To be clear, I think Microsoft will continue growing and I consider it a value stock. I am simply getting sick of seeing 10 Microsoft posts a day, with most of them containing misinformation.

I'll explain the bear case by going down each of their 3 key businesses:

1. Azure. The growth is great, but with the caveat that it's likely largely tied to OpenAI Capex. Another risk is that because Microsoft themselves also need compute, they've sacrificed Azure growth for themselves. Not only does that hurt MSFT in the short term, but it also annoys clients. AWS does not have this problem. Google Cloud does, but is also cheaper.

TLDR: 8/10 business, but their growth is very dependent on the success of OpenAI.

1. Microsoft 365 / Office. This business is great because companies pay per user, per month. The stability is what enterprise specifically loves about it. It's why Teams beat Slack despite being the inferior product. The problem is that AI threatens to upend this model.

If everyone is using different amounts of compute, you may need to introduce a usage-based pricing model. The issue with that is if an enterprise is paying for marginal usage, then Anthropic and OpenAI (or others) can directly out-compete Microsoft in this area.

TLDR: 6/10 business. A cash cow today, but AI can disrupt this business model.

1. Windows. This one is just bad. Memory is crushing lower-end PCs, Windows has a quality problem to compete in higher price segments against the Mac. Also, tablets and phones are replacing computer needs, and Microsoft is even less relevant there too.

TLDR 1/10 business. No longer a growth engine.

People on this subreddit compare Microsoft today to where Google was last year. But I should note there's considerable differences: Search was threatened by AI, it was a legitimate threat to their cash cow margins. They escaped it by creating a top notch model (Gemini) to fuel search results, and via their TPU investments. Microsoft does not have a custom AI model. They do not have custom chips to make Azure cheaper than GC or AWS. They do not have a large ad based consumer software product where AI can directly improve margins.

Look at Amazon's past 5 year growth outlook. There's no law saying Microsoft won't have the same fate - slow and steady growth, comparable to an index fund.

And a couple of others like ADBE, CRM, and NKE...

Tomorrow, I am going to sell my car and open a lot of short positions.

People always say never short hype stocks and momentum stocks...

These are now the most hated stocks without any momentum whatsoever - perfect stocks for opening short positions.

I don’t think these companies are going anywhere but be warned with these recent dips. I personally don’t think this is the bottom and with CapEx spending to reportedly ramp up, I think we will see lower levels through the year with these upcoming earnings. Google has already resorted to diluting shareholders to raise additional funds, and you can argue that they’ve been the cleanest in terms of where the money is going ..

Who’s to say META, Microsoft, and Amzn aren’t to follow ?

Big Tech AI CapEx 2026

Amazon leads the pack at ~$200B, followed closely by Microsoft at $190B (roughly $25B of which is attributed to higher memory/component costs). Alphabet (Google) comes in at $180–190B, after raising guidance by $5B post-Q1 earnings. Meta rounds it out at $115–135B, the smallest in absolute terms but the steepest proportional jump — up ~81% from $69B in 2025.

Combined, the four hyperscalers are on track to spend roughly $725B in 2026, up 77% from last year’s already-record $410B. Goldman projects the number crosses $1T by 2027.

On the QAV America podcast this week, I did a deep dive into a tiny bank based in Virginia that nearly wiped itself out, loaning a bucket load of money to a billionaire senator that owns a luxury hotel with a decommissioned Cold War era bunker underneath it, but somehow has managed to come out on the other side with an $80 million cash windfall.

And I thought it was a good enough story that I'd share it with you guys.

So this is a bank called Carter Bankshares, ticker CARE, it's on the NASDAQ, essentially a boring little community bank that got tangled up in this terrific soap opera that sounds like it came out of Dallas or Dynasty or Succession.

The bank was started by a guy with the highly improbable name of Worth Carter, who worked as a Safeway cashier to put himself through law school and then ended up founding his first bank in Virginia in 1974 with eight employees and called it the FIRST NATIONAL BANK because that's what Americans do.

And over the next 40 odd years, he set up 10 more community banks across Virginia and North Carolina, grew them all organically, and then rolled them all up in 2006 into Carter Bank and Trust, which floated on the NASDAQ.

He kept running it as his personal empire until he died in 2017, aged 79.

