence since its completion, serving as a hub for international research.

4. BeiDou-3 (2020 - 2022) - global satellite navigation constellation. This means China’s military, commercial shipping, and smartphones are no longer reliant on the U.S. military’s GPS network for positioning and timing data. They also proved their capacity to “tow-truck” satellites into a graveyard orbit which not only shows they now have the technology to maintain their constellations but also push others - attack really, in case of conflicts.

China isn’t just a competitor, it is a leader in some sector and lots of specialists tend to say they will achieve the next major steps before the U.S, with Chang’e-7 and 8 focused on moon’s resources extraction, Tianwen-2 and 3 to collect and return components from an asteroid and Mars respectively, becoming the first country ever to achieve this, or their satellite constellations expansion which could become bigger than western ones before 2030, while the next steps on the moons are also part of the race.

One of the critical technologies to move forward in space conquest is reusable rockets and while SpaceX is incontestably the leader, Chinese tests are very promising and like in the U.S. led by private companies subsidized by the government - which forces competition and innovation.

China is not lagging in technology anymore and has tailwinds the U.S. doesn’t have, notably when it comes to manufacturing. The winner of this race will not only be the one that lands the first human on the moon, it will be the one with the technological knowledge to build a base on the moon and extract resources. All the Chinese missions are designed to reach this target ~2030 with a very healthy momentum while the U.S. is waking up from a very long nap and starting to scale their expenses, accelerate missions. They have the first mover advantage and an edge in technology - especially communication, but the gap is closing extremely fast.

And the only way to win is to accelerate.

This is what they are doing; I already talked about NASA’s missions acceleration towards the moon in my review of Intuitive Machines and Firefly Aeropspace - two space opportunities shared last week.

This release is dated from March 2026 and talks about 25 missions until 2029 - one every two months, expensive missions which require tons of equipment and money flowing to the companies manufacturing or servicing them.

This is the core narrative, boosted by Chinese successes, with a global thrill from narratives like SpaceX and Rocket Lab successes - especially the former’s reusable rockets and Starship test flights, the Artemis II success last week with its flight around the moon resulting in large datasets and incredible pictures, and the excitement around Artemis III planned for 2027 to demonstrate U.S. private companies capacity and technologies to land a crewed ship to the moon, while Artemis IV, planned for 2028, should see the second real human landing on the moon.

The space is a now priority again for the U.S, spending is unlocked, missions are accelerating and the enemy isn’t joking while control of space will unlock advantages for the first mover in terms of resource exploitation and warfare.

Liquidity, Narrative, Fundamentals

You know how the market works now and I’ve already answered why I expect space-related stock to push higher over the coming years - some already have.

• Liquidity from a business perspective is a matter of governmental spending which we know can be unlimited if deemed necessary and investors will go where revenues accelerate the most - and space has the potential to be that sector after or in parallel of AI datacenters and compute demand.

• Narrative is a matter of momentum driven from the current frenzy around space plus SpaceX and China’s successes which revived the space race. Governmental contracts are also diversified by design as the government wants to maximize its chances of success, meaning diverse companies with thoughts and processes give more potential - and more winning stocks.

• Fundamentals are real; they are the last vertical of what make stocks move but even if we are talking about speculation, R&D, cash burn and negative FCF, the winners will unlock contracts for the most important human expansion to ever happen: colonizing space. Finding the winners today is impossible but there will be some, probably some named in today’s article, and our job will be to cut the fat as the market progresses while ridding the narrative.

From here, the only question left is what to invest in?

As usual, most of my stocks come from price action screeners as we want to invest in sectors with structural tailwinds and market action. I’ve had ~10 stock in my screeners over the past two/three weeks which is significant and means market participants are buying those names big time. You want to be with them.

This write up is meant as a presentation of opportunities, not a detailed review of each company so depending on your system and investment strategy, more research will be needed. I personally intend to play the momentum as it is impossible to value those companies - cash generation isn’t their strong suit. It’s all about narrative, contract announcements, momentum, optimism, and that is the game I’ll play.

The Already Winners

The sector isn’t starting now, one of the main narratives is SpaceX IPO planned later this year - no date set yet, with a capitalization expected ~$1.75T, making it the 9th biggest capitalization on the U.S. market in front of its brother Tesla. This IPO is going to attract lots of capital towards space names and push momentum. But SpaceX isn’t the only space winner and momentum is already here.

• Rocket Lab, the only proven orbital launcher publicly traded - until SpaceX joins, up 1,154% since 2024.

• Planet Lab, a low-latency satellite imagery provider, up 1,434% since 2024.

• AST SpaceMobile, a company with a proprietary satellite technology for mobile connectivity, up 1,519% since 2024.

I am not here to say those will not be winners in the future but they ran a lot already and I would look at them only for short trades assuming their stock holds key support and give great retests. They are already very extended and expensive, even if revenues and cash generation are impossible to predict, the R:R isn’t here long term to me.

The Winners to Be

I selected a few names which met my framework and will present them today with a brief fundamental review, how they integrate in the space supply chain, why they should benefit from the actual narrative - besides speculation, and a price action review to see how we can ply them. I already talked about Firefly Aerospace and Intuitive Materials so I won’t again, you will find everything you need here.

Orbital Infrastructure, Telecom & Data

These companies own and operate satellites constellation and offer different services.

Iridium Communications

This one already popped on my screener in February but I did not have time to do my research - and missed ~50% returns in a few weeks.

The company operates a L-band constellation in Low Earth Orbit (LEO) and offer different services to different sectors, focused on communications or geolocalization as their signal is designed to penetrate severe weather, making it the go-to for maritime/aviation transport or remote location.

Iridium is not a speculative asset.

It is a well established company with recurring revenues and growing margins as its services increase in value added while its stock has been left behind by the market and is now catching up on “fair value”, helped by the ongoing space narrative.

We could talk about Viasat and Globalstar with comparable fundamentals and chart profile but Iridium remains the strongest play with large cashflow, strong position even with Starlink knocking at the door, and funds to expand its constellation and service added in the years to come. This is the safest space play I can share today, at a great valuation and with a clear investment plan, but optimism could lift the two others as well.

The stock ran ~50% since its breakout a few weeks ago and only went higher since, now triggering my trimming alerts so I wouldn’t jump on it here, at all. This was the first breakout on growing volume and we should see a retest in the coming weeks/months. This is what we wait for.

W50 now sits ~$25 and could climb a bit higher, I personally would be interested sub $30 if the retest was given. There is no rush for when an entire sector starts an uptrend, nor lack of opportunities. We have to be patient and attribute liquidity to the best prospect, not chase the best runner.

EchoStar

This one isn’t a great play, even though Social Medias are spamming it lately, so I wanted to share some words here not to be fooled. EchoStar is a SpaceX proxy, they own shares after selling to SpaceX their spectrum licenses. It isn’t an opportunity at all and I’d avoid it at all cost as the market now expects a $1.75T valuation for SpaceX and has priced in EchoStar’s shares for it.

Earth Observation & Analytics

We’ll find some more explosive opportunities here with lower valuation and newer business models, leveraging AI and new systems. Higher risks and potential rewards.

Spire Global

The company operates a constellation of nano-satellites to collect radio frequency data to track maritime, aviation and weather patterns, and resell this data through API, or let them deploy their own software within their satellites for local treatment.

Satellites are usually equipped with high quality cameras to take pictures which means nights our cloudy weather impact their service. Spire satellites work like bats, sending radio waves and looking for their return to map their environment regardless of light or weather… except these satellites do not send waves, they only look out for them. Every technology or movements generate waves which can be captured and used. This is what Spire’s satellites do.

Spire is also a turnaround story as it sold its maritime business for ~$240M in April 2025 and used the proceeds to pay down its debt, leaving ~$110M of net cash to operate its business which at ~$17M quarterly burn gives the company a year and a half of running. The second turnaround narrative came in March with their quarterly report and a 50% YoY growth guide with EBITDA profitability and positive cash flow early 2027 while excluding their Canadian WildFireSat program - meaning there is upside to this guidance.

The source of growth? Spire proved that they can use a single satellite to detect S and X bands radar signal used by military radar system. This enters a warfare part of space called real-time electronic warfare intelligence (RFGL), meant to detect when radars are used in specific geographies as they by design will release radio waves and make themselves detectable as they try to detect what is around them. This could allow to find dark ships, defense systems, GPS detections and more. Spire intends to 15x its RFGL capacities over the next year with manufacturing in the west, funded mostly by the U.S. DoD and allied nations fundings.

Spire is currently engaged with 17 countries and is negotiating sovereign constellation contracts in the high 8-figure to low 9-figure range while agencies like NASA and NOAA are outsourcing satellite manufacturing and are increasing their fundings for RFGL-like systems for non-defense purposes.

Spire hit in a handful positive narratives at the same time with uncertain geopolitical times, a global enthusiasm around space, a very healthy financial restructuration and profile, a new technology for radio waves leveraging AI, and an increasing spending for defense purposes in the west. All those news were fairly new and justified a massive spike in stock price and volume interest.

As usual, exactly what I look for in a chart, with a perfect entry ~$14 on the breakout retest as the market and traders digest this massive 72% push in two weeks, hopefully as soon as possible. This is a high risk high reward play, the only of its kind as competition is only in the private sector. Be careful of volatility.

Spire is the most interesting high risk high reward opportunities in this write up.

BlackSky Technology & Satellogic

I will treat both together as their core business is identical: earth observation with lenses this time - traditional observation and data collection with images from LEO satellites. The difference lies in their customers and their specialty.

BlackSky is focused on AI interpretation of images focused for defense. They do not sell images, only interpretations after analyzing hours, days or weeks of the same high priority target, like Iranians’ military bases to find the numbers of jets hidden within hangars or caves for example. Their business is defense systems and high precision observations for allied governments who need real-time tactical analytics, not just raw data images, and the thesis relies on growing demand for such analysis as the west is increasing spending - U.S. and Europe alike.

Investing-wise, same pattern as usual with growing volume, clear breakouts and W50 retests; purchase zone either aggressive at the $30 retest or waiting for a deeper retest on the W50 ~$22 for a better R:R - if it happens.

Satellogic is a bit different; their public objective is to map the entire Earth to the meter with high resolution images and leverage AI analytics, just like BlackSky, but not only defense focused - even if they did sign a contract with the DoD recently. The company builds its own satellites in house and focuses on rendering the service as cheap and fast as possible, to ship a usable satellite in months at the lowest market cost to large companies or states for sovereignty purposes, and proved this concept by signing two satellites and their operation for Portugal with a $80M multi-years contract - significant as the company generated $15M revenues FY25.

Satellogic is a small actor operating cheap satellites focused on rapid image capture and AI analysis if necessary which gives a flexibility which doesn’t exist in the industry, images can take days and be expensive from legacy players. This is their value added and they intend to push it further with their Merlin constellation designed for the continuous remapping of the Earth to the meter, combined with AI compute directly in the satellite for final analysis sent down to Earth. Very comparable to BlackSky but cheaper and not military focus.

The narrative is also boosted by the financial restructuring and FY25 ending with 25% reduction in opex making their operation healthy financially while sitting on $38M of net cash and a $65M non cancellable backlog for the next years with $28.6M to be recognized over the next year - an expected growth of 90% YoY after growing 94% YoY this last quarter organically.

I’ll let you guess the chart pattern.

Vertiginous today, yes, but we aren’t FOMO investors, we are patient. Volatility goes both ways and we will see a retest eventually, even if it takes weeks as a 143% in a month triggers profit taking. Aggressive buying would be the breakout ~$5.5 which could be a bit high as we are talking about a small capitalization and lots of volatility - to treat lightly. Key averages are between $3.5 and $4 which seem much more reasonable but would require a ~50% drop - possible but still deep. Both would be great entry depending on your profile and system.

Satellogic could become a new giant of Earth observation, but the risk comes with the potential reward here within a pretty competitive industry.

Conclusion

Once again, this is a rapid review of interesting opportunities I would invest in based on narrative and price action, with interesting fundamentals/potential. These remain speculative and to be treated lightly as most are high risk high reward. Nevertheless, they are worth spending a bit more time if one of them interests you - I personally have seen enough to put my money where my mouth is at the right price.

Space seems to be one of the theme for 2026 and even if most of those companies will need years to fulfill their fundamentals and reach their full cash generation potential, the market is a forward looking engine.

This write up, combined with my previous one gives you a concrete overview of why space is so important, why the market is looking at it and six names which all share the same setup, plus four more which already ran massively but still can be traded on key support if that is something you do.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

Not really what works on social media and as a fact, it cost me ~300 subscribers since the start of the year, who decided that my content was not for them as I did not want to participate anymore in this confirmation bias echo chamber X and Substack are slowly becoming. And it served me right - and you who chose to stay, as my stock picking delivered ~40% alpha YTD - which is pretty massive and you can follow it all for free here.

This article is just one more of those going against the crowd as trying to justify the current SaaS sell-off in an environment where most are saying those stocks are lifetime opportunities won’t make me more friends.

But I’m here to make money, not friends - although I’d love to make both. So let’s dissect what is happening on the SaaS sector, why, and how we will profit immensely from it, when the time is right - not before.

SaaS What?

I’m not sure everyone knows what a SaaS is so let’s start here as it is key to understand why they are dying. Software-as-a-Service.

Say, you have two ways to eat nowadays. The “normal” way - at least for me, is to go do my own shopping with my small legs and wallet, come home, turn on the gas, cut my vegetables or season my beef, cook it all and serve hot. The “occasional” way is to take the same legs but go sit at someone else’s table who’s going to ask me what I want to it, prepare it for me and serve me. And if I want salad instead of fries, or to remove tomatoes from my burger then sure, the cook will comply.

This is a SaaS; I do nothing but pay and consume. Someone else works at making it good enough so it is worth my money, and I just have to ask for what I want within the circle of competence of the provider - you won’t ask for caviar at McDonald’s.

Adobe is a SaaS, they allow me to download and use a software with built in tools, a certain degree of personalization but no control over the core code. I can use it myself and that’s about it, just like I can eat a restaurant’s food but can’t go in the kitchen to cook my own steak.

SaaS companies give you access to a controlled environment with pre-defined access, liberty and customization.

Most SaaS are meant to resolve pain points - which is key to why they are being sold off nowadays as AI is just better and cheaper at doing so, with the bonus of even understanding context. Some smart guys found out there was a strong need for a service which was complex or costly to set-up and built a generic system to resolve this particular one, sold it, improved it, expanded, etc…

Take DocuSign. The founders understood early the need to sign documents remotely, that moving our small legs with a pen on our pocket would become a pain point in the years to come; they built a service to sell trust online in the form of a document signing platform, integrated different document formats to heal their users’ pain points - and generated $3.22B of revenues FY25 by doing so.

Not bad, eh?

The entire SaaS sector relies on a handful ground rules.

1. Resolve a pain point many will accept to pay for.

2. Grow user base, revenues and margins.

3. Optimize and improve the service for retention.

4. Drink margaritas.

The SaaS sector is unforgiving before reaching the margaritas as everything depends on how fast it scales, retain users and prices its service. SaaS rely on massive volume demand to resolve a pain point and the value clients agree to pay for it to be resolved externally.

The SaaSpocalypse

This is the name given to the so called “silly” sell-off of the SaaS sector - which isn’t silly at all as I am about to explain.

The SaaS ETF, IGV, is down an astonishing 25% since January. We are talking about an ETF here, not an individual name; this should give you an idea of some of the losers’ performance… We’re talking about casual -50% YTD on Duolingo or AppLovin’, and more… Some portfolios will take years to climb back this performance.

A literal bloodbath cause by AI, with reasons.

Let’s start with a few words to remember what the market is about: safe and growing cash generation, right? You’ve heard me say this so many times now - details on this write-up.

This is how the market works. Understanding this helps avoid value traps; companies that look cheap but have no path to margin expansion, revenue acceleration, or gain the market’s trust. Without a catalyst, the market simply walks away. A value trap can become a winner, but it needs one of those triggers first.

We don’t buy those. We look for the names the market is about to fall in love with; companies that can accelerate growth or increase cash generation, creating a double appreciation: rising cash and expanding multiples.

