CER Fall 2025 Publication

Rising Through the Wafer

Momentum in the Making

Diversification Mitigates Volatility SEPTEMBER 30TH - DECEMBER 7TH 2025

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Issue 11 Fall 2025

Biannual Equity Research Report

Fall 2025 Introduction

CORNELL EQUITY RESEARCH

LETTER FROM THE PRESIDENT

This semester, we welcomed an outstanding class of thirteen new members. Their diverse backgrounds have strengthened discussions and our interdisciplinary approach to equity analysis. From the outset, this cohort has demonstrated the creativity and intellectual curiosity we value, and we are confident they will play a lasting role in the club’s future.

While equity research remains central to the club’s identity and the core of our educational focus, we believe education should serve as a means rather than an end. Our goal is to equip members with a strong analytical foundation and the flexibility to apply these skills toward whatever paths they choose to pursue.

We are pleased to continue several initiatives launched last year, most notably the CER Newsletter, which has become a central pillar of our research output. Alongside this, we refined our website and visual identity to present our work more clearly, reinforcing our commitment to institutional professionalism.

Fall 2025 also represented a meaningful expansion of CER’s external engagement. For the first time, we hosted information sessions with firms and career preparation organizations. Looking ahead to Spring 2026, we plan to revamp our New Member Education series with the help of our advisor, Professor A. J. Edwards, to place greater emphasis on equity research fundamentals.

It has been a privilege to lead a thoughtful executive board alongside dedicated sector leads who continually strive to elevate the quality of our work and the experience of our members. As a relatively young organization, flexibility remains one of our core strengths.

Thus, Fall 2025 was a productive and impactful semester for us, and one that met our highest expectations as we continue to build and refine the club.

Yours Sincerely,

Khanh Nguyen President, 2025-26

2025-2026 Executive Board

President Khanh Nguyen kpn27@cornell.edu

Executive Vice President Griffin Murphy gdm63@cornell.edu

Vice President of Education Vatsal Kalola vk366@cornell.edu

Vice President of Publishing Konrad Hartung kfh37@cornell.edu

Vice President of Recruitment Kaden Liu kl2226@cornell.edu

Vice President of Public Relations Emily-Jane Luo el782@cornell.edu

2025-2026 Executive Board

Vice President of Research Justin Li jjp258@cornell.edu

Vice President of Research Andy Cho hc877@cornell.edu

Vice President of Development Spencer Hom sh2573@cornell.edu

Vice President of Finance Kashmir Tai qt56@cornell.edu

The Macroeconomy: Q2 & Q3 2025 Executive Summary The U.S. economy rebounded in Q2 2025 after a weak start to the year, and growth remained solid through Q3. Real GDP expanded at an annualized 3.8% in Q2 (after a Q1 contraction of –0.6%) , driven by resilient consumer spending and a sharp drop in imports. While official Q3 GDP data were delayed by a 43-day federal shutdown, preliminary estimates pointed to continued above-trend growth (~3–4%) in Q3. Inflation, however, proved stickier than hoped. Headline and core price growth hovered near 3% year-on-year – above the Fed’s 2% target – as new import tariffs added an estimated 0.4–0.5 percentage points to inflation over the summer. The labour market cooled noticeably: unemployment ticked up to 4.4% by September, its highest in over two years , and monthly job gains slowed to a crawl (e.g. only ~22,000 in August). Consumer spending remained positive but showed signs of strain under higher prices and borrowing costs, especially for lower-income households.

Trade and capital flows were reshaped by protectionist policy and geopolitics. The Trump administration’s tariffs – which lifted the average effective U.S. tariff rate to its highest since the 1930s – contributed to higher input costs and complicated global supply chains. U.S. import demand shifted, with “reindustrialization” efforts spurring some reshoring of manufacturing and FDI into U.S. factories, even as U.S. companies also diversified foreign operations to “China+1” locations. Meanwhile, China’s role in global trade remained immense – it is still the largest trading partner for much of the world – and Chinese exports have increasingly reoriented toward emerging Asian markets as U.S. tariffs bit. Despite trade tensions, financial conditions loosened in late 2025. The Federal Reserve pivoted to monetary easing, cutting

Kaleb Kavuma Nov 30, 2025

interest rates in both September and October by 25 bps each (the first cuts since 2020). This helped fuel an “everything rally” in financial markets: by November, gold was up ~26%, the S&P 500 +16%, Euro Stoxx 50 +16%, and emerging market equities +23% on the year. The U.S. dollar slumped ~8%, reaching multi-year lows against the euro and yen , which in turn boosted dollar-sensitive assets. “Safe havens” and speculative assets alike surged – gold hit record highs above $3,700/oz , and Bitcoin skyrocketed to ~$125k (a >250% jump from 2023) before a late-Q3 pullback.

Looking ahead, investors are weighing the durability of these trends. On one hand, AI-driven capital spending has provided a potent tailwind – the “Magnificent 7” tech giants alone are on track to spend ~$700 billion on capex and R&D in 2025, which powered roughly half of GDP growth this year. On the other hand, persistent tariffs, rising bankruptcies, and tightening credit present headwinds that could challenge the resilience of the expansion.

The following report delves into Q2 and Q3 in detail, reviewing macro indicators, trade and capital flows, Fed policy shifts, financial stress signals, and asset price moves (FX, gold, crypto), with a focus on implications for investors. While the U.S. avoided recession through late 2025 – “bending but not breaking” in the face of shocks – the economic landscape grew more uneven, requiring careful navigation of both opportunities (e.g. the AI boom) and risks (e.g. credit downturn).

Macroeconomic Indicators: GDP, Inflation, Labor Market, Spending Growth reaccelerated in Q2 2025 after stalling in Q1. According to the BEA’s third estimate, real GDP grew +3.8% annualized in Q2 , a sharp turnaround from the revised –0.6% dip in Q1. The Q2 strength was led by consumer spending, which accelerated as households kept spending from excess savings and wages, especially on services.

Personal consumption contributed ~2 percentage points to growth, offsetting drags from investment and exports. An important boost came from trade: imports plunged –7.6% (annualized) in Q2 , as businesses worked down inventories and tariffs curbed some purchases, mathematically adding to GDP by reducing the trade deficit. Final sales to private domestic purchasers (a demand measure stripping out trade and inventories) rose ~2.9%, underscoring that underlying domestic demand remained solid. In Q3, growth appeared to stay positive in the ~3% range (annualized), though the precise figure was unclear due to the lack of an advance GDP release (the result of a prolonged federal funding lapse). Private estimates (e.g.

Atlanta Fed GDPNow near 4%) suggested another quarter of above-trend expansion, aided by a late-summer surge in business investment (particularly tech-related capex) and steady consumer outlays. However, there were hints of slowing momentum by late Q3 – for instance, real consumer spending growth eased as the quarter progressed, and housing activity remained subdued under high interest rates. On a year-on-year basis, real GDP in Q3 2025 was roughly 1.6% higher than a year prior , marking a comedown from the 5%+ post-pandemic growth rates but still avoiding recession. Notably, this resilience came despite significant shocks (e.g. tariffs, political uncertainty), reflecting underlying economic adaptability.

Inflation in Q2–Q3 stayed elevated and “sticky.”

After decelerating from 2022’s highs, price growth

downshifted only gradually through 2025. Headline CPI oscillated in the mid-3% range (y/y) and core inflation around 3–4% – well above the Fed’s 2% goal. In Q3 specifically, core PCE inflation was ~3.0% (y/y), and was projected to end 2025 around that “uncomfortably firm” level. A key reason inflation didn’t moderate faster was the new tariff regime. Starting in January, the administration imposed broad tariffs (25% on many imports), raising the effective U.S. tariff rate to ~16% (vs ~2.3% at end-2024). By August, tariff pass-through was visibly pushing prices higher: the Fed estimated tariffs accounted for ~0.5 percentage points of annualized inflation in June–August. In other words, absent the tariffs, core inflation might have been closer to ~2.5% instead of ~3.0%. Consumer goods categories highly exposed to imports (furniture, electronics, apparel, etc.) saw notable price jumps. Even so, inflation didn’t spiral – it rose only modestly from spring to late summer (e.g. core PCE 2.3% in April to ~2.7% by August ) as firms likely absorbed some costs and demand for goods softened. Importantly, inflation expectations remained anchored, and many investors viewed the tariff-driven bump as one-off. By Q3’s end, oil and food prices were stable-to-down on the year, helping cap headline inflation. Still, Fed officials voiced concern that inflation was proving “sticky” and could persist above target into 2026. The bottom line: price pressures persisted despite tighter monetary policy, forcing consumers to stretch budgets and the Fed to justify why it was easing policy with core inflation still ~150 bp above target.

Labor market conditions in Q2–Q3 reflected a gradual cooling from 2024’s boom. Unemployment edged up from ~3.8% in March to 4.4% by September 2025, crossing above 4% for the first time since early 2022. This rise in joblessness, while notable, still left the rate historically low – near what many economists consider full employment. However, trends beneath the headline indicated loosening labour demand. Monthly payroll gains averaged under 50k in Q3, a sharp slowdown from the 250k+ monthly pace seen the

prior year. By August, payrolls barely grew (+22k) , and job openings fell to their lowest in over 3 years as businesses pulled back on hiring. Sectors like retail and manufacturing saw outright job losses in Q3, even as healthcare and hospitality continued to add workers (benefiting from post-Covid rehire dynamics). Labor force participation ticked up slightly, helped by improving immigration flows and older workers returning, which eased some hiring frictions. Yet cracks appeared: initial unemployment claims trended higher than in 2024, and layoff announcements (as tracked by Challenger) picked up, especially in finance and real estate. The labour market also diverged by income and skill – white-collar hiring slowed sharply, and tech firms that expanded feverishly in 2021–22 continued trimming staff, whereas lower-wage service jobs remained relatively plentiful. The Trump administration’s restrictive immigration stance (e.g. historically low border crossings and tighter work visa rules) further tightened labour supply in some areas , which kept wage growth above 4% (y/y) into mid-2025. But as demand cooled, wage gains decelerated, and by Q3 average hourly earnings growth was running ~3.5% y/y (closer to productivity+inflation). Productivity showed signs of life – output per hour rose in Q3 after a long slump, possibly as firms invested in automation (including AI) to offset expensive labour. Overall, the labour market in Q2–Q3 moved from red-hot to just warm, reducing the risk of a wage-price spiral but also undercutting consumer confidence somewhat.

Indeed, consumer sentiment surveys softened as job security became less taken for granted. By late Q3, Fed Chair Powell described the labour market as “gradually cooling” – a necessary development to curb inflation, albeit one creating hardship for those workers finding it tougher to secure jobs.

Consumer spending remained the linchpin of the expansion through Q3, but its composition shifted amid inflation and higher borrowing costs. Real personal consumption expenditures (PCE) grew modestly in Q2 and Q3, keeping GDP afloat. Services spending led the way – Americans

continued to spend on travel, dining out, healthcare, and entertainment. Pent-up demand for experiences (post-pandemic) boosted services by ~4% annualized in Q2, offsetting flat goods spending. In contrast, goods consumption levelled off, and in some categories declined, as prices rose and interest costs bit. Big-ticket purchases that rely on financing – homes, autos, appliances – were especially soft.

For instance, auto sales slipped in Q3 as auto loan rates hit ~9%, the highest in over a decade, squeezing affordability. Retail sales (ex-autos) seesawed month to month, but generally showed only nominal gains that lagged inflation, indicating flat real volumes. By late Q3, consumers were paring discretionary purchases (apparel, electronics) and dipping into savings to maintain essentials. The student loan payment restart in September (after a multi-year pause) added another pinch on disposable incomes, though its macro impact in Q3 was limited (loans only gradually entered delinquency post-moratorium). Crucially, household balance sheets entering 2025 were relatively strong overall – leverage was lower than pre-2008, and mortgage debt was mostly locked in at low rates.

This helped consumption weather the headwinds.

Government fiscal support (e.g. the middle-class tax cuts extended by the OBBBA act) also put extra cash in some consumers’ pockets. However, the support was uneven: lower-income families felt the squeeze of inflation hardest. By Q3, lower-income consumers were cutting back and relying more on credit cards for everyday expenses, while higher-income consumers still spent freely on travel and luxury goods (Powell described the situation as “bifurcated” – stress at the low end, robust spending at the high end ). Overall, consumer spending grew at a slower, sustainable pace in Q2–Q3 rather than the breakneck rates of 2021–22. The big question for investors: can U.S. consumers continue to spend in 2026 as excess savings dry up and borrowing gets tougher? Late in Q3 there were nascent signs of caution – e.g. rising credit-card delinquencies and a dip in consumer confidence – warranting close attention despite the still-healthy aggregate spending data.

Macroeconomic bottom line: The U.S. in Q2 and Q3 2025 achieved a “soft landing” interlude – growth remained positive and even above trend, inflation stopped falling but didn’t explode, and unemployment, while up, was far from recessionary levels. This balancing act was aided by unique factors (the AI investment boom, fiscal supports) even as policy tightened and external risks grew. Yet, under the surface, pressures built: inflation’s persistence kept real wages under pressure; tariffs introduced distortions (higher prices, supply chain shifts); and consumer resilience began to wane for more vulnerable groups. These cross-currents set the stage for the Fed’s delicate task in H2 2025 – to ease monetary conditions enough to sustain growth, but not so much as to reignite inflation. The next sections discuss how trade and capital flows were “rewired” in this period and how policymakers navigated the changing landscape.

Trade and Capital Flows: Tariffs, Reshoring, and Shifting Global Patterns Trade dynamics in Q2 and Q3 were dominated by the Trump administration’s “America First” trade policies, which markedly raised tariffs and aimed to incentivize reshoring. The effects were twofold: U.S. import patterns changed (both volume and sourcing), and global trade relationships realigned, especially among emerging markets (EM) and China.

Tariffs: As noted, the U.S. enacted sweeping import tariffs in early 2025 – 25% duties on broad categories from China, the EU, and others – lifting the effective tariff rate to ~16% (pre-substitution). This was the highest U.S. tariff burden in nearly a century, a level not seen since the 1930s. Such an abrupt tariff increase (“tariff shock”) had immediate impacts. U.S. import volumes fell in Q2 (–7.6% annualized) as firms rushed to adjust supply chains. Some of that decline reflects substitution (finding non-tariffed sources or

domestic suppliers), and indeed imports from China dropped sharply, while imports from tariff-exempt countries (e.g. Vietnam, Mexico) rose. By Q3, U.S. customs duties collected had quintupled from a year prior, reflecting the tariff wall. For businesses, the tariffs drove input costs higher – a Reuters analysis noted many companies felt a profit squeeze from rising materials costs, especially in manufacturing and retail sectors that rely on imports. The industrial sector was hit hard: U.S. factories faced pricier components (e.g. machinery parts, electronics) unless they could find domestic alternatives. This contributed to a mild manufacturing downturn by Q3 (PMI surveys slipped below 50). For consumers, tariffs translated into higher prices for imported consumer goods, from electronics to apparel, contributing to inflation as discussed. However, some tariffs were structured to exempt critical tech inputs – notably, imports of advanced AI chips and data centre hardware were waived from duties, preventing an even bigger cost hit to tech companies.

Reshoring and Investment Flows: A key goal of the tariffs was to “reindustrialize” the U.S. by incentivizing domestic production. There were early signs this was partially succeeding. Throughout Q2–Q3, several multinational firms announced new U.S. factories or expansions, explicitly citing tariffs and policy incentives. For example, in May a major electronics assembler unveiled plans for a Midwest plant, aiming to avoid import duties on finished tech goods. Foreign direct investment (FDI) into U.S. manufacturing picked up – Commerce data through mid-2025 showed a rise in new manufacturing FDI commitments, after years of stagnation. J.P. Morgan’s strategic research noted US and Canada saw the largest increase in inbound FDI among regions in 2025, driven by advanced manufacturers in Asia looking to sidestep tariffs by building locally. The One Big Beautiful Bill Act (OBBBA), which provided tax credits for domestic capital expenditure, further juiced these flows. As a result, capital spending on structures and equipment in the U.S. surged in Q3, with private non-residential

investment up strongly (particularly in factories, EV battery plants, and data centres). The paradox is that while tariffs initially depressed trade volumes (a drag on Q1 GDP), by Q3 the capex boom they spurred was adding to GDP. In fact, the AI-related capex surge – clouded in the broader “reshoring” narrative – became a dominant theme (more on that in the Fed section and CapEx trends section).

overlap. By end of Q3, China remained the world’s top trading nation by volume, but the U.S. was catching up in influence via its reshaped supply chains. A World Bank analysis illustrated a map split – more countries in Asia and Africa count China as their largest trading partner, whereas the U.S. leads in trade with the Americas and some of Europe.

Globally, trade flows were “rewired” as partners reacted. China, facing reduced U.S. import demand, redirected exports toward EM markets.

Chinese exports to ASEAN and other EM Asia jumped, reaching a record share (~55%) of China’s total exports. Many emerging countries gladly absorbed goods now pricier in the U.S. Meanwhile, some U.S. import demand shifted to allies: e.g.

Vietnam, India, and Mexico expanded exports to the U.S., benefiting from tariff arbitrage as companies adopted a “China+1” strategy (moving production out of China to avoid tariffs). Mexico’s exports to the U.S. hit all-time highs in 2025, and Mexico gained U.S. market share in categories like auto parts and electronics. In Latin America, U.S.–China competition was evident: Latin American countries saw robust export growth to the U.S. (notably oil and agriculture), even as Chinese investment flowed in (China now dominates FDI in many LatAm countries, though the U.S. still leads in trade volume).

On capital flows, Q2–Q3 saw intriguing patterns: global investors reallocated capital toward regions perceived as relative “winners.” Early in the year, some foreign investors sold U.S. Treasury holdings, unnerved by erratic U.S. trade policy and a weaker dollar, and redirected funds to Europe and Japan (which were seen as less directly hit by the U.S.–China tariff crossfire). This contributed to U.S. yields rising in Q1, though by Q3 that pressure eased as the Fed cut rates. Conversely, emerging-market bond and equity funds saw inflows in mid-2025. EM financial assets rallied as investors chased higher yields and the weaker dollar boosted EM currencies. J.P. Morgan EPFR data showed cumulative EM bond fund inflows turned positive for the first time since 2021. EM currencies appreciated against the dollar in Q3 – many were deemed undervalued vs USD and caught up as risk sentiment improved. For instance, the Mexican peso and Brazilian real were among the best-performing currencies YTD. China, however, saw capital outflows – its stock market languished and the yuan weakened until authorities intervened – reflecting concerns about China’s own economic slowdown and geopolitical isolation.

Emerging markets overall actually benefited from the tumult in some ways: many EM commodity exporters enjoyed improved terms of trade as the U.S. and China jockeyed for resources and market access. For example, Brazil and Argentina saw stronger demand for soybeans and metals from both the U.S. (as a China alternative) and China (as it diversified suppliers). However, a few EM economies reliant on Chinese demand (e.g. in Africa) were hurt as China’s economy downshifted and focused on closer Asian partners. The bottom line is that global trade bifurcated: a U.S.-centric network (North America, Europe, certain Asian allies) and a China-centric network (China’s Asian neighbours, parts of Africa and LatAm), with some

Trade policy uncertainty remained extremely high throughout Q2–Q3. The U.S. frequently tweaked tariff rules (granting exemptions for some allies, negotiating adjustments with the EU on specific goods). This uncertainty itself was a drag: an index of U.S. trade policy uncertainty hit record levels (~8,000 in mid-2025, 8x normal) , which executives said made supply-chain planning difficult. Some firms delayed investment decisions pending clarity on whether tariffs would stick or be bargained down (legal challenges were ongoing). Toward Q3’s end,

there were hints of diplomatic negotiations – for example, U.S. and EU talks in September to reduce auto tariffs – but no major breakthroughs yet. The upshot for investors is that geopolitics materially altered trade and capital flows in 2025: supply chains became more regional, certain EM gained at China’s expense, and tariff costs reverberated into prices and margins. These shifts created both risks and opportunities – e.g. opportunities in countries like Mexico or Vietnam gaining production share, risks for companies tied to China trade or facing higher input costs.

In sum, Q2–Q3 trade data captured an economy in flux: the U.S. was importing less and producing slightly more at home, by design of tariffs, while globally the centre of gravity of trade shifted incrementally away from China towards a more diversified network. Whether this rewiring makes the U.S. economy more resilient (via domestic supply chains) or less efficient (via higher costs) is a debate ongoing.