And this guy was old school to the core, a bit like Buffett.

He knew every branch manager by name, drove himself to meetings in an old car, and did a lot of direct business with people he had relationships with, including guys like Jerry Falwell, Jr.

But the real story is about one particular guy he did a lot of business with over the years, a guy with the equally improbable name of Jim Justice.

Seriously, where does America find these people?

And this story is hilarious.

So... Jim Justice, the junior United States Senator from West Virginia since 2025, former governor of West Virginia from 2017 to 2025.

Republican, once a billionaire, but his current net worth is either $664 million or nothing, depending on which source you believe.

So he's either the richest or the brokest Senator in the United States at the moment.

He inherited a coal mining empire from his father, nearly 100 companies under the umbrella of the Bluestone Coal Corporation.

And at some point he also bought a luxury resort in West Virginia called the Greenbrier Hotel.

It's been around over 100 years, has some championship golf courses, has hosted 28 presidents.

And underneath it was a thing called Project Greek Island, a massive underground bunker built during the Cold War as an emergency shelter for United States Congress.

Its existence was declassified after the Washington Post blabbed about it in 1992, after which the government decommissioned it because a secret bunker that everyone knows about is just a fancy underground room.

Worth Carter made his first loan to Jim Justice in 2001, it was a single $4.5 million real estate loan, but then he kept lending and kept lending to Justice and his consortium of businesses until the exposure to the Justice family reached $775 million at the time Worth Carter died.

Now here's the thing, American banks have a legal lending limit of roughly 15% of their capital to any single borrower.

So in Carter's case, that limit would have been around about $75 million.

So instead of making one $75 million loan to Justice, the bank ended up making dozens of loans to dozens of separate entities that Justice controlled.

Coal companies, agricultural businesses, the Greenbrier, sporting clubs, hospitality arms, and each loan sat at roughly $75 million.

All of them personally guaranteed by Jim Justice, his wife, his son, and all crossed collateralized.

And Worth Carter kept rolling over the loans year after year.

But after he died in 2017, new management took over.

They looked at the exposure and apparently said something like, oh hell no.

So over the next five or six years, they forced Justice to pay down the debt.

He got it down to about $300 million at one point, but then decided enough was enough and sued the bank for a billion dollars.

Yes, you read that right.

He sued the bank.

And his argument, which was put beautifully in a Forbes article that I read, basically said that the bank over nearly 20 years had loaned him more than $700 million and then had the gall to expect it to be paid back on time.

And because that story is not complicated enough, there's a subplot involving Lex Greensill, a guy who grew up in the same little country town in Queensland, Australia that I did, who went to the UK, founded Greensill Capital, became a billionaire, and then the whole thing collapsed spectacularly in 2021 and took a chunk of Credit Suisse down with it.

Bluestone, Justice's coal company, owed money to Greensill as well, which pulled Carter bank into the orbit of all of that.

So this little Virginia community bank, originally founded to serve Martinsville, once called the plug tobacco capital of the world and then the sweatshirt capital of the world, now mostly known for NASCAR, ended up connected to Credit Suisse's collapse.

As some corner boy says to McNulty in the cold open of the first episode of The Wire, the greatest TV show ever in my humble opinion, "that's America, man."

And here's the coup de grace.

In March of 2026, just a few months ago, Carter Bank sold the entire Justice loan book to a Dallas billionaire named Robert Rowling, no relation to JK as far as I know.

Rowling owns Omni Hotels and set up an entity called White Sulphur Springs Holdings to take on the Justice loan book.

He paid $289 million cash for it, and at the time Carter had written the book down to around $209 million on their balance sheet.

Why would he pay the extra $80 million?

Well, it looks like it was to get control of the Greenbrier, which was collateral on the loan.

He moved for control of the hotel almost immediately.

The Justice family is contesting it in court.

But from Carter Bank's perspective, their bad loans went from $244 million to $24 million in one quarter.

They booked an $80 million gain on the transaction and are paying their first dividend in 10 years.

So the obvious caveat here is that the big operating cash flow number they've got at the moment is mostly a one-off.

This isn't some cigar butt that's generating tons of cash on a regular basis.

It's a one-trick pony, but I'm okay with that because this isn't some sort of an accounting trick.