That’s what stock picking is about.

The SaaS sector has been rewarded by high premiums for two decades because they were the only economically viable solution to structural pain points. If a company needed to sign 10,000 documents per day, it was cheaper to contract DocuSign than to develop and maintain an in-house software, just like it’s easier to pay a bit more to go to the restaurant than to cook sometimes.

This created an entire sector where winners had a strong, safe and recurrent cash generation. As long as the pain point existed, companies would rely on the company which solves it and as by design, successful companies grow, their usage of pain point resolution increase and SaaS revenue grow. With stable margins also comes increased cash generation, etc… A virtuous wheel which pushed the market to increase those companies’ premium while fundamentals were improving.

Take Adobe as an example.

The stock’s multiples followed free cash flow margins to perfection through the years, up and down alike, until… 2025. This is where we’ll need some critical thinking. Most stop at “what was will be again” and buy those stocks. This is the problem of fundamental investors: they look at the past only.

But the world moves forwards, thankfully, and what was could not be anymore. You do not ride a horse to go to work nor wash your clothes in the lake. What was eventually stopped to be when new technologies disrupted old methods. And that was for the greater good.

This is what the market is pricing now.

What is AI?

We’ve already answered that question many times from a technological point of view, but never from a usage point of view. Artificial Intelligence is an automated and intelligent tool which can be used for any kind of tasks, including… resolving pain points.

A versatile technology trained for everything whose progress has been baffling, especially these last few weeks/months. I mean, I am a nerd and most of you also are - that’s a compliment coming from me. We are aware of the new technologies and developments; heck, most of you read a 15min write up about photonics. Only nerds do that, most people I spend time with daily have no idea that the word “photonics” even exists.

I use AI every day now and see it improving each passing week, I see answers, services or corrections I was frustrated not to have six months ago finally happen. We all see Anthropic’s new Claude releases, monthly, shipping new functionalities like if they were socks, and how transformative they have been - notably Claude Code with most CEOs telling us than a significant proportion of their code is now written by AI.

I’d say maybe 20% to 30% of the code that is inside of our repos today... are probably all written by software.

Satya Nadella, Microsoft CEO

Over the past 6 months, I built 3 websites and ~100 scripts for automation tools for my investing, writing and research. I could never have done so much before. This made Anthropic the fastest growing company in history, reaching a $30B run rate in less than 3 years of activity while ChatGPT continues to scale and without including Gemini or other AI functionalities and compute demand.

AI is baffling and its progress is even more baffling, to the point that this week Anthropic CEO said they developed a security focused AI model called Mythos, which was so performant they couldn’t release it to the public for fear it would be too easy to use it to hack into current system and decided to team up with security specialists to avoid this situation and find a way to integrate this model for defense first.

This is AI. This is a massive structural shift improving at the speed of light. And you guys want to tell me that what was true a decade ago will still be true in a year, while Palo Alto, which developed the most powerful and comprehensive security service is now being pushed to its limit by a new AI model?

Cmon…

The Disruption Risk

I will steal the wise words of a reader to go straight to the point.

The market correctly sees the risks (regardless whether the risk is justified or not which is a matter of personal opinion), and, as such, is no longer willing to give them premiums as safe, stable compounders. Hence the stock price crashed despite the numbers of most earning reports are still looking great…

The sentence in bold is the most important sentence on this entire write up. As always in the market, personal opinions simply don’t matter, and they don’t make money - not by themselves. You can take 1 year or 10 years to realize this, but it will still be true even with AI pace of progress because the markets are about future’s expectations based on individuals’ sentiments. Unless AI can predict the future, the market’s structural behavior won’t change.

Back to our the point and why the current SaaS disruption is justified: because AI is a structural change. What was a large pain point might just become a 10 days of work using Claude Code and what was 10M daily users might become 5M as AI agents replace workers - or hire fewer workers/consume fewer licenses, reducing retention, recurrent revenues and therefore cash generation, even if margins stay stable. SaaS mostly resolve tech pain points and AI will reduce the friction to solve pain points.

As for the argument “Don’t be stupid AI cannot build Adobe’s software”, it completely misses the point of what a disruption and stocks are. We are not talking about replacing those companies or software, we are talking about reducing the need for them which means reducing their cash generation.

Once more: the market only cares about future and safe cash generation.

Obviously, SaaS won’t die. Today, the market treats them all equally because it has no capacity to distinguish the future winners from the future losers. In doubt, sell everything, reassess in a few months.

Even structural AI winners like Palantir are being sold off while AIP is exactly what the AI revolution strives to create: an AI centric software.

And we’d expect non AI-centric names to thrive? No. The market has no view on what the future looks like for those names - neither you nor I do. We all have bias, opinions, but there is a possibility for 90% of nowadays’ SaaS to be entirely disrupted and rendered useless by AI in the next 5 years. You might judge it small, maybe even use the word “ridiculous”. But it exists.

I would never have imagined AI become so performant, so fast. Who says the next years will not again bring exponential improvements? What then?

The SaaS Future

Today, the market doesn’t see a future for those companies. It knows they won’t disappear, everyone knows that, but it has no idea what to do with them and so it sells. Liquidity goes away as uncertainty is real, whether we like it or not.

Obviously, SaaS will survive. Some, at least, maybe with another form, business model or value added. I cannot imagine Palo Alto or CrowdStrike be disrupted by AI as their cybersecurity service is more than just an AI model, and their need is exponentially growing with the democratization of AI ironically. These companies will adapt.

First, they will need to become AI native. I’ll always remember Brian Chesky’s words during an Airbnb earning call in 2024 about how this wasn’t a choice, but a necessity, while it would take a few years to get there as AI applications are structurally different from normal software.

The founder-led companies and the companies that are prepared to change and transform are the companies that are going to benefit from AI, because AI means everyone changes. And if you don't change, you're going to be disrupted... If you don't disrupt yourself, someone else will.

This is the first complexity, while model are by design AI-centric, SaaS have to pivot from classic software to AI-centric model, which makes them late by design; it’s always more efficient to build a house from scratch than to remodel one while being careful to keep the foundations and some furniture.

Second, resolving a simple pain point won’t be enough anymore. SaaS will need to create value which goes beyond facilitating workflows as this will be done cheaper and faster in-house with AI now. The cost and time of developing and maintaining a DocuSign equivalent got divided by 50x and will be even more in a few years; companies can’t compete on pricing with AI agents. The standards are different now.

Third, the economics might need to change as AI is structurally deflationary. A business model based on low prices - which can now be competed with, and high volume - which will structurally reduce… Well, you can do the math. Again, not all SaaS are impacted but most, while the market has no clue on which.

The SaaS sector, or what it will become, needs to prove itself. It needs to prove the market its business can adapt to AI, leverage the technology to its benefit and accelerate user acquisition or monetization. If we take Adobe as an example, again… We’re not there. Some are doing well, no doubts there, but again: the market treats them all the same because it has no certainty what AI will be in five years and considering the recent pace of improvements, it assumes it will continue and could disrupt more verticals - and might be right.

The market cares about predictable and safe future cash generation and stocks trade on liquidity first, sentiment second and fundamentals third.

Liquidity is tight, sentiment is in the gutter as SaaS future is everything but predictable and their fundamentals - hence cash generation, is threatened. In the meantime, many sectors have large tailwinds and are worth betting on while the SaaS downtrend has no end in sight. It will end when most companies show that their AI centric service has a large potential, not before, and this might come in years for our legacy players, or in a few quarters for new ones. Cheap is a bullshit word in the face of a technological revolution, and being early is not a great position to be when investing, contrary to what most preach on social media - and their portfolio shows this today.

I will without any doubt be one of the biggest SaaS stock buyers in the years to come, and I’ll very probably make a killing on those names once the market sees the potential and corrects its mistakes. It will happen, but today is way too early to anticipate tomorrow’s winners - even if some look very tempting like the cybersecurity vertical. You don’t want to hear this, but most will become value traps. Let time filter those and let the market give signs of who will win the AI enhanced software era.

What was won’t necessarily be again.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

Would you rather have weekly or bi-monthly articles like this one, focusing on the names I select? Or would you prefer weekly access to the raw data (~10 names per week) so you can dig into the names I don’t highlight (which included big winners like Marvell or Iridium these last weeks on which I simply didn’t have time to write), but that still meet my uptrend criteria? I could share this in a section of my website or simply drop it every weekend in the group chat - or something else entirely.

Everything is on the table, I just want to make sure it actually brings you value, you might also be satisfied with the way things are right now. Any feedback is welcome!

Intuitive Machines

Ticker:

IM is about space logistics and lunar infrastructure. Their core business is to design, manufacture and operate lunar landers (Nova-C and Nova-D) to transport scientific and commercial payloads to the surface of the Moon. They basically manufacture the luggage that contains what “travelers” want to bring to the moon and goes inside the rocket - except in this case the luggage can move by itself and deliver your panties right at your hotel door autonomously.

This is the core but not the only competence they have, they also manufacture rovers, Earth re-entry vehicles and other pieces of hardware (propulsion systems, avoidance systems, autonomy landing software, lunar rovers…), communication solutions on or close to the moon - basically setting up internet up there, software necessary for any companies travelling in the region, and a few other smaller things.

If I were to summarize, IM is one of the key player on hardware/software requirements to explore the moon but also later on, exploit it.

Their business model today is to fund R&D and capital intensive missions with governmental contracts; they are the primary NASA partner for lots of hardware and software, with a five years $4.82B contract to set up communication and navigation services for missions in the region - the famous moon’s internet, and late March a new $180M contract for IM’s fifth landing mission for NASA’s Commercial Lunar Payload Services (“CLPS”) initiative. NASA financed the four missions for a total ~$390M.

IM-1 was the first commercial payload to successfully land on the moon ever in February 2024, and transmitted 350 megabytes of information during ~140h, a pretty large success even if the NOVA tipped on landing, preventing perfect conditions and only transmitted for a few days. Can’t succeed on the first try right?

IM-2 confirmed the technology’s capacity to land but did not land where it was supposed - ~250m away, and could not set its solar panel right ending in a power outage. Initial tests were successful, with more complex tests being cancelled.

IM-3 is supposed to launch H2-26 with no defined dates yet, with autonomous robots, radiation sensors, a lunar plant experiment, Intuitive Machines’ first lunar data relay satellite - to start building a commercial data relay network in lunar orbit, and more… And IM-4 is scheduled in 2027, launched with SpaceX Falcon for always more hardware on the moon.

I think the case is pretty clear already. The technology still requires fine tuning which can only happen with tests and IM is NASA’s preferred partner for those, with Firefly Aerospace as its main competitor as it is a wish for NASA to diversify - meaning contracts will continue to go towards both, and others. IM is the undisputable leader today and proved its technology already so as NASA intends to accelerate the frequency of launches and tests, IM will naturally benefit from more contracts.

This is our generation’s space conquest and it is a very serious one which the U.S. intend to win. If you wonder why, the answers are simply: the moon is filled of key resources we’d love to extract, its gravity and conditions make it an interesting geography for any kind of manufacturing (pharmaceuticals and semiconductors are already being manufactured in space with many advantages), plus the need to make humanity an interplanetary species.

These kind of missions and the global interest around the moon will only increase in the years to come. Becoming the go-to hardware manufacturer for moon exploration and later on exploitation is something, just like becoming the preferred launcher for commercial or touristic space travels for SpaceX or Rocket Lab is.

There is an entire economy and supply chain on the space exploration sector which is set to explode in the years to come - I could write on that if interested.

And as said so many time, with the markets being about liquidity first, sentiment second and fundamentals third, the space sector is a large focus for #1 and #2 while #3 are still speculative but also very real, with potential. With SpaceX IPO coming this year, the excitement around the entire sector is palpable and should only increase - at least until D-day, boosting #1 and #2 further. It is already happening to be honest with SpaceX expected to IPO ~$2T which is massive, Rocket Lab up 135%, PlanetLabs up 724% or ASTMobile up 323% since 2025. Space is hot.

Without any surprises, IM is pushing higher and meeting my criteria - growing volume on rising stock with breakouts, and Firefly Aerospace which is also a publicly traded company (IPOd in 2025 so chart is in daily timeframe) has the exact same profile. Same sector, same tailwinds, same momentum.

Both are on a pretty tough resistance right now ~$23 and ~$35, breaking those levels on volume would trigger a clear uptrend for months - hence giving a great entry, while retesting lower breakout ~$20 and ~$28 respectively would give a great risk reward accumulation point… Two really strong setups either way.

This is the bottom line of the trades, speculative but based on real fundamentals and potential, carried by a heavy momentum with SpaceX and the Artemis II mission, the push governments are giving to space exploration, etc…

Two positions I could personally take with a few months timeframe as I’d also expect SpaceX IPO to print a top in optimism and anticipation - too early to say for now but probable.

Sigma Lithium Corp

Ticker:

Much more classic within a well-known sector, a small capitalization still at ~$1.6B but with “less” execution risks and clearer demand for its products as we are talking about lithium - as advertised in the name. Sigma is a pure play on high quality lithium extraction, operating in Brazil with a few twists, transforming it from just another lithium player to a potential great opportunity.

First, the company certifies a “quintuple green extraction” (zero coal power, zero tailings dams, zero utilization of potable water, zero use of hazardous chemicals and zero accidents), which you might not care about but many companies do as they have environmental restrictions – the famous ESG regulations. This became important as most of the resource comes from China or Chinese operated mines and doesn’t answer these regulations.

As the west is working on independence from extraction to refining and focuses on ESG-approved commodities, Sigma will receive more demand - as my second point will confirm.

Second, the company signed a $100M collateralized bank guarantee fully collateralized by its own clients through a blend of corporate guarantees, letters of credit and export receivables to be mutually agreed. This is the equivalent of Meta and Microsoft pre-paying for Nebius’ compute before it is installed, highlighting the demand for its products and allowing them to invest healthily in their second Greentech plant to double production from 270,000t to 520,000t annually.

Healthy balance sheet and the financing to double their capacity – hence revenues, in the medium term. This comes with execution risks obviously but this is excellent news for the financial health of the company and its growth profile.

Third, as a pure play lithium extractor, Sigma is optimized with ~40% operating cash margins – pretty high for a commodity miner, and extracts the commodity for cheaper than competition - hence very competitive on the market.

Sigma is guiding to a $592/t extraction and shipping of their lithium, which puts them on the lowest extraction price on the sector - green position on the chart, while the red, blue and green lines are their profitability margins depending on lithium’s price, which as we’ll see has been rising and sits ~$2,000/t today.

Fourth, the geopolitical situation helps western companies with Trump’s tariffs forcing local production - Brazil isn’t local but it is close from U.S. factories which are being built to refine the raw material locally, while battery productions are already within the U.S. for some companies. As the continent works on building a supply chain locally - meaning without China, Sigma will become a logical go-to partner.

Natural resources are also on the rise for many reason - geopolitics and fears of supply chain shocks, raising oil being, refocus of liquidity… Raising resources are never great for an economy but we can benefit from it.

Lastly, the dollar falling is a big tailwind for Latin America comapnies as most of their loans – as confirmed with Sigma’s own loan, are denominated in dollars while their expenses to pay local workers and resources are in local currencies. I’ve wrote about this currency mix and how it impacts LATAM on MercadoLibre’s thesis.

In summary, Sigma is an optimized pure play with a very healthy balance sheet, an accelerating growth profile, healthy cash generation with an advantage with its ESG product compliance and cost competitiveness, while the global macro is a tailwind – less competition from China combined with cheaper operations in Brazil.

To put some perspectives, Albemarle Corp – its main competitor, has already ran ~170% over the last year without explosive news and while having a less attractive financial profile – but being a much bigger diversified company.

The second tailwind for the industry is the global electrification happening around the world now while lithium is the most important component for batteries – which are globally getting cheaper and more efficient for households and businesses alike. If we look at Tesla’s success with Megapacks and the rebound for solar installations for households, on which I am overly bullish and is pushed by the Iran war, then demand for lithium should continue to increase, and if the commodity is also more expensive, profits for producers simply accelerates.

And both Albemarle and Sigma charts show this kind of anticipation by the market. As usual for the latter, the same chart patterns as always.