For now, investors saw both challenges (higher inflation, disrupted supply chains) and investment themes (beneficiaries of reshoring, EM outperformance) emerging from the new trade regime.

Fed Policy: Rate Cuts and Monetary Posture Facing this complicated backdrop of strong growth but above-target inflation and rising uncertainties, the Federal Reserve pivoted from a long tightening campaign to cautious easing in Q3 2025. The Fed’s posture in Q2 was still officially “higher for longer” – it held the policy rate at a ~4.25% peak through the spring – but by late Q2, cracks in the economy and political pressure for rate relief set the stage for a change.

In July, the Fed signalled openness to cuts if growth faltered. Then, at the September 2025 FOMC meeting, the Fed delivered a 25-bps rate cut, its first cut since the pandemic. It followed with another 25-bps cut in October, bringing the target fed funds

range down to 3.75–4.00%. These back-to-back cuts marked a notable shift to easing mode, even though core inflation was still ~3%. Fed Chair Jerome Powell framed the cuts as “insurance” to help support a cooling labour market and guard against downside risks. Indeed, the Fed acknowledged that policy had likely been restrictive enough (real rates were positive and credit conditions tightening), and with hiring slowing and financial stress emerging, a modest easing was deemed prudent.

However, the Fed was far from unanimous or confident about this easing path. The October cut saw two FOMC dissents in opposite directions – one official wanted a deeper cut; another wanted no cut at all – underscoring the split views among policymakers. Powell himself noted “strongly differing views” on the Committee about further cuts. After the October move, he explicitly signalled a potential pause: “A further reduction in December is not a foregone conclusion… policy is not on a preset course”. This cautious messaging was meant to prevent markets from assuming a full-on cutting cycle. The Fed was essentially navigating a fog: it was easing despite inflation still above target, which is unusual. Why? Partly because inflation’s trajectory seemed to be improving beneath the surface (e.g. service inflation excluding housing was slowing), and the risks of overshooting on rates grew as growth softened. Powell highlighted that the risk of more persistent inflation had “declined significantly since April,” while the risk of unnecessarily hurting the labour market had risen.

Moreover, the Fed was flying somewhat blind due to data outages – the government shutdown in Sept–Oct led to no official jobs or CPI reports for a while. Powell likened it to “driving in the fog” and thus justified moving carefully. The Fed basically chose to err on the side of growth given the improved inflation outlook. This stance was bolstered by clear evidence that inflation expectations remained anchored and wage growth was cooling, reducing the fear of a 1970s-style wage-price spiral.

Another factor was political pressure: President Trump had openly advocated for rate cuts to boost growth (he’d even mused about replacing Powell if the Fed didn’t cooperate). While the Fed insisted it doesn’t bend to politics, observers noted Trump’s wishes “hung over” the Fed’s deliberations. The 2025 Fed, stocked with several Trump-appointed governors, did lean dovish once price stability seemed within sight. Markets overwhelmingly expected the Fed to cut, and not cutting might have tightened financial conditions inadvertently. By end of Q3, futures priced in at least one more 25 bp cut in December, putting the Fed in an accommodative stance heading into 2026.

Monetary policy impacts were quickly felt in asset prices: stocks rallied strongly in Q3 on the prospect of easier money, and the dollar weakened (as noted earlier). Credit spreads tightened somewhat after the Fed cuts, giving relief to corporate borrowers – though high-yield spreads remained above 2024 levels due to higher default risk (more on that in the Financial Signals section). Housing caught a mild bid: 30-year mortgage rates, which had topped 7%, eased to ~6.5% by October, prompting a small refinance uptick and stabilizing home sales. That said, the Fed’s cuts were “too little, too late” for housing to rebound meaningfully in Q3.

In terms of communication and posture, the Fed tried to strike a balance: it framed the cuts as a “mid-cycle adjustment,” not the start of an all-out easing binge. Powell emphasized the Fed could “pause if needed” and that policy was still somewhat restrictive after cuts. Essentially, the Fed wanted flexibility – if inflation surprised up (e.g. due to tariffs), it could pause; if growth wobbled, it could cut more. This data-dependent mantra was complicated by the lack of data during the shutdown, but by December, data releases resumed and showed continued moderate growth and easing price pressures. Notably, the Fed also took liquidity actions: in late October it announced a halt to quantitative tightening, deciding to stop shrinking its balance sheet and even resume small Treasury purchases to ensure market liquidity. This was prompted by stress in money markets (a brief spike in funding rates indicated scarce liquidity). By ceasing balance sheet runoff, the Fed kept its roughly $6.6 trillion holdings steady. This added to the dovish tilt and helped soothe bond markets – long-term Treasury yields, which had spiked to ~5% in September, fell back toward 4.3% by late Q3 as the Fed’s actions and the ebbing deficit fears (tariff revenue unexpectedly boosted near-term fiscal outlook) calmed investors. The 10-year yield

by November was down ~50 bps from January , and the yield curve remained inverted but less so as short rates fell.

One eye-catching element was how the Fed rationalized cutting despite core inflation ~3%. The Fed essentially invoked a “flexible average inflation targeting” spirit – tolerating inflation modestly above 2% given it had run below target in the 2010s and aiming to sustain the expansion. Also, the Fed argued that tariff-driven inflation was a one-time price level adjustment, not true ongoing inflation, and thus could be looked through. Indeed, Fed staff estimated the tariffs would boost PCE inflation by roughly 0.3 – 0.5 pp in 2025, but that inflation would then fall back toward 2% in 2026 once the level shift passed. This gave cover to cut rates – and in fact by November the Fed was back to cutting despite above-target inflation for the first time since the 1970s. It’s a testament to how much the inflation paradigm had shifted (inflation seen as transitory/tolerable) and how pressing the growth and financial stability concerns had become.

Going forward, the Fed’s monetary posture as of Q3’s end could be summed up as: easing, but hesitantly. By November, it was essentially at a neutral policy stance (short rates near estimated nominal neutral). The FOMC’s year-end projections (from September) still showed core PCE ~3% and unemployment rising toward 4.5% by 2026 – a mix requiring fine-tuning. Investors were split on whether the Fed would deliver an additional cut in December; futures implied about a 60–70% chance of a December cut. The Fed was also aware of the

election year 2026 approaching, adding incentive to get policy onto a sustainable path before political pressures intensified. Fed communications reflected a desire to separate rate decisions from politics – e.g. Powell emphasized their data-dependence and pushed back on any notion that the Fed cut due to Presidential demands (though markets cynically noted the timing aligned with Trump’s vocal calls for lower rates).

In summary, Q2–Q3 2025 marked a turning point for U.S. monetary policy, from fighting inflation to supporting growth. For investors, this shift was a major positive driver (equities and bonds both gained as rates fell). However, it was not without controversy – the Fed was effectively threading the needle, trying to avoid both recession and re-acceleration of inflation.

The rest of 2025 would test whether this mid-course adjustment was the start of a gentle glide to a soft landing or merely a calm before potential turbulence if inflation didn’t behave. By the end of Q3, one clear outcome of easier policy was the significant weakening of the dollar, which we turn to in the currency section, alongside the moves in gold and crypto that accompanied shifting Fed policy and risk sentiment.

Financial Signals: Corporate Distress, Credit Markets, Bankruptcies Even as macro indicators painted a generally positive picture in Q2–Q3, financial stress signals began flashing in pockets of the economy. After years of low defaults, 2025 saw a notable uptick in corporate distress and bankruptcies, as well as mounting strains in consumer credit for lower-income Americans. Investors grew more attuned to credit quality and default risk, reflecting the lagged impact of past Fed tightening and the cost pressures discussed earlier.

Corporate bankruptcies surged in 2025 to levels not seen since the Global Financial Crisis. By October, 655 U.S. companies had filed for

bankruptcy year-to-date, already exceeding the full-year 2024 total of 687. S&P Global projected that 2025 was on pace to be the worst year for large bankruptcies in 15 years. The monthly run rate of filings spiked mid-year: August saw 76 bankruptcies (the highest monthly count since 2020’s pandemic shock), and October had 68. This wave was concentrated in larger firms (S&P’s data cover companies with >$2M in liabilities, including both public and sizable private firms). It reflected a perfect storm of rising costs and tighter credit.

Many companies struggled with higher debt service after the Fed’s rapid 2022–24 rate hikes; interest coverage ratios deteriorated for highly leveraged firms. At the same time, input and labour costs were up due to inflation and tariffs, compressing profit margins. Demand for some goods also cooled just as those costs hit, leaving overextended firms with weak cash flow.

Sector-wise, industrials and consumer discretionary companies led the bankruptcy rankings, accounting for 98 and 80 filings respectively in the first three quarters. These sectors are highly exposed to supply-chain disruptions (industrials) and shifting consumer spending (discretionary). For instance, the industrial sector – including manufacturers affected by tariffs on inputs – saw a rash of insolvencies.

One notable case: First Brands Group, a major auto-parts maker, filed Chapter 11 in September with >$10 billion in liabilities, after tariff-driven cost spikes and falling demand “shocked debt investors”. Similarly, in consumer discretionary, several retail and leisure companies failed as consumers pulled back and pricing power waned.

Crucially, interest rate effects were front and centre.

Many zombie companies that had survived on ultra-low borrowing costs in the 2010s could not refinance in 2025’s 8%+ yield environment.

Standard & Poors noted bankruptcy filings have risen every year since 2022, as the Fed’s hiking cycle took hold. By mid-2025, Moody’s trailing 12-month speculative-grade default rate had climbed to ~5% (from ~2% a year prior), and their

forward-looking indicators put default risk at 9%, the highest post-2009. In other words, credit conditions in 2025 were “challenging enough to provoke the most defaults since the financial crisis”.

The global credit market felt tremors as well.

There was a “wave of credit concerns” that not only hit issuers but even ensnared some lenders.

For example, a notable casualty was Tricolour Holdings, a subprime auto lender that filed Chapter 7 (liquidation) in September. Its failure caused JPMorgan Chase to charge off $170 million in loans (JPM had exposure to Tricolour’s debt), which CEO Jamie Dimon admitted was “not our finest moment”. Meanwhile, some regional banks continued to face stresses (lingering from the spring 2023 bank failures). Although no major bank failed in Q3 2025, a few regionals saw earnings hit by credit loss provisions and write-downs on commercial real estate loans. Overall, investors began demanding more yield to hold corporate debt: credit spreads widened moderately in Q2 (high-yield OAS moved from ~400 bps to ~500 bps at its peak in July) as recession fears flickered.

However, after the Fed cuts, spreads tightened a bit in Q3, indicating credit markets stabilized somewhat thanks to easier financial conditions. The Fed’s rate cuts essentially threw a lifeline to many indebted companies, cutting their prospective interest burdens on floating-rate debt and improving refinancing odds. Indeed, by late Q3, some companies rushed to issue new debt to refinance – there was a “rush of debt issuance by major tech companies to fund AI expansions” , which was well-received by the market, showing that higher-quality issuers retained good access to capital.

Consumer credit also showed signs of strain, though not a full-blown crisis. With the labour market still solid, most households continued to service debt, but delinquencies ticked up from historic lows. By Q3 2025, 4.5% of total household debt was delinquent (30+ days), up from ~3.8% a year earlier. Credit card balances

reached a new record – $1.23 trillion outstanding – as consumers leaned on cards to cope with higher prices and the resumption of student loan payments. Credit card delinquency rates (90+ days) rose to around 7% of balances by Q3 (still below the ~10% pre-2010 level, but up significantly from the pandemic-era lows ~4%).

Notably, the increase in delinquencies was broad-based: a St. Louis Fed study highlighted that the share of people with delinquent card debt rose across all income groups and regions since 2021. As of Q1 2025, about 12.1% of U.S. adults (20–64) had a 30+ day delinquency on a card, up from ~8% in 2019. In lower-income areas, delinquency incidence was nearly 18% – triple the ~6% rate in high-income zip codes. This underscores that financial stress was concentrated among lower-income and subprime borrowers, who exhausted savings and were hit harder by inflation.

In contrast, prime consumers remained mostly current on mortgages and auto loans. Auto loan defaults did rise modestly (90-day delinquency ~3%, highest since 2019) as used car prices fell and some subprime auto lenders (like Tricolour) went under, leading to 2.2 million vehicle repossessions in 2025 (a multi-year high). Student loans saw a technical surge in delinquency (from <1% to ~13%

by Q3) as reporting resumed post-forbearance , though many borrowers are in new income-based plans mitigating immediate defaults.

On the financial system side, banks tightened lending standards significantly throughout 2025.

The Fed’s senior loan officer survey for Q3 showed a net 50% of banks tightening standards on commercial loans – a degree last seen in 2020 – reflecting both caution and the need to preserve capital. Regional banks in particular pulled back on commercial real estate (CRE) lending, contributing to a slowdown in CRE investment and some distress in office property markets. By Q3, office vacancy rates hit record highs (~20% nationally), pressuring landlords – indeed, a few high-profile office owners defaulted on mortgages (not systemic individually, but indicative of sector stress). Markets kept an eye on

any spillovers, but thanks to bank and investor resilience, contagion was limited.

In the capital markets, one positive signal was the high-yield market reopening for new issuance in Q3 after being largely shut in Q1–Q2.

Several companies successfully issued junk bonds in September at yields around 8–9%, suggesting investors were again willing to take credit risk at a price. Equities of highly leveraged companies lagged, however, as equity holders priced in potential dilution or distress. Notably, the stock prices of regional banks remained depressed (KBW regional bank index down ~10% on the year) as markets anticipated tighter regulation and higher funding costs post-2023 bank failures.

Investor lens: These financial stress indicators pointed to a growing divergence – while large, healthy corporations (especially in tech) thrived and borrowed cheaply, weaker firms and lower-income consumers were under real pressure. Markets began to differentiate more on credit quality: credit spreads between BBB and junk widened, and consumer lenders’ stocks underperformed broad indices. This has echoes of late-cycle dynamics, where default rates typically rise with a lag after rate hikes. However, unlike 2008, the financial system was better capitalized and the economy more services-oriented, muting systemic risk. By the end of Q3, overall U.S. financial conditions (Bloomberg index) were actually easier than at the start of 2025 – thanks to Fed cuts and market rallies – but beneath that, default risk was at its highest since the Great Recession according to Moody’s.

This dichotomy (frothy markets vs. rising defaults) is something investors remained wary of. The coming quarters would show if Fed easing could engineer a gentle downshift in defaults or if the credit cycle would continue to deteriorate into 2026.

Currency, Gold, and Bitcoin: FX and “Safe-Haven” Flows Q2 and Q3 witnessed significant moves in currency and “safe-haven” asset markets, reflecting shifting monetary policy and the unique risk environment of 2025. In particular, the U.S. dollar fell sharply, while gold and Bitcoin surged – a classic pattern when U.S. real rates decline and uncertainty rises. We analyse these moves and their drivers below.

The U.S. dollar (USD) entered 2025 relatively strong but depreciated notably by Q3. The DXY dollar index dropped about –8% from January to November , putting the dollar at its weakest levels since 2018 against major currencies.

Several factors drove this: 1.​ Fed policy pivot – as soon as markets sensed rate cuts were coming, the dollar’s yield advantage eroded, pushing investors to rotate into other currencies.

2.​ Trade policy – the U.S. administration’s explicit goal to reduce the trade deficit and even musings about the benefits of a weaker dollar signalled less support for the currency. Indeed, by November officials touted the dollar being “~8% weaker since Trump took office” as an achievement for competitiveness.

3.​ “Safe-haven” credibility – unusual U.S. political and fiscal uncertainty (debt ceiling dramas, the long government shutdown) led to what one analyst called an “almost overnight loss of safe-haven attributes” for the dollar. During the 43-day federal shutdown, for instance, some global investors reduced dollar holdings, citing governance concerns.

By early Q3, the EUR–USD broke through $1.15 (from ~$1.08 end-2024) and the USD/JPY fell into the mid-130s, as both the ECB and BOJ maintained tighter or stable policies relative to the Fed’s easing tilt. Traditional havens like the Swiss franc and Japanese yen strengthened against USD, with the franc reaching parity. The emerging market FX index also climbed, as the weaker dollar and strong EM inflows lifted currencies from the Brazilian real to the Indonesian rupiah. A caveat: the Chinese yuan was an outlier – it depreciated against the dollar, breaching 8 CNY/USD at one point (a ~10% drop YTD), due to China’s internal slowdown and monetary easing, before state banks intervened to stabilize it. This divergent yuan (weak) vs. rest-of-EM (strong) was a telling sign of China-specific issues. The net effect of the dollar’s decline was easier global financial conditions and a boost to U.S. exporters’ competitiveness (though partially offset by foreign retaliatory tariffs).

President Trump welcomed the weaker dollar – after all, a key promise was a “weaker dollar” and indeed the dollar was significantly weaker than at his inauguration.

From an investor perspective, the currency moves implied FX gains for unhedged foreign investments. Those who shifted into European or EM assets not only got local market appreciation but also FX uplift. Conversely, U.S. investors saw international diversification pay off in 2025. Going forward, questions arose whether the dollar had peaked for the cycle or might rebound if U.S. growth outperformed. But through Q3, momentum and policy pointed to further USD softness.

Gold shone brilliantly in 2025, reinforcing its status as a valuable alternative asset. After consolidating in 2024, gold prices took off in 2025, hitting all-time highs. By September, gold broke above $3,700 per ounce (a record) , and it ended Q3 around $3,500/oz – up roughly 30% from January and +55% year-to-date. This rally was fuelled by multiple factors:

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Real interest rates fell: As the Fed cut rates and inflation remained around 3%, real yields dropped, reducing the opportunity cost of holding gold.

“Safe-haven” demand: Geopolitical tensions (the report mentions a Gaza ceasefire but also fragile stability , plus ongoing Russia-Ukraine war) and U.S. political uncertainty (debt showdown, etc.) boosted gold’s appeal as a hedge.

Investor flows: There was a notable rotation into gold by institutional investors diversifying away from equities and bonds.

Also, central banks continued strong gold purchases globally (a trend since 2022) to shore up reserves amid currency uncertainties.

Weaker dollar: Since gold is dollar-priced, a weaker USD mechanically lifts gold’s price.

With DXY down ~8%, that alone was a tailwind for gold.

General hysteria: after extremely strong returns into Q3, the gold trade was widely reported, with extreme levels of retail investors piling in to try and benefit. This riding the momentum trade became extremely popular, causing the prices to continuously be pushed higher in Q3, before a liquidation event in October causing a 10% temporary pullback.

By mid-year, some dubbed it a new “golden age” for the metal, with gold up ~26% by early Nov , outperforming almost all asset classes. The JPM Mid-Year Outlook highlighted gold as a key portfolio diversifier against inflation and market volatility – that proved prescient as gold kept rising even when stocks had wobbles. In October, as stocks had a brief pullback on valuation concerns, gold spiked above $3,800 before settling. To put the price in perspective, gold was around $1,800 two years prior – so it essentially doubled amid the pandemic aftermath and new macro regime.

Bitcoin and cryptocurrencies – often dubbed “digital gold” – saw even more dramatic moves.

Bitcoin’s price absolutely skyrocketed through Q3, riding a wave of speculation tied to both risk appetite and “safe-haven” appeal. Starting 2025 around ~$50,000, Bitcoin rallied relentlessly, peaking at over $125,000 in early October.

That’s a ~150% gain in nine months (and over 250% from its ~$35k level a year earlier).

Several drivers were at play: “Risk-on” tech trade: In H1, Bitcoin benefited from the same forces lifting AI tech stocks – abundant liquidity (from still-easy financial conditions then), investor exuberance for disruptive tech, and FOMO. Bitcoin is seen by some as a high-beta play on tech optimism, and indeed it correlated with Nasdaq strength in early 2025. ●​ Inflation hedge: As 2025 progressed and real rates fell, some investors bought Bitcoin as an alternative hedge against currency debasement and geopolitical risk, similar to gold. The narrative of Bitcoin as “digital gold” regained popularity with inflation above 2% and a weakening dollar. ●​ Institutional adoption: There were milestones like the first Bitcoin ETFs launching and major asset managers announcing crypto initiatives, which boosted credibility. Additionally, continued interest from retail and some sovereign entities (a few smaller countries continued to experiment with Bitcoin in reserves or legal tender) kept demand strong. ●​

By Q3, Bitcoin’s market cap exceeded $2 trillion, and it became more valuable than any single public company aside from Apple and Microsoft.