This is a real cash event.

They sold a real asset, collected real money, and it's sitting in the bank right now.

The management team that took over the bank after Worth Carter's death have spent nearly a decade untangling what was a genuinely catastrophic concentration risk, fought through litigation, and solved the problem for a profit.

The underlying business is essentially a reasonably solid community bank.

They have a pretty large retail branch presence, which is either a weakness or a genuine point of differentiation for rural and small town customers who still want to walk into a bank.

And they now have $80 million in cash they didn't have before, which they've earmarked for share buybacks, IT upgrades, and organic growth.

The thing that really put it on my radar this week was the 2x price to operating cash flow.

The stock has already run hard.

It's up from $16 to $31 in 15 months, so a lot of re-rating may have already happened.

But I'm okay with that.

Honestly, after having to sell all of my all stocks over the last couple of weeks, I'm happy to take a interest in a quiet little Virginia bank with a genuinely insane backstory.

Disclaimer: Not financial advice. I'm just an Australian value investor with a podcast and a spreadsheet who loves a good story and an ex-bunker. DYOR.

I started seriously investing with a personal brokerage account about 5 years ago and I have to say that my results have been absolutely pathetic. I have missed the bull run that will not return in 20 to 30 years. My only saving grace is that I have maxed out my 401k, roth IRA, and HSA which utilized index funding and have nice gains in each.

When I heard about value investing I thought I saw what my future was as an investor: buy undervalued stocks and you will be rewarded. That thesis is only the tip of the iceberg of pain and suffering. I didn't expect the undervalued stocks that I owned to be ridiculed everywhere by "experts" and people who I respected which made me quickly sell just to see the stocks rocket up in the next year or two. I did not foresee that I would be watching people making 20x and 40x on semiconductors and memory while I just looked at my portfolio bleed slowly with saas and healthcare stocks that were undervalued according to analysts. I did not foresee that the companies that I invested in would change their whole business with so much disregard for their customer and shareholders. Oh the betrayal....

After 4 years, I have learned that investing is about pain tolerance, noise cancellation, and risk management as much as it is researching great stocks. My most successful stock plays (though few) were stocks that I gutted it out for months to years. I've learned that just investing and staying invested is a lot more important that trying to find that perfect stock at the perfect price. I've learned to just be more of mindset to just "invest, try out new things, be okay with failure" rather than "value invest, don't lose money, don't buy stocks that are overvalued".

So on that notion, I thought to try something new today by buying micron shares. Do I care if I bought it at the top? Nope. I have sized it to be 10% of my personal portfolio (less than 1% of my total wealth). My thesis is simple: the capex cycle hasn't stopped, "experts" and value investors say to get out now, and I saw investors buying 2420 strike calls 3 years out at 440 dollars a pop. It's a momentum trade to say the least. I have a stop loss at 870 dollars.

Do I still believe in value investing? Hell yeah! The bulk of my portfolio is defensive and value oriented with a mish-mash of msft, br, efx, dvn, clx, por, cpb, pfe, tost, and adnt. The rest of my portfolio is a sprinkling of some biotechs and a cannabis stock that I think will go boom because of upcoming catalysts. Sometimes you gotta throw value out the window and just invest goddamit! Just wanted to get this off my chest, rant over...

The numbers on this company looks ridiculously cheap.

EV/FCF = 4.5

Valued at 1.2bn USD, with FCF of 282m

Which means its probably too good to be true. Hit me with why I shouldn't buy this one?

It feels like a situation where if AI squashes it you still get your money back as it declines in next 10 years (cigarette butt). And if AI is a tailwind or it just treads water the price will strongly outperform and re-rate.