Now sitting below a strong resistance which creates the same condition than both IM and Firefly Aerospace: a breakout on volume triggers a buy on the retest as the trend is starting, while a rebound on the W50 triggers accumulation anticipating for a potential breakout.

If we start looking at valuation, the stock looks more expensive than its peers but it also has higher cash generation, healthier balance sheet, a premium for the potential revenue growth, its ESG compliance, accelerating demand for local supply chain and cost competitivity, with the risk being execution risk for its expansions.

Another name I would gladly buy on the right price action conditions.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

We will start by the need and the technology itself, what it is and why is their a need to upgrade our datacenters, and then go over the entire supply chain to have a global overview of the companies involved in this new technologies, their role in the supply chain and how they interact with each other.

The sector has received lots of liquidity and stocks already returned hundreds of percent, but as this technology could be the next foundation for scaling inference, the opportunity wouldn’t stop after those returns and we should be ready for when (not if) the breathers happen.

The opportunity is clear, the technology is backed by serious capital and people, the speculative part of investing, betting on if the technology will be adopted, is behind us and what lies ahead is scaling - with order books and revenue growth. Analysts have no idea on what to expect and this is when the risk reward will be the best - on the breathers happening after fundamental confirmations but before the first financial ones.

This is what makes the opportunity so interesting today; while it is just starting, while analysts have no idea of what is coming, while most of these companies are still pretty small and ignored by the biggest players.

Late enough to avoid all the risks. Early enough to reap more than enough returns.

Physics & Bottlenecks

Before going over photonics themselves, we need to review some concepts we’ve already seen - like datacenters or GPUs, which I’ll go over again briefly.

Datacenters are the interconnexion of thousands of hardware, each with its own specialty; a hardware is the interconnexion of hundreds of semiconductors. Data transits through them via electrical or optical “cables” between them in the datacenter or conductive metals - copper as the cheapest conductor to scale, within the hardware.

Artificial Intelligence is this famous new technology, born from data and compute. A model learning from billions of iterations to guess the next token - which could be anything from a letter to a pixel passing by an action, each mistake forcing the model to update its parameters during training by adjusting weights in how the next token is guessed, until reaching satisfaction. AI learns just like you do, by repeating a task and adapting as your mistakes teach you how you should do things, until you get it right - until you are satisfied at least.

For decades, the AI bottleneck was compute, the question being how do we treat so much data, how do we guess the next token fast enough so a simple task like writing a one-line text doesn’t take weeks?

This was resolved by GPUs, semiconductors designed to do parallel computing and behave like a hive. Thousands of GPUs would be allocated to one task, each only working on a fraction of the problem, be fed the required data to solve it and share the result with the hive. This new computing method, GPUs parallel computing instead of CPUs sequential computing, allowed model training with human timeframes.

GPUs are made from specific semiconductors, optimized and small. AI democratized, its potential became very clear and demand for compute rose exponentially, reaching a point where physics were limiting its deployment. This created an entire ecosystem, some would call it a circular economy, with many large winners in the stock market, as you all already know.

Then came inference, the usage of those models. Musicians learn music theory early on, but eventually they need to pick up their instruments. Imagine you have trained all your life and your final exam will be someone - let’s say me, giving you a song. Any song, with the required music sheet, and you’ll need to play it well enough so I’m satisfied. This is inference, the model knows, now it has to be used for what it was trained - whatever it is from driving to generating images.

The issue with inference is, it is limited. The model itself and its capacities aren’t, it could answer perfectly to your needs - assuming it is trained perfectly, just like you will take your guitar and play me Sweet Home Alabama if I give you the music sheet. But imagine if 10M people gave you a different music sheet at the same time and asked you to play them all, simultaneously. You couldn’t.

When a model is going live, if usage grows exponentially, the resources allocated to that model have to grow as well. Just like you’d need to hire more workers if your workload was 1,254h/day. Except, more workers wouldn’t be your only need in term of logistics. No, you’d also need roads large enough for your materials to reach your workers, a parking lot large enough to unload those and food for everyone.

AI isn’t just about stacking GPUs together, it is about data computing. You’ll need the workers (GPUs), you’ll need the data (materials), you’ll need the parking (memory) and you’ll need those wide large roads for your materials to pass (bandwidth). You’ll also need everyone to be there on time so they can work (latency). If one is missing, well… Your task will be delayed, maybe some of your workers will just spend their day playing cards not just because they’re lazy, but because they simply cannot work. And you don’t want to pay your workers doing nothing, right?

All this introduction brings us to today’s actual bottleneck with AI. Inference is reaching exponential real world demand growth, and we realize that more workers isn’t the solution anymore – we do need more but that won’t solve our problem. No, our biggest problem today are the parking, the punctuality and the highways.

Today, we’ll only talk about those damn highways.

What Are Photonics?

Photonics are the science behind light generation and manipulation. On this write up, tech focused, we will consider them as optical semiconductors, chips designed for optical connectivity within the hardware, supposed to replace copper which is now physically reaching its limit for our needs. Without going into details, copper highways simply aren’t big enough for our materials to circulate on them and be on time, combined with a much lager energy consumption that light. There’s no solution with those highways, we just need to change them.

Enter optics, light, photons. Now those would answer our need in term of bandwidth and latency, simply because light travels faster than anything else while generating less heat than conductive copper - or the amount of hardware needed to push copper to its limit and deliver the bandwidth and latency we need today. It isn’t a matter of preference but of physics.

But using photons isn’t easy, nor cheap, as it comes with many more requirements and complications than copper, and creates two very large verticals to work properly, for those photons to be generated and travel where we want them, how we want them. Two verticals, many more opportunities.

1. A photon generator - a laser. To guide light, well… we need light.

2. A semiconductor to guide light, called SiPho - for Silicon Photonics.

On their final forms - in a few quarters time, hundreds of both will be combined together into a final usable product to transmit data through light within hardware: Co-Packaged Optics.

Today, we will go over this new hardware which should be responsible for the next phase of scaling AI datacenter by improving our current deficient highways; what it is, how it works, its supply chain, manufacturing process and key players in each vertical, so we understand why it matters and why the opportunity is real - and massive.

Here’s is an overview of where we’re going.

SiPho: Silicon extraction → SOI wafers (Soitec) → EDA simulation (Synopsys) → SiPho engineering (Broadcom, Marvell) → Foundry etching (GlobalFoundries, Tower Semi, TSM) → Testing and validation (Aehr Test Systems, Teradyne, FormFactor).

Lasers: Indium/Phosphorus extraction → InP substrate (Axti, Sumitono) → Epitaxy (IQE, Coherent, Lumentum) → Laser Chip Fabrication (Coherent, Lumentum, Sivers) → Testing and validation (Aehr Test Systems).

CPO: Final assembling (Fabrinet).

The Opportunity.

We understood the global physics and the bottleneck, so before diving into the specifics let’s talk about the opportunity and why I am writing all this here after sending you an article few days ago about a potential bear market.

But as I always say: there is always a bull run somewhere.

Even during weak markets, companies continue their operations. Cash flow is still generated and spent. AI hyperscalers and compute providers in general have commitments for hundreds of GW of new datacenters over the next ~5 years. Buildouts could slow and some could even be cancelled but the net increase in total usable GW from today to 2030 would still be massive, and photonics are expected to be ready within hardware by next year and play a large role in those new datacenters, scale AI further, which means it should reflect in photonics companies’ revenues.

This isn’t just a narrative or a maybe. Key players in the industry are investing in this including Nvidia. Jensen Huang not only confirmed that CPOs were the only viable solution to scale AI further but also invested directly - through Nvidia, with $2B investments/partnerships with Coherent and Lumentum to accelerate R&D and manufacturing on InP lasers - we’ll detail what they are later, and $2B more with Marvell to strengthen the NVLink networking system with photonic solutions.

Sure, $6B isn’t much for Nvidia and its ~$30B quarterly FCF but it shows the direction and that management is putting money where its mouth is, while Nvidia is the company with the clearest view on AI scaling needs so pushing $6B on a technology is signal, not noise. They did the same a few years ago with networking companies and hardware manufacturers to push GPU capacities further for training - and they were right to do so.

Here are Jensen’s words at the latest Nvidia GTC.

The AI factory is the new unit of computing. To connect a million GPUs, we can no longer rely on the old physics of copper. Silicon photonics is now central to the next generation of AI infrastructure.

By integrating silicon photonics directly into our switches, we are shattering the old limitations of hyperscale networks. We are moving from a world of pluggable parts to a world of integrated light.

We have squeezed every last drop out of copper. At 224G per lane, the physics simply demand light. The transition is no longer a choice; it is a thermal necessity.

The technology is ready, but the supply chain is not yet at the ‘Industrial Scale’ required for zero-defect AI factories.

Nvidia GTC keynote

The bottleneck is real and specialists of the sector believe the solution is photonics. As hyperscalers expect a combined ~$0.5T spending in AI buildouts next year, it is fair to assume that part of it will go to the first usable photonics technologies, or at least their engineering while spending shouldn’t slow down by 2027 - even if it doesn’t increase, while spending on photonics should increase as the next technology to scale AI further.

I mean, big spenders with only one new technology to move their capacities forward points to a pretty obvious investment path, but who knows? I could be wrong.

And if we look at the sizes and revenues of these companies, we see that they wouldn’t need much spending to be transformed from small caps to key AI players.

We are looking at a sector whose combined market cap is lower than the yearly CapEx expected from hyperscalers this year, and total cumulated revenues are lower than $70B, while some of those have a core business outside of photonics which means the photonics related revenues of this sector are even lower.

Don’t read too much into this, this is just to illustrate that the sector is still relatively small compared to the opportunity once CapEx flows down onto photonics - although obviously the entirety of the $0.5T won’t flow to optics, but even 0.5% of this total spending would be material for this sector.

There is no knowing exactly where the industry is heading. There’s lots of optimism and anticipation in the stocks today, with most of those names up hundreds of percent over the last few quarters, but there is a reason for such a performance and no saying where it stops. Some of these companies are still small caps, ignored by most of the large players because it is too early in the cycle to pour hundreds of millions on them, and analysts don’t even know half of them - even less their potential.

If you were to look at analysts’ expectations on Nvidia, they were wrong almost every quarter - still are today. Why? Because it was impossible to understand the sector and anticipate demand for their hardware and the spending frenzy which was unlocked over the last years. Some things cannot be modelled.

They aren’t stupid, they are simply playing a game which cannot be played as Nvidia - and AI, is an irregularity in the markets, a company and sector you only see a handful times in a lifetime, but it isn’t the only one and even if photonics names ran 500% over the last few quarters, nothing says they have reached their potential. It took Nvidia 1 year and a half to return 500% after being known as a key AI player and delivering its first GPUs to OpenAI in 2016. The stock is up 3,000% since.

I wouldn’t expect photonics to become Nvidia. But if photonics were indeed the next foundation for AI scaling, analysts won’t be able to anticipate growth, profitability and cash generation just like they couldn’t with Nvidia, because demand will be faster than they’d expect it.

Massive past returns do not mean future returns are unlikely. It means we missed the discovery, the riskiest part of investing where the potential is here but unconfirmed. It now is confirmed by Nvidia’s endorsement, while the potential is still unknown. If it were to be as transformative as expected by the market and Jensen himself, then the safest part of the gains are in front of us, with fundamental confirmations and stocks which should be lifted up by revenues, growth and cash generation.

Everything the market likes.

The SiPho Supply Chain

SiPho: Silicon extraction → SOI wafers (Soitec) → EDA Simulation (Synopsys) → SiPho design (Broadcom, Marvell) → Foundry etching (GlobalFoundries, Tower Semi, TSM) → Testing and validation (Aehr Test Systems, Teradyne, FormFactor).

Silicon Extraction & SOI Wafers

Key player: Soitec.

Wafers are the foundation of all semiconductors, the platform on which elements can be etched or deposited. You can think about them as your plate during dinner, on which you will serve your dinner - except your food isn’t microscopic hopefully.

I have a detailed write up on Soitec, its business and its importance in the supply chain. They manufacture SOI wafers - a very specific wafer architecture optimized for photons, which are the industry standard for SiPhos, and not only do they manufacture them but they also own the patent for the industry standard technology to do so.

They are the first bottleneck of the «chain: every SiPho requires an SOI wafer which will either be produced by Soitec or by its partners who pay a fee to use their proprietary technology - except if buyers accept to pay more for another provider not using Soitec’s technology but that would be less scalable.

Investing wise.

As noted in my detailed review, Soitec is in the sweet spot to start an investment in my opinion - I own it, after a clear W50 breakout on massive volume after years of downtrend as its core business declined.

The market is ignoring its key position on the supply chain and focuses on the company as a whole, not on this SiPho position and revenue growth potential, which could eclipse the revenue decline in other verticals during the next quarters.

EDA Simulation

Key players: Synopsys.

The software providers. They do not design the chips, they build the complex digital physics simulators (Electronic Design Automation) that the architects will use to design the chips. Every single chip is first designed and tested within a software environment before sent to manufacturing, to theoretically prove the viability of the design.

Investing wise.

Synopsys has been part of the entire AI revolution as its software isn’t exclusively optic related which means its core business and revenue growth have already been rewarded in the past years. It remains a key player in the industry but I wouldn’t focus on it.

SiPho Design

Key players: Marvell, Broadcom.

The architects. Companies with the engineering capacities to design how light should interact within the SiPho to reach its maximum potential. They receive requirements from final users and work with them to design the most efficient SiPho for their needs, just like a house architect would design the best house based on your demands.

For the sake of clarity, while Marvell is only an architect - and specializes in optimized connectivity which is why it is such a key player in SiPho, Broadcom also has manufacturing capacities. Just to be thorough.

Investing wise.

Just like Synopsys, both have been part of the entire AI revolution as their design aren’t exclusively optic-related, and both have been rewarded although Marvell was left behind as its core focus is networking - despite other verticals, which might give the company a push now as they will receive orders to fit optics within hardware.

The stock saw a healthy breakout on large volume post Nvidia’s investment and any retest ~$100 seems like a great entry.

This would be my focus if I wanted a stable giant with upside, ignoring the small-cap risks; Broadcom is retesting its W50 this week which is always a great entry during uptrends, but at a much higher valuation due to its partnership with Google for TPU designs. But a W50 is a W50, all great companies deserve to be bought at this level and any optics-focused partnerships - especially for Google’s TPUs, would push the stock even higher.

Foundry Etching

Key Players: GlobalFoundries, Tower Semi, TSM.

Just like Soitec, I have a detailed write-up on foundries.

Those foundries will etch the required components from the SiPho designs - waveguides, photodetectors, modulators, etc… on SOI wafers. These companies own fabs around the world and manufacture the finished product based on specifications.

Investing wise.

Tower Semi is up 290% since 2025, boosted in 2026 by Nvidia’s partnership, and is extended now. The opportunity is real but I wouldn’t touch such a chart, especially while they are being sued by GlobalFoundries for using patented technologies.

Both companies are key for optics and one is much cheaper than the other while having comparable potential. Just like Soitec, GlobalFoundries is dragged down by its core slowing business as it isn’t a SiPho pure-play, and is a much bigger company than Tower.

To me, GFS is the right play today with the perfect chart signaling accumulation at low valuation with a perfect retest of the W50 given this week ~$42, the price I highlighted in my review.

Tower would be a great name to own after a breather and TSM, which is obviously a great name, is also a major player for every semiconductor and a great opportunity but not a company I would focus on personally as I’d rather look at higher potential and volatility. As with Broadcom, a great focus to limit risks and volatility.

Testing and validation

Key players: Aehr Test Systems, Teradyne, FormFactor.

Once a semiconductor is finished, it must be tested as it won’t be shipped/paid for without confirmation of its performance. These companies sell the go-to systems or/and the components to test SiPhos components - and lasers as we’ll see later. They do not necessarily perform the tests themselves but usually sell the hardware to do so.

Investing wise.

AEHR will be the best play fundamentally as the most used hardware to test optics and SiPhos (with wafer-level burn-in), and the market rewarded it. As with any uptrend, buying the W50 is key and AEHR gave many retests over the last months, waiting for another one is the logical next step to me.