However, its notorious volatility resurfaced late in Q3. After hitting ~$126k in early October, Bitcoin abruptly slid below $90k by late November, a 30%+ drop. This coincided with a broader tech stock wobble and questions about AI profitability (Bitcoin often trades as a liquidity barometer). As one wealth strategist noted, “Bitcoin serves as a risk proxy for

equities”, so its slide was a sign of waning risk appetite in markets. Indeed, Bitcoin’s fall happened as some investors took risk off the table following huge gains. Nonetheless, at ~$90k, Bitcoin was still up ~80% YTD – a stellar (if stomach-churning) performance. Other cryptos similarly saw big swings; Ethereum doubled then gave back some gains.

The interplay between gold, Bitcoin, and equities became a talking point. Interestingly, gold and Bitcoin – often thought to compete for similar “hedging” demand – both rose for much of the year, suggesting ample liquidity to lift all boats. But their divergence in Q4 (gold kept near highs while Bitcoin fell) hinted at Bitcoin acting more like a speculative risk asset, whereas gold held its ground as a stable hedge. This was further evidenced when Bitcoin’s slide was cited as a potential warning sign for equities by analysts , whereas rising gold was seen as a classic cautionary flag of risk aversion or inflation concerns.

The Japanese yen’s moves were also notable. Early in 2025, with the Bank of Japan adjusting yield curve control, the yen strengthened through ¥130s per USD, reflecting some “safe-haven” flow when U.S. politics turned messy. Similarly, Swiss franc appreciation mirrored gold’s rise to an extent, reaching its strongest value vs euro in years.

However, neither currency outshone gold’s performance – a testament to gold’s singular status when both geopolitical and inflation worries percolate.

In currency markets beyond USD, a key development was China’s currency policy: the PBOC let the yuan weaken past the psychologically important 8.0 line (lowest since 2007) before intervening to stabilize it around 7.7 by Q3’s end.

This yuan weakness exported deflation to trading partners (offsetting some tariff effect on U.S. prices) but also raised EM competitiveness. It added pressure on other Asian currencies, though with the dollar down, many managed to gain vs USD even as they fell vs CNY.

For investors, the Q2–Q3 moves underscored the value of diversification and hedges. Those holding gold were rewarded with positive, un-corrolated returns. Crypto traders saw both massive upside and the importance of disciplined risk management given volatility.

Currency-wise, unhedged international exposures boosted portfolio returns due to USD weakness. Going forward, the dollar’s direction remained a key debate: would Fed cuts and twin deficits push it even lower, or might a growth rebound and “safe-haven” flows lift it back?

By end of Q3, consensus leaned bearish on USD. In summary, FX and “safe-haven” asset trends in 2025 reflected the macro crosswinds: a less hawkish Fed and policy uncertainty took the dollar down; inflation concerns and geopolitical angst took gold up; abundant liquidity and tech fervour took Bitcoin on a wild ride up and down.

These moves had real implications – e.g. the weaker dollar contributed to international equities outperforming U.S. equities in dollar terms , and the gold surge benefited mining stocks and EM reserve assets. From an investor standpoint, Q2–Q3 proved the wisdom of holding non-correlated assets like gold (up ~50%) alongside equities, and perhaps a small allocation to crypto for those able to endure volatility – as all delivered strong returns. 2025 has been a banner year for “safe havens”, and the U.S. dollar was not among them.

Conclusion Q2 and Q3 2025 demonstrated the U.S. economy’s ability to adapt and persevere through a challenging environment – one marked by steep tariffs, shifting global ties, and the hangover of prior tightening.

The period was characterized by solid growth without new inflation highs, suggesting the economy managed a version of the coveted soft landing for much of 2025. Investors benefitted from this “goldilocks-ish” mix: equities hit record highs (despite occasional tremors), bonds stabilized as the

Fed eased, and non-traditional assets like gold and crypto provided hefty returns. Easy financial conditions, in fact, “fuelled asset gains with emerging markets outperforming” developed markets – a reversal of the previous decade’s trend and a reminder that global context matters greatly for U.S. investors’ allocations.

However, beneath the surface, the landscape was changing in ways that warrant a vigilant investor stance. The trade and capital flow rewiring means companies can no longer rely on the pre-2025 globalization status quo. Tariffs have raised costs and uncertainty; firms that agilely adjust supply chains (or those in sectors protected/benefiting from tariffs) will outperform those that don’t. Meanwhile, the AI revolution emerged as a double-edged sword: on one hand, massive AI-related capex has become a key growth driver (hyperscale’s’ $700bn spending is lifting GDP) , and any portfolio exposed to this trend (Big Tech, semiconductor makers, data centre REITs) has thrived. On the other hand, questions are growing about returns on AI investment and whether an AI spending bubble is forming. Investors should be mindful that while AI is boosting productivity and markets now, if profitability doesn’t follow, a correction in AI-driven equities could bite (as hinted by late-Q3 volatility in AI stocks).

Monetary policy heading into 2026 is now accommodative, a stark change from a year ago.

This provided a tailwind to risk assets in Q3, but it also reflects that the Fed sees rising risks. Credit cracks and a cooling job market prompted the Fed’s insurance cuts – they will likely cut further if needed, but the bar for hiking again is also higher given political pressures. In essence, the Fed has shifted to a pro-growth bias, which supports equities and credit in the near term. However, if inflation proves sticky (e.g. tariffs keep core PCE stuck ~3%), the Fed may find itself in a bind later. For now, their assumption – echoed by the market – is that inflation will gently glide down to target, enabling a benign rate environment. Investors should watch inflation expectations and wage trends

closely; any re-acceleration could force a policy rethink, challenging the current bullish consensus.

Financial stability risks, while contained so far, bear watching. Corporate default rates are climbing, and history shows default cycles can gain momentum.

The fact that 2025 is seeing the largest bankruptcies since 2010 means creditors (and equity holders of leveraged firms) need to stay selective. Credit spreads in high-yield have not blown out – indicating markets expect this default wave to be manageable – but complacency can be dangerous if the economy slows. Similarly, consumer credit stress could translate to weaker consumption if unemployment rises more. So far, strong balance sheets and the still-low jobless rate have prevented a negative feedback loop. But if unemployment were to head toward 5% or more (the Fed’s projections ~4.5% for 2026 ), we could see consumer spending materially falter, hitting corporate earnings across the board. Thus, labour market indicators (jobless claims, payrolls) and bank lending standards will be key early warning signals in coming months.

On the global stage, the U.S. economy must be viewed in the context of an evolving international backdrop. China’s growth has underwhelmed (with deflation whispers there) even as it fortifies ties with EM Asia – this could mean weaker global demand but also lower commodity prices, a mixed bag for the U.S. Europe avoided recession in 2025 and its stocks matched the S&P , helped by a weaker dollar and their minimal exposure to tariffs.

Emerging markets, as highlighted, had a banner year with easy money and strong commodity exports; but they too face the question of how sustainable the “Trump trade boom” is if U.S. tariffs persist or global frictions increase. Investors with an “international lens” saw that diversification paid off in Q3 2025 – a theme likely to continue if the dollar stays soft and non-U.S. growth niches (like India’s manufacturing push or Brazil’s tech adoption) shine. Keeping an eye on geopolitical risks (e.g. trade negotiations, conflict hotspots) remains paramount, as surprises there can quickly roil FX and commodities.

In conclusion, Q2 and Q3 2025 will be remembered as a period of resilience and rotation. Resilience of the U.S. economy – avoiding the long-predicted recession – and rotation in markets – with leadership shifting (EM over US, gold and AI assets joining the rally, defensive value stocks lagging high-growth names for much of the run). The key takeaways are: macro policy and politics matter immensely (witness tariffs and Fed cuts moving markets), and risk management is crucial (credit risks are rising, and speculative manias can reverse quickly as seen with crypto). Many themes continued, some intensified (tariffs, AI), and some turned (Fed policy). As we reflect on 2025’s second and third quarters, the investor lens should stay focused on early signals of trend changes: e.g. does inflation break lower (bullish), or does oil or wages spike (bearish)? Does the default trickle become a flood or peak out harmlessly? Does AI capex start delivering profits or sow regret?

Thus far, markets are essentially pricing in a “goldilocks” glide into 2026 – moderate growth, falling inflation, and ever-easier policy. That scenario could very well materialize (indeed, tariffs’ one-off impact will fade, and AI investments could boost productivity). But investors would do well to maintain some hedges and humility. Upside and downside risks abound: an upside surprise could be a stronger-than-expected Chinese stimulus lifting global growth (and commodities, helping U.S. multinationals), whereas a downside surprise could be an inflation resurgence or a policy misstep reigniting volatility. After a lucrative Q2–Q3, prudent portfolio adjustments (rebalancing gains, upgrading credit quality, and ensuring sufficient diversification across asset classes and geographies) are sensible moves. The U.S. economy’s Q2–Q3 story was one of adaptation – likewise, agile adaptation will serve investors heading into the next chapters of this cycle, keeping portfolios resilient to whatever 2026 brings.

Consumer Fall 2025

Consumer Retail 2H2025 Recap

Amy Zhang November 15th, 2025

Metrics and Graphs Change in Consumer Sentiment

In search of the value-conscious spender: As 2025 draws to a close, the global consumer is cautious but still active. Recent ConsumerWise research shows that sentiment has fallen sharply from its 2024 high—net sentiment in the US is about 35% lower than last year’s peak—yet spending has not fallen in lockstep.

Shoppers describe themselves as “timid”: worried about prices and affordability, but still planning to spend when the offer and Source: University of Michigan via FRED timing feel right. For retailers and brands, this means the year is ending as a stock-picker’s market: macro conditions feel soft, but Preferred payment methods performance is diverging. Players that get assortments, value propositions and promotions right are still seeing solid demand, while others face a slow bleed as consumers quietly trade down or delay purchases.

Consumer Spotlight : Paradoxical behavior, real trade-offs McKinsey’s latest work on the State of the Consumer 2025 and its October 2025 update on how people are spending time and money highlight a set of paradoxes: consumers are both saving and splurging; cutting back in one category to afford something “special” in another; and trading down without wanting to feel like they are. Consumer behavior in late 2025 reflects a series of Source: PwC Holiday Outlook 2025 careful trade-offs. Across income groups, shoppers are prioritizing essential goods while exercising restraint in Gen Z plans to cut holiday spend semi-discretionary categories. When they do trade down, it’s typically through smaller pack sizes, fewer units, or a shift toward lower-cost channels rather than abandoning preferred brands entirely. At the same time, consumers continue to redirect spending toward emotionally meaningful categories such as beauty, dining out and small indulgences—often trimming other essentials to make room for these purchases. The result is a consumer who is highly intentional. They are more likely to Source: PwC Holiday Outlook 2025 weigh trade-offs across their entire basket and less likely to tolerate products or experiences that don’t feel worth the money.

Holiday outlook 2025: Smaller wallets, not smaller expectations: PwC’s Holiday Outlook 2025 frames this season as a “remix”: value-seeking, emotionally driven, and generationally split. On average, US consumers expect their holiday spending to fall by 5% versus 2024, the first meaningful dip since 2020. For the 2025 holiday season, consumer spending is expected to dip slightly—average spend per person is projected at about US $1,552, representing a roughly 5 % decline year‑on‑year. Gift‑category spend alone is forecast to fall about 11 % to around US $721, while expenditures on travel and entertainment remain largely flat or show modest growth. Meanwhile, 84 % of consumers say they plan to cut back somewhere in the next six months—most likely in dining out, apparel and big‑ticket items. Generational gaps are also pronounced: Gen Z plans the steepest pullback, trimming holiday budgets by approximately 23 %, though they still expect to spend more than US $1,300 on average.

The hunt for value: Earlier, more deliberate, and more practical: McKinsey’s 2025 holiday research shows US consumers have pulled their shopping even earlier this year. Roughly two-thirds plan to start before Black Friday, with millennials leading the early-shopping trend. Only about one in ten now sees Black Friday weekend as the official kick-off.

more than a quarter rank gift cards among their top three payment choices, almost doubling their prominence from 2024. Beyond what they buy and how they pay, shoppers are also seeking promotions that feel fair, transparent and aligned with their financial reality, rather than blanket discounts or aggressive upselling. For retailers, this means that broad markdown strategies are losing effectiveness, and thoughtful, data-driven offers tailored to specific life stages and basket needs are becoming far more powerful.

Private-equity activity in consumer and retail is targeted but purposeful: Companies are streamlining portfolios by selling slower-growth brands and investing more heavily in core, higher-potential categories like wellness and beauty.

Investors are particularly drawn to brands with strong equity but weak omnichannel execution, or businesses where better operations and data can quickly improve margins. These carve-outs and restructurings are likely to remain important deal opportunities into 2026.

Conclusion: In 2H 2025, consumers are tightening their budgets but still protecting the moments and experiences that matter. Holiday spending is set to fall around 5%, with Gen Z making the deepest cuts, yet shoppers are reallocating across categories and payment methods to make the season work.

For brands and retailers, this is a test of precision: those that understand evolving value equations and Consumers’ holiday behavior in late 2025 reflects a execute sharply across channels continue to grow, clear shift toward practicality and value. Many are even as overall sentiment softens. Looking ahead to channeling more of their budget into “needed 2026, we expect performance gaps to widen, with goods” such as groceries, household basics and, clear winners in value, experience and digital increasingly, gift cards—which have become the execution—and mid-tier players under increasing top planned purchase for a large share of shoppers. pressure to adapt or consolidate.

Payment preferences are shifting in the same direction: nearly half of US consumers expect to use cash as one of their primary payment methods this season, up noticeably from last year, while

Jarret Zundel| November 24, 2025

Rating: Buy Current Price: $15.71 Price Target: $49.27 Company Updates / News Market Cap: $2,512.7 ●​ Beta: 1.53 ●​ EPS: 1.86 ●​ PE Ratio: 9.96 ●​ 52 Week High: $22.46 ●​ 52 Week Low: $6.04 ●​ Net sales decreased 2.8% and comparable sales decreased 1.7% from Q3 last year ●​ Gross margin increased 51 basis point from Q3 last year ●​ Kohl’s shares jumped 35% after it posted a surprise profit in Q3, highlighting momentum in its turnaround under the new CEO Michael Bender Competitor Statistics from Q3 2025​

EV/EBITDA: 6.2x Revenue: $22,701M

EV/EBITDA: 10.0x Revenue: $11,188.2M

EV/EBITDA: 10.8x Revenue: $6,625.6M

Investment Thesis:

Kohl’s (KSS) A Retailer Poised for Turnaround

Kohl’s Corp (Kohl’s) is a national specialty retailer that operates 1,100 stores across 49 U.S. states and serves more than 60 million customers. In fact, 80% of Americans live within 15 miles of a Kohl’s store. The brand offers a wide range of apparel, home goods, beauty, and accessories to value-oriented customers of all genders and age ranges. After years of missteps, including the reduction of key private brands and the scaling back of popular product lines, the company saw declining store traffic and a deteriorating customer perception. In 2023 and 2024, these strategic errors, combined with a challenged macro backdrop, pushed Kohl’s stock into deep value territory.

However, under refreshed leadership and a renewed focus on core merchandising, Kohl’s is beginning to reverse course. The broader retail industry is demonstrating resilience, and consumer demand remains robust where shoppers see value. While near-term revenue growth will remain modest as the company executes a multi-year turnaround, Kohl’s is significantly undervalued based on my analysis. Overall, a strong retail industry environment, renewed executive leadership, and aggressive strategy efforts to elevate the customer experience position Kohl’s for a turnaround.

Valuation/Financial Modeling: As of November 24th, 2025, Kohl’s Corp is trading at $15.71 per share. To value the company, I conducted a discounted cash flow analysis using a weighted average cost of capital (WACC) of 8.8% and a terminal growth rate of 3.0%. My revenue, margin, and free cash flow assumptions are in line with analyst expectations of near-term stabilization followed by a gradual return to low to single-digit revenue growth as operational changes take hold. Under these assumptions, the perpetuity growth method produces an equity value of approximately $49 per share, while the EBITDA exit multiple method yields an even higher valuation of roughly $73 per share. Together, these results imply Kohl’s is trading at a 70%–350% discount to intrinsic value, signaling substantial upside potential if the company successfully executes its turnaround strategy.

Retail in the Face of Tariffs: Retailers, including Walmart, T.J. Maxx, and Gap are seeing growth across all income levels this holiday season despite the noise about tariffs. Despite its ongoing sales declines (5.1% in the latest quarter), Kohl’s is carefully managing tariffs. Bender emphasized that the company’s diversified sourcing strategy allows it to shift production among countries to avoid tariff pressure. Kohl’s is also negotiating with vendors and adjusting purchasing decisions based on demand elasticity models to minimize any impact on customers. Despite a 5.1% sales decline in the latest quarter, continuing a year-long trend, the company delivered a strong profit of $139 million in the first half of the year, far above the $39 million profit in the same period of 2024

Jarret Zundel| November 24, 2025

Leadership Change: Kohl’s, under CEO Michael Bender (as of November 23, 2025), is focusing on growing digital sales, reinstating its strongest beauty lines, and reducing niche offerings in favor of higher-volume proven products.

Kohl’s 5 Year Stock Chart

Source: S&P CapitalIQ

Risk Potential

Tariffs and Supply Chain Exposure Kohl’s faces meaningful exposure to U.S. tariff policy because a significant portion of its merchandise, particularly apparel, accessories, and home goods, is sourced from China and other low-cost Asian countries. Any reinstatement or escalation of tariffs would directly increase the company’s cost of goods sold, pressuring margins in an already challenging retail environment. Kohl’s lacks the pricing power of premium brands and cannot fully pass these costs on to its price-sensitive customer base without risking traffic declines.

Leadership Instability: Kohl’s has experienced considerable leadership turnover, including five CEOs within a decade, which has contributed to inconsistent long-term strategy. Frequent shifts in merchandising strategy, brand partnerships, and store remodel initiatives create operational inconsistency across the fleet. This increases the risk that new initiatives fail to gain traction, while also limiting investor confidence in management’s ability to execute a turnaround strategy.

Margin Pressure From E-Commerce and Discount Competitors: The rapid growth of digital-first competitors (Amazon, Temu, Shein) and discount retailers (TJX, Ross, Burlington) continues to erode Kohl’s market share. These competitors offer lower price points, broader selection, or more convenient digital experiences. Kohl’s e-commerce sales carry structurally lower margins due to fulfillment and shipping costs, while store traffic has been declining. Together, this mix shift creates long-term margin compression risk.

Sources: Wall Street Journal| Capital IQ | Pitchbook | Yahoo Finance| Morningstar | investors.kohls.com | Seeking Alpha |Milwaukee Journal Sentinel

Energy Fall 2025

Energy

Howie Wang November 15th, 2025

3Q2025 Recap

Lede and Abstract

Change in Global Oil Demand The latter half of 2025 has captured a divergence between the oil and (%) utilities markets. Oil faced an unsteady landscape riddled with demand and supply uncertainties, with demand growing from 2Q2025 but still modest YoY, and ballooning global inventories and production numbers. Utilities, however, continue to face incredible growth as capital flows into the sector to remedy the hunger for power to power the data centers behind the AI boom.

––––––––––––––––––––––––––––––––––––––––––––––––––––– Oil Sector The oil market, coming into the second half of the year, spent much of its time grappling with a combination of modest demand growth, surging inventories, and growing production rates. Although demand and supply imbalances were not as bad as 2Q25, as tariff uncertainties partially died off, and petrochemical feedstock Source: International Energy Agency; World Bank movement resumed.

In May, OPEC and OPEC+ announced that they would begin rolling back their daily caps on oil production, pre-empting the original expiry of the cap in 2026. In addition, non-OPEC+ countries also boosted oil flows. In combination, the increase in oil production from producers globally has led to a massive 6.2 million barrel increase in daily worldwide production since January. Partially recognizing the oil glut, OPEC+ announced at the beginning of November that plans to increase production would halt at the new year, although increases are still expected through the end of December at a rate of approx. 137 000 additional barrels per day.