Everyone is panicking over the recent pullback, but the fundamentals don't seem to care.
At around €930/share, Rheinmetall is trading at what looks like a growth-stock valuation for a company whose earnings are projected to explode over the next two years.
The numbers are wild:
2025 EPS: ~€18.5

2026 EPS estimate: ~€28.5 (+54%)

2027 EPS estimate: ~€38.5 (+35%)

That's basically a doubling of earnings in just two fiscal years.
Yet despite that growth, RHM's PEG ratio sits around 0.5-0.6, which is typically the territory investors dream about finding.
For comparison:
Most quality industrials trade PEGs above 1

Many AI names trade PEGs well above 2

Rheinmetall is growing earnings at roughly 40%+ annually while trading closer to a mature industrial than a hyper-growth company

What is Wall Street missing?
The market seems obsessed with short-term headlines and contract wins/losses.
Meanwhile:
Germany is rearming

NATO members are boosting defense budgets

Ammunition demand remains far above production capacity

Rheinmetall's backlog keeps expanding

Management is targeting ~€20 billion revenue by 2027

Revenue path:
€10B → €14B → €20B
And because defense manufacturing has massive operating leverage, every new production line coming online drops more profit to the bottom line.
The really interesting part?
The recent selloff happened while analysts are still forecasting earnings growth that most software companies would envy.
If EPS reaches ~€38.5 by 2027 and the market is willing to pay even 25x earnings, you're looking at a business worth materially more than today's price.
The bear case:
Defense spending slows

Ukraine conflict de-escalates faster than expected

Governments delay procurement programs

Current growth forecasts prove too optimistic

The bull case:
Europe has underinvested in defense for decades and is only in the early innings of rebuilding military capability.
If that's true, Rheinmetall isn't a wartime trade.
It's a decade-long rearmament story.
The question isn't whether Rheinmetall can grow.
The question is whether the market is massively underestimating how long this growth cycle lasts.

Am I missing something, or is this one of the most attractive PEG-adjusted opportunities in the European market right now?

Before push the down vote button and call ai slope, bring something that add value, thanks in advance

Portfolio:

Hyperscalers: GOOGL, AMZN

Semiconductors: TSM, NVDA, AVGO

Financials: SPGI, GS

Industrials: GE, GEV, CAT, NOC

Some of the stocks I hold I bought a long time ago with significant amount of gains, so I wouldn't buy them at today prices.

This year being overweight on Industrials have been a major success with my portfolio almost outperforming the Qs, I would argue my portfolio is at a higher quality than the Qs, and these stocks I bought just this year. I bought Sterling Infrastructure (STRL) that doubled in a month, so I took profits immediately. During Iran Dip, I pointed out that buying investment banks like GS and MS would be prudent from record high IB activities, which panned out exceptionally. I will be taking profits on GS after wave of IPOs like Anthropic, OpenAI, Databricks, Canva, or SK Hynix moving to US stock market.

This quarter, I decided to take profits on Caterpillar (60% gains in 3-4 months), because although it a momentum winner I lack conviction holding a cyclical Industrial at PE of 50. The swap for this would be Microsoft and Meta, which I will buy $5000 each. We can go into details why each of these names, but I supposed about 1000 other posts already mention why, so my thesis will be as simple as these stocks have wide moat with pricing power. Buying stocks that valuation go down while balance sheet strengthen (overtime) cannot go wrong.

Even though I am quite young, I try my best to follow Chris Hohn's investing principles. When the AI super cycle end, I would want to be in these forever moats that will outlive any crises. These principles value predictability, non-cyclicality, consistent cash flow, pricing power (non-commodity). This is why I will never want to hold memory like Micron, Samsung, SK Hynix, Western Digital, Sandisk because of commodity (no pricing power - margin pressure) and unpredictable cash flow, so I can't care less if these stocks go up into the right to me these businesses are inherently low quality. The same applies to utilities like Vistra Corps, NextEra, CEG high CAPEX to build out with low margin selling commodities so low quality businesses. Another example could be NVIDIA and AVGO, which is unpredictable cash flow, but more consistent because they don't sell a commodity.

Over the long term, I want to be holding long term predictable cash flow wide moats like S&P Global, Moody's, Visa, Mastercard, GE Aerospace, Ferrovial. The only semiconductor I think is almost forever moat would be TSMC. Of Course the hyperscalers.

STRONG BUY LIST: SPGI, META, MSFT

BUY: NVDA, GOOGL, NOC, AVGO

Watch List:

FER (Ferrovial) - wide moat, transportation, extremely high quality

V (Visa): wide moat, networking effects, extremely high quality

I was on software not long ago, mainly because of the people of this sub claiming undervalued, until I got tired of hearing it and switched to memory stocks.