Teradyne and FormFactor are both extremely extended at the moment, patience will be key on those to avoid taking the elevator down and seeing a position destroyed because of FOMO. But those three names would be great opportunities at the right price be exposed to the SiPho testing sector which should also see demand grow as production increases.

The Laser Supply Chain

Lasers: Indium/Phosphorus extraction → InP substrate production (Axti, Sumitono) → Epitaxy (IQE, Coherent, Lumentum) → Laser Chip Fabrication (Coherent, Lumentum) → Testing and validation (Aehr Test Systems).

I will not go over the raw material extraction as most of the production comes from China and the refinement of the material is then done during substrate manufacturing, so we’ll start there right away.

InP Substrate

Key players: Axti, Sumitomo

This is the name given to a wafer made from a different chemical (Indium Phosphide). Concretely, it remains a wafer, optimized for laser usage.

We will focus on Axti, which is comparable to Soitec. InP substrates are the industry standard for semiconductor lasers - yes we are talking about semiconductors which produce light (photons), Axti owns patent for specific process within the InP industry standard manufacturing technology called Vertical Gradient Freeze (VGF) which allow them to yield low-defect wafers and therefore cost competitive. And while this is their most important advantage, it isn’t the only one.

They also own the raw material extraction vertical through subsidiaries in China which gives them privileged access at a preferential price. Their operation in China aren’t just material extraction, they also manufacture InP substrate there which reduce costs massively and increase its competitiveness and their manufacturing scale.

Axti is the only InP substrate vertically integrated pure play and the very best in the entire market, meaning most of lasers demand for SiPho optical connectivity will pass through them at one point due to their prices.

Investing wise.

Without much surprise, it comes at a premium but this is where my speech about Nvidia and analysts’ expectation comes into play. The stock is up 2,222% since 2025 to a ~$3B market cap for ~$90M of revenues. It is extended, very much, but it has everything we are looking for: massive volume and rapid expansion on strong potential and fundamentals.

I would not buy here, but it is and will be a leader in photonics, one of the key players and most important company to scale optics within hardware, without any doubts, while having massive exposure to… China. Volatility will happen and as usual: the W50 is key in uptrends.

Massive past returns do not mean the run is over, it means we should be patient and wait for those retests which always happen.

Epitaxy

Key players: IQE, Visual Photonics, Applied Optoelectronics, Coherent, Lumentum.

We have a blank InP substrate, a perfect, flat crystal which cannot generate photons by itself. We need something else, a phenomenon called electroluminescence; epitaxy is the technological process to achieve it, by depositing microscopically thin layers of crystals on top of our InP base, called “Quantum Wells”. The finished product will be called an epi-wafer.

That’s where physics is amazing and our understanding of it is mind-blowing.

Here’s how those wells work. Electricity will be conducted within the hardware and electrical impulses will enter the quantum wells, which are designed to change the energy state of electrons and force the release of a photon. This is how a “simple” well generates light from an electrical signal.

IQE and Visual Photonics are the epitaxy leaders, I added Applied Optoelectronics, Lumentum and Coherent because all three also do epitaxy - but not only as we’ll see below. When it comes to pure epitaxy needs, a fab to transform InP substrates into epi-wafers, IQE is the western leader.

Investing wise.

It won’t surprise you if I tell you that IQE is up 382% year-to-date I guess. And yet, compared to the rest of the sector this isn’t much as the stock is only up 122% since 2025, while being the go-to company for epitaxy. The stock has been on a downtrend since 2017 as the need for epi-wafers was very niche and never met expectations, until this year, with demand for lasers growing.

If the thesis of this write-up is right - that photonics are the future, then epitaxy is a mandatory step to scale it. The question is: will it pass through dedicated fabs or vertically integrated ones? In the first case, IQE has a long way to go, although the company has other structural issues that any investor should look at before investing - this write up is focused on the photonics supply chain not individual financial profiles.

Laser Chip Fabrication

Key players: Coherent, Lumentum, Applied Optoelectronics, Sivers Semi.

The last step of the chain, which consists of many different actions including etching waveguides, cleaving the wafer into individual laser chips, adding conductive metals, etc… This is the equivalent of the SiPho’s foundry stage, once the wafer (epi wafer in this case), is ready and the final touches are missing to manufacture the finished product meeting clients’ specifications.

We can find names we already know; those companies are vertically integrated, they do their own epitaxy from the InP substrate, they work on the design and the final touches on the wafer - they do not need to pass through IQE or other fabs, they do it themselves.

Once treated by one of these companies, the InP substrate leaves the factories as a finished and functional semiconductor laser which can then be packaged with SiPhos to offer a complete optical connectivity within hardware.

Investing wise.

As you can imagine, those are loved by the market as vertically integrated on one of the most important sectors to develop and scale photonics. They are extremely extended today and could remain like this for long, but they will be key in the development of photonics and any retest on the W50 would be a buying opportunity as long as it happens on healthy fundamentals - not the rejection of their technology.

Testing and validation

Key players: Aehr Test Systems, Teradyne, FormFactor.

We already went through them as they propose complete testing systems - which include both the lasers and the optic channels.

CPO Packaging

Key players: Fabrinet, Coherent, Applied Optoelectronics, Lumentum.

We’ve seen all the key companies required to manufacture both SiPhos and lasers, the only step missing is to combine both technologies into a packaged solution capable of delivering a customized optical connectivity within hardware.

The industry will rely on pluggable optical transceivers for the next quarters until the final product, Co-Packaged Optics (CPO), is ready to scale but both will use the same components so the supply chain is identical.

Packaging is probably the most important step of them all as electrons don't care if a copper wire is slightly crooked, but photons will miss the target if a laser is misaligned with a silicon waveguide by even a fraction of a micrometer - and the device will be useless.

We find our three leaders once again - vertically integrated laser semiconductor manufacturers as advertised. The only step they do not perform is the creation of the InP substrate, which they will always need to purchase. But we also find another company: Fabrinet.

The known giant and the only technology-agnostic one as the company receives the required products/specifications and assembles them as required by their final client. This technology-agnostic giant has the advantage of flexibility.

Investing wise.

The stock has been rewarded for its packaging services globally, up 142% since 2025 as the company is much larger and exposed to more optical verticals than just these new technologies. Another large and stable company to invest in for those who want to avoid small caps.

Conclusion

The photonics sector is just starting. Many of these names, which are still ignored by most market participants, will accelerate once real revenues and continued orders flow really kicks in. We’ll need to buy them at a correct price but the thesis and the signals are strong, execution is the only missing link to have successful investments.

This write-up was designed to give a complete overview of the entire AI optical supply chain, from raw physics to hardware, from blank substrates to pluggable transceivers and CPOs. The complete supply chain to replace our congested copper highways with light/photons.

Keep in mind those companies are part of the same sector but all have their particularities and financial profiles, their own risks. Depending on whether you want to invest in them long-term or simply trade them by buying key support levels and moving averages you will need to do your own research and follow your own process. I am here to share the ideas and the logic behind the narratives only.

Personally, I intend to wait for key supports on daily/weekly charts. I intend to take small positions with a trading mindset - clear entry and exit points, while waiting for deeper breathers. Hopefully, we’ll soon see pullbacks on their W50 where, if the fundamentals stay as strong as today, I’d build heavy positions in those names and ride the entire photonics wave - while I already have large positions in GlobalFoundries and Soitec.

I hope this write-up gave you a bit more clarity on the supply chain, the key actors and the fundamentals of this massive new AI vertical, and that you will be able to leverage this information into your own systems.

There’s always a bull run somewhere.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

I didn’t expect 2026 to be a good year for most of the market and shared it extensively, especially for the stocks most of social medias were looking at, and the last months have proven me right with most of them strongly sold or really destroyed in some cases - losing 50% plus of their value in some cases.

And finally, this month, the S&P500 broke its weekly 50 on growing volume after months of weakness.

I’ll speak bluntly and as I see it: this might be the start of a bear market. I struggle to see why the market would push higher and will assume that any coming bounce is nothing but a bounce, an exit liquidity for traders. I will not take part on most of the market activity until I see strength again.

This is the main subject of this month investment plan. Why do I believe this and why am I being even more cautious now.

Liquidity

As shared on my February review, the single most important factor to a bull run is liquidity. This is what most investors who focus on fundamentals and intrinsic value only misunderstand. It isn’t because you sell the best bananas on the world that you’ll be billionaire. If no one has the money to buy your bananas… Then you don’t make money.

If no one wants to buy your stock… It won’t go up.

Now fundamental investors will ask “Why wouldn’t I want to buy Meta at 20x earnings? It is so cheap!”. No, it isn’t. Valuation is relative, 20x earnings is cheap for someone who has money to buy it, but it isn’t necessarily everyone. As long as most think that, the stock will go up but the opposite will also be true. There is a factor of possibility first - some cannot buy, and a factor of wish - some don’t want to buy. The first is mathematical, the second is sentimental.

Mathematically, global liquidity is shrinking with constant - not increasing, fiscal policies, stable interest rates for longer around the world and no real stimuli, while the current geopolitics are shrinking liquidity even more.

The situation is Iran isn’t improving at all and I believe lots are losing faith in Trump and his institution as the messages are changing everyday from total annihilation to let’s make peace tomorrow, the latest - at time of writing, being “we’ll get out and let Hormuz close” while also sending more soldier in the region.

Inconsistent, growing uncertainty, crushing will to invest - but that’s about sentiment and we’ll dig this after.

On liquidity, the situation impacts oil’s supply chain which reduces capacities to invest because of global inflation. If prices increase, everything we pay is more expensive leaving us with less money for other activities, purchases or investments, and what is true for individuals is also true for companies.

I said last month I wouldn’t be worried until we see weeks of disruption without short term potential resolution.

Still, it is impossible to know what will happen. You know what you lose, never what you get. The removal of Khamenei doesn’t necessarily means peace and prosperity from Monday. It remains to be seen who will take the lead and what their objectives will be; if its army commander or someone with less restrain takes command, it could lead to a long fight.

We still have uncertainty. Maybe less worries than if Khamenei held the reins. Nothing is certain. As I write this - Sunday lunch in Europe, missiles are still flying, commands of the Iranian regimes just went to the next one and the Strait of Hormuz is blocked. The question is can this be sustained and for how long without a stable decisional structure in Iran.

There’s no point trying to predict Monday’s open, it will depend on what happens in the next hours and we could have another very eventful week end into a non eventful week. Or an eventful week. I talked often about weakness in the market lately and that could be another excuse for sellers to continue their biding.

We are at a month of disruption now, effects on the economy are real and won’t be fixed that easily even if we were to reopen the canal today, and no countries will be immune to the consequences. Even America who has no/very limited exposition to Middle East oil will see inflation due to globalization. Any product manufacturing process goes through clear steps.

Material extraction → Transformation → Manufacturing → Commercialization.

If any of these step get more expensive, the final product will be more expensive and as everything - most things, in the U.S. are imported then the life cycle of their products manufacturing will also be impacted by oil spikes.

Global oil disruptions affect the entire world.

Some places will be worse than others – notably countries getting their oil directly from the Middle East as everything will get more expensive there, but no place will be safe because of that globalization effect, while oil will also get more expensive even from other geographies as the total supply shrinks which increase demand on a shrinking supply.

If China bids for Canadian oil above what the U.S. pay for it, Canada will sell to China at a higher price or the U.S. will have to compete for it. All those dynamics on a mandatory resource for every country will generate inflation, already has and it will only get worse each passing day now.

I see it in Portugal and in Europe already in my daily life, gasoline prices are up ~20% compared to a month ago - this is real life not data set. Imagine the impact on a family who drives 40km every day. And imagine at the size of a business which uses oil daily for producing a toy, food, clothes or electrical services.

If every household/companies expenses in Portugal rise ~20%… Money spent cannot be spent again, which means lower consumption, less leisure and spending, less investing, even if stocks are “cheap”. Can’t buy stocks if they have to buy gasoline. that phenomenon is also true for companies - who could buy back stocks or invest in their operations; and that will happen worldwide.

Inflation is a vicious cycle. Less money, consumption, investments lead to decrease in revenues for companies, earnings, investments, less liquidity which in turns reinforce the circle.

You’ve heard me say often that the market works on liquidity first. Sentiment second. Fundamentals third. We’ve covered liquidity, why it dried and why it’ll continue to dry.

Sentiment

Our bigger problem lately is the wish to buy.

Individual investors and institutions need a reason to buy stocks and if you believe “Meta is at 20x earnings!” is enough, well… You’re wrong. Institutions and big players don’t invest that way, they have frameworks/conditions for the bulk of their liquidity, they are risk averse.

Leaving in our social media bubbles it looks like everyone is looking at earning multiples compared it to historical; but that’s not investing, no serious players work that way. That’s wishful thinking that the future will be identical to the past, and it never is.

The market needs optimistic catalysts to move higher, buyers need to see a positive future to spend their cash - which is needed for other things today, on stocks, they need to believe that tomorrow’s prices will be higher than yesterday. Why would you invest if you expected tomorrow to be worst?

Stability and certainty is what the market needs.

For quarters, the market had things to look up for. CapEx spending, slowdown of inflation, return of consumption, AI and its benefits in costs/growth, plus everything this new revolution brought, rate cuts, tariffs optimism, etc… There was always a reason for the situation to get better, clearer. Most of those are behind and I struggle to see what could push optimism forward in today’s situation while data are going to show inflation spikes - this isn’t a maybe anymore.

A gloomy situation with falling stocks increase negativism, triggers profit taking, making the situation more gloomy, with real financial consequences on companies, triggering more sales, pessimism, etc… Momentum is a self reinforcing mechanism which starts and ends in extremities, and we might have seen the bullish extremity.

There’s nothing to look up to, except maybe the retreat from Iran without victory and the reopening of the Hormuz straight but even then, liquidity is hurt and inflation will happen. The only question is how much - more each passing day?

Why take risks in such uncertain times without clear positive catalysts?

Liquidity first. Sentiment second.
Both are in the gutter.

So What?

Look, if you read me since some time, you know I am not a doomer. I am an optimistic and I love to invest, but I also know how to call a cat a cat. We can call it a dog if we want but it still won’t bark.

The situation is shit and even an end to the war in Iran wouldn’t fix it. Damages are done, now let’s see how much damages will be done and how the market will react. Of course good news would trigger optimism but as I said: from now on, every bounce should be considered as nothing but a bounce, an exit liquidity for traders.

The silver lining is that we have systems.

Good systems, which work in any kind of environment and protect our capital while forcing our focus on strength. My view of the market has been pretty spot on for months now and my stock picking reflects this with a large overperformance YTD despites a tough environment where many got destroyed - X is full of -50% portfolio. This is because of my system, helping me to cut losers and focus on winers.

Contrary to what social medias preach, DCA in bear market isn’t the solution. Patience and focus on execution is.

If there is one write up that you have to read on my entire Substrack, it would be this one. I believe this methodology is what will set winners and losers in term of returns over the next months - it already has those last months. You don’t want to be early during a downtrend

Strength will come back, and as our favorite stocks are falling, opportunities also will. We don’t know when nor why, but seeing stocks like Meta, Palantir or AsteraLabs fall means I’ll get to buy them later on.

So I’ll have the same conclusion than last month, while being more pessimistic myself.

I have no conclusion to give during uncertain times and as much as I like to share the situation as I see it, the only thing we can do as investors is follow our system, here to protect us from this kind of situation. If we bought great names at great prices and in great setups, we will be alright. If they break their setups, those names were maybe not as strong as we thought and that is fine. Decisions can be taken then.

Follow the system. Don’t play Pokémon. Preserve capital.

This is what I will be doing for the months to come. Sit tight on my positions and the few sectors which behave well, cut if they stop behaving, observe my watchlist until green lights turns on, with uptrend starting on large volume, so I can go all in as the market finds a new wave of optimism and liquidity.

Portfolio & My Focus

Even during a global bear market, there’s a bull run somewhere, opportunities to catch, sectors to dig and things to learn. There’s always an asset going up, even if that assets is the dollar.