Oil Last 6 Months (Brent Crude)

For a moment, oil prices rebounded by ~$5/barrel after President Trump, along with EU and UK partners, imposed sanctions on Russia’s two largest oil producers, Lukoil and Rosneft, in response to Source: S&P Capital IQ Pro a lack of progress in the Ukraine situation. Investors hoped that these sanctions would hamper Russia’s oil exports, reducing the OPEC/OPEC+ Oil Production growing global oil inventory surplus. However, the impacts of said sanctions on Lukoil and Rosneft have yet to fully materialize.

Furthermore, Ukrainian strikes on Russian oil refineries and other infrastructure add to the uncertainties around Russia’s role in the global oil glut.

Source: International Energy Agency

Looking upstream, uncertain oil prices and elevated input costs are weighing on margins. Finding and development costs increased, with the Dallas Fed reporting that firms require oil to be at $65 per barrel to justify drilling new wells. Midstream and downstream markets had stronger returns, posting an average of 8.2% and 19.8% margins, respectively, throughout the sectors.

Utilities stocks have rallied, with the Morningstar US Utilities Index up 19% YTD, and many of them trading at a premium. Hyperscalers have also continued to direct money into independent power producers to meet their monstrous data center needs.

The resurgence of activity, combined with changing regulatory landscapes, has led to a significant change in the deals space. M&A value has skyrocketed in 2025 to $77.7 billion (May 2024 - May 2025) despite fewer transactions, reflecting the wave of investor optimism for deregulation that followed Trump’s election last year as well as data-center driven demand.

Despite the current oversupply, the market faces a more optimistic outlook than it did back in 2Q. Demand, while still low, has marginally rebounded thanks to higher-than-anticipated consumption in China, though the core of current growth lies in petrochemical feedstock used to produce plastics, Power & Utilities Deal Value/Volume pharmaceuticals, and other everyday items.

Oil Demand in Current Policies Scenario

Source: S&P Global Market Intelligence, PwC Examining M&A activity closely, we find that the majority of activity is from the acquisition of fossil generation assets/firms. While strides have been made in energy transition, an administration hostile towards most renewables, along with a desire for proven and reliable conventional energy sources, has put renewables in the back seat.

Source: International Energy Agency Utilities Sector The utilities market, on the other hand, has continued to enjoy the insatiable demand for power by AI data centers. Whereas the oil market suffered from an oil glut, the utilities market is confronted with a supply shortage.

A particular exception to the current administration’s hostility, and an important facet of the utilities and energy production story, is both political and investor enthusiasm for nuclear. The current administration has taken steps to deregulate nuclear generation.

Furthermore, global investment into nuclear infrastructure is forecasted to increase to $70 billion per year by 2030, reflective of current favourable outlooks on nuclear energy sources and small modular reactors.

Thomas Lee | December 15, 2025

Rating: Buy Current Price: $357.14 Price Target: $393.65 Company Updates / News Market Cap: $107.98B ● Beta: 1.13 ● EPS: 8.73 ● PE Ratio: 39.59 ● 52 Week High: $412.70 ● 52 Week Low: $161.35 ● Q3 2025 mixed earnings: beat revenue estimates but fell short on EPS estimates ● $1.0B loan agreement with DOE toward 835 MW repowering project ● Calpine Corporation $27B acquisition by Q4 2025 Competitor Statistics from Q3 2025

Constellation Energy (CEG) Turning Up the Power Investment Thesis: Constellation Energy is the largest producer of carbon-free energy in the United States, operating a diversified fleet composed primarily of nuclear assets alongside renewable and natural gas generation. The company serves commercial, industrial, and residential customers with clean power and energy management solutions across competitive markets. Constellation’s brand is built around supplying reliable, 24/7 carbon-free electricity and helping customers advance toward decarbonization targets, while maintaining a disciplined approach to operational excellence and cost efficiency. The company aims to capitalize on several structural trends: accelerating electrification, rapid growth in energy-intensive data centers, and increasing federal and state demand for clean baseload power. Despite exposure to power price volatility, Constellation has demonstrated consistent operational performance and strong execution. My Buy recommendation reflects the belief that the company is positioned to outperform the broader market as demand for carbon-free, around-the-clock power rises, and as Constellation leverages its scale to drive long-term growth.

Valuation/Financial Modeling:

As of November 22nd, 2025, Constellation Energy was trading at $345.78 per share. I believe that this equity is undervalued and will increase to $393.65 within the current year. I conducted a Discounted Cash Flow Analysis with a terminal growth rate of 2.0% and a cost of equity of 13.0% across 5 years to arrive at this valuation. My assumptions are based upon Constellations’ historical data and an optimistic view of Constellations’ opportunistic position within the industry.

Aggressive Expansion: EV/EBITDA: 18.43x Revenue: $26.3B

EV/EBITDA: 11.55x Revenue: 31.24B

Constellation’s recently announced acquisition of Calpine Corporation, the largest U.S.-based producer of energy from low-emission natural gas generation, in a cash and stock transaction set to expand Constellation’s customer network and contribute to enhanced grid reliability for decades as customers and the industry transition toward cleaner energy sources. The acquisition signals Constellation’s focus on industry leadership. It recognizes the strengths of peer companies as an addition to the goal of clean energy generation that the industry, the country, and its customers need.

Constellation’s investment in the long-term growth of generating the cleanest and most reliable energy in the U.S., combining the best-in-class partners, and solidifying its position as an energy leader with the lowest carbon emissions in the U.S.

Competitive Landscape: EV/EBITDA: 14.56x Revenue: 17.19B

EV/EBITDA: 11.56x Revenue: 29.78B

Constellation operates within an industry that relies on diversified utilities and independent power producers. However, its scale as the largest U.S. producer of carbon-free baseload power differentiates it from peers that rely more heavily on natural gas and coal. This advantage positions Constellation as the preferred supplier for corporations and data centers seeking 24/7 clean energy, creating higher-value contractual opportunities and reinforcing high barriers to entry.

Thomas Lee | December 15, 2025

Constellation vs Duke Monthly Share Price (YTD)

Source: S&P Capital IQ Risk Potential Nuclear Fall Off: The Inflation Reduction Act’s zero-emission nuclear production tax credit supported Constellation’s earnings in 2023-2025 heavily; however, this production tax credit is said to expire after 2032 unless extended, and Constellation has one of the largest exposures to nuclear in the industry, roughly 85% of output.

Future of Data Centers: Data centers are a substantial growth driver for Constellation, signing long 24/7 clean-power agreement contracts for 10-20 years with developers, but if AI hardware becomes more energy efficient, or data center buildouts slow, hyperscalers may renegotiate or even delay contracts, impacting Constellation’s growth assumptions. Additionally, the potential for a future technology bubble due to the interconnectedness of a few major technology firms could have contractual and capital repercussions on Constellation.

Calpine Alignment: The strategic acquisition of Calpine is set to expand Constellation’s customer base and network, but the different asset portfolio of gas turbines, peakers, Combined Cycle Gas Turbines (CCGT), and geothermal assets poses potential integration complexities, which could be capital-intensive if synergy targets are missed.

Sources: Constellation.com| Duke-energy.com | Investors.constellationenergy.com | NY Times| Bloomberg | Stock Analysis | Capital IQ

Jacob Rodriguez| November 24, 2025

Rating: Buy Current Price: $168.59 Price Target: $194.26 Company Updates / News ● Market Cap: $57,121M ● Beta: 1.43 ● LTM EPS: $2.83 ● EV/Rev: 4.5x ● EV/ EBITDA: 14.9x ● 52 Week High: $219.82 ● 52 Week Low: $90.51 ● Rep. Lisa C. McClain recently purchased between $1,001 and $15,000 in Vistra stock ● Moody’s Ratings changes outlook of Vistra from stable to positive ● Mediolanum International Funds recently acquired 44,013 shares of Vistra

Competitor Statistics from Q3 2025

EV/EBITDA: 18.88x Revenue: $6,570M

EV/EBITDA: 11.40x Revenue: $7,635M

EV/EBITDA: 32.12x Revenue: $812M

Vistra Corp. (VST) An Energy Evolution Investment Thesis: Vistra, the largest competitive power producer in the United States, operates an integrated system of both power generation through a diverse fleet of natural gas, nuclear, coal, and renewable facilities, and power marketing, operating in both retail and wholesale energy markets. Through strategic capacity expansions and acquisitions, Vistra has consolidated a generation capacity of approximately 44,000 MW, positioning the company as a primary beneficiary of the evolving U.S. energy market. Driven by the proliferation of AI-focused data centers, electrification of oil and gas extraction, and the increasing prominence of extreme weather conditions, U.S. electricity demand is poised for unprecedented growth through the end of the decade and beyond. However, there remain sizeable risks to this projected growth, most notably the increased threat to production capacity during extreme weather scenarios and the possibility of energy-intensive data centers pursuing the vertical integration of their own power generation. While both risks pose a threat to Vistra’s future profitability, my buy recommendation reflects the belief that Vistra’s vast generation capabilities, the surging demand for electricity in U.S. retail and wholesale markets, and the continued development of artificial intelligence infrastructure will produce a lucrative environment for Vistra to employ the full extent of its power production capabilities.

Valuation/Financial Modeling:

As of November 24th, 2025, Vistra Corp. is trading at $168.59 per share. I believe this stock is undervalued and estimate a target price of $194.26, implying a moderate upside of 15.2%. To determine this price, I conducted a discounted cash flow analysis using a weighted average cost of capital (WACC) of 10.38% and a terminal growth rate of 3.5%. My perpetuity growth model yielded an implied share price of $171.76, while my exit multiple model produced an implied share price of $216.76. My current target price was produced by applying equal weight to both models.

Comanche Peak Nuclear PPA: On September 29, 2025, Vistra announced its first long-term power purchase agreement (PPA) with an undisclosed investment-grade company, which is assumed among equity research analysts to be a hyperscaler. The agreement will provide the hyperscaler with supplies of zero-carbon energy produced by Vistra’s Comanche Peak nuclear plant, which will begin delivering a portion of the agreed-upon amount of power in Q4 2027 and continuously ramp up to eventually supply the full 1,200 MW in 2032. While this PPA will deliver higher returns than typical retail market rates at no expense to increased volatility, the true value of this agreement lies in the precedent it will create for the power producer. Assuming it successfully delivers on this agreement, Vistra will establish itself as a competitive player in the growing hyperscaler power market, setting it in a prime position for future PPA procurement opportunities.

Jacob Rodriguez| November 24, 2025

Acquisitions and Expansion:

In the latter half of 2025, Vistra undertook two key developments that are set to expand its power generation capacity by almost 3,500 MW. The first development that accounted for a majority of the generation increase was the acquisition of seven currently operational natural gas power plants from Lotus Infrastructure Partners, increasing production capacity by 2,600 MW. While the plants are spread across key competitive markets for Vistra, the most important facilities gained from the deal are those in the PJM market. These facilities include the Fairless and Hazelton natural gas plants, providing 1320 MW and 158 MW of generation capacity, respectively. This acquisition will bolster Vistra’s future profitability, as the PJM market is expected to see load growth of an estimated 32 GW from 2024 to 2030, driven mainly by data center proliferation in the area. The second development Vistra undertook in the previous quarter was the expansion of the Permian Basin Power Plant in West Texas. The site has begun construction of two new natural gas peaker units, which are expected to be completed and operational by Q1 2028 at the latest, adding a total of 860 MW to the site’s current capacity of 325 MW. These peaker plants will be designed to accommodate the sizable growth projected in the ERCOT market, fueled by the electrification of the oil and natural gas industry, rising retail demand during peak hours, and substantial projected energy load requests from large-scale data centers.

ERCOT Adjusted Large Load Breakdown

Vistra 5 Year Stock Chart

Source: Electric Reliability Council of Texas (ERCOT)

Source: S&P Capital IQ

Risk Potential Natural Gas Weather Event Risk:

Ironically, one of Vistra’s primary growth catalysts-natural gas facility expansion-also represents a key risk. With the company currently pursuing multiple avenues to augment its generation capacity by expanding its natural gas energy facilities, Vistra is gaining increased exposure to the threat posed by extreme inclement weather conditions. Evidence of such threats is apparent in the effects of winter storm Uri in February of 2021, which caused mass power outages across the state of Texas due to power generation facilities freezing to a halt. Natural gas plants were later revealed to have the highest failure rate during the extreme weather, accounting for 58% of all outages during the winter storm. Therefore, with weather events like Uri likely to become more common within the next few years due to global warming, Vistra’s significant capital allocation into natural gas generation poses a growing risk.

BYOP (Bring Your Own Power) Trend: Over the last twelve months, data centers have increasingly sought to generate power on-site as grid capacity has struggled to meet surging electricity demand. While there is a consensus that the BYOP trend is a temporary fix to the grid’s current shortcomings, and that grid connection is ultimately what data centers seek for a consistent, diversified power supply, there remains some concern over the possibility of data centers pursuing their own long-term energy generation infrastructure to serve as an additional hedge to grid overextension. Should this trend materialize, and data centers begin investing in vertical expansion to include power production, it is likely Vistra would see downward pressure on its top-line revenue.

Sources: Vistra Investor Relations|The Wall Street Journal|Yahoo Finance|S&P Capital IQ|Electric Reliability Council of Texas

Healthcare Fall 2025

Healthcare 3Q2025 Recap and 2026 Outlook

Laura Zhai November 17, 2025

Metrics and Graphs

Lede and Overview: The healthcare sector has delivered positive earnings growth in Q3 and stable cash-flow generation, backed by continued innovation, AI adoption, and exceptional performance in select innovators in pharmaceuticals and biotech. However, healthcare underperformed the S&P 500 YoY again, driven by policy uncertainty, regulatory risks, and rising geopolitical tensions.

––––––––––––––––––––––––––––––––––––––––––––– Underperformed & Underevaluated - 2026 Outlook As of the start of November 2025, healthcare stocks have become the top-performing sector in the S&P 500, rising nearly 7% even as the rest of the market declined. This strength is largely associated (Fig. 1) Source: The Lead-Lag Report with sector rotation: as momentum for tech stocks has slowed down, investors have redirected capital to healthcare stocks, treating them as a defensive sector amidst economic uncertainty, given their historical stability. This rebound also reflects its recovery from many years of underperformance and low evaluations. In 2023 and 2024, while the S&P 500 was up by 25% yearly, the healthcare sector remained flat. In fact, by August 2025, major players were trading at steep discounts relative to their earnings. UnitedHealth, for example, dropped to 12x its next year’s earnings projections. This low P/E ratio offered an opportunity for capable investors to capitalize on the mispricing.

Looking forward to 2026, the industry’s resilience, driven by non-cyclical demand, demographic aging, and continued innovation, provides optimism despite its underperformance YoY (Figure 1). If market volatility persists, the healthcare sector could continue to (Fig 2) Source: PwC attract capital inflows, which could extend to the sector’s outperformance in the next quarter.

Regulatory & Macro Spotlight

Capital Markets, M&A, AI themes

“The One Big Beautiful Bill Act” (OBBBA), enacted on July 4, 2025, has implemented structural changes in federal health programs via increased restrictions and reductions in funding across Medicaid, the ACA marketplaces, and Medicare. Over the next decade, it will take about $1 trillion out of federal health programs, increasing the uninsured by 10-12 million people (Fig. 2). For providers, especially those in rural areas and that are Medicaid-heavy, this may translate to high volumes of disenrollment, increased pressure on medical margins, and aggressive funding cuts. To mitigate these challenges, providers may begin prioritizing investing in AI technology that supports workforce efficiency and predictive analytics, to save on operational costs long term.

US Drug Pricing: “Most Favorable Nation” President Trump’s policy, “Most Favorable Nation,” where U.S. pharmaceutical companies would match drug prices to the lowest prices paid by other developed countries in exchange for exemption from national-security-related tariffs, provides an optimistic outlook for large pharma companies. Although this limits US companies’ pricing power, the relief from high tariffs seems to have compensating effects. Additionally, it encourages portfolio diversification as faster launch sequencing can help anchor US MFN benchmarks. As part of the deal, Pfizer has promised an investment of $70 billion in R&D in the US over the next decade, and its stock price has increased by 6.8%, reflecting investors’ relief in avoiding tariffs. However, innovation may become more centralized as smaller biotech companies may struggle with adapting to the tariffs and competing against oligopolies that possess a layer of protection and security. Therefore, although this deal offers short-term relief through increased affordability and tariff protection, innovation within the U.S. may be discounted.

Healthcare M&A deals remain below pandemic peaks but rose higher in Q3, driven by biopharma, biotech, and physician practice management, where assets are strategically consolidated. Q3 deals in biotech and biopharma are primarily motivated by pipeline diversification and risk pooling rather than purely increasing market sizes. Large pharma companies continue to use M&A and licensing to refill pipelines as patents expire; however, they are targeting specific late-stage or de-risked assets, such as those within rare diseases and immunology. This implies that acquirers have become increasingly selective, favoring assets that have near-term revenue potential rather than broad bets, amidst policy uncertainties such as OBBA, MFN, and inflation.

The integration of AI across all subsectors continues to gain traction as stakeholders face increased cost pressures, labor shortages, and demands for more innovation. Pharma and biotech companies are using AI to streamline clinical trial designs and reduce the risk of pipeline development. More than 70% of providers are already implementing AI solutions geared towards revenue cycle management, prior authorization, and patient care planning. In the short term, this can effectively reduce operational costs and optimize internal processes, increasing healthcare service margins. In the long term, accelerated adoption of AI can potentially restructure the competitive dynamics of the pharma and biotech industries, as smaller companies may struggle to match AI-enhanced R&D capabilities.

In conclusion, Q3 of 2025 highlights a pivotal shift for healthcare as regulatory pressure, pricing reforms, and funding cuts transform competitive landscapes.

Simultaneously, sector rotations, selective M&A activity, and accelerating AI integration are improving efficiencies and stabilizing investor sentiment. Overall, healthcare demonstrates resilient fundamentals and stabilization amid policy normalization.

Lindsey Price| November 12, 2025

Rating: Buy Current Price: $220.88 Price Target: $237.00 Company Updates / News ● ● ● ● ● ●

Market Cap: $38.07B Beta: 1.38 EPS: 7.27 PE Ratio: 30.75 52 Week High: $228.12 52 Week Low: $134.65

Iqvia Holdings Inc. (IQV) Diversification Mitigates Volatility Investment Thesis: IQVIA Holdings Inc. (NYSE: IQV) is a Durham, North Carolina-based healthcare technology company focused on creating a healthier world through data, innovation, and intelligence. IQVIA aims to drive the healthcare industry by increasing efficiency for healthcare and biotechnology companies, connecting them to patients, and making the patient experience smoother in any way possible.

With over a billion patient records and 90% of global pharmaceutical sales tracked, IQVIA is able to use algorithms and AI to formulate a better understanding of the healthcare industry, tracking patterns and discovering both problems and solutions. On October 28th, earnings per share performed 0.81% ● IQVIA beats expectations for better than expected, and IQVIA continues to outperform its sector. However, third quarter earnings and IQVIA is a relatively volatile stock, with a Beta of 1.38 and 11 changes of more revenue due to increased demand than 5% in the past year. Additionally, revenue growth remains slow, with for services increases of 3.5% each year for the past two years. ● Q4 earnings call is scheduled for February 17th, 2026 Though a relatively volatile stock, due to strong financials, revenue growth, and diversified potential across a wide range of objectives and customers, I give ● IQVIA’s last earnings call reported $3.00 earned per share, IQVIA a BUY rating. With an implied share price of $237, above November 12th’s price of $220.88, IQVIA has upside potential. above market expectations

Competitor Statistics from Q3 2025

EV/Rev: 2.3x Revenue: $0.22B EV/Rev: 0.8x Revenue: $1.15B

EV/Rev: 2.65x Revenue: $4.02B

Valuation/Financial Modeling:

As of November 12th, 2025, IQVIA is trading at $220.88 per share. I completed two discount flow analyses. The first used the perpetual bridge to equity method with a 1.5% perpetual growth rate based on revenue growth over the past four years and projections for the future. This projected an implied shared price of $237. I also completed a discounted cash flow analysis using an exit multiple bridge to equity method, projecting an implied share price of $240 with an EV/EBITDA Exit Multiple of 13% based on forecasts and projections. Under these assumptions, I reached a conservative valuation of $237, a slight undervaluation, with potential for further growth over the next few months and quarters.