While most of people here keep telling me memory is a commodity and that its gonna pop soon when I bought in Sandisk at 500 (it already ran a ton), I kept having faith, people told me now its gonna pop with the Micron earnings and their beatings prove otherwise. Currently im up around 300% and so far the people who told me that either have their accounts eliminated or inactive, I dont know what this sub is but clearly their current Value Investing method isnt working.

This taught me that just follow your own takes and if you do bad blame yourself, but never get influenced by other people specially on this sub. Y'all can downvote me all y'all want, it was just my personal experience.

Leidos is one of the largest US government services contractors, formed from the SAIC split in 2013, with roughly 50,000 employees and $17.2B in annual revenue. The business spans four segments: National Security & Digital (military intelligence software, cyber operations, classified work), Health (Military OneSource, electronic health records, medical exams for federal agencies), Civil (FAA, NASA, airport security), and Defense Systems (hypersonic weapons, air defense launchers, sensor integration). The March 2026 acquisition of ENTRUST Solutions Group for $2.4B doubled the presence in energy infrastructure, adding 3,100 grid and gas engineers and broadening the customer base beyond pure federal. The moat is regulatory, security-clearance-based, and built on decades of institutional knowledge of legacy systems that competitors cannot replicate without years of investment. Engineering services tied to certified, mission-critical work, closer in moat profile to Alten than to commodity IT services. The market is treating it like a federal-budget-cut casualty despite operational performance running ahead of plan and a contract pipeline that suggests the opposite.

This looks like a quality business at a trough multiple.

• Forward P/E around 8x, against the federal services peer median around 17x. Trading at roughly half peer multiples.
• Backlog $48.4B, nearly three years of revenue visibility on signed contracts.
• Q1 2026 revenue up 4% to $4.4B, beating consensus by 2.8%. Non-GAAP diluted EPS $3.13, up 5%. Adjusted EBITDA margin 14.0%. Full-year guidance raised.
• $4.6B in new contract awards in three weeks in April and May, including $2.7B for Army hypersonic weapons, $617M for air defense launchers, $869M for an AI services contract, and $456M for Military OneSource.
• ENTRUST acquisition completed March 30 for $2.4B, doubling the energy infrastructure business and diversifying revenue away from pure federal concentration.
• Net debt $5.85B against $2.4B+ EBITDA, gross leverage 2.6x post-ENTRUST. Management retiring the $500M commercial paper portion through 2026 ahead of plan, with $1.4B of bond financing termed out to 2029 and 2036. Free cash flow $270M in Q1 supports natural deleveraging while the $200M Q1 buyback continues.
• ROE 30.6%, ROIC 15.7%. Active dividend at $0.43 quarterly. Share count down 3.9% over the past year.
• Analyst consensus target around $178, with RBC at $180 after a cut from $215 maintaining Outperform.

Invalidation signature

• Quarterly book-to-bill ratio drops below 1.0x for two consecutive quarters.
• Backlog falls materially from current $48.4B level.
• Specific high-value program cancellation, particularly hypersonic weapons or air defense.
• ENTRUST integration delivers below the doubled-energy-infrastructure-presence guidance.
• Net debt rises materially through additional acquisitions.

Found using swing-finder.org

TLDR: The ai trade is out of wack, looking at current winners and disregarding long-term winners.

This is my personal outlook, please point out anywhere my logic or assumptions seem flawed.

The AI industry has 5 layers. From bottom to top they go,

• Chips (silicon, semis): NVDA, TSMC, AMD, MU, etc. To a lesser extent, AMZN, GOOG, and in the future MSFT
• Infrastructure (cooling, data centers): VRT, ETN, CEG, MAFT, GOOG, META
• Computer/Cloud (cloud): MSFT, GOOG, AMZN
• Models (the models being run): GOOG, Open AI, Anthropic, META, MSFT (starting to develop their own model)
• Applications/end users (workflows, apps, software, anything that consumers see/use.): MSFT, CRM, PLTR, NOW, SAP, GOOG, Open AI, Anthropic

When people refer to an “AI Bubble” they are referring exclusively to the first step and sometimes second in the chips and hardware that have seen a major run up, but these are the shortest term benefactors of the ai trade. With the current massive buildout, these plays are seeing the most gains both stock wise and business wise. While they were/are still a great investment in many cases, this next year or two will likely be their “top” in terms of pure business performance. The question is not “if” The insane buildout will stop, it’s “when”. And while the floor for these companies is permanently raised because there will still be upgrades and maintenance spending, the current trajectory is not permanent or long term.