We’ve seen in over the last months with all the opportunities shared on this Substrack and their performances. If you follow me since ~6 months, most of the thesis you received were outside of tech and performed wonders (Nutrien, Darlings, Smith & Wesson, Halliburton, Schlumberger, SolarEdge, Huntsman…).

Not all of them did, of course but discipline with a clear system cut losers fast and let winners run, resulting in a 34.5% YTD alpha on the market, all shared publicly and for free on my website.

This isn’t my personal portfolio, it is an equal weighted portfolio of all the thesis shared on here following my investing strategy - buying the W50 breakout retest with high volume on strong fundamentals and closing the position if the stock breaks it on volume for a handful days.

This website is the visualization of my stock picking performance.

And I’ll simply continue to follow my strategy, boringly, with a clear focus on strength which still exists today, in photonics first, supported by continuous CapEx even during uncertain economics, the energy vertical is also obviously very strong while many other defensives are also doing great - materials namely.

The portfolio is only holding on 9 positions, I personally am holding 3 after closing some losers this last days, without any pleasure…

The hardest one to sell was Transmedics ~$110 as the stock broke its W50 on high volume despites strong fundamentals. There isn’t much to do in those situation but respect the system and let go, despites personal convictions, despites what looks like an amazing opportunity. If the stock were to have such a strong potential, the market will reverse and give me another opportunity, on high volume and strong price action. Until then, I’ll continue to follow the company, but from the sidelines.

• This trade returned 48.75% vs. 23.88% for the S&P 500 on the same period, a 24.87% alpha over 11 months.

Alibaba was a different kind of deception as the market had some reasons to sell it: its liquidity is being spread on two different verticals while it should be focused on AI. Weather a great management decision or forced by competition, this will slow down AI expansions and the market won’t buy a company focused on e-com, it proved it with Amazon, MercadoLibre and Sea Limited.

• This trade returned 53.01% vs. 7.26% for the S&P 500, a 45.75% alpha over a year and three months.

I also had to close UPS which fell below its W50 on weak price action following the war in Iran; logical as the transportation business is heavily impacted and a restructuration in the middle of an energy crisis won’t be easy to succeed…

• This trade returned -4.47% loss vs. -2.09% for the S&P 500, a -2.38% loss over two months.

Lastly, Lululemon as the sector did not convince with its latest earnings and the stock lost its local bottom. We do not hold weakness.

• This trade returned -13.83% loss vs. -1.26% for the S&P 500, a -12.57% loss over three months.

And that leaves us today only holding winners and strength, four of them linked to the energy/materials sector performing really well, one holding on AI compute, one cyclical hardware forgotten by the market and three new names on a sector in very high demand: photonics.

Nine stocks, two categories.

The Runners

All these names are great holds but have been identified months ago and are simply running now. They’re just great names to hold with strong narrative and improving fundamentals, maybe a trim here or there if one needs to rotate liquidity, but nothing more.

Halliburton and Schlumberger are in this situation. Identified months ago, running very well and pretty high but with much more room to go especially as the conflict in Iran will require their service either to find oil or repair damaged infrastructures. We found the trend, studied valuation and fundamentals, and are now riding it.

I could put Nebius here as well. On the paper, we are back around the W50 and this is where we accumulate. Fundamentally, everything is strong but sentiment and liquidity are weak. And I am curious on how the market will react on those names with rising electricity costs which should increase Opex and hurt margins as their business is about electricity consumption. Nevertheless, the system says this name is a hold or a buy as long as we hold this W50 even if its sector is weakening.

They aren’t in the screenshot as the retests weren’t given, but I have to add Nutrien (up 8.4%), Darlings (up 46%) and Smith & Wesson (up 35.4%) to this list, which are in the same situation: perfect uptrend to ride quietly. Those weren’t counted in my YTD performance, which would be even better including them.

The Buyable

My photonics names remain the most interesting buys in the market to my opinion. The sector is one of the only strong in tech with very bullish narrative and fundamentals funded by continuous hyperscalers CapEx which won’t disappear because of some oil disruption.

Sure, they could be slightly reduced but that would hurt Nvidia and the likes, who depend on acceleration, not photonics who are a very niche business without much revenues and would benefit massively from a few billions spent their way - which is nothing compared to the $500B plus planned in CapEx FY26.

Soitec owns the technology to manufacture photonics wafer, the socle of everything, GlobalFoundries is the #1 worldwide SiPho fab and Silicom is the only temporary alternative to photonics, until the technology scales. The three company share one characteristic: they have a beaten down stock due to weak core business cycles over the last years.

Cheap stocks at the heart of the next technological wave for AI datacenter scaling, with perfect price action signaling strong accumulation at reasonable prices.

Nordic Semiconductor follows a comparable pattern, although it will be impacted by final consumer demand for AI wearables which could be lowered if inflation were to come back and push its cycle to a bit later if hardware companies were to slow production as consumers weaken. But the stock remains at a reasonable price for a large potential over the next years.

SolarEdge is without a doubt on par with photonics in term of attractivity, one of my favorite name in the current market. Fundamentals are excellent, narrative is perfect with the war pushing for more energy independence, and price action is as good as the rest with another breakout being retested ~$45.

The breakout volume wasn’t as high as I’d like it but I believe this name is a strong candidate for the next quarters/years at today’s valuation.

Huntsman is a bit more messy. Higher oil prices mean higher commodity price to produce its material, but it also means less competition as the material sector was hurt by Chinese competitivity for years, and as an energy crisis would be heavier on Asia than America, it is possible that it hurts Chinese competitivity, while material and chemicals prices are rising, giving a second hedge to the company. I believe the entire chemical sector is really worth looking at and I’ll try to come with more names around this narrative - I have found a few but need a bit more research.

Looking Ahead

The month to come should be quiet. I have two sectors to study and will write about them if I find interesting assets: materials (a beaten down sector providing key chemicals or goods for recession proof industries) and optics (photonics are only one part of the vertical as to transport light, we also need lasers and other mechanisms which could see a strong narrative and revenue growth).

I’ll also continue to run my screeners regularly to find new opportunities the market like and share them if necessary. This is business as usual: follow the system.

We will also start earning seasons from mid-April, with too many interesting companies to list but count on me to share the most interesting data with you, related to the verticals we are invested or looking at closely.

As to conclude.

I am not very bullish for the months to come. We might bounce, and it seems like today is off a good start as Trump said the war wouldn’t last much longer and the Strait will open by itself when the U.S. retreat. That would be the best for everyone but first, who knows? Second, when? And third, what about the damages already down?

A bounce during a downtrend is nothing but a bounce. It can be violent and give hope to investors, especially now after 5 straight red weekly candles on the S&P 500, we could expect it! But as long as we’re below key moving average, it’s still just a bounce… It doesn’t bark.

I talked about that rotation for long, the logical next step is for the sectors liquidity left to fall, until they find a bottom - when bad news don’t punish the stock anymore, stabilize, and bounce again. This is what I expect for most of the market, each sector reaching the next step at its own pace. I don’t see why the S&P 500 would shot up to new highs without liquidity growth nor positive catalysts. We can always hope for some drastic measures from Trump to push the stock higher as its performance is tightly linked to its personality, but it’s hard to see happen… And if it were? Then my portfolio would shoot up with it as I’m only involved in strength.

In the meantime, there is always a bull run somewhere and it’s my job to find it. I’ll continue doing it, share strong sectors and soon enough, you’ll see me talk about Meta, Nvidia, Palantir, and all those names that deserve to be bought and rode.

Their time will come again, and we’ll be there to buy them.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

We’ll need to go back to some basics to have a proper understanding of our subject: semiconductors. We’ve talked about all this already on my ASML/TSM review so go for it, it’ll be a great introduction, even though we’ll go over the basics again today.

What are they? Simply put, they are etched circuits on wafers. The complexity comes when we start talking about the circuits – which are meant to conduct electricity between components, and the wafers – which are made of different elements to optimize conductivity or not.

The final goal of any semiconductor is to control current between elements being cautious on signal clarity, speed and heat, which results in different circuit pattern, elements, components, materials, etc… Hence their complexity and constant improvements, as they are also very, very small - we’re talking ~1,000 time thinner than a hair.

This explains why we have many different components and how critical they are. The objective of a semiconductor within a smartphone isn’t the same as within a 5G antenna which again isn’t the same within a GPU. They’re all different in size, components, materials, etc…

Which brings us to our subject today, a new kind of semiconductor we talked about a few days ago in my GlobalFoundries and my Silicom Ltd thesis: photonics (optics semiconductors called SiPho for Silicon Photonics) and their packaged version CPOs (Co-Packaged Optics) which are the aggregation of SiPho within a board to make it usable. Those are the new innovation supposed to push AI datacenter capacities further and solve the actual networking bottleneck.

And as for any semiconductors, it all starts with the wafer.

SOI (Silicon on Insulator)

The wafer is the raw platform made from specific materials on which circuits will be etched; SOI is one kind of wafer, optimized for optical connectivity, hence bandwidth/latency. A “normal” semiconductor is a simple layer of silicon. The problem is that silicon is transparent to some wavelength, not usable to transport light by itself as it would pass through it left, right, top and bottom, losing photons to the void hence signals, data. Not very optimized…

No, for light to transit, we need it contained within a defined and reflective space so no photons are ever lost as they bounce until they reach their destination.

This is how it works in optic fiber for example, which can look weird as it is nothing but a twisted cable plugged between two pieces of hardware. In reality, the light bounces on the refractive side walls of the cable until finding the receiver at the other end, without losing a single photon in the process – nothing affecting data transmission at least, and with no heat.

If the cable was made of silicon only, the light would pass through…

When it comes to optics semiconductors, we use SOI wafers, a three-layer cake optimized to trap light where we want it: within the silicon only. SOI are manufactured with a technology called “Smart Cut” which is a patented method from the company we’re talking about today.

Here’s how they work.

• Layer 1 – Single-crystal Silicon. Classic semiconductors, except instead of etching conductive patterns for electrical impulse, we will etch “waveguides” for lights to refract and follow a direction, just like in an optic cable.

• Layer 2 – Buried Oxide (BOX). An oxide layer more reflective than silicon which prevents light from escaping below the silicon layer.

• Layer 3 – More silicon. A much thicker meant as a handler. A mechanical layer to fix the wafer and give it stability; we are talking about a semiconductor optimized to let light pass through, precision is necessary.

When connected to a light source, photons will transit through the semiconductor, trapped between “waveguides” etched on the first silicon layer and the reflective BOX around, between point A and B with minimal loss and heat.

SiPho are optimized for bandwidth and latency and when packed within a CPO, they give the possibility for data to transit through photons within a GPU, a rack, or any other hardware, pushing AI compute to a new scale.

Now again, what we call SOI is only the wafer which will be sold to a foundry to be etched according to specifications into a SiPho, then shipped or directly assembled within a CPO and installed within a GPU, rack or any kind of hardware which requires optical networking.

The wafer is step 1 of a semiconductor’s life (excluding material extraction and refinement), GlobalFoundries and Tower Semiconductor for example are buyers of wafer to etch them, build CPOs and resell those finished products. You know I am bullish on SiPho, CPOs and on both foundries so very logically, I am bullish on demand for wafer.

SOI Usage

To do a bit of history SOI isn’t new, has been used for years and is very critical in sectors which are already focused on optical connectivity.

• RF and mixed-signal devices (4G/5G, smartphones, satellite communications…)

• Low-power and high-performance CMOS (AI datacenters, wearables…)

• MEMS devices, including sensors and actuators (cars, medtech…)

• Power management ICs (EVs, IoT…)

The AI datacenter need is new as no one foresaw a decade ago that our network would be a limitation for global compute withing hardware, creating a bottleneck. The tech industry realized this maybe a few quarters ago and needed time to engineer the solution, which is coming to life nowadays in the form of massive and growing demand for SOI wafer and SiPho.

Soitec Dominance

Now that all introductions are done and we understand SOI and their applications, we can talk about Soitec, which is the leader in SOI wafer. I’ll be very straightforward, not only are they the leader, they own the technology on how to manufacture SOI wafers which gives them a quasi-monopoly on who can and cannot do so.

Two words: Smart Cut, the technology used to create the BOX layer within a silicon.

Yes, Sebastian, on the overall SOI market, of course, there is. We always say that there is competition, starting with our only licensee today, with SEH. But we don’t see big changes in the segment shares we are observing, and particularly for us, regarding the 200 and the 300 millimeters. Of course, players are claiming to have SOI solution, and some SOI solutions are not using our technology like Smart Cut. You can have also other ways to do SOI, a silicon insulator, namely BSOI, that is quite well adapted for power application in the cars. But even the domains, competition, and our positioning, it’s quite strong.

Then today, we don’t see segment shares, significant evolution, and the competition is far away from what we are doing.

Pierre Barnabé, Soitec Q4-25 Earning Call

As you could read, it isn’t the only method to manufacture SOI wafers, another main one being SIMOX (Separation by IMplanted OXygen). The objective and results are the same but as the method is more complex and more expensive due to the hardware used, and as no one wants to pay equal quality more… well, the cheapest and most scalable wins.

And that lays my investment thesis on Soitec; they are the company owning the patent to manufacture the cheapest SOI wafers at scale, which usage is supposed to blow up as SiPho and CPOs demand is also blowing up… What’s left to say?

This doesn’t mean they are the only producers of SOI wafers, others also do but have to pay a fee for using their technology so Soitec effectively makes money on 100% of SOI wafers manufactured with Smart Cut, plus their own production which is ramping up, with accelerating orders, demand and contacts from the tech industry.

Edge and Cloud AI revenue amounted to EUR 54 million, showing 27% organic growth YoY and improving from Q2-26. Activity continues to be supported by AI-related demand across edge and cloud environments, with contributions from both Photonics-SOI and FD-SOI. Specifically, Photonics-SOI remains very dynamic.

And today, we have more than five customers today engaged in our silicon photonic solutions, and more and more are coming.... And each of these customer asking for more and more volumes. I’m confident that this dynamic should last, because the need for AI are very important. And of course, we are part of this components of this industry, because the silicon photonics is today the only solution, viable solutions, that is allowing for next generation AI data centers, transfer control, to transform, electron into photons for high bandwidth. Particularly if you move up to 1.6 giga. Not only for the data centers, but tomorrow to interconnect the GPU, and particularly with the co-packaged optic solutions.

And on top of it, we are enhancing our photonics layers with the lithium niobate, let’s say, add-on, that is helping the industry to move beyond the 1.6 tera. That means that we have today a plan, a clear plan, and the industry have a clear plan to fuel the silicon photonics growth, for the coming 4-5 years, without any doubt. And our market shares, positionings, relationships with our customers, is making us confident.

Pierre Barnabé, Soitec Q4-25 Earning Call

Besides these confirmations from Soitec, we have confirmations on SiPho and CPOs demand with companies like GlobalFoundries and Tower Semiconductors talking about a ~50% CAGR in SiPho and expansions for their SiPho fabs – a $900M expansion planned this year to 5x their production for Tower while GlobalFoundries is planning to increase production after their acquisition of Advanced Micro Foundry to a $1B+ run rate by end of year 2027 - hence roughly 4x as well.

Very basic math, if Tower and GlobalFoundies both intend to 4x/5x their production in the next two years or so, it also means they will need to 4x/5x their SOI wafer purchases and as we’re looking at industrial scale, most should be produced with Smart Cut which means directly sold by Soitec or by companies paying fees to use Soitec’s technology.

I think you start to see the potential already.

The Opportunity

I won’t be able to put a price or a target/valuation on Soitec because we are talking about the company potentially responsible for the next AI datacenter innovation, the first wheel of a car which should be very fast. It’s impossible to anticipate demand, revenue growth, margins nor the potential premium which could come from their position, so I won’t it. It’s also hard to anticipate how the stock would react if CPOs weren’t the solution and demand for SOI wafers were to fall.

What I can say though is that today, Soitec is in the same state than GlobalFoundries: completely ignored by the market because of its slowing core business, looking like a weak company with declining growth and margins, unprofitable and certainly not worth any premium.

Why? Because they are the leader in SOI wafers and those are used in other sectors, AI datacenters are only the new shinny source of demand, while the other sector… Well, they’ve been extremely weak and plagued by an inventory building during/post Covid, as the period boosted demand for hardware which slowed down massively the years after.