Diverse Opportunities: IQVIA provides a wide range of patient services, including data analysis for pharmaceutical and biotechnology firms, which includes data for clinical trials, intelligence and information-based sessions to identify and solve issues in the clinical space, AI innovation for companies and patient groups, surveying for censuses, and direct patient support. IQVIA is also contracted by a wide range of companies, including Pfizer, Bayer, public medical centers, and the US and UK governments. These diverse products and clients stabilize IQVIA, as any risk to one can be minimized through other opportunities. Additionally, IQVIA is larger than its competitors (see sidebar), making it less subject to market trends.

Lindsey Price| November 12, 2025

IQVIA Stock Price Compared to Top Competitors Over the Last 5 Years

Risk Potential Volatility: Over the last few years, IQVIA’s stock has remained volatile, with a beta of 1.38. This is due to many factors, including uncertainty in the pharmaceutical and biotech industries. Over 11 different days during the past year, the stock has changed more than 5%. This volatility has gone both ways, mostly due to market changes such as tariffs or Pfizer’s agreement with Trump. However, IQVIA’s beta remains similar to or less than that of competitors ICON PCL (ICLR), MedPace (MEDP), and Charles River Laboratories International (CLR), with values of 1.25, 1.43, and 1.68, respectively.

Reliance on Other Firms: This reliance on other firms for revenue, as well as the impact of other firms on IQVIA’s stock price, is another risk.

IQVIA’s main customers are not the patients that it seeks to help, but the pharmaceutical and biotech companies that directly reach those patients. Therefore, IQVIA must partially rely on its clients for success. Though they can also drive change through new products, breakthroughs, and efficiencies, their business model relies on client contracts, which sometimes have more to do with the clients than IQVIA’s offerings.

Mitigants Focus on Innovation: Over the past few years, IQVIA has increased its focus on innovation, especially with the implementation of AI. If IQVIA can continue to produce strong results and beneficial services for their clients (Pfizer, Bayer, the US government, etc.), they will continue to grow their revenue, and their stock will reflect their results rather than the results of their clients and contractual work. IQVIA is focused on creating the best possible resourcing, strengthening its client relationships, and providing a profitable future.

Sources: IQVIA Investor Relations| Jeffries Equity Research| Yahoo Finance | JP Morgan Investment Research

Max Klein| November 30, 2025

Rating: Buy Current Price: $324.54 Price Target: $356.0 Company Updates / News ● ● ● ● ● ●

Market Cap: $293.88B Beta: 0.43 EPS: $19.2.

PE Ratio: 16.9 52 Week High: $622.83 52 Week Low: $234.61

● UNH's share price is down 7.2% since the Q3 earnings call on October 28th, despite 12% YoY earnings growth ● UNH’s Q4 earnings call is scheduled for January 15th, 2026

UnitedHealthcare Group Inc. (UNH) Investment Thesis UnitedHealthcare Group Inc. is an industry-leading insurance and healthcare services provider. Widely viewed as the most diversified healthcare platform in the United States, UnitedHealthcare Group Inc. consists of UnitedHealthcare, an insurance provider, and Optum, a healthcare services platform. Through Optum Health, Optum RX, and Optum Insight, UNH has been able to capture market share and profit in pharmacy, delivery, and analytics services. This vertically integrated ecosystem has positioned UNH as a leader in cost-control and will allow the firm to effectively take advantage of sector tailwinds such as aging demographics and an industry-wide shift towards value-based care.

Due to recent setbacks, including leadership instability, shifting usage of Medicare Advantage, and the aftermath of a 2024 cyber-attack, UNH’s stock price has fallen by over 45% since April 2025. This presents a unique opportunity to invest in a blue-chip stock while it is valued like a “problem child.”

Valuation As of November 30, 2025, UNH trades at $324.53 per share. My valuation weights the DCF Gordon Growth and the DCF Multiples Method at 50% each, in order to equally value the company's long-term fundamental value with its current intrinsic value. This approach leads to a base case price target of $356.0, representing a 9.7% upside on the current market price. Through scenario analysis, the upside case results in a price target of $408.91 and a downside of $263.11. Recent Q3 earnings have shown 12% YoY revenue growth despite Medicare Advantage pricing difficulties, and sector tailwinds are expected to accelerate this growth. These factors have led me to believe that UNH is undervalued, resulting in my rating of BUY.

A Unique Opportunity Following the assassination of UnitedHealth Insurance CEO Brian Thompson in December 2024 and CEO Andrew Witty stepping down in May 2025, UNH has undergone significant recent leadership uncertainty. Beginning in 2024 and continuing into 2025, customer use of Medicare Advantage (MA) has shifted, increasing the taxpayer burden of the program. To combat this, the Center for Medicare Services (CMS) decreased its reimbursement rates in mid 2025, compressing UNH’s margins. The 2024 cyberattack led to cleanup costs in excess of $900 million and projected lost revenues of $2.1 billion. These recent drivers of downward share price movement have all since stabilized and will no longer affect UNH’s profitability. UNH’s share price remains low due to these effects, however, presenting investors with a unique opportunity to capitalize. The firm’s leadership is committed to growing earnings once again in 2026 after a period of stagnation; in addition to their strong and continued revenue growth, there is a clear path to margin repair for UNH.

Max Klein| November 30, 2025

(Annotated) UnitedHealthcare 2025 Stock Chart

Source: seekingalpha.com

Risk Potential Changes to Medicare Advantage and Reimbursement Despite their recent movement towards value-based care through Optum, Medicare Advantage remains one of the primary sources of revenue for UNH. We have seen the effects that changes in customer behavior can have on insurance companies, and UNH remains sensitive to that possibility. While the firm is better-positioned to deal with these effects than its competitors due to its size and diversity, possible shifts in Medicare Advantage user behavior and the subsequent changes to CMS reimbursement could have a large impact on UNH in the future.

Cybersecurity In February 2024, Change Healthcare, a subsidiary of Optum, was hit by a ransomware attack. Reportedly, the attack affected hundreds of thousands of healthcare providers, pharmacies, and patients, and there were concerns of breaches of privacy, payment processing integrity, and data leaks. Because Change Healthcare deals with nearly every large hospital, insurer, and pharmacy, the blast radius of the attack was enormous, in addition to the estimated $3 billion cost of the attack to UNH itself. While the direct effects of the attack have been dealt with, UNH and other healthcare providers remain vulnerable to cyberattacks.

Mitigants Sector Tailwinds As a leader in value-based care, UNH is uniquely positioned to benefit from the movement towards value-based care seen across the industry. Optum is the largest provider of value-based healthcare in the United States, and has only seen its market share grow in recent years. Additionally, an aging population favors UNH, as an older population requires more healthcare. These tailwinds will help to accelerate UNH’s growth in the coming years.

Sources: UnitedHealthcare Investor Relations| APNews | Yahoo Finance | Forbes | BusinessWire

Samantha Bramen | Nov 25th, 2025

Rating: Buy Current Price: $93.10 Price Target: $127.00 Company Updates / News Market Cap: $282.88B ● Beta: 0.17 ● LTM EPS: 30.41 ● EV/Rev: 5.29x ● EV/ EBITDA: 17.12x ● 52 Week High: $93.39 ● 52 Week Low: $61.24 ● Administration reaches a deal with AstraZeneca on lowering drug costs ● AstraZeneca to expand biomanufacturing in Maryland ● AstraZeneca beats Q3 estimates on oncology strength Competitor Statistics From 2024 Annual Report

EV/Rev: 3.01x Revenue: $63.63B

EV/Rev: 5.27x Revenue: $88.82 B

EV/Rev: 8.11x Revenue: $56.33 B

AstraZeneca (AZN) Momentum in the Making Investment Thesis: AstraZeneca is a British-Swedish multinational pharmaceutical and biotechnology company with its headquarters at the Cambridge Biomedical Campus in Cambridge, UK. It focuses on developing therapies in the key areas of Oncology, BioPharmaceuticals, Cardiovascular, Renal and Metabolism, Respiratory and Immunology, Vaccines and Immune Therapies, Rare Diseases, and the Pipeline.

Though the company has lost the momentum of the COVID-19 boom, they’re new focus on revenue growth, leading to their goal of $80 B by 2030, has expanded their horizons. In Q3 of 2025, Oncology, the largest source of their revenue, experienced a 16% growth. AstraZeneca’s strong growth outlook is driven by expanding earlier-line use, broader global adoption, and strong momentum across high-value biologics and next-generation oncology therapies.

Valuation/Financial Modeling: As of November 13th, 2025, AstraZeneca was trading at $93.10 per share. I believe that this stock price is undervalued and will increase by 36.09% to reach $127 within the next 18 months. I conducted a Discounted Cash Flow analysis using a terminal growth rate of 2.5% and a WACC of 5.2% My valuation also showed that AstraZeneca would fulfill its goal of $80 B in revenue by 2030.

U.S. Strategic Capital Investment Is a Key Driver: AstraZeneca has experienced above-industry revenue growth by focusing on promising areas in the United States. Now the company is declaring a $50B investment in the U.S. by 2030, expanding AZN’s domestic R&D and manufacturing footprint and supporting medicine development. The U.S. already represents around 42% of total revenue, but management hopes this geography will reach 50% of total revenue by 2030, helping aid their goal of $80 B in revenue by 2030. AstraZeneca is expected to create tens of thousands of high-skilled jobs across the U.S. and strengthen U.S. leadership in biopharma manufacturing through its facility in Virginia. It will be focused on weight management and metabolic portfolio, housing an oral GLP-1, baxdrostat, and oral PCSK9. This represents an entrance into the high-potential United States weight loss market, which competitors such as Pfizer, Eli Lilly, and Novo Nordisk have tapped into.

Oncology Subsector Will Lead with Pipeline Growth Oncology has been providing the highest source of income with drugs such as Tagrisso, which treats non-small cell lung cancer. Imfinzi has experienced a 21% growth Yoy, treating NSCLC, SCLC, bladder cancer, and bile duct cancer. Enertu is projected to reach $11.2B by 2030, growing at a CAGR of 20%. AstraZeneca’s leadership in oncology, the highest-growth and highest-margin therapeutic area, is becoming the company’s primary engine for long-term revenue and EPS acceleration.

Samantha Bramen | Nov 25th, 2025

AstraZeneca vs. Pfizer 1-Yr Stock Price

Source: S&P Capital IQ Risk Potential Policy Pressure on U.S. Drug Pricing: One of the risks AstraZeneca is currently facing is the threat of government policies. The Trump administration is demanding price cuts on drugs with the threat of instead facing 100% tariffs. The White House is pressing 17 drugmakers to reduce U.S. prices, aiming to align with lower international levels. However, AstraZeneca struck a deal to avoid tariffs for 3 years by offering select drugs to be up to 80% off through the TrumpRx platform.

Potential Margin Pressure from Large Discounts: The deep price cuts of up to 80% could pressure U.S. margins if they are enforced beyond Medicaid or TrumpRx. The TrumpRx discounts also may not reduce patient out-of-pocket risks compared to Medicaid, which could cause a reputational risk. However, AZN has few Medicaid products, so there is less of a risk of margin impact.

Marketing and Compliance Failure in Key Products: AstraZeneca was notified of a breach of the UK industry code due to its alleged misleading marketing of Symbicort, its asthma drug that made false claims for age use guidelines. This leads to reputational damage and risks potential future issues. However, AstraZeneca immediately removed and updated the webpage when the misleading claim was flagged. They also publicly acknowledged their processes to adhere to national guidelines going forward.

Sources: AstraZeneca Investor Relations|Yahoo Finance | S&P Capital IQ | Reuters

Industrials Fall 2025

Industrials

Matthew Jarek November 15, 2025

3Q2024 Recap and 2025 Outlook Lede and Abstract

Industrials remain a foundational sector, responsible for building the infrastructure powering growth in new industries. In a market defined by AI and electrification, the industrial sector yields massive winners positioned to rise on new structural waves and deliver outstanding returns.

Amid steady GDP and resilient employment levels, industrials extended their outperformance in Q3 2025.

Policy-driven reshoring, AI infrastructure build-outs, and defense modernization under Trump were the key to strong demand across aerospace, specialty machinery, and electrification. Despite the tariff headwinds, sector equities posted double-digit gains, with Caterpillar (CAT) and GE Aerospace (GE) leading the charge. The Industrial Sector Index (YH310) now trends 3.5% above the S&P 500, supported by top-heavy growth in Aerospace & Defense, Specialty Machinery, and Farm & Heavy Construction.

Agriculture

The agricultural sector has seen an increasing trade deficit, and has been particularly susceptible to global competition via the tariff war.

Combined with industry-specific rising variable costs, climate challenges, and the government shut down, farmers have been hit hard.

Equities specializing in farming have had to adapt, and done so successfully, growing nearly 25% YTD. Caterpillar (CAT) outperformed with Q3 sales up 10% to $17.6B, and up over 52% YoY, and Deere (DE), is also experiencing 12.5% growth YoY (Q3 sales down 9%) amid soft U.S. ag demand and tariff pressures, with precision tech and Financial Services providing offsets for Ag Trade performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Source: US Department of Agriculture

Rare Earth Minerals Competition for rare earths intensified as EV adoption and defense applications surged. Trump’s approval of the Ambler Road project and $35.6M federal investment in Trilogy Metals marked a strategic pivot to reduce reliance on China, granting the U.S. access to copper, cobalt, gallium, and germanium deposits. Shares of Trilogy surged over 200% post-announcement. Policy incentives and recycling flowsheets positioned North America for accelerated growth. Key beneficiaries include MP Materials (MP) and Lynas Rare Earths (LYSCF), and US mining operations should be watched closely in the coming months.

Electrification momentum under the Trump administration strengthened with Toyota’s $13.9B North Carolina battery plant launch and an additional $10B U.S. investment pledge, reinforcing the U.S.-Japan alliance. The facility targets 30 GWh annual output for hybrids and EVs, supporting domestic supply chains. Watch Panasonic Holdings (PCRFY), Toyota (TM), and Albemarle (ALB) for exposure to battery ecosystems Moreover, the AI-driven data center boom and electrification push have transformed energy infrastructure into one of the fastest-growing industrial verticals. Global electricity demand from data centers is projected to double by 2030, with AI workloads driving rack densities into the hundreds of kilowatts, forcing operators to adopt advanced power and cooling systems.

The trend is apparent throughout the entire US, with consumer and industrial power demand increasing again after a flat period of nearly two decades. This surge is reshaping investment priorities toward high-efficiency power distribution, thermal management, and on-site generation, creating a $580B global data center investment market in 2025.

Vertiv (VRT), Bloom Energy (BE), and nVent Electric (NVT) are leading this transformation. Vertiv specializes Globally, the battery industry has entered a new phase: in power systems and thermal management for hyperscale annual demand surpassed 1 TWh in 2024, and average AI deployments, reporting Q2 revenue up 35% YoY and EV battery pack prices fell below $100/kWh, a critical a backlog of $8.5B; its stock is up ~67% YTD. Bloom cost-competitiveness threshold. Lithium prices have Energy provides solid oxide fuel cells for resilient, dropped by more than 85% from their 2022 peak, while global manufacturing capacity hit 3 TWh and could triple low-carbon on-site generation, with Q3 revenue up 57% within five years if announced projects materialize. These YoY and partnerships with Oracle and Brookfield. nVent trends signal a shift toward standardization, economies of delivers electrical connection and protection solutions for data centers and grid modernization, posting 30% YoY scale, and consolidation, with China still producing over sales growth and a ~62% YTD share price surge.

75% of global batteries and driving cost leadership Collectively, the segment has grown ~52% YTD, through LFP chemistry. underscoring how electrification and AI convergence are driving structural demand for advanced energy infrastructure.

Batteries and Energy Infrastructure

Complementing these trends, Specialty Industrial Machinery players like GE Vernova (GEV), Cummins (CMI), and Rockwell Automation (ROK) are capitalizing on grid modernization and automation demand. GE Vernova reported $10B revenue (+12% YoY) and a 55% surge in orders, while Cummins and Rockwell are embedding AI-driven controls and electrified powertrains into industrial systems, reinforcing their role as critical enablers of the digital and energy transition.

Aerospace and Defense Not much contextualization needed in the area of Aerospace and Defense, as it continues to be the cornerstone of Industrial sector performance, representing 25% weight of the whole sector and exhibiting nearly 38% growth YTD. .GE Aerospace (GE) delivered record Q3 results: revenue up 24% YoY to $12.2B, driven by LEAP engine shipments (+40%) and defense orders (+83%). Howmet Aerospace (HWM) posted $2.09B revenue (+14% YoY) with margin expansion to 29.4%. Boeing (BA) and General Dynamics (GD) benefited from sustained Pentagon budgets, though Boeing faces certification delays on 777X. GE’s outbound FDI hit $22B through H1 2025, underscoring global ambitions.

Conclusion Industrials remain effective enablers of next-gen infrastructure—from rare earth supply chains to electrification and aerospace platforms. Despite tariff uncertainty, structural drivers like AI, defense, and grid modernization continue to underpin sector resilience. With these reshoring and automation tailwinds, industrials are positioned for durable growth into 2026. Investors should favor companies aligned with electrification, aerospace, and specialty machinery themes, all aligned under the AI and analytics boom, while monitoring cyclical softness in OEM production lines.

Sources:

NY Times | Barrons| CFRA Equity Research| Yahoo Finance | WSJ | Financial Times | Capital IQ | Robinhood | IEA

Justin Kaplowitz | December 22, 2025

Rating: Buy Current Price: $320.10 Price Target: $458.60 Company Updates / News Market Cap: $124.38M ●​Beta: 1.16 ●​LTM EPS: $9.98 ●​EV/Rev: 5.04x ●​EV/ EBITDA: 22.26x ●​52 Week High: $399.56 ●​52 Week Low: $231.86 ●​Missed revenue targets by ~70 million in Q3. ●​Recorded significant backlog growth in Q3 of 20% in Electrical Americas and 15% in Aerospace. ●​Announced $9.5 Billion acquisition of Boyd Thermal.

Competitor Statistics from Q3 2025​

Eaton Corporation (ETN) The Quiet Winner of the AI Gold Rush

Investment Thesis

Eaton Corporation (NYSE: ETN) is a global power management and electrical equipment company that provides infrastructure for vehicles, buildings, and data centers. Its largest segment, Electrical Americas, is a key supplier to data centers and electrification projects. With record backlog growth, enhanced efficiency, lower tariffs, and supply chain normalization, the company is poised for higher margins and sustained high-single- to low-double-digit organic growth through 2026 and beyond. Capital deployment will also augment growth through the firm’s acquisitions of Boyd (liquid cooling) and Fibrebond (modular power and communications enclosures). For these reasons, we recommend a buy rating on Eaton, with a price target of $458.60 for 2029 and a 43.27% upside potential.

Evaluation Suggests Upside As of December 22nd, 2025, Eaton Corporation is trading at $320.10 per share. A discounted Cash Flow Analysis was used to value the company, incorporating a weighted average cost of capital (WACC) of 9.01%, a terminal growth rate of 5%, and an exit multiple of 20x EBITDA. FCF assumptions were determined using management projections primarily announced during the firm’s November 6th, Q3 earnings report, with a large order backlog growth rate (18% growth YOY) leading to elevated revenue growth in Q4 2025, 2026, and possibly early 2027, while eventually steadying to 2025 forecasts of 8.5-9.5%, in the years following. Also, as reported in Q3 Earnings, CapEx is likely to be inflated in 2026 and to return to 2025 levels (the firm's estimate is ~$1.2 Billion) in the years following. Using these assumptions, we determined a 2029 valuation of $458.60, implying a 43.27% upside relative to the current stock price.

Growth Poised to Accelerate in 2026 EV/Rev: 4.84x Revenue: $18.02B

EV/Rev: 6.64x Revenue: $7.16B

EV/Rev: 5.71x Revenue: $8.34B

On a rolling 12-month basis, order acceleration in Eaton’s Electrical Americas segment is up 7%, and data center orders are each up approximately 70% on the quarter.

Additionally, Backlog has increased by 2 billion dollars, or 20% YOY, in Electrical Americas. Eaton's Aerospace segment also grew, with a 15% increase in backlog in Q3 2025. Orders will likely be fulfilled by 2026, with some extending into 2027, based on earnings call announcements. Once completed, these orders will translate into organic growth, leading to high revenue growth in 2026 and possibly 2027. Currently, Eaton is driving growth through increased capital investment, with a particular focus on data center construction. The company has recently made moves to acquire Boyd and Fibrebond. While raising current CAPEX may seem challenging, it is expected to lead to significant future growth. Boyd, which specializes in liquid cooling solutions, and Fibrebond, known for its power enclosures, will help transform Eaton from a supplier focused solely on power into a full-stack data center infrastructure provider. Once fully integrated, the two firms are expected to attract diverse data center clients, leading to order growth and organic expansion as those orders are fulfilled.