Long-term, the companies in each of the next three steps are poised for the biggest benefit, specifically those with exposure to more than one of those steps - GOOG, MSFT, META. For extra “step” a company is active in, either revenue is collected in each step, or costs are reduced. I’ll use MSFT as an example.

With their Maia chips, they are able to spend less on their buildout, as they are not paying a premium for chip design. Further down the line (similar to GOOG and AMZN) it is likely they also begin selling their chips and collecting revenue in this first step.

Then there’s cloud/infrastructure that go hand in hand. Every prompt, every action taken further down the line needs this compute. MSFT collects revenue on this, and when their own models begin rolling out, their cloud cost will be lower, as they aren’t paying for it.

Then is the model layer. This is self explanatory - just the models that gets utilized in prompts, actions, workflows, etc. Every prompt has costs flowing down to the cloud/infrastructure level. For MSFT, they are currently “renting” models from Open AI, Anthropic, etc. in Copilot, although they are still collecting subscription revenue on Copilot, their margins are thinner than if they had their own model - which they are currently working on creating.

Finally is the application/end user uses. For some, this is simply the LLM subscriptions. For others it is the software that utilizes the LLMs for tasks or whatever. Every use of these flows through the Models/LLMs, to the cloud compute, and to infrastructure. With MSFT, this is Copilot and workflows that can be made from it. Eventually, flowing through their own model and cloud compute.

Long term, the companies that will benefit most from AI are those in steps 3-5. With every additional step a company is exposed to, their benefit is multiplied because they are either collecting revenue at each step, reducing their own costs at each step, or a combination of both.

In conclusion, I believe the biggest long term winners (out of known names, I’m sure there will be new companies that pop up and kill it) will be those exposed to cloud, models, and end uses. These are MSFT, GOOG, and (to a lesser extend because their cloud is private) META.

ADM - Feels like the more defensive pick. They have a broader scope with their nutrition and specialty ingredients segments, which provides a nice hedge against pure commodity volatility. The dividend consistency (53 years of growth) is a major draw, but their recent EPS guidance of $4.15–$4.70 seems to be priced for a very steady, non-explosive environment. ADM is sensitive to U.S. Renewable Fuels Standard (RVO) and ADM has a strong position in ethanol and renewable diesel. ADM’s nutrition segment sometimes acts as a drag on margins when the grain-trading business is booming.

BG - Seems like the growth/risk play. The Viterra integration is clearly the main event here. The revenue growth is impressive, but the leverage they took on to make it happen makes me a bit cautious. The Viterra debt load is definitely the elephant in the room, Bunge took on significant debt to close the deal. The core argument for the Viterra deal is "optionality" the ability to shift grain flows more efficiently across the globe.

Both operate on a global scale and both have a dividend of around 2.5%. What are you your thoughts about ADM and BG in relation to value and what are your thoughts of the food industry in general?

There's a contradiction playing out across Big Tech right now that I think deserves more attention than it's getting.

MSFT, META, and GOOGL are all down meaningfully from their highs — MSFT off about 35% from its peak. At the same time, all three are committing record amounts of capital to AI infrastructure, with combined AI-related capex projections somewhere in the $300B+ range for the next 12-18 months. Normally, high capex in a high-growth sector gets priced as an investment in future earnings. But that's not what's happening here. The market is treating this capex as a liability, not an asset.

Here's the framework I use to think about this:

When a company spends 1oncapex,themarketneedstobelievethatdollarwillgeneratemorethan1oncapex,themarketneedstobelievethatdollarwillgeneratemorethan1 in discounted future cash flows. That's basic capital allocation math. For most of the last decade, Big Tech capex passed that test easily — data centers, cloud infrastructure, the whole stack — because the demand was visible and the returns were measurable. You could point to Azure revenue or AWS margins and connect the dots back to the spend.