In mobile communication, customer engagement remains active around advanced RF solution and next-generation platforms, despite constrained volumes with RF-SOI demand still impacted by customer inventory correction, mobile communication generated revenue at EUR 90 million in the third quarter, down 36% year-over-year organically.

In automotive and industrial, while the environment remains challenging, our technologies are well-positioned to support future applications once demand recovers. Automotive and industrial revenue reached EUR 16 million, improving sequentially versus the second quarter, but remaining down 32% organically year-on-year. Market conditions are still weak.

5G activity was slightly down year-over-year, while showing an improvement from Q2.

On a year-on-year basis, revenue remains down, reflecting a 22% decline at constant scope and foreign exchange, and a negative currency impact of 7%. Sequentially, revenue increased 18% organically compared with the second quarter, coming in above our guidance.

Pierre Barnabé, Soitec Q4-25 Earning Call

If that remind you another story – and opportunity, this is the exact same situation for Nordic Semiconductor.

Soitec is going through a rough time for the biggest volume of its business which is mostly for RF technologies, cars and smartphones – with the last two being in a clear slowdown/stabilization since Covid hence inventory issues and slow demand recovery, which in turn triggered slow growth over the last years.

Management was a bit more confident this last quarter might be close to demand bottom, but this wouldn’t mean return of growth on a their core vertical this year and would still hurt the profile of the company.

As for inventory reduction, which is another priority, we’re aligning production with actual demand. Of course, the downside of this is that it brings a temporary hit on margins and profitability.

Pierre Barnabé, Soitec Q4-25 Earning Call

In the middle of this situation, we have an SOI organic growth for photonics up 18% sequentially and 27% YoY combined to very positive management comments on what is yet to come and their capacity to deliver in volume with strong supply chain for materials – which will be my next area of research as if demand for SOI wafers grows, demand for materials also will and might create other opportunities, combined with lasers as transporting photons happens only if photons are generated (to give you a heads up on the potential next narratives).

We have no specific limitation, but to be sure, we organize properly our factories, because of course, we are sharing the same factories for the 200 and particularly the 300 millimeters. Then it’s a matter of anticipation. But we have access to the right level of bulks. As you know, we diversified also our sources of silicon bulk in terms of the quality, and particularly the one able to correspond to Photonics’ requirements and demands. We have today more and more customers asking for Photonics and more and more in volumes, 200 and 300 millimeters. But today, there is no specific limits to take the ride and to accompany a market that is growing by around 25%-30% per year.

Pierre Barnabé, Soitec Q4-25 Earning Call

This is the global thesis on Soitec today. A company trading at low valuation because of low growth and declining margins due to a slowing core business, with the potential to be revigorated by a massive and accelerating demand for their wafers for photonics, on which they have a quasi-monopoly as they own the patent to produce them.

This looks like a pretty strong potential here.

Investment Plan

You should be used by it now, the chart looks like every charts I look for. A clean base – although this one was pretty rapid, built in ~4 months, with a lower low on massive volume followed by stable price action on growing volume, which indicates more buyers at actual price, meaning the majority of the market finds value at this price – otherwise price would drift lower. And as usual, the final confirmation comes from a breakout and reclaim of the W50 on volume spike, meaning most of the market accepts, in sync, to pay more for this stock.

There are always reasons for liquidity to go towards a name: value and potential. It doesn’t mean every stock with this pattern will succeed, but every success starts with this pattern because a large base of investors accept to pay higher prices for the stock and bet on its success. And that’s what we want to see - and buy.

We now know why those investors bet on Soitec, our next step is to know if we want to be involved with it and at what price. I want to and bought on Tuesday as the French market had a bad day and Soitec followed – yes Soitec is a baguette company. That retest went close to the W50 and I built a pretty large position, as a concentrated investor buying a great price target.

I shared this on my Silicom Ltd write up because of the volatility of this name and was right to as it went up double digits since. I couldn’t write fast enough in time…

Once again, it is very hard to value the company and set targets - to buy or sell, as we have no idea of the wafer volume coming their way nor their capacity to execute. Soitec has never received a premium comparable to their situation today, so we can’t really model anything. This is a narrative trade with a massive potential, which could materialize - or not.

My opinion is that a EUR 1.81B company trading ~2x sales with the potential to become a critical infrastructure company for the future of AI datacenter has upside, both in term of growth and premium valuation - hence pretty explosive upside. And is actually trading at a pretty sweet spot even considering its core business – which is supposed to stabilize, compared to historical multiples.

The real risk lies in the success on SiPho and the continuous dominance of Soitec in the SOI wafer vertical. I wouldn’t touch this stock otherwise. If CPOs weren’t working or weren’t the answer to the actual networking bottleneck, or if a competitor were to find a better technology than Smart Cut, this investment could hurt, badly. There are no answers on the CPO efficiency yet – although the entire industry points to it but things could change, and when it comes to dominance, Soitec is ready to defend its position and even consolidate it with more patents.

We are filing more and more patents every year, more and more. This year we're gonna even beat what we did last year. That was quite exceptional. Then we continue to run ahead.

Pierre Barnabé, Soitec Q4-25 Earning Call

But the risks exist.

As I said I am already in and will gladly buy more if we see another retest ~W50, I only bought commons; I do not do options on such names. Low valuation and expected volatility are the perfect recipe to blow up option trades. No reasons to add risk on an already risky trade. Only shares with quarters long timeframe - hopefully years.

If SiPho and CPOs are indeed the future of AI datacenters as many – Jenssen included, believe, then we’re probably in for years of growing demand, and if AI hardware were to indeed need to include CPOs in each of them… There is a case to say that SiPho and CPOs will be the next biggest vertical of AI hardware, and we know hyperscalers aren’t done spending.

If that were really the case, then the need for SOI wafers would only be starting and demand for it would only accelerate.

Then the co-packaged optics is, is really a new architecture, for which we see, some, pull forward, because, it was expecting to come in 2028, then 2027s, and today we, we have heard that, some, first, let’s say, design gonna be, gonna be commercially available by end of, of this year. Then there is a clear accelerations.

Pierre Barnabé, Soitec Q4-25 Earning Call

If so, then the next innovation cycle relies on SOI wafers.
And then, mostly on Soitec.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

I have been working a lot on the current AI bottleneck lately - networking and bandwidth, not just because social medias are full of companies in the sector but because many names are showing up on my screeners, which means they are being accumulated and breaking out key levels - which is what we want to buy.

I already talked about GlobalFoundries a few days ago - the SiPho fab leader. We won’t talk about SiPhos today - although we will still talk about networking bottlenecks, but I want to share that I plan to write about Soitec this week, and as the stock is close to a pretty sweet spot and my write up isn’t ready yet, I wanted to share it with you before.

I wanted to share this first so you can start looking around before the full report hits your inbox in the next few days - hopefully.

The AI Networking Bottleneck

We went through the basics in the GlobalFoundries thesis, detailing how optics are the only viable solution to increase bandwidth and decrease latency within AI data centers, currently the #1 focus for compute providers.

As we move from training to inference, the needs change. Training was about sheer data compute, having as much of it as possible to train behaviors. Inference is a different beast; it requires compute but also speed. Data must transition rapidly between network points before being processed. Today, we have the power to process this data; we have so much power that GPUs end up staying idle, waiting for data to reach them.

This is today’s inference issue: the speed at which data transits between compute points, mostly due to the limitations of copper. To use my previous analogy.

Imagine a highway limiting the number of people passing through. Say 2M cars can drive simultaneously. But in the middle, there’s a section where only 1M can pass (bandwidth), controlled by tolls that require travelers to change their car engines (latency and power). That creates waiting time, slowing down the entire system.

GlobalFoundries Thesis

The market is excited about photonics because it is the only way to scale compute further. Adding more GPUs today is like adding workers on a construction site waiting for supplies. It won’t build that house faster, what we’d need is to move the supplies faster. But as noted by Jensen and Astera Labs’ management, we are still years away from industrial scale silicon photonics.

The AI factory is the new unit of computing. To connect a million GPUs, we can no longer rely on the old physics of copper. Silicon photonics is now central to the next generation of AI infrastructure.

We have squeezed every last drop out of copper. At 224G per lane, the physics simply demand light. The transition is no longer a choice; it is a thermal necessity.

The technology is ready, but the supply chain is not yet at the ‘Industrial Scale’ required for zero-defect AI factories.

Nvidia GTC keynote

What’s up until then? There might be another way to bridge the gap.

FPGA & SmartNIC

To be clear: these technologies won’t replace the long-term need for photonics, but they are usable today, faster to deploy, would remain useful even after the transition and could help with it, temporarily and in some cases.

Field-Programmable Gate Array (FPGA)

A FPGA isn’t a GPU nor a CPU. Think of it as a Ditto (the Pokémon). By now, we probably all know the difference between those two.

• CPUs are the brains, excellent at complex, vertical, serial tasks.

• GPUs are the muscles, excellent at horizontal, parallel computing.

Before going further, we need to understand the physical optimizations of GPUs and CPUs. Chips are made of silicon, a semi-conductive “sand” on which electrical paths are etched, physically, to optimize electrical flows between components depending on the final need of the semiconductor. Exactly like we would manufacture a jet to fly as fast as possible for example; you’ll understand easily it isn’t meant to drive. One path, one function, no detour, no waste of energy.

We thought GPUs/CPUs would be enough; they are compute wise but aren’t self-sufficient and hyperscalers are now looking to optimize them, and that requires other hardware; one of them being FPGAs.

FGPAs also are semiconductors, silicon. The difference between GPUs/CPUs and FGPAs is physical. While the first have finite and optimized etched circuits, the second has configurable etched circuits. It has more than it needs but those can be turned on or off, depending on the needs.

Imagine driving in a city. There are plenty of roads, right? A GPUs/CPUs will have only one road, the most efficient one and everyone would follow it. A FGPA on the contrary will have all the roads configured, but traffic lights will force drivers on this or that one, depending on where they are and want to go.

GPUs and CPUs can be optimized like with Nvidia’s CUDA, making the road smaller or bigger, slicker, changing the wheels or the cars to accelerate traffic. But the road itself will always be the same, from one point to another. It cannot be changed because it physically is built that way and you aren’t going to destroy buildings to change the road because Michel wants to pass here and not there. No one cares Michel, follow through and be optimized.

With FGPA, the road Michel wants to take already exists. It is closed but it exists and if the need were to favorize this road, then it could be opened. This kind of reconfiguration isn’t simple nor extremely rapid, but once the configuration is set - which is the hardest part, a simple reboot can transform the same hardware with one optimization, for one function to another one, “just like that”.

Your question now should be: then why do we have GPUs and CPUs?

Well, material optimization remains the best form of optimization. Imagine a car with pals which can turn into an helicopter. A normal car will be smaller, faster, consume less. Sure, you won’t fly with it, but sometimes you just need to go see grandma, not to fly. GPUs and CPUs are much better at what they do.

So the next logical question is… Why would we use those, then?

First, they are already very used in specific sectors nowadays as the ultimate focus of those semiconductors are latency, critical in cybersecurity, defense systems or algorithmic trading for example. But they are starting to become critical for a much bigger market who’s actual bottleneck is both bandwidth and latency: inference.

AI infrastructure investments are shifting from training models to querying the models at scale known as inference. Inference is continuous, distributed, and extremely latency-sensitive.

While training primarily happens via network GPU cards at the core of the data center, inference happens everywhere, continuously, at the edge, in telcos, and in enterprise data centers. This creates massive networking and interconnect bottlenecks, and that’s exactly the problem that Silicom excels in solving.

Liron Eizenman, Silicom Q4-25 Earning Call

Because they are configurable and reprogrammable, they can be used improve network congestions, acting as a GPU/CPU when needed, or a hybrid. They have two key characteristics which make them so valuable.

1. Modularity: As they are modular, they can treat information differently. A GPU needs a large amount of data before starting its compute and will stay idle until it has enough data - you don’t want million-dollar hardware to stay idle. A FPGA can be configured to compute while data flows. It can be configured to only treat one type of data while being energy optimized. Or it can be overly specialized for a temporary task companies won’t spend thousands to engineer a GPU for.

2. Interconnectivity: They can be directly interconnected within the hardware - to the GPUs/CPUs or any other chips, which largely improves latency and removes bandwidth bottlenecks as data flows to them directly at electrical speed. Which will brings us to our second subject today.

FPGA can be seen as Dittos used for niche usage, when a GPU or a CPU won’t be as efficient of isn’t worth being developed for, in very specific use case where nothing else can optimize workflows or for very specific needs.

SmartNICs

The FPGA is the silicon, it isn’t complete by itself; it needs to be included within a motherboard with potentially other components (RAM or/and DPUs) and connectors to fit within the system. The final product is called SmartNIC, a Ditto board focused on networking, optimizing packet flow between the network and components with the lowest latency possible.

FPGAs and SmartNICs are usually used in modular environments where latency has to be the lowest possible: Cybersecurity, 5G networks, virtualization, defense systems, algorithmic trading… And now, potentially inference, connected to GPUs, CPUs, or any hardware within the racks with limited copper in between.

A Ditto which can be connected to critical infrastructure, optimized for low latency and maximum bandwidth.

Silicom LTD.

This is the company we’ll look at today, a pure SmartNIC player. Silicom doesn’t do FPGAs; they buy them and manufacture SmartNICs for their clients. Which also means they do not own tech IPs and are just a component assembler at the end of the day, not the highest value in the chain but still selling a very demanded finished product.

The company and sector have been a bit distant from the AI revolution; there were always FPGAs in quantity in AI datacenters but the need for customized ones wasn’t there then, and it might be now. Might be.

Let’s talk about the environment first.

Nvidia, AMD & Co.

All the big guys already have FPGAs; as I said, it isn’t new. AMD bought a company called Xilinx in 2022, was known as the go-to for FPGAs and today’s leader in the sector. Intel acquired Altera in 2015 but didn’t do great with it and partially sold it this year, while Nvidia is focused on SmartNICs with ASICs, not FPGAs, via BlueField.

Those are for the big integrated guys, but there also exist some independent names manufacturing FPGAs: Lattice and Microchip - two stocks with a pretty crystal-clear growth trend at the moment.

And there is a crystal clear source for actual demand: AI.

And this companion role becomes foundational as AI workloads push system-level complexity higher and higher and drive to faster time to market, as AI servers disaggregate into processor boards, networking cards, security cards, power and cooling modules, storage, and other specialized blades. FPGAs show up everywhere in the data center. We are also seeing the same trend accelerating in physical AI. Intelligence is moving closer to the sensors where data is created. A single robot can have multiple vision sensors, including image, LIDAR, radar, and infrared, requiring fusion, aggregation, and preprocessing.

In addition, humanoid robots could have dozens of motors, requiring high precision and low latency control. Companion chip FPGAs sit, besides those sensors and actuators, to synchronize high-bandwidth vision streams with real-time motion and deliver deterministic responses.

Lattice Semiconductor Q4-25 Earning Call

Two stocks which could be considered, but their risk profiles aren’t comparable to Silicom, with 8x and 24x sales and large competition from Intel and AMD. No, my focus wouldn’t be on FPGAs because those are only one part of the story, the critical part, but only one part.

The key for today’s networking bottleneck is flexibility. Hyperscalers have very specific needs which require independence, something that today’s leaders do not have.

AMD and Nvidia both have closed ecosystem and will not propose customized hardware with manufacturers they do not partner with. They propose a finished product which is enough in 95% of cases but the last years showed that hyperscalers needed independence and further customization, not for the bulk of their compute but for the optimized niche.

And this is what Silicom proposes. They are a middle man, constructor agnostic, and can meet any kind of optimized hardware demand for any kind of niche.

The Thesis

To recap the thesis clearly: FPGAs are already used in AI datacenter and should only increase in usage as the need for flexibility and network optimization grows. The question is how will those be integrated and why would Silicom benefit?

The first answer is that demand will continue in their core vertical - very low latency services which now also leverage AI like cybersecurity, algorithmic trading and the others we already talked about. Demand on those sector is accelerating as confirmed by management.