Justin Kaplowitz | December 22, 2025

Potential for Margin Appreciation as Tariff Headwind and Underutilization Ease Over the past year, Eaton’s Electrical America’s Segment margins have stalled largely due to recent tariffs and some headwind from underutilization of increased capacity. However, both of these revenue-limiting roadblocks will be mitigated over time.

Tariffs, having already been implemented and factored into Eaton’s 2025 margins, will likely not further limit margin appreciation in 2026. Additionally, Eaton has worked to limit impediments caused by tariffs through regionalizing its supply chain. Over the last two years, Eaton has invested more than a billion dollars in transitioning its supply chain from Asia to the United States.

Future Data Center Construction Market

Projected Net Income and Revenue Growth

Source: Market.us

Eaton Faces Manageable Risks A potential risk for Eaton’s growth is that Data center investment is highly inflated. There's a chance that if artificial intelligence loses traction, firms will decelerate or even cancel orders for Eaton’s products, leading to huge revenue loss. While this may be a possibility, it is very unlikely. This is because artificial intelligence and data center production have become an arms-race-like competition between the U.S. and China, and both nations are horrified at the thought of falling behind. For this reason, data center construction will likely only increase, and the U.S. government might actually supplement the artificial intelligence market, leading companies like Eaton to have even greater growth potential.

As of Q3 2025, Residential and consumer-based businesses remain weak with reported negative growth of 8% in Eaton’s Vehicle segment and 19% in the firm’s E-mobility segment YOY. One major reason for Eaton’s weak Residential segment is due to limited builder sentiment and construction. People are unable to afford houses due to high interest rates and, thus, mortgage rates. However, if the Fed lowers rates again, then mortgages will go down, and demand in the housing market will increase. This would evidently lead to revenue growth in Eaton’s current weak segments.

Utilization is also becoming less of an obstacle with time. Eaton is working to grow its supply chain internally, specifically through its “factory as a grid” approach. Through the approach, Eaton is transitioning to on-site energy usage, allowing each facility to operate as an individual microgrid. As one of the main obstacles to data center efficiency is a lack of energy, such an approach will greatly increase Eaton’s efficiency overall. Additionally, Eaton is producing better and more efficient products with increased ability to handle higher data center workloads. This can be observed through Eaton’s creation of equipment with the ability to support 800 VDC adoption in data centers, along with liquid cooling and complex fiber enclosure capabilities, through its acquisition of Boyd and Fibrebond. All of these actions will improve data center efficiency and allow Eaton to maximize its profit.

Sources:

Eaton Investor Relations | Market.US | S&P Capital IQ

T.J. Malone| November 24, 2025

Rating: Hold Current Price: $204.62 Price Target: $220.76 Company Updates / News Market Cap: $16.141 B ● Beta: 1.94 ● LTM EPS: 4.25 ● EV/Rev: 1.1x ● EV/ EBITDA: 14.0x ● 52 Week High: $224.03 ● 52 Week Low: $99.70 ● MasTec double beats for Q3 2025 ● Earnings beat overshadowed by weak cash flows stock drops 8% after earnings ● MasTec’s next earnings report (Q4 2025) is expected after close February 26, 2026 Competitor Statistics From Q3 2025

EV/Rev: 1.1x Revenue: $7.46B

EV/Rev: 2.2x Revenue: $27.19B

EV/Rev: 1.5x Revenue: $5.713B

Investment Thesis:

MasTec Inc (MTZ) Patience Is Power

MasTec is a leading infrastructure construction company positioned at the intersection of multiple secular growth trends, including renewable energy transition, grid modernization driven by data center electrification, nationwide fiber deployment, and pipeline infrastructure replacement. The company's $16.5 billion backlog provides strong visibility and supports our 14.7% revenue CAGR projection through 2029, smashing the 8-10% industry average, driven primarily by the Clean Energy & Infrastructure (18% CAGR) and Power Delivery (16% CAGR) segments capitalizing on $1.5+ trillion in government infrastructure spending from the IIJA and IRA. However, despite this attractive growth trajectory, MasTec's 7.9% EBITDA margin meaningfully trails peer averages of 10-11%, and concerningly, the fastest-growing segments generate the lowest margins (CE&I at 6.3%, Power Delivery at 8.3%), creating an unfavorable mix shift. Furthermore approximately 40% of projected growth depends on government programs facing policy uncertainty under a new administration. My DCF analysis yields a $220 price target, and I am assigning a HOLD rating pending evidence of sustained margin improvement or a more attractive entry point, with a clear path to upgrade once the company demonstrates operational leverage from its revenue scale.

Valuation/Financial Modeling:

As of November 24, 2025th, MasTec is trading at $204.62 per share. To value this company I conducted a discounted cash flow analysis, using a weighted average cost of capital (WACC) of 8.37% and a terminal growth rate of 3.0%. My revenue and FCF assumptions are in line with analyst and management projections of MasTec’s revenue steadily increasing through 2029. Using these assumptions, I came to a valuation of around $253, implying a slight upside of around 7%.

The Role of Government: MasTec's growth is heavily dependent on federal infrastructure spending, with approximately 40% of projected revenue growth tied to the Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA). The IIJA's $65 billion allotted for broadband expansion directly benefits the Communications segment, while $65 billion for power grid modernization supports Power Delivery growth. The IRA's $370 billion in clean energy incentives, including production tax credits for wind and solar, is the primary catalyst for Clean Energy & Infrastructure's projected 18% CAGR, driving utilityscale renewable construction and energy storage deployments that comprised 33% of 2024 revenue. However, policy uncertainty emerged in January 2025 when the Trump administration paused new federal wind permits and signaled potential rollbacks of renewable subsidies, creating downside risk to CE&I margins and project economics. While data center power demand and utility grid investments provide non-government growth drivers, any material reduction in IRA tax incentives could pressure renewable project viability and slow MasTec's fastest-growing, though lowest-margin, segment.

T.J. Malone| November 24, 2025

MasTec 5 Year Stock Chart

Source: Yahoo Finance Risk Potential Margin Compression:

MasTec's fastest-growing segments generate the lowest profitability, creating an unfavorable mix shift. Clean Energy & Infrastructure (18% CAGR, 44% of growth) operates at only 6.3% EBITDA margin, while Power Delivery (16% CAGR) has declined from 9.4% to 8.3% margin since 2022. Both segments rely on fixed-price EPC contracts where cost overruns directly impact profitability. If segment-level margins don't improve while scaling these divisions, consolidated EBITDA could remain stuck at sub-8% levels, limiting earnings growth despite strong revenue performance and compressing valuation multiples.

Pipeline Infrastructure Backlog Collapse:

MasTec's Pipeline Infrastructure backlog collapsed 42% year-over-year to $0.7 billion (Q2 2025) following the Mountain View Pipeline completion, representing only 0.33x revenue coverage versus 1.2-2.0x in other segments.

Our projections assume 8-10% growth resumes in 2026, but current trends show limited replacement project visibility. While Pipeline represents just 17% of 2024 revenue, it generates the highest margins (18.3% EBITDA), meaning declines would disproportionately impact profitability and accelerate the unfavorable mix shift toward lower-margin Clean Energy & Infrastructure and Power Delivery segments.

Customer Concentration:

MasTec's top 10 customers represent 35% of 2024 revenue, with its largest at 8%. Within segments, major utilities or telecom carriers comprise 15-20% of revenue. Loss of a key customer through contract non-renewal could create sudden revenue gaps, while large customers possess significant bargaining power to dictate pricing and resist cost pass-throughs, limiting MasTec's margin expansion despite strong demand.

Sources:

MasTec Investor Relations| Refinitiv | Yahoo Finance | S&P Capital IQ | The Wall Street Journal | Pitchbook |

Media Fall 2025

Media & Entertainment 3Q2025 Recap

Lede and Abstract: Media & Entertainment in late 2025 is defined by two contradictory yet coexisting forces: 1) Surging demand for digital video, creator-led content, and live events, powered by AI tooling, sports rights inflation, and record global streaming hours. 2) Severe economic pressure on legacy media, accelerating cord-cutting, collapsing linear TV ad markets, and an industry-wide recalibration of content spend. The result is that M&E has become the most bifurcated sector of 2025—with winners in streaming profitability, sports IP, gaming, and creator ecosystems, and structural declines across linear TV, traditional film, regional media, and ad-dependent publishers.

AI-Driven Content Acceleration: The scaling of AI technology across the media and entertainment value chain has reached an inflection point moving past experimentation towards redefining the economics of content. AI-powered workflows are shortening production cycles through automated video editing, real-time rendering for VFX and multi-language localization, to produce “global-ready” content at scale in days vs. months. Generative AI helps writers with ideation and drafting, but also provides novel functionality like character generation and script-variants for story creation. Creators are now using AI for automated B-roll, voice cloning, thumbnail optimization, and hyper-personalization at scale for audience engagement. Industry analysts estimate the current size of the AI-media market to be at US $25.98 B and growing at a CAGR of 27% through 2030 to ~US $99 B. This growth trajectory across the use cases underscores how AI is becoming a fundamental input to each stage of the content development process. While lower barriers to entry are democratizing participation in content creation, authenticity, IP, and leveraging of human creativity at scale through AI becomes key differentiators for success.

Sports Rights Inflation: Sports rights are perhaps the most potent megatrend transforming the media landscape in 2025. Amid escalating competition between streamers, Big Tech platforms, and legacy broadcasters, total sports rights spending in the U.S. reached US $30.5 B in 2024, more than doubling in the last 10 years. A growing group of global contenders is treating sports as the last remaining form of appointment viewing and the ultimate subscriber-acquisition engine.

Vivaan Shah November 18th, 2025

Metrics and Graphs Change in Share of Viewing (%)

Source: Nielsen

AI in Media & Entertainment Market Size

Source: Grand View Research

USA Sports Rights Spend vs TV Industry Revenue

Source: Ampere

This is driving aggressive bidding wars not only for the NFL, NBA, UEFA, IPL but also in emerging niche leagues.

A deepening chasm between Tier-1 and Tier-2 properties: as every platform chases ‘the sports crown’, elite leagues are extracting premium deals and increasing their power, while smaller leagues feel pricing pressure and face increasing distribution challenges. Responding to an increasingly fragmented and on-demand-first audience, and changing nature of fandom, leagues are evolving toward micro-bundles, team-specific passes, and immersive, interactive viewing experiences that create deeper engagement. There’s also a mounting question of sustainability: with rights costs rising at such a blistering pace and outstripping growth in ad revenue, how far will platforms go to leverage commerce, betting, and targeted ad-insertion to pay the bills?

Creator Economy Monetization: Industry professionals are seeing a new wave of specialization, with creators maturing from platform-dependent influencers to multi-platform media businesses. Monetization streams are also diversifying, with a movement away from ad- and brand reliant income toward community commerce, AI-personalized merchandise, and platform-native storefronts. As the global creator economy is expected to exceed US $500 B in worth by 2027, brands are increasingly shifting budget to creator-led campaigns for their authenticity, improved conversion rates, and the expansion of niche communities.

Global Creator Economy Market

While top creators are staffed with teams, production studios, and intellectual-property lines, mid-tier creator marketing costs are skyrocketing, and algorithms are becoming more unpredictable. With more social platforms building native monetization tools, creators are acting as both content producers and micro-entrepreneurs, and media companies are being challenged to rethink partnership models and integrate creator ecosystems natively into their content and commerce strategies.

Gaming & Interactive Media Expansion: Gaming is the fastest-growing entertainment sector, with a value of US $187.7 B in 2024 and an estimated US $188 B+ in 2025.

Gaming's influence in pop culture now surpasses that of film, TV, and music combined. Mobile has the largest revenue share, with live-ops, microtransactions, and cross-platform play defining consumer spend.

Global Mobile Gaming Market

Source: Market.US Gaming IP is the hot currency in transmedia deals; major entertainment groups like to use them to expand into movies, series, merchandising, experiences and events. AI tools are increasingly used in development pipelines, speeding up asset production by up to 50% and allowing studios to provide more dynamic game updates. As GenZ and Millennials shift their social time to games, brands are reallocating budgets to gaming, in-game advertising, interactive storytelling, and branded virtual worlds.

Source: Grand View Research

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Cecilia Liu| November 16th, 2025

Rating: Buy Current Price: $235.03 Price Target: $285.58 Company Updates / News ●​Market Cap: $43,430M ●​Beta: 0.95 ●​LTM EPS: -22.77 ●​EV/Rev: 7.21x ●​EV/ EBITDA: 58.8x ●​52 Week High: $264.79 ●​52 Week Low: $177.09 ●​Take-Two last quarter earnings beat expectations by 3.8% ●​Adjusted EBITDA comes in at $387.6M, beating expectations by 34.6% ●​Delayed Grand Theft Auto VI from May to November 2026 Competitor Statistics from Q4 2025​

Investment Thesis:

Take-Two Interactive (TTWO) Take the ride

Take-Two is an American video-game company owning three major publishing labels and offering blockbuster console, PC, and mobile titles games. Rising to prominence through Rockstar Games, creator of Grand Theft Auto, (in my opinion the greatest game and) the second-best-selling series of all time, Take-Two didn’t stay parked in the GTA garage. Despite its anchored dominance in premium AAA blockbuster storytelling, the company drove full throttle into new realms. Its second division, 2K, houses the sports-simulation arm, and has become the most consistently monetized e-sports title. The 2022 Zynga acquisition completed Take-Two’s map of the gaming realm, claiming console, PC, and now mobile as parts of its atlas. With a highly diversified content portfolio and broad audience, Take-Two’s stock has risen 27.68% over the last twelve months, performing in line with a gaming sector that has benefitted from growing investor sentiment and solid industry tailwinds. As Activision Blizzard acquired by Microsoft and EA prepared to go private, most of its competitors have effectively logged off and left Take-Two as the last major independent titan in the public market game. It also holds the ultimate epic GTA VI slated for release at the end of 2026 and poised to define the next decade of gaming. Given its 8.80% pullback last month following disappointment around the GTA VI delay, I argue that the stock is a buy at this moment.

Valuation/Financial Modeling:

EV/Rev: 6.98x Revenue: $7.28B

EV/Rev: 15.84x Revenue: $4.46B

EV/Rev: 7.63x Revenue: $194.35B

As of November 2025, Take-Two Interactive is trading at $235.53 per share.

Through a Discounted Cash Flow analysis using a 7.40 % WACC, I model steady growth in 2026 followed by a significant revenue inflection in 2027 driven by the long-awaited launch of GTA VI, with momentum continuing through 2028–2030.

My perpetuity growth model yields an implied value of $267.77, while an exit-multiple approach using a 23.1x EV/EBITDA multiple yields an implied value of $303.59. Applying an equal weight, the target price will be $285.58, an upside of 22%.

Grand Theft Auto VI Release The upcoming release of GTA VI is the most important catalyst in Take-Two’s portfolio over the next 5 years. Its predecessor GTA V, having sold over 220 million units worldwide,continues to generate meaningful bookings more than a decade after its launch. Sold 32.5 million copies in its first year, 20 million copies as recently as 2020, and still selling 5 million copies in 2025, GTA V’s unprecedented longevity and cultural relevance is unquestionable. The historical performance sets a high bar for GTA VI while also highlights the long-tail monetization the company consistently achieves with its flagship IP. Industry expectations for GTA VI are bullish; according to Insider Gaming and other analysts’ estimations, the game could generate up to $7.6 billion revenue within its first 60 days, making it a potential record-setting entertainment release. GTA VI will not be a one-year spike; if past GTA V dynamics hold, the title is positioned to provide a multi-year revenue engine.

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Cecilia Liu| November 16th, 2025

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Strong Recurrent Consumer Spending Recurrent Consumer spending (RCS) – in gaming purchases case – generated from ongoing consumer engagement and includes virtual currency, add-on content, in-game purchases and in-game advertising. It is now a core pillar of Take-Two’s revenue; in Q2 2026, net Bookings from recurrent consumer spending grew 20% and accounted for 73% of total Net Bookings and accounted for 72% of total GAAP net revenue. Flagship games like GTA Online, NBA 2K along with Zynga’s mobile hits like Empires & Puzzles and Toon Blast drive continuous user spending through Shark Cards, virtue currency purchases, MyTeam packs, and other microtransactions. Unlike traditional console or one time game purchases on Steam, these revenue streams are recurring, high-margin, and durable, helping fill in the gaps between major AAA releases. Management has emphasized in the latest earning call that RCS is expected to grow as a percentage of total booking through engagement loops and broader in-game monetization opportunities, complementing the cyclical impact of major franchise launches.

Take-Two 5 Year Stock Chart

GTA VI Game Sales

Source: S&P Capital IQ

Source: TweakTown

Risk Potential GTA VI Timing and Performance A key structural risk embedded in Take-Two is its heavy dependence on the successful and timely launch of GTA VI. The title has already faced multiple delays, and any further slippage into 2027 or beyond would disrupt revenue expectations despite contributions from other franchises such as WWE 2K26 and Borderlands 4. Given its unprecedented scale, uncertainty around GTA VI’s pricing strategy and consumer’s willingness to pay create further risk. Some argue that GTA VI is not a magic bullet in this broader gaming industry with questions of long-term viability of traditional AAA releases and the increasing competition from live-service titles. If GTA VI underperforms relative to unprecedented market expectations, Take-Two’s long-term growth trajectory would be significantly challenged.

Labor Disputes In November 2025, Rockstar reportedly terminated more than 30 employees. Rockstar claimed the terminations were due to the distribution of confidential information, but the Independent Workers’ Union of Great Britain (IWGB) alleges the move was clearly an act of union busting. The situation escalated as over 220 Rockstar employees signed a letter demanding the reinstatement of their dismissed colleagues, and the issue has now reached the UK Parliament. With legal action already initiated, prolonged labor unrest and protest pose risks to the company’s production stability and development timeline.

Sources:

Take-Two Investor Relations| Yahoo Finance | S&P Capital IQ | TweakTown | Gamespot | Insider Gaming

Karen Zheng| November 26, 2025

Rating: Buy Current Price: $320.10 Price Target: $458.60 Company Updates / News Market Cap: $15.16B ●​ Beta: 1.61 ●​ EPS: -0.26 ●​ PE Ratio: 21.5x ●​ 52 Week High: $53.61 ●​ 52 Week Low: $26.23

Investment Thesis:

DraftKings (DKNG)

Despite ongoing competition from peers, the emergence of predictive sports betting, and the threat of heightened regulation, DraftKings' technology and product offering produce a brand advantage. DraftKings' in-house technology platform, SBTech (acquired in 2020) will allow it to capitalize on a network effect that allows more control in leveraging customer data and launching new products. We see DraftKings’ online platform as well-positioned to participate in the $50 billion North American sports betting and i-gaming revenue opportunity by 2028.

Valuation/Financial Modeling: As of November 26th, 2025, DraftKings was trading at $32.76 per share. I believe that this equity is undervalued and will increase to a target price of $39.28 within the current year. I conducted a Discounted Cash Flow Analysis with a terminal growth rate of 4.00% and a cost of equity of 9.85% across 5 years to arrive at this valuation. My assumptions are based upon DraftKing’s historical data and an optimistic view of DraftKing’s future performance. DraftKing also has a healthy liquidity profile with positive adjusted EBITDA and FCF to the firm in 2024, and with an untapped $500 million credit facility to continue investing in existing and new products.

●​ DraftKings’ Q3 revenue missed expectations ●​ DraftKings and FanDuel left the American Gaming Association ●​ Prediction markets such as Kashi are gaining DraftKing’s Moat: momentum in the U.S., directly competing with Following a 2018 Supreme Court ruling, the company has been leveraging its early sportsbooks like DraftKings mover advantage in daily fantasy sports (platform launched in January 2012) to gain a Competitor Statistics from Q3 2025​

leading share position in online sports and i-gaming betting. DraftKings holds the number-two revenue share position in the states in which it competes, at about 30%.

This is behind online peer FanDuel’s leading 40% share. With its strong and established presence, we think DraftKings is well-suited to obtain sports betting and i-gaming licenses.