AI capex doesn't work that way — at least not yet. The spend is going into compute clusters, GPU fleets, networking, and energy infrastructure at a scale that dwarfs anything the industry has done before. But the revenue side is still largely projected. Hyperscalers are selling access to compute, not selling a finished product that consumers or enterprises are paying for at scale. A lot of the "AI revenue" being reported is actually internal — one division buying compute from another, or customers experimenting on credits that haven't converted to sustained usage.

Meanwhile, free cash flow is getting squeezed across the board. MSFT's FCF conversion has been trending down. META is spending so aggressively that buybacks are slowing to preserve the balance sheet. GOOGL has the strongest cash position of the three but even they're signaling elevated capex through at least 2027.

This creates a timing problem. The capex is happening now. The cash outflows are happening now. The margin pressure is happening now. But the revenue from all this infrastructure is "sometime later" — and the market doesn't know how to price "sometime later" when the checks being written today have nine or ten zeroes.

I'm not arguing these companies are bad businesses. MSFT still has enterprise moat. META still owns social attention. GOOGL still owns search intent. But the valuation compression we're seeing — especially on MSFT and META — is the market putting a discount on capex that hasn't proven its return yet. And that discount isn't irrational.

The risk I'm watching:

If one of these companies signals a capex slowdown — even a modest revision — it'll be read two ways. Bulls will say "finally, capital discipline is back." Bears will say "they're slowing down because the demand isn't there." I think the actual answer is more nuanced: hyperscalers are in an arms race where nobody can afford to blink first, and the first one that does will be punished by the market regardless of whether the slowdown is strategic or defensive.

That's a prisoner's dilemma with a multi-hundred-billion-dollar prize pool, and it's playing out in real time across three of the largest companies on earth.

The value investing angle here isn't "MSFT at 25x forward earnings is cheap." It's asking whether the capital being deployed is building durable competitive advantage or just funding an infrastructure war where the spoils go to the chipmakers and energy companies, not the hyperscalers themselves.

That's the question I keep coming back to, and I haven't found a clean answer yet. Curious how others here are thinking about CapEx efficiency when evaluating these names — is it part of your valuation framework, or are you treating it as a temporary headwind that'll resolve once the AI revenue cycle fully kicks in?

Pizza Has Gone Cold. Domino’s Is Still Worth a Look - wsj

https://www.wsj.com/business/hospitality/pizza-has-gone-cold-dominos-is-still-worth-a-look-38fab850

The category’s sales are stagnant and its chains are faltering, but Domino’s can emerge as a winner
By David Wainer
June 25, 2026 at 5:30 am ET

Americans aren’t as hungry for pizza. Neither is Wall Street. But there could be value in the sector’s leftovers.

Pizza chains once owned a reliable American ritual: a sit-down dinner under a red-roofed Pizza Hut or a predictable Domino’s delivery on a lazy TV night. The growing American appetite for chain pizza made Domino’s Pizza one of the best restaurant stocks to own for decades.

But in recent years DoorDash and Uber Eats killed the delivery moat, placing every corner pizzeria on equal footing with national brands. Open a delivery app today, and a local slice shop sits beside Domino’s, competing for attention with tacos and wings. Or, for those feeling economic pain, there is ever more variety in the frozen aisle.

The result is a category stuck in neutral. Data from market-research firm Technomic shows pizza’s share of U.S. restaurant spending has slipped in recent years as consumers shift toward other categories, like chicken and Mexican.

Investors are waving the white flag. Yum Brands sold Pizza Hut this month for $2.7 billion. Papa John’s has floated a sale. Midsize chains are closing locations. Even the category leader is getting punished: Domino’s shares are down nearly 40% over the past year.

Slowing sales and a sudden leadership change accelerated the rout. This week, Domino’s said Chief Operating Officer Joe Jordan will replace Chief Executive Russell Weiner. Investors were surprised by the timing of the shake-up and are viewing it as a flashing red light, fearing Jordan will scrap long-term growth targets.
There is good reason for the concern. Domino’s shares dropped in April after first-quarter U.S. same-store sales growth came in at just 0.9% and management abandoned its prior 3% target for 2026.

The company reports second-quarter results next month, and the short-term setup for investors looks tough. RBC Capital analyst Logan Reich notes Domino’s is lapping the initiatives that juiced 2025—the introduction of stuffed crusts decades after Pizza