Just to give an example, a few weeks ago, we announced that the global networking and security as a service leader significantly expanded its deployment of Silicom Edge devices into multiple additional use cases, increasing our expected annual revenues from this customer from $3 million-$4 million to between $8 million and $10 million, more than doubled, with some of those incremental revenues expected in the coming months.

Q4 revenues grew 17% year-over-year to $16.9 million, well ahead of our guidance range between $15 million and $16 million. It confirms that the demand for our core product is high, resilient, and strengthening.

Liron Eizenman,

This is step one, the base case. Step two is about the bull case: customized SmartNICs to optimize network bandwidth and latency within inference. Not for special sectors, but for inference itself.

Management was contacted by some hyperscalers not for a definite order, but for a POC - Proof of Concept. There is interest in the technology for a larger usage, enough to see if their product can answer the demand to resolve those bottlenecks.

We already have initial orders for our inference-optimized FPGA-based solution to be utilized by our customer at a POC with a hyperscaler end user, and we are developing a dedicated AI NIC based on a leading high-performance networking chip for another AI inference leader. We have initial orders in hand and follow-on POCs underway. We are also engaging with multiple customers, and we are in advanced discussions with additional AI inference chip vendors.

Liron Eizenman, Silicom Q4-25 Earning Call

This isn’t a thesis coming from my imaginary mind; it is real demand coming from hyperscalers to try out SmartNICs and see if they can help resolve actual bottlenecks, combined with real demand for their product in their known verticals.

In 2025, we achieved eight major new design wins across edge systems, SmartNIC, and FPGA solutions, with both new customers and existing Tier 1 customers expanding their engagements with us. Those design wins give us strong visibility into 2026 and beyond, supporting our expectations for double-digit revenue growth for the year ahead.

We are again targeting between 7 and 9 design wins in the current year, spanning across all our product lines.

Liron Eizenman, Silicom Q4-25 Earning Call

Now, keeping feet on the ground, those are what they are: POCs. They might not be conclusive and won’t yield massive revenues this year.

And even for 2026 as a whole, I think we are not expecting them to be still huge. There is an opportunity for that, but we definitely are expecting our core business to be very, very strong in 2026 and keep growing. And each of those opportunities, it can boom at any point in time, but right now, we’re still in the early stages. But we feel that we are very strong in the early stages and that we feel very strong traction on each of those.

Liron Eizenman, Silicom Q4-25 Earning Call

But the bull case doesn’t rely on massive revenue tomorrow, it relies on the potential for SmartNIC to be valuable within inference, for hyperscalers, to help with the actual bottlenecks - releasing pressure on the network and improving GPU usage, reducing idle time, etc...

Still feet on the ground, we aren’t talking about redefining inference neither, simply helping on key pressure points. If the opportunity was as huge as the new GPUs, hyperscalers wouldn’t do a POC with such a small company, they’d either develop it internally or buy the company. Working with an assembler makes sense if the need is large enough to justify the spending, but small enough not to do it internally.

The potential is real. The interest is real. The POC is real. But the opportunity is niche. That being said, “niche” at the scale of hyperscalers spending hundreds of billions per year is the Everest from the point of view of a ~$100M company.

So the inference happens everywhere. And when we say everywhere, it could be at the edge of the network, it could be a local data center, it could be a telco data center, it could be even in the enterprise. And there are so many different installation types and deployment types and types of different networking they need to support, then different cards, different companies developing different inference chips, not all of them able to provide all the different layers that they need to cope with. So they will only focus on the inference chip, but they need someone to complement it on the networking side. So if you want to do, as you said, scale out to multiple servers, multiple ports, how do you do it efficiently? How are you making sure that the network is not a bottleneck and that you actually get the most that you can out of the inference chip? That, I think, is the key. And there’s no like it’s very fragmented and very different from deployment type to another. That’s where the opportunity is created.

Liron Eizenman, Silicom Q4-25 Earning Call

If those POCs were conclusive, we’d pass from niche hardware for low-latency verticals returning to double digit growth to an hyperscaler partner with a feet in the AI inference game optimization sector. This certainly would trigger market’s rerating.

Financial Profile & Risk

To state this clearly: we are looking at a micro cap. A ~$100M capitalization, very small, very volatile and very risky - although I’ll mitigate that risk right away.

Silicom is a ~$100M cap with ~$50M of cash and equivalents in the bank for no debt. This is what we call a fortress and leaves management with many opportunities, from acquisition to investment into manufacturing capacities or buybacks - which are the preferred use for now. And management confirmed the actual demand for their products do not require much capacity expansions or R&D.

So in some of those projects, as we said, we’re leveraging existing IP and we’re leveraging existing know-how. So it’s not like we’re starting from scratch. So for some of those opportunities, it’s actually taking some of our existing products, making some changes on them so we can react very, very fast, and it can actually be a quick road to revenue here and quick road to design wins. On some of the others, we do need to do some development, but we already started with that. So we are deep into the development of some of those. So we think overall, we are expecting it to be faster than what we’ve seen in the past.

Liron Eizenman, Silicom Q4-25 Earning Call

That said, they have the cash needed if need be to accelerate production, expand, or anything else. We are talking about a company trading at 1x EV/sales with no real need for its cash - yet, but buybacks and safety cushion.

Although this safety cushion is necessary as the company remains unprofitable. We’re talking about ~30% gross margins for -20% operating margins and a loss of ~$3M per quarter. As shared earlier, Silicom is an assembler and do not own IPs or patents, which means lower margins and at the moment, no profits. So cash is important for the company.

Profitability isn’t the bull case either way here, we are with a small cap growth name and returns will be tied to demand, growth and hyperscalers POCs. But at today’s valuation, with double digit growth guidance and a very large cash cushion, risk always exists but it seems much lower than many other micro cap.

Investment Plan

As for investing, micro cap always come with their risk and volatility so always keep this in mind. This is a risky investment. Based on a clear thesis but risky nonetheless.

A company trading at 1.7x sales, less than 1x EV/S with ~50% of its capitalization in cash, a very healthy guidance of double-digit growth for its core business without including a potential tailwind from the actual largest AI bottleneck, which means growth could be much stronger if the POCs were to be conclusive.

The last time the company traded at double-digit growth, it was trading at ~3x sales and this growth is today’s guidance only based on core business.

If we were to combine a 15% FY26 growth with a 3x sales multiple, which would be the base case, without a hyperscaler POC success, we’d be looking at a ~$200M cap, ~100% higher than today. An hyperscaler POC success would justify a higher growth rate and multiple, which I wouldn’t try to model but would push the name higher.

The way I see this name is a good risk-reward with excellent potential return in the base case, and exponential returns in the bull case - public acknowledgment that their SmartNIC has value in hyperscaler AI inference systems. The market would anticipate this and won’t wait for orders to pour in to reward the stock; any positive announcement in favor of their hardware will trigger demand directly, in anticipation of future growth. Narrative will be key on this name.

I already have a position as price action confirmed demand for this stock, which probably means others share my thesis.

The base and the bottom are clear and were fixed before the hyperscaler and AI potential, which is a good sign as buyers did not have today’s expectations. The breakout happened last quarter when these announcements were made, meaning the market accumulated the return of core growth and got excited by the AI potential.

Clear base, clear volume increase, clear breakout, clear retest.

This is growth investing 101; this is the very beginning of this stock’s potential, while the downside risk is still minimum. Any negative news on the hyperscaler POC would certainly trigger selling, but at less than 1x EV/S and with ongoing buybacks, I wouldn’t expect a -50% overnight - although once again this is a micro cap.

This is a high risk, high reward name with the risk being diluted by a strong core business, massive cash and low valuation. But we are still talking about a $100M capitalization within a very volatile environment and sector. So it is important to be cautious with those speculative names.

The potential is here, demand for the stock as well. Now let’s follow the core business and the hyperscalers POCs.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

As for investing, Alibaba is officially no longer a stock I can hold, as it has been trading below its W50 for several weeks and this quarter didn’t show what I wanted and was not received positively by the market.

I have a system, and I follow it: I do not hold weakness.

We rode this name from $80 in December 2024 following a clean W50 retest after a high-volume breakout, delivering 53.01% returns vs. 7.26% for the S&P 500, an alpha of 45.75% over a year and three months.

Vertically AI Integrated

This is a major part of the bull case as Alibaba owns the entire AI stack, from infrastructure to software, including models and end users. This is what could drive above-average growth in the coming years and what the company has to leverage - and they are doing so.

Looking ahead, we are well-positioned to drive growth on both enterprise AI and consumer AI fronts, powered by our fullstack AI capabilities spanning foundation models, cloud infrastructure, and proprietary chips, alongside deep integration with our broader ecosystem

It showed this quarter with continuous acceleration - slower but still here.

Management confirmed that their AI services continue to capture a large share of the Chinese tech market. This is key to the bull case, as the country is accelerating its AI transformation and demand is - and will remain, massive.

Alibaba Cloud continues to lead the market, attracting more customers to onboard our comprehensive AI+cloud products and services, including high-performance networking, distributed storage, cloud operating system, and services for model training and inference.

They also confirmed growing adoption of their AI services by end users, beyond internal optimization and compute usage, which is another important signal as this is how they leverage the final consumers into revenues.

Since launching its Chinese New Year campaign on February 6, Qwen app has seen tremendous user engagement. By the end of February, approximately 140 million users have had their first AI-driven shopping experience through Qwen app’s agentic features from ordering food and groceries to ticketing and travel bookings. In February, consumer-facing Qwen has surpassed 300 million monthly active users across all platforms.

There isn’t much to criticize on their AI/cloud execution. This is what I want to see and the company is moving forward really well, even if growth acceleration slowed a bit this quarter; the market may be frustrated but this could simply be a temporary pause before a second ramp-up.

Local Consumption

The first issue is exactly where expected: Chinese consumption. I remain bullish long term but the Chinese government only deploys targeted and gradual stimulus, unlike the liquidity expansions in the U.S. where it is accepted to just throw money into people’s pockets. Not even talking about the cultural trend of saving...

And so what looked like a promising acceleration was hurt this quarter with a big sequential growth decline.

No magic here, deceleration comes from lower consumption and a normalization of their fee programs which was modified a year ago. Not what one wants to see for an e-commerce platform but this isn’t the source of growth nor the bull case either way, it was only meant to be the source of cash generation to fund their AI expansion.

And this is where the real problem lies this quarter.

Growth Without Cash Flow

To expand AI infrastructure, you need cash. And this quarter, Alibaba saw a 2% revenue growth - which should have been a 9% without the negative drag of Intime and SunArt, for a -74% decline in operating income… What happened?

Management decided to scale meaningfully its investments, but not only in AI and clouds, also in their e-commerce business and quick commerce infrastructures, yielding a 43% decline YoY in cash generation from the stable source, from the vertical which was supposed to generate cash to expand AI.

Can’t help but see Obiwan Kenobi screaming “You were the chosen one! It was said you were to destroy the Sith. Not join them!” Well apparently management thought it would be great to spread spending between two verticals instead of focusing only on one and do it well.

On another hand, the small foot print taught us that some of the AI CapEx spending was reattributed to “All Others”, so even if the cloud vertical seems healthy the real EBITDA and margins of this vertical alone is probably not as shinny as displayed.

I believe the market is fine with their cloud situation and even this accountability trick. We’ve seen it in the west: you need to spend to grow and Alibaba has a large opportunity ahead plus very stable finances which allow spending. The issue is about spending on an e-commerce platform without much ROI as their quick commerce, which “only” is growing 20%+ is not generating much cash…

Management is going all in on two capital-intensive verticals at the same time without comparable returns. Why? The funds required for tech are already so large, why split them? Why now?

I know my bull case relies not only on AI but on AI application and Chinese consumers, so this is a step management has to go through, they have to invest in their e-commerce platform, but there is a time for everything and trying to go through two capital intensive transformations at the same time while cutting massively your cash generation doesn’t seem to be the right approach…

It can work. But the risks are huge and vision/execution must be flawless.

Investment Strategy

So as I shared earlier, Alibaba does not meet my criteria anymore.

The thesis isn’t broken per se but it isn’t true anymore, not in the form I was expected and as management decided to play the game in hard mode, the market is not going to reward them... It already struggle to accept the risks to fund AI datacenters in the west so it certainly won’t reward a Chinese company with comparable challenges plus spendings on another vertical with lower ROI.

What if they run out of funds? What if they execute wrongly and have to come back on some of their decisions? What if they misunderstand the market or the technology’s potential? What if one vertical slows down the other? SO many more what ifs.

They have/had the chance of being the #1 AI service in China with a complete dominance while keeping their status of #1 e-commerce platform but decided to gamble both with massive spending instead of having a clear focus.

It doesn’t meant they won’t succeed. It means they are making it harder than it should and the market doesn’t like harder than it should. One mistake could set them years back and slow everything down.

The market obviously doesn’t like it. The stock lost its W50, lost its higher low and fell harshly post earnings with high volume, meaning lots of investors unloaded their shares accepting a lower price for it.

I am very bullish on China and on Alibaba, but the gamble they are taking isn’t worth it right now, the market doesn’t want it: so I wouldn’t want either. I did not have a position personally and was waiting for the earnings to take a decision, which is that I’ll stay out. And as the stock doesn’t meet the criteria anymore, I also closed the position on my stock picking follow up website.

This is the end of Alibaba for me, at least in term of positions. I will continue to follow the company as a massive potential and the #1 Chinese cloud, but investment wise, I will need more to start another position.

As shared at the beginning, I am closing a position with great returns and am very happy with the trade. Hopefully, Alibaba will give us more. Until then…

Farewell.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.

I found GlobalFoundries pretty randomly, not even looking at the trendy photonics narrative, but because my screener found it which is surprising as most photonics names are already up hundreds points over the last months. And after digging for a few hours, I followed Druckenmiller’s method:

Buy first, study later.

And as I studied more I bought more, so I already own a position today and I will detail everything with you, from what photonics are to why GlobalFoundries was left behind, and what we can expect from the stock.

Copper, Optics, Photonics, Scale In/Out.

Lots of concepts, but we’ll go step by step without going too deep into the details; we aren’t physicists. I already talked about data centers and how they are built in my Arista thesis, I’ll go over some vocabulary and concepts so we all start from the same base.

• Internet is the name given to the physical interconnection between data centers, usually done by cables, sometimes submarine, sometimes dug below the ground.

• A data center is the name given to the physical interconnection of hardware at the same location, under the same roof.

• A rack is the name given to the interconnections of hardware within one vertical… well, rack.

Companies buy hardware, interconnect them together within a rack, interconnect racks together to “create” a data center, and then interconnect those data centers, creating “the internet”. Brief and oversimplified, but effective.

Now we can start talking about interconnexions themselves.

Copper & Optics.

Hardware communicate with each other via electrical signals passing through cables. Originally - and still today, many of those cables are made of copper for two main reasons: its conductivity and its price - it’s cheap.

As technology evolved, copper showed its limitations in term of bandwidth and efficiency. Signals are lost or deteriorated as density increases and the metal heats up past a certain speed of signal exchange, which creates constraints.

New technologies emerged to answer those two issues and help signal transit faster: optics. More expensive but much more efficient.

With this, data centers evolved, using optics in some cases and copper in others, the latter mostly within hardware, racks or compute clusters, while optics were used between racks or nearby data centers - what we now call scale-up and scale-out respectively in the AI era.

Let me introduce one term that matters a lot for AI data centers: east-west traffic. At a high level, east-west traffic simply means data moving between machines inside the data center rather than in and out of the data center. Traditional applications were dominated by north-south traffic, users talking to servers. AI flips that model. Most of the data now moves laterally between compute resources and the switch fabrics that interconnect them.

In AI systems, GPUs and XPUs must constantly exchange data to train and run large models. That lateral machine-to-machine communication is what now dominates network load.

This shift to what is commonly referred to as scale out and scale up networking exposes multiple system bottlenecks and forces a reset towards maximizing system level efficiency on multiple levels. At the same time, power consumption is approaching 1,000 TWh annually. When power becomes the constraint, the industry no longer optimizes individual components. It optimizes entire systems. Interconnect efficiency becomes critical.