Legalization in Key States

EV/EBITDA: 20.8x Revenue: $15.44M

The emergence of predictive sports betting could incentivize states like California and Texas to legalize the activity. While sports betting and iGaming are currently legal in around 40 states and seven states, respectively, we expect another handful to be added to each market in the next few years, as governments look to capitalize on tax revenue generated from the growing activity. As a result, the North American sports betting and iGaming market is expected to reach more than $50 billion in revenue by 2028.

Railbird EV/EBITDA: 8.6x Revenue: $6.82M

In 2025, DraftKings acquired the predictive event platform Railbird, with plans to launch an offering in December 2025 to compete with Kalshi and Polymarket. We think DraftKings’ healthy liquidity profile affords it latitude to invest further behind its brand.

The company operates in a net cash position (which equated to $74 million at the end of 2024), with an untapped $500 million credit facility, and positive adjusted EBITDA and free cash flow to the firm in 2024.

Karen Zheng| November 26, 2025

DraftKings Share Price (YTD)

Source: CapitalIQ

Risk Potential Organized Crime: A cyclical downturn in the U.S., driven by slower economic growth, lower consumer confidence, or rising unemployment, could materially impact discretionary spending. Since online sports betting and iGaming are non-essential consumer expenses, users may reduce engagement during weaker economic periods.

Excess Inventory: The industry is becoming increasingly competitive, with FanDuel continuing to dominate market share. At the same time, legacy casinos are investing aggressively and expanding into online betting, which may put additional pressure on DraftKings’ ability to differentiate.

Economic Uncertainty: Sports betting legislation differs widely across states, and changes in regulation, such as higher tax rates, licensing requirements, or slower approvals, could limit market expansion or squeeze margins. If new states delay legalization or if current states increase taxes, the total addressable market could end up being smaller than projected.

Sources: DraftKing’s Inestor Presentation| NY Times | Barrons| Morningstar Equity Research| Yahoo Finance | Capital IQ | Robinhood | Pitchbook

Technology Fall 2025

Technology 3Q2025 Recap and 2026 Outlook Overview

Since the previous publication, the Technology, Media, and Telecom sector has remained a primary driver of equity performance, supported by resilient AI-infrastructure demand and improving clarity around the Federal Reserve’s 2026 rate plans. Despite occasional volatility tied to mixed megacap earnings and global political developments, sentiment has stayed relatively constructive.

Q3 2025 was defined by two themes: the normalization of AI-infrastructure spending after two years of exceptional growth, and a rotation away from megacap leadership toward broader strength in software, semiconductors, and media. AI continues to anchor the narrative, with global AI-capex on track to exceed $390 billion in 2025 before moderating in 2026.

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Technology (TMT)

Q3 2025 reaffirmed AI’s central role in the technology sector, but with clearer signs of maturation after two years of exceptional expansion. GPU and accelerator demand remained solid, though growth rates slowed as hyperscalers shifted from peak procurement toward system-level integration and orchestration. Semiconductor companies delivered mid-teens revenue gains supported by sustained data center construction, stronger memory pricing, and continued investment in AI networking. The megacaps posted mixed results, with the Magnificent 7 underperforming broader tech as investors rotated into software, semiconductors, and infrastructure names.

Cloud providers reiterated that 2025 represents the peak of AI-infrastructure capex, noting that spending is increasingly directed toward optimization, networking efficiency, and scaling of inference workloads rather than pure compute expansion.

2026 Outlook: Investors expect 2026 to mark the shift from AI-infrastructure buildout to monetization, with enterprise adoption becoming the primary performance driver. After nearly $390 billion in AI capex during 2025, spending should remain elevated but grow more slowly as GPU supply normalizes and inference workloads stabilize. Nvidia’s Blackwell rollout will ease constraints, while software firms benefit from AI-native applications and agentic workflows embedded across operations. Enterprise IT budgets are set to reaccelerate as ROI clarity improves. Lower financing costs and moderating valuations should also spur M&A activity.

Uday Batra November 17, 2025

Media (TMT)

Telecom (TMT)

The media sector in Q3 2025 reflected a combination of innovation, competition, and persistent caution.

Short-form video continued to dominate attention, with LinkedIn’s push into TikTok-style formats gaining more traction than expected among professional users.

Streaming platforms escalated their content investments, particularly in exclusive sports rights and premium franchises, as Amazon strengthened its Prime Video position and Apple expanded the Vision Pro ecosystem to support more immersive formats.

Regulatory pressure remained a meaningful headwind, driven by ongoing U.S. and EU scrutiny of TikTok and broader content-governance concerns. Advertising trends were uneven and highly sensitive to macro conditions, contributing to the S&P 500 Media Index’s approximately 12 percent gain since May, a respectable number. Still, management teams expressed optimism as ad budgets stabilized and AI-powered content personalization advanced rapidly.

Telecom performance in Q3 2025 reflected the closing stages of the global 5G deployment cycle and the transition toward a more efficiency-oriented investment environment. With most large CSPs completing major portions of their 5G buildouts, equipment demand softened, contributing to mixed earnings across key suppliers including Qualcomm, Nokia, and Ericsson. However, enterprise connectivity provided meaningful support to sector performance, as adoption of private 5G networks, industrial IoT systems, and edge-AI deployments accelerated.

Companies continued integrating localized LLMs and latency-sensitive AI workloads, driving demand for secure, high-bandwidth network infrastructure.

Satellite connectivity was a major storyline, with Starlink surpassing nearly 7,000 operational satellites and strengthening its dominance in low-Earth-orbit systems, intensifying market speculation about a potential 2025–2026 IPO. Despite relatively muted top-line growth, the S&P 500 Telecom Services Index returned about 10 percent since May, supported by the sector’s defensive cash flows, improving margins, and growing opportunities in edge computing and satellite-to-device services.

2026 Outlook: The 2026 outlook centers on how effectively media firms embed AI across production, personalization, and distribution. Spatial computing and AR/VR adoption should accelerate as Apple, Meta, and Asian OEMs release next-generation devices for both consumers and enterprises. Streaming is expected to consolidate as platforms acquire smaller studios to reduce churn and secure premium content. Advertising should improve with stabilizing budgets and AI-enhanced targeting, while investment in blockchain-based authentication rises. Overall, 2026 is set for steadier growth driven by AR expansion and better content monetization.

2026 Outlook: The telecom sector’s 2026 outlook centers on AI-optimized network management, expanding satellite connectivity, and the early foundation for future 6G standards. With 5G buildouts largely complete, spending is expected to shift toward AI-driven automation that boosts efficiency and reduces operating costs. LEO satellite networks will extend into emerging markets, while edge inference and localized AI models drive new enterprise demand. Rising cybersecurity needs should sustain investment even as overall capex moderates, marking a transition toward monetization, efficiency, and AI-enabled network services.

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Dylan Wong| November 6, 2025

Rating: Buy Current Price: $30.92 Price Target: $40.88 Company Updates / News ●​Market Cap: $2,006M ●​Beta: 1.66 ●​LTM EPS: 1.72 ●​LTM EV/Rev: 1.92x ●​LTM EV/ EBITDA: 10.47x ●​52 Week High: $45.12 ●​52 Week Low: $13.87 ●​ACM’s expected Q4 2025 Earnings Call is Wednesday, February 25, 2026 ●​LSV Asset Management increased its shareholder stake by 462% in Q3 ●​ACM recently narrowed its 2025 revenue outlook to $875-925M Competitor Statistics from Q3 2025​

EV/Rev: 2.53x Revenue: $681.4M

Investment Thesis

ACM Research Inc. (ACMR) Rising Through the Wafer

ACM Research is a leading developer of wafer cleaning and advanced packaging equipment for the semiconductor manufacturing sector. The company supports major foundries and chipmakers with innovative solutions that enable higher yields and improved process performance. Its growth is fueled by increasing demand from AI, 5G, electric vehicles, and China’s push for domestic semiconductor production. Although short-term headwinds from inventory shifts and geopolitical tensions have created volatility, ACM’s strong technology, expanding customer base, and growing service revenues demonstrate durable growth. These strengths make the company a compelling buy for investors seeking targeted exposure to the semiconductor equipment sector.

Valuation As of November 6th, 2025, ACM trades at $30.92 per share. My valuation uses a blended approach and places the greatest weight on the DCF Gordon Growth method at 35%, highlighting the company's long-term fundamental value.

Forward-looking multiples P/E '26 and EV/Revenue '26 are each weighed at 15% alongside trailing multiples P/E LTM at 5% and EV/Revenue LTM at 10%. The analysis is rounded out with a 20% contribution from the DCF Multiples Method, which reflects terminal value based on market comparables. This approach yields a base case price target of $40.88, representing 32.20% upside, with scenario analysis showing a bull case at $61.88 and a bear case at $34.90.

Manufacturing Expansion in China and the US ACM recently delivered its first Ultra Lith KrF Track system to a leading semiconductor manufacturer in China, marking a major milestone as the company expands into front-end semiconductor equipment. The company continues to innovate in wafer cleaning and packaging and is scaling up production capacity with new R&D and manufacturing centers in Lingang, Shanghai. Reflecting this momentum, management has raised its China revenue goal from $1.5 billion to $2.5 billion as new fabs come online, positioning ACM to capture increased demand and strengthen its global market presence.

US CHIPS Act and Strategic Diversification EV/Rev: 0.78x Revenue: $2,110.7M

EV/Rev: 3.11x Revenue: $853.1M

In response to new funding opportunities from the US CHIPS and Science Act, ACM is establishing a production and R&D facility in Oregon as part of its broader US expansion. This investment allows the company to participate in federal incentive programs, strengthen relationships with key domestic partners, and contribute to efforts aimed at building a more resilient national semiconductor supply chain. By developing manufacturing capabilities in the United States, the company reduces its exposure to international trade risks and meets new sourcing requirements. This also positions the company to benefit from long-term trends in reshoring and ongoing technological advancement within the American semiconductor industry.

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Dylan Wong| November 6, 2025

ACM Research 5 Year Stock Chart

Source: Investing.com

Risk Potential Trade Policy and Tariff Risk Current US-China tariffs are directly impacting ACM by raising costs on Chinese imports by about 20%, with some semiconductor-related tariffs reaching over 30%. These tariffs increase expenses and result in shipment delays, putting pressure on margins while making it more difficult for ACM to fulfill orders. Even as ACM expands US operations, navigating higher import costs continues to strain its production schedules and operational flexibility.

Customer Concentration ACM derives over 75% of its revenue from China, making the business highly sensitive to concentration risk. While the stock trades at a low forward 15x P/E multiple and maintains respectable growth, its 18% ROIC trails industry leaders. Such exposure to a single market introduces a level of unpredictability that overshadows attractive financial metrics, as any escalation in geopolitical tensions or policy restrictions could cause the company’s earnings outlook to deteriorate rapidly.

Competition and Technological Change In 2024, ACM spent approximately 14% of its revenue on R&D with top competitors typically spending closer to 17%. Its gross margin is about 42%, which also trails the industry benchmark of 46%. Analyst consensus projects a 20% revenue CAGR for the company through FY2027. However, unless the company narrows its gap in technology investment, sustaining this level of growth may be difficult as the industry rapidly evolves.

Sources: ChartMill | Investing.com | KoalaGains | MarketBeat | Morningstar | Quiver Quantitative | S&P Capital IQ | Simply Wall St | The Wall Street Journal | Yahoo Finance

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Alex Salvatore| December 9th, 2025

Rating: Hold Current Price: $406.29 Price Target: $394.97 Company Updates / News ●​Market Cap: $1.919T ●​Beta (5Y Monthly): 1.20 ●​EPS (TTM): $3.89 ●​EV/ EBITDA (TTM): 59.48x ●​52 Week High: $407.29 ●​52 Week Low: $138.10 ●​AVGO’s expected to report Q4 2025 Earnings on Thursday, December 11, 2025 ●​Shares rallied 11% on 11/24/25, as investors poured money into some AI stocks Competitor Statistics​

Investment Thesis

Broadcom Inc. (AVGO)

Broadcom Inc. is a global technology leader that designs, develops, and supplies a broad range of semiconductor and infrastructure solutions. Broadcom has two main segments, semiconductors and infrastructure software, both of which are essential in data centers. In semiconductors, Broadcom provides networking chips, switching silicon, and custom ASICs, among other products. In software, Broadcom acquired VMware on November 22, 2023, and, along with its existing enterprise software, serves large enterprises with virtualization, cloud management, and security tools. The company’s customers span hyperscalers, telecom providers, device manufacturers, and Fortune 500 enterprises, creating a stable revenue foundation. Broadcom’s strategy centers on long-term, recurring revenue, deep customer relationships, and leadership in next-generation AI and cloud infrastructure. Although Broadcom’s share price is currently pricing in rapid growth, I believe those expectations are well-founded and that Broadcom is uniquely well-positioned to take advantage of the AI boom.

Valuation As of November 25, 2025, AVGO trades at $385.03 per share. My valuation equally weights the DCF Gordon Growth and the DCF Multiples Method at 50% each, highlighting the company's long-term fundamental value. This approach leads to a base case price target of $340.29, representing a -11.62% downside on the current market price. Through scenario analysis, upside case results in a price target of $424.61 and a downside of $227.65. While long-term fundamentals remain strong, much of the VMware synergies and earnings growth from AI is already reflected in the valuation, resulting in my rating of Hold.

VMWare Acquisition EV/EBITDA (TTM): 39.57 Revenue (TTM): 187,142M

EV/EBITDA (TTM): 13.74 Revenue (TTM): 44,284M

EV/EBITDA (TTM): 32.71 Revenue (TTM): 7,793.3M

The VMware acquisition significantly expands Broadcom’s presence in enterprise software, adding a large base of recurring, mission-critical revenue to what was previously a primarily semiconductor-focused portfolio. VMware’s virtualization, cloud management, and application infrastructure solutions give Broadcom a foothold in corporate IT environments, enabling stronger cross-selling and long-term customers. The acquisition diversifies Broadcom’s revenue streams, enhances cash flow, and strengthens its ability to compete as a full-stack infrastructure provider.

TPUs vs GPUs While GPUs remain the dominant general-purpose accelerators for AI training, hyperscalers like Google and Meta increasingly rely on custom ASICs and TPUs for large-scale inference workloads due to their superior efficiency and lower cost.

Broadcom is a key design and manufacturing partner behind these custom silicon efforts, supplying critical ASIC engineering, high-speed interconnects, and networking components for both Google’s TPU roadmap and Meta’s MTIA chips. This deep integration into hyperscaler silicon roadmaps positions Broadcom as a structural beneficiary of the shift toward custom AI accelerators, especially well positioned as CEO Hock Tan sits on the board of Meta.

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Alex Salvatore| December 9th, 2025

Broadcom v Nvidia 5 Year Stock Chart

Source: seekingalpha.com

Risk Potential AI Infrastructure Demand AI-related capex is highly sensitive to macro conditions, market volatility, and specific platform engagement trends, all of which can change hyperscaler spending behavior. If Meta, Google, Amazon, or Microsoft slow their AI infrastructure build-outs, even temporarily, Broadcom’s ASIC and networking revenues would experience meaningful near-term pressure. Because AI demand is still in its early cycles and not yet stable or predictable, Broadcom remains exposed to sharp fluctuations in customer investment priorities.

Competition Broadcom faces intensifying competition in custom silicon and AI networking from Marvell, NVIDIA, AMD, and from hyperscalers' internal chip teams. Any technological leap from a competitor, like superior interconnects or lower-power ASICs could erode Broadcom’s share in next-generation AI networks and infrastructure. As the custom silicon market becomes more strategic, Broadcom must continue outperforming rivals on performance, cost, and execution to defend its position.

Hyperscaler Customer Concentration A substantial portion of Broadcom’s revenue is concentrated among a small group of hyperscaler customers, including Google, Meta, Amazon, and Apple. If even one of these companies reduces orders, accelerates in-house chip development, or shifts to an alternative supplier, Broadcom’s financial results would be materially impacted. This reliance increases the company’s sensitivity to individual customer strategies, procurement cycles, and long-term architectural decisions.

Sources: Seeking Alpha | The Wall Street Journal| Yahoo Finance | CNBC | S&P Capital IQ

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Zaryab Kanjiani| Nov 25, 2024

Rating: Buy Current Price: $37.76 Price Target: $52.59 Company Updates / News ●​Market Cap: $6.2B ●​Beta: 1.52 ●​LTM EPS: 0.65 ●​EV/Rev: 6.17x ●​EV/ EBITDA: 31.64x ●​52 Week High: $49.76 ●​52 Week Low: $22.67

Cognex Corp (CGNX) Because Even Robots Need Eyes!

Investment Thesis:

Cognex (CGNX) is the world’s leading provider of machine vision products that blend hardware and software to enable efficient automation in manufacturing, distribution, and the tracking of discrete items. Although overlooked in the technology industry, machine vision is widely recognized as a necessary component of automated production and quality assurance. Virtually every manufacturer or provider can achieve increased quality and efficiency through machine vision applications, from customers across logistics, automotive, consumer electronics, and semiconductor. As modern factories move away from human capital toward robots, Cognex serves as the eyes for these robots, for tasks that require far too much precision for humans or standard cameras.

My recommendation reflects Cognex’s ability to generate strong free cash flow and ability to expand into growing areas such as EV battery inspection and semiconductor packaging, all while maintaining a debt-free balance sheet. Despite near-term volatility in certain industries it operates in, investments into industrial automation will remain intact in the long term, and Cognex’s dominant market share positions it favorably globally.

●​Appointed a new CEO (Matt Moschner) on June 27, 2025. ●​Q3 Earnings beat Analyst estimates by 22% ●​Acquired Moritex Corporation in Valuation/Financial Modeling: Q4 of 2023.

As of November 25th, 2025, Cognex Corp is trading at $37.76 per share. In my view, this price undervalues Cognex’s ability to capture accelerating demand for Competitor Statistics machine vision and automation over the next several years, and I believe the stock from Q4 2025​ will appreciate to $52.59. Using a Discounted Cash Flow (DCF) model with a Weighted Average Cost of Capital (WACC) of 13.15% and a terminal growth rate of 3.0%, I project revenue to track closely with the North American Industrial Robot market, moving with the same variance Cognex has historically exhibited, rebounding next year, and then growing near the industry’s projected rate in the EV/Rev: 2.59x years that follow. To arrive at the blended implied share price, I weighted the Exit Revenue: $5.26B Multiple at 15% due to elevated exit EBIT multiples, Growth Perpetuity at 35%, and P/E and EV/EBIT at 25% each. These assumptions lead to an implied share price of $52.59, implying an upside of approximately 39%.

EV/Rev: 7.24x Revenue: $902.3M Logistics and Segment Shift: Cognex is in the middle of reshaping its revenue mix, moving away from an automotive-heavy base and leaning more toward logistics and semiconductor applications. While this shift has pulled revenue away from historically higher-margin segments, coupled with a decrease in short-term margins due to the Moritex acquisition, the underlying strategy is clear. Automotive volumes have EV/Rev: 4.46x stayed relatively steady year over year, giving Cognex a stable floor, while logistics Revenue: $1.72B continues to expand as Amazon, UPS, FedEx, and major retailers open new fulfillment centers and increase their use of machine vision for high-efficiency scanning and traceability. In my view, analysts are overweighing the stagnation in automotive, which now makes up a smaller share of the business. The more relevant story is Cognex’s position in logistics and semiconductor markets, where competition is limited, and barriers to entry are significantly higher.

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Zaryab Kanjiani| Nov 25, 2024

Cognex and S&P 500 5 Year Stock Chart

Source: S&P Capital IQ Risk Considerations Cognex remains exposed to various risks that stem from the nature of the markets it operates in. One of the most important dynamics to consider is the rising competition from lower-cost machine vision providers, particularly from China. As open source computer vision libraries, such as OpenCV and TensorFlow, increase and firms become more financially capable of investing in machine vision technologies, there is a possibility that customers either opt for cheaper alternatives or start building systems in-house. While Cognex is positioned competitively in the short term due to its performance gap and extensive intellectual property that distinguishes it from competitors, the growing availability of cheaper substitutes could pose pressure to Cognex’s long-term pricing power.

Cognex is also vulnerable to customer concentration risk. In recent years, two customers have accounted for more than 10% of total revenue. Any shift in vendor preference or unforecasted cyclicality in orders could significantly impact revenue results. Although this poses a threat, it also highlights a strength of Cognex. Cognex is good at curating long-term relationships built on volume purchases with its customers. It also maintains these relationships by consistently delivering the strong performance these companies expect. The flip side is also clear; if any one of these large customers pulls back or switches vendors, Cognex’s numbers would be affected right away.