GlobalFoundries Q4-25 Earning Call

Upgrading systems means upgrading every parts, focusing on bandwidth and latency, or in English words the speed and quantity of information which can be transferred per unit of time. The more, the better.

Compute Intensity

What we call AI is the result of compute clusters iterating together until they find the answer to your problem, like hundreds of humans brainstorming until they find the final answer.

We’ve already talked about GPUs; the brains, the compute capacity, how they work and how Nvidia revolutionized the industry. But as shared above, this isn’t enough anymore. As training/inference developed, models complexified and only increasing the brain capacity wasn’t enough, we needed those brain to communicate with each other faster; the nervous system was weak, incapable of matching the “thinking” pace.

Imagine if you find the answer to your part of the equation, but you have to wait ten second before communicating it. Imagine if hundreds of brains had that limitation. This is what I mean when I say the nervous system is weak. And this is what management meant when they talked about the industry’s need to optimize the entire system.

So the entire chain was upgraded with optimizers like AsteraLabs’, improved connectivity like Arista Network’s or Nvidia’s NVLink, and more. But we are still limited as demand and innovation isn’t slowing, on the contrary, which brings us to another barrier, not yet crossed: optics, the nervous system.

This is where physics takes over. Using copper becomes fundamentally challenged beyond 200G per lane. It cannot economically support the reach, bandwidth density, or power efficiency required for sustained GPU to GPU communication at scale.

GlobalFoundries Q4-25 Earning Call

As I said, copper and optics still coexist. In traditional data centers, each piece of hardware has a purpose and the flow of data is sequential, each fulfilling a need, which means data transit isn’t the same between all hardware and copper has its place.

With AI datacenters, data transits constantly between GPUs and all GPU have the same function: to compute and communicate the output with the “hive”, which collectively produces the final result. This means communication between hardware within the rack and across the data center is constant and must be as fast as possible; maximum bandwidth and minimum latency.

Any slowdown in the chain means a slowdown in total compute, a waste of energy and GPU uptime - and therefore money.

This is what photonics are looking to solve: transferring copper connections into optical ones further along the chain, removing the conversion delay between electrical signals/light and accelerating the transit globally, increasing data transmission speeds manyfold and therefore the compute capacity of an entire data center.

The challenge is massive. It’s not just unplugging copper and plugging in optics, it is rethinking entire hardware connectivity within and between hardware. To help you visualize, here what connectivity looks like between hardware today.

An optic fiber (yellow cable) plugged within what we call SFPs which serves as a bridge between light and electrical signals - passing through copper, within the hardware. The data transit from a hardware through copper to a converter which transit the signal in light to another converter doing the contrary and then sending the signal through copper again. Sometimes, the signal simply passes from copper within the hardware to copper cables, towards copper within the next hardware.

Imagine a highway limiting the number of people passing through. Say 2M cars can drive simultaneously. But in the middle, there’s a section where only 1M can pass (bandwidth), controlled by tolls that require travelers to change their car engines (latency and power). That creates waiting time, slowing down the entire system.

That’s what a single copper connector does within an optical system. The system is only as strong as its weakest link. This is the state of connectivity today.

SiPho and CPOs

The only solution is to replace copper and all those connectors. Enter SiPho - silicon photonics. Engineered semiconductor components designed to transmit light, and CPOs, the finished product filled with SiPho to interconnect hardware between each other or components within a hardware with photons only.

This semiconductor is meant to replace the system above entirely and you can imagine why this isn’t just a plug and play difference, this is a complete rethinking of hardware architecture - which won’t happen overnight, replacing copper within and between racks.

This doesn’t mean copper disappears; it will still be used where cost efficiency matters. But high-performance compute will increasingly rely on CPO. Jenssen confirmed this need and tendency a few days earlier at Nvidia GTC.

The AI factory is the new unit of computing. To connect a million GPUs, we can no longer rely on the old physics of copper. Silicon photonics is now central to the next generation of AI infrastructure.

By integrating silicon photonics directly into our switches, we are shattering the old limitations of hyperscale networks. We are moving from a world of pluggable parts to a world of integrated light.

We have squeezed every last drop out of copper. At 224G per lane, the physics simply demand light. The transition is no longer a choice; it is a thermal necessity.

The technology is ready, but the supply chain is not yet at the 'Industrial Scale' required for zero-defect AI factories.

Nvidia GTC keynote

As we reach physical limits in current data center architectures and demand for compute continues to accelerate, the only path forward, instead of waiting years to build more capacity, is to innovate and improve compute quality: more performance per unit of space and energy, as I’ve said many times.

This sets the stage for the company we’ll discuss today.

GlobalFoundries & Tower Semiconductor

So, again: SiPho are semiconductors, which means they are manufactured in fabs, just like GPUs and ASICs. And yes, TSMC is one of the main fab working on this as they are the preferred manufacturing partner for GPUs and ASICs for companies like Nvidia.

But they aren’t the only ones, and they’re not even considered the leader in this space. Their advantage lies in integration: they can embed CPO directly into GPUs they manufacture, making the entire workflow cheaper and faster.

GlobalFroundries is one of the key player of the sector. As I said earlier, I found it pretty randomly through my screeners and it surprised me as they are build to find potential/starting uptrend: higher lows/highs, high volume and breaking out their W50. This is partly why I believe there is something here.

Not only is the narrative hot - it’s extremely hot, but fundamentals are strong and price action is clean. Nothing happened with the stock since its IPO in 2022 but in recent months, we’ve seen rising volume and flat price action, which is typical of accumulation before a breakout. That breakout came in January and we are not going through an healthy retest.

This is demand, and I quickly understood why when I discovered that its main competitor - outside of TSMC is Tower Semiconductor, one of the best-performing stocks of 2025, up 36% year-to-date after partnering with Nvidia this February for silicon photonics.

So my first question was: why is Tower trading at such a premium compared to GlobalFoundries if both are considered key players in photonics? And I found a few reasons - despites Nvidia’s partnership. But none that justifies such a gap.

Specialization. This has become increasingly important in AI, as specialized hardware means performance. Tower focuses on low-volume but highly customized SiPho and related technologies. They don’t operate at scale but instead prioritize deep customization. They also consider themselves the leader in the sector.

They know how precious, especially from Tower, SiPho demand is, as we are truly, by far, the leader in silicon photonics.

Tower Semiconductor, Q4-25 Earning Call

GlobalFoundries is a much larger company with more verticals, more revenue streams, less specialization. They have a higher volumes and more capacity. But while Tower claims leadership, the numbers are more balanced.

Silicon germanium and silicon photonics revenues represented 27% of our corporate revenues, or $421 million, up from $241 million, or 17% in 2024.

SiPho revenues alone were $228 million in 2025, up from $106 million in 2024. Specific to the Q4, RF infrastructure revenues were 32% of corporate revenue, with SiPho having achieved $95 million, or a $380 million annual run rate.

Tower Semiconductor, Q4-25 Earning Call

GlobalFoundries does not break out SiPho revenue as explicitly, but they stated that their optical networking business generated ~$1B in revenue, with SiPho expected to reach a $1B run rate by 2028 - or more.

Clearly, CPO in the scale-up sense is gonna be an accelerant to the market. But honestly, you know, if CPO takes a little longer, you know, we still stick by that number. We’ll just ship more pluggables as CPO, you know, catches up and honestly, could go the other way as well, where CPO could be bigger sooner, bigger faster, and that scale-up networking could actually drive that percentage of that billion-dollar plus run rate, you know, up above 1/3. That’s why, you know, to your point, we’ve pulled in the expectation of, instead of a billion-dollar plus revenue in 2030, it’s really a billion-dollar plus run rate before the end of 2028.

GlobalFoundries Q4-25 Earning Call

This implies ~50% CAGR over the next three years. Tower is guiding toward comparable numbers with currently ~$380M SiPho run rate, which is significant.

Extrapolating from GlobalFoundries’ numbers - 50% CAGR to a $1B run rate by FY28, we can conclude that they generated ~$250M with SiPho in FY25, implying a run rate comparable to Tower for FY26 with expectations of nearly 100% growth for the year.

Tower might be the leader, but we are not talking about a 90/10 split, more like 55/45, especially considering both companies have comparable products and roadmaps. This contrasts with Tower’s management claim that they are the only company selling 1.6T connectivity hardware.

For long range and coherent applications, we are shipping into 400G and 800G ZR+ solutions, as well as 1.6 terabit coherent interface modules. In scale-out data center networks, we’re enabling high bandwidth, low loss links with DR4 and DR8 architectures, scaling to 1.6 T, 3.2 T, and beyond.

GlobalFoundries Q4-25 Earning Call

So yes, Tower is specialized in lower volumes and higher customization. That works well in the early stages of a new industry but as the market scales, large-volume production of standardized designs will become necessary and that requires industrial capacity and execution. Volume.

I am not saying Tower will slow down, they certainly won’t, but there is a clear competition between both companies, each with their own advantage and capacities while the market is shared, not dominated.

Size. There is a significant difference in scale and diversification between both companies.

This has a major impact on market’s perception. Tower looks like a high-growth story while GlobalFoundries looks sluggish even though the SiPho opportunity is similar with similar growth. This is basic math, it’s harder to grow from $6B than from $1.5B. At current revenues, SiPho represent ~22% of Tower’s revenue and only ~5% of GlobalFroundries’

And it showed already as Tower’s stock appreciated the last months on accelerating quarterly growth while GlobalFoundries’ acceleration is also real in SiPho but not showing at the company’s level. GlobalFoundries’ legacy business is a drag and that is probably not going to change so the alternative is to have a strong growth on SiPho which shows in the company’s profile - which can happen.

Yet, both companies have comparable operating margins which should increase with higher-value products.

So growth might look a bit slower for GlobalFoundries but its cash generation is comparable while operating verticals with lower margins and owning the full cost of maintaining/expanding its infrastructure. Not bad.

Capital efficiency. Tower is not spending as much as GlobalFoundries; they focus on using capacity rather than building it. They install their equipment within third-party infrastructure and rent space, meaning their fabs are effectively leased capacity which reduces CapEx. GlobalFoundries owns its fabs and must fund expansion/maintenance.

This is a structural difference; both models have advantages and inconvenient - lower costs and CapEx for Tower vs control and scalability for GlobalFoundries. Tower is facing issues with Intel for example which is kicking them out of its New Mexico fabs, forcing Tower to relocate production to Japan, causing delays.

Intel has expressed its intention not to perform under the September 2023 Fab 11X agreement. We are presently in a mediation process.

Tower Q4-25 Earning Call

Not owning infrastructure can be financially efficient but creates operational risks, especially in a sector as strategic and capacity-constrained as AI hardware.

On the contrary, GlobalFoundries owns and operates its fabs in strategic geographies, including New York.

To solve this challenge for our customers, GF launched plans for our silicon photonics and advanced packaging facility in 2025 in Malta, New York, to establish high-volume manufacturing capability to support the CPO ramp. The result of this investment is expected to deliver a fully integrated silicon photonics production flow from silicon substrate to known good optical modules. This capability will dramatically shorten the manufacturing cycle time and also provide rapid turnaround from wafer fabrication to full module yield all under one roof.

This could be an advantage especially given the importance of U.S. manufacturing in Trump’s administration - tariffs, regulations, capacity constraints, subsidies, taxes...

These are the main differences between the companies. They are not fundamental but mostly in term of by perception - to my view.

Analysts’ question: One of your competitors talks about having over 80% of the silicon photonics market today, but you have very similar revenues to them. It seems like you have at least a similar trajectory into 2026, I mean, to 2027. Can maybe try to explain the discrepancy in their view versus how GlobalFoundries sees things and kind of more broadly, how might your platform approach to silicon photonics versus Tower’s more customized solution set play into this perceived difference? Thanks.

Mike Hogan: Let me just put, like, some framing and some context around how we think about where we are in Silicon Photonics. You know, you can talk to the Tower about what they think, but I’ll give you our perspective. You know, I think just simply put, we think we’re the largest player in Silicon Photonics, full stop. You know, we’ve built that position based on a decade of sustained investment and benefited from the deep customer and partner learning cycles that go along with that. Just generally have, you know, benefited from a lot of time over target to feel like we have the largest market share of all the pure play Silicon photonic foundries.

GlobalFoundries Q4-25 Earning Call

GlobalFoundry is not behind, but it looks like it. But it doesn’t have less volume or less potential.

Advanced Micro Foundry & MIPS

Important to talk about those acquisitions late 2025 which changed GlobalFoundries’ profile and competitive positioning.

AMF is a Singapore-based pure-play photonics company focused on SiPho, directly competing with Tower. This is why GlobalFoundries remains the #1 SiPho foundry and the source of its potential, now integrated within the company, its scale and financial resources to expand operations.

MIPS is an autonomous entity within GlobalFoundries, focused on physical AI processing - low-latency and real-time compute for robotics, automotive, and edge applications. A key sector for future growth verticals.

The Thesis

It seems to me that Tower’s stock has been better marketed than GlobalFoundries’, but that does not mean it has a fundamentally superior business, especially in a market that will require industrial-scale production.

We had referred to as the $380 million run rate that we had in Q4, take off of that some small amount of NRE, which we don’t specify, the silicon wafers that we shipped for the Q4, that exact amount of silicon wafers by capacity, we plan to have five times more than that in the Q4 of 2026.

Over 70% of the total SiPho capacity is either presently reserved or in the process of being reserved through 2028, firmly backed with customer prepayment.

Tower Semiconductors, Q4-25 Earning Call

If I were to point to the true leader, it’d be TSMC, not Tower. Not because it has the best photonics tech but because of its integration within GPU and ASIC manufacturing workflows and its customer base, which will be happy to integrate CPOs directly into chips by the same manufacturer.

That said, demand for photonics is real, and TSMC alone won’t have the capacity to meet it. GlobalFoundries and Tower will capture part of the market and I struggle to imagine one being excluded as volumes ramp over the next few years.

Sure, GlobalFoundries doesn’t have a partnership with Nvidia but it works with major players like AMD and Broadcom, both significant in the ecosystem with AMD supplying GPUs to hyperscalers and Broadcom designing Google’s TPUs.

GlobalFoundries is a strong development partner and a key supplier for our next generation of optical networking products.

Near Margalit, VP and GM of Optical Systems Division at Broadcom

And if Nvidia is the one making the market moves, we know they can partner with many companies within the same industry as it is in their interest to have the most diversified supply chain, not just please one or another. So new partnerships could happen as volume demand scales.

Bottom line, GlobalFoundries is and will be a key player in both photonics and CPOs, it might look a bit sluggish compared to Tower Semiconductor but treat comparable volume at comparable margins. The opportunity seems be here fundamentally, while the market is ignoring it as growth looks (and is) slower due to legacy verticals…

From a risk perspective, we are looking at a key player trading at average/low multiples while the industry it represents if reaching new highs and demand will accelerate. There is always a downside to any stock, but the risk reward in this specific case looks massive if photonics were to scale and volume were to go towards GlobalFoundries - and management says it will.

We also need to keep in mind the clear stock accumulation. If the market wasn’t positive, we wouldn’t see growing volume and breakouts, holding the W50.

The $1M question is: is it anticipation, speculation? Or because something is coming?

I already bought shares at ~$42 while the W50 sits ~$40, I bought before completing my research and again yesterday while writing this article as my research confirmed my suspicions. The main question is how fast demand can grow and how will the market react to a slower global growth, while the narrative and the SiPho growth should accelerate.

Will it push the premium as high as higher growth names because of the company’s strategic importance and volume capacity, despites a slower global growth, or not? I’d either way assume that even a slower growth in a key sector is enough to justify higher multiples than today. Really higher, while any partnership or positive catalyst - and many could happen, will trigger strong reactions/momentum.

Once again, it’s all about risk/reward, and this one seems solid.

Disclaimer: I am not a licensed financial advisor, analyst, or broker. This content reflects my personal opinions and investment decisions for informational and educational purposes only. I hold positions in securities discussed and may buy or sell without notice. Nothing here constitutes a recommendation to buy, sell, or hold any security. Past performance does not guarantee future results.

Always conduct your own research and consult a qualified professional before making investment decisions. I accept no responsibility for any financial losses.