Automation is inevitable Overall, Cognex is a well-established company that delivers high-quality automation solutions across a wide set of industries. They consistently reinvest around 15% of revenue into R&D, which is strong for a tech company operating in such an industrial, hardware-driven space. Despite having a low D/E of about 5.3%, they still rolled out six new products in the last year. The company is also coming off a slower 2023, and 2024 looked soft on the surface because they were absorbing the Moritex acquisition and the hit it had on net profitability. As those acquisition-related costs fade, and since Moritex is tied to the semiconductor market—which continues to grow—I think Cognex positioned itself well by moving into that space early, and they should benefit from that decision over the next few years.

Sources:

Cognex Investor Relations| Yahoo Finance | S&P Capital IQ | The Wall Street Journal | International Federation of Robotics | SEC.gov |

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Technology 3Q2025 Recap and 2026 Outlook Overview Since the previous publication, the Technology, Media, and Telecom sector has remained a primary driver of equity performance, supported by resilient AI-infrastructure demand and improving clarity around the Federal Reserve’s 2026 rate plans. Despite occasional volatility tied to mixed megacap earnings and global political developments, sentiment has stayed relatively constructive.

Q3 2025 was defined by two themes: the normalization of AI-infrastructure spending after two years of exceptional growth, and a rotation away from megacap leadership toward broader strength in software, semiconductors, and media. AI continues to anchor the narrative, with global AI-capex on track to exceed $390 billion in 2025 before moderating in 2026.

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Technology (TMT)

Q3 2025 reaffirmed AI’s central role in the technology sector, but with clearer signs of maturation after two years of exceptional expansion. GPU and accelerator demand remained solid, though growth rates slowed as hyperscalers shifted from peak procurement toward system-level integration and orchestration. Semiconductor companies delivered mid-teens revenue gains supported by sustained data center construction, stronger memory pricing, and continued investment in AI networking. The megacaps posted mixed results, with the Magnificent 7 underperforming broader tech as investors rotated into software, semiconductors, and infrastructure names.

Cloud providers reiterated that 2025 represents the peak of AI-infrastructure capex, noting that spending is increasingly directed toward optimization, networking efficiency, and scaling of inference workloads rather than pure compute expansion.

2026 Outlook: Investors expect 2026 to mark the shift from AI-infrastructure buildout to monetization, with enterprise adoption becoming the primary performance driver. After nearly $390 billion in AI capex during 2025, spending should remain elevated but grow more slowly as GPU supply normalizes and inference workloads stabilize. Nvidia’s Blackwell rollout will ease constraints, while software firms benefit from AI-native applications and agentic workflows embedded across operations. Enterprise IT budgets are set to reaccelerate as ROI clarity improves. Lower financing costs and moderating valuations should also spur M&A activity.

Uday Batra November 17, 2025

Media (TMT)

Telecom (TMT)

The media sector in Q3 2025 reflected a combination of innovation, competition, and persistent caution.

Short-form video continued to dominate attention, with LinkedIn’s push into TikTok-style formats gaining more traction than expected among professional users.

Streaming platforms escalated their content investments, particularly in exclusive sports rights and premium franchises, as Amazon strengthened its Prime Video position and Apple expanded the Vision Pro ecosystem to support more immersive formats.

Regulatory pressure remained a meaningful headwind, driven by ongoing U.S. and EU scrutiny of TikTok and broader content-governance concerns. Advertising trends were uneven and highly sensitive to macro conditions, contributing to the S&P 500 Media Index’s approximately 12 percent gain since May, a respectable number. Still, management teams expressed optimism as ad budgets stabilized and AI-powered content personalization advanced rapidly.

Telecom performance in Q3 2025 reflected the closing stages of the global 5G deployment cycle and the transition toward a more efficiency-oriented investment environment. With most large CSPs completing major portions of their 5G buildouts, equipment demand softened, contributing to mixed earnings across key suppliers including Qualcomm, Nokia, and Ericsson. However, enterprise connectivity provided meaningful support to sector performance, as adoption of private 5G networks, industrial IoT systems, and edge-AI deployments accelerated.

Companies continued integrating localized LLMs and latency-sensitive AI workloads, driving demand for secure, high-bandwidth network infrastructure.

Satellite connectivity was a major storyline, with Starlink surpassing nearly 7,000 operational satellites and strengthening its dominance in low-Earth-orbit systems, intensifying market speculation about a potential 2025–2026 IPO. Despite relatively muted top-line growth, the S&P 500 Telecom Services Index returned about 10 percent since May, supported by the sector’s defensive cash flows, improving margins, and growing opportunities in edge computing and satellite-to-device services.

2026 Outlook: The 2026 outlook centers on how effectively media firms embed AI across production, personalization, and distribution. Spatial computing and AR/VR adoption should accelerate as Apple, Meta, and Asian OEMs release next-generation devices for both consumers and enterprises. Streaming is expected to consolidate as platforms acquire smaller studios to reduce churn and secure premium content. Advertising should improve with stabilizing budgets and AI-enhanced targeting, while investment in blockchain-based authentication rises. Overall, 2026 is set for steadier growth driven by AR expansion and better content monetization.

2026 Outlook: The telecom sector’s 2026 outlook centers on AI-optimized network management, expanding satellite connectivity, and the early foundation for future 6G standards. With 5G buildouts largely complete, spending is expected to shift toward AI-driven automation that boosts efficiency and reduces operating costs. LEO satellite networks will extend into emerging markets, while edge inference and localized AI models drive new enterprise demand. Rising cybersecurity needs should sustain investment even as overall capex moderates, marking a transition toward monetization, efficiency, and AI-enabled network services.

Dylan Wong| November 6, 2025

Rating: Buy Current Price: $30.92 Price Target: $40.88 Company Updates / News ● Market Cap: $2,006M ● Beta: 1.66 ● LTM EPS: 1.72 ● LTM EV/Rev: 1.92x ● LTM EV/ EBITDA: 10.47x ● 52 Week High: $45.12 ● 52 Week Low: $13.87 ● ACM’s expected Q4 2025 Earnings Call is Wednesday, February 25, 2026 ● LSV Asset Management increased its shareholder stake by 462% in Q3 ● ACM recently narrowed its 2025 revenue outlook to $875-925M Competitor Statistics from Q3 2025

EV/Rev: 2.53x Revenue: $681.4M

ACM Research Inc. (ACMR) Rising Through the Wafer Investment Thesis ACM Research is a leading developer of wafer cleaning and advanced packaging equipment for the semiconductor manufacturing sector. The company supports major foundries and chipmakers with innovative solutions that enable higher yields and improved process performance. Its growth is fueled by increasing demand from AI, 5G, electric vehicles, and China’s push for domestic semiconductor production. Although short-term headwinds from inventory shifts and geopolitical tensions have created volatility, ACM’s strong technology, expanding customer base, and growing service revenues demonstrate durable growth. These strengths make the company a compelling buy for investors seeking targeted exposure to the semiconductor equipment sector.

Valuation As of November 6th, 2025, ACM trades at $30.92 per share. My valuation uses a blended approach and places the greatest weight on the DCF Gordon Growth method at 35%, highlighting the company's long-term fundamental value.

Forward-looking multiples P/E '26 and EV/Revenue '26 are each weighed at 15% alongside trailing multiples P/E LTM at 5% and EV/Revenue LTM at 10%. The analysis is rounded out with a 20% contribution from the DCF Multiples Method, which reflects terminal value based on market comparables. This approach yields a base case price target of $40.88, representing 32.20% upside, with scenario analysis showing a bull case at $61.88 and a bear case at $34.90.

Manufacturing Expansion in China and the US ACM recently delivered its first Ultra Lith KrF Track system to a leading semiconductor manufacturer in China, marking a major milestone as the company expands into front-end semiconductor equipment. The company continues to innovate in wafer cleaning and packaging and is scaling up production capacity with new R&D and manufacturing centers in Lingang, Shanghai. Reflecting this momentum, management has raised its China revenue goal from $1.5 billion to $2.5 billion as new fabs come online, positioning ACM to capture increased demand and strengthen its global market presence.

US CHIPS Act and Strategic Diversification EV/Rev: 0.78x Revenue: $2,110.7M

EV/Rev: 3.11x Revenue: $853.1M

In response to new funding opportunities from the US CHIPS and Science Act, ACM is establishing a production and R&D facility in Oregon as part of its broader US expansion. This investment allows the company to participate in federal incentive programs, strengthen relationships with key domestic partners, and contribute to efforts aimed at building a more resilient national semiconductor supply chain. By developing manufacturing capabilities in the United States, the company reduces its exposure to international trade risks and meets new sourcing requirements. This also positions the company to benefit from long-term trends in reshoring and ongoing technological advancement within the American semiconductor industry.

Dylan Wong| November 6, 2025

ACM Research 5 Year Stock Chart

Source: Investing.com

Risk Potential Trade Policy and Tariff Risk Current US-China tariffs are directly impacting ACM by raising costs on Chinese imports by about 20%, with some semiconductor-related tariffs reaching over 30%. These tariffs increase expenses and result in shipment delays, putting pressure on margins while making it more difficult for ACM to fulfill orders. Even as ACM expands US operations, navigating higher import costs continues to strain its production schedules and operational flexibility.

Customer Concentration ACM derives over 75% of its revenue from China, making the business highly sensitive to concentration risk. While the stock trades at a low forward 15x P/E multiple and maintains respectable growth, its 18% ROIC trails industry leaders. Such exposure to a single market introduces a level of unpredictability that overshadows attractive financial metrics, as any escalation in geopolitical tensions or policy restrictions could cause the company’s earnings outlook to deteriorate rapidly.

Competition and Technological Change In 2024, ACM spent approximately 14% of its revenue on R&D with top competitors typically spending closer to 17%. Its gross margin is about 42%, which also trails the industry benchmark of 46%. Analyst consensus projects a 20% revenue CAGR for the company through FY2027. However, unless the company narrows its gap in technology investment, sustaining this level of growth may be difficult as the industry rapidly evolves.

Sources: ChartMill | Investing.com | KoalaGains | MarketBeat | Morningstar | Quiver Quantitative | S&P Capital IQ | Simply Wall St | The Wall Street Journal | Yahoo Finance

Alex Salvatore| December 9th, 2025

Rating: Hold Current Price: $406.29 Price Target: $394.97 Company Updates / News ● Market Cap: $1.919T ● Beta (5Y Monthly): 1.20 ● EPS (TTM): $3.89 ● EV/ EBITDA (TTM): 59.48x ● 52 Week High: $407.29 ● 52 Week Low: $138.10 ● AVGO’s expected to report Q4 2025 Earnings on Thursday, December 11, 2025 ● Shares rallied 11% on 11/24/25, as investors poured money into some AI stocks Competitor Statistics

EV/EBITDA (TTM): 39.57 Revenue (TTM): 187,142M

EV/EBITDA (TTM): 13.74 Revenue (TTM): 44,284M

EV/EBITDA (TTM): 32.71 Revenue (TTM): 7,793.3M

Broadcom Inc. (AVGO) Investment Thesis Broadcom Inc. is a global technology leader that designs, develops, and supplies a broad range of semiconductor and infrastructure solutions. Broadcom has two main segments, semiconductors and infrastructure software, both of which are essential in data centers. In semiconductors, Broadcom provides networking chips, switching silicon, and custom ASICs, among other products. In software, Broadcom acquired VMware on November 22, 2023, and, along with its existing enterprise software, serves large enterprises with virtualization, cloud management, and security tools. The company’s customers span hyperscalers, telecom providers, device manufacturers, and Fortune 500 enterprises, creating a stable revenue foundation. Broadcom’s strategy centers on long-term, recurring revenue, deep customer relationships, and leadership in next-generation AI and cloud infrastructure. Although Broadcom’s share price is currently pricing in rapid growth, I believe those expectations are well-founded and that Broadcom is uniquely well-positioned to take advantage of the AI boom.

Valuation As of November 25, 2025, AVGO trades at $385.03 per share. My valuation equally weights the DCF Gordon Growth and the DCF Multiples Method at 50% each, highlighting the company's long-term fundamental value. This approach leads to a base case price target of $340.29, representing a -11.62% downside on the current market price. Through scenario analysis, upside case results in a price target of $424.61 and a downside of $227.65. While long-term fundamentals remain strong, much of the VMware synergies and earnings growth from AI is already reflected in the valuation, resulting in my rating of Hold.

VMWare Acquisition The VMware acquisition significantly expands Broadcom’s presence in enterprise software, adding a large base of recurring, mission-critical revenue to what was previously a primarily semiconductor-focused portfolio. VMware’s virtualization, cloud management, and application infrastructure solutions give Broadcom a foothold in corporate IT environments, enabling stronger cross-selling and long-term customers. The acquisition diversifies Broadcom’s revenue streams, enhances cash flow, and strengthens its ability to compete as a full-stack infrastructure provider.

TPUs vs GPUs While GPUs remain the dominant general-purpose accelerators for AI training, hyperscalers like Google and Meta increasingly rely on custom ASICs and TPUs for large-scale inference workloads due to their superior efficiency and lower cost.

Broadcom is a key design and manufacturing partner behind these custom silicon efforts, supplying critical ASIC engineering, high-speed interconnects, and networking components for both Google’s TPU roadmap and Meta’s MTIA chips. This deep integration into hyperscaler silicon roadmaps positions Broadcom as a structural beneficiary of the shift toward custom AI accelerators, especially well positioned as CEO Hock Tan sits on the board of Meta.

Alex Salvatore| December 9th, 2025

Broadcom v Nvidia 5 Year Stock Chart

Source: seekingalpha.com

Risk Potential AI Infrastructure Demand AI-related capex is highly sensitive to macro conditions, market volatility, and specific platform engagement trends, all of which can change hyperscaler spending behavior. If Meta, Google, Amazon, or Microsoft slow their AI infrastructure build-outs, even temporarily, Broadcom’s ASIC and networking revenues would experience meaningful near-term pressure. Because AI demand is still in its early cycles and not yet stable or predictable, Broadcom remains exposed to sharp fluctuations in customer investment priorities.

Competition Broadcom faces intensifying competition in custom silicon and AI networking from Marvell, NVIDIA, AMD, and hyperscalers' internal chip teams. Any technological leap from a competitor, like superior interconnects or lower-power ASICs, could erode Broadcom’s share in next-generation AI networks and infrastructure. As the custom silicon market becomes more strategic, Broadcom must continue outperforming rivals on performance, cost, and execution to defend its position.

Hyperscaler Customer Concentration A substantial portion of Broadcom’s revenue is concentrated among a small group of hyperscaler customers, including Google, Meta, Amazon, and Apple. If even one of these companies reduces orders, accelerates in-house chip development, or shifts to an alternative supplier, Broadcom’s financial results would be materially impacted. This reliance increases the company’s sensitivity to individual customer strategies, procurement cycles, and long-term architectural decisions.

Sources: Seeking Alpha | The Wall Street Journal| Yahoo Finance | CNBC | S&P Capital IQ

Zaryab Kanjiani| Nov 25, 2024

Rating: Buy Current Price: $37.76 Price Target: $52.59 Company Updates / News ● Market Cap: $6.2B ● Beta: 1.52 ● LTM EPS: 0.65 ● EV/Rev: 6.17x ● EV/ EBITDA: 31.64x ● 52 Week High: $49.76 ● 52 Week Low: $22.67

Cognex Corp (CGNX) Because Even Robots Need Eyes!

Investment Thesis: Cognex (CGNX) is the world’s leading provider of machine vision products that blend hardware and software to enable efficient automation in manufacturing, distribution, and the tracking of discrete items. Although overlooked in the technology industry, machine vision is widely recognized as a necessary component of automated production and quality assurance. Virtually every manufacturer or provider can achieve increased quality and efficiency through machine vision applications, from customers across logistics, automotive, consumer electronics, and semiconductor. As modern factories move away from human capital toward robots, Cognex serves as the eyes for these robots, for tasks that require far too much precision for humans or standard cameras.

My recommendation reflects Cognex’s ability to generate strong free cash flow and ability to expand into growing areas such as EV battery inspection and semiconductor packaging, all while maintaining a debt-free balance sheet. Despite near-term volatility in certain industries it operates in, investments into industrial automation will remain intact in the long term, and Cognex’s dominant market share positions it favorably globally.

● Appointed a new CEO (Matt Moschner) on June 27, 2025. ● Q3 Earnings beat Analyst estimates by 22% ● Acquired Moritex Corporation in Valuation/Financial Modeling: Q4 of 2023.

As of November 25th, 2025, Cognex Corp is trading at $37.76 per share. In my view, this price undervalues Cognex’s ability to capture accelerating demand for Competitor Statistics machine vision and automation over the next several years, and I believe the stock from Q4 2025 will appreciate to $52.59. Using a Discounted Cash Flow (DCF) model with a Weighted Average Cost of Capital (WACC) of 13.15% and a terminal growth rate of 3.0%, I project revenue to track closely with the North American Industrial Robot market, moving with the same variance Cognex has historically exhibited, rebounding next year, and then growing near the industry’s projected rate in the years that follow. To arrive at the blended implied share price, I weighted the Exit Multiple at 15% due to elevated exit EBIT multiples, Growth Perpetuity at 35%, EV/Rev: 2.59x and P/E and EV/EBIT at 25% each. These assumptions lead to an implied share Revenue: $5.26B price of $52.59, implying an upside of approximately 39%.

EV/Rev: 7.24x Revenue: $902.3M

EV/Rev: 4.46x Revenue: $1.72B

Logistics and Segment Shift: Cognex is in the middle of reshaping its revenue mix, moving away from an automotive-heavy base and leaning more toward logistics and semiconductor applications. While this shift has pulled revenue away from historically higher-margin segments, coupled with a decrease in short-term margins due to the Moritex acquisition, the underlying strategy is clear. Automotive volumes have stayed relatively steady year over year, giving Cognex a stable floor, while logistics continues to expand as Amazon, UPS, FedEx, and major retailers open new fulfillment centers and increase their use of machine vision for high-efficiency scanning and traceability. In my view, analysts are overweighing the stagnation in automotive, which now makes up a smaller share of the business. The more relevant story is Cognex’s position in logistics and semiconductor markets, where competition is limited, and barriers to entry are significantly higher.

Zaryab Kanjiani| Nov 25, 2024

Cognex and S&P 500 5 Year Stock Chart

Source: S&P Capital IQ Risk Considerations Cognex remains exposed to various risks that stem from the nature of the markets it operates in. One of the most important dynamics to consider is the rising competition from lower-cost machine vision providers, particularly from China. As open source computer vision libraries, such as OpenCV and TensorFlow, increase and firms become more financially capable of investing in machine vision technologies, there is a possibility that customers either opt for cheaper alternatives or start building systems in-house. While Cognex is positioned competitively in the short term due to its performance gap and extensive intellectual property that distinguishes it from competitors, the growing availability of cheaper substitutes could pose pressure to Cognex’s long-term pricing power.

Cognex is also vulnerable to customer concentration risk. In recent years, two customers have accounted for more than 10% of total revenue. Any shift in vendor preference or unforecasted cyclicality in orders could significantly impact revenue results. Although this poses a threat, it also highlights a strength of Cognex. Cognex is good at curating long-term relationships built on volume purchases with its customers. It also maintains these relationships by consistently delivering the strong performance these companies expect. The flip side is also clear; if any one of these large customers pulls back or switches vendors, Cognex’s numbers would be affected right away.

Automation is inevitable Overall, Cognex is a well-established company that delivers high-quality automation solutions across a wide set of industries. They consistently reinvest around 15% of revenue into R&D, which is strong for a tech company operating in such an industrial, hardware-driven space. Despite having a low D/E of about 5.3%, they still rolled out six new products in the last year. The company is also coming off a slower 2023, and 2024 looked soft on the surface because they were absorbing the Moritex acquisition and the hit it had on net profitability. As those acquisition-related costs fade, and since Moritex is tied to the semiconductor market—which continues to grow—I think Cognex positioned itself well by moving into that space early, and they should benefit from that decision over the next few years.

Sources: Cognex Investor Relations| Yahoo Finance | S&P Capital IQ | The Wall Street Journal | International Federation of Robotics | SEC.gov |

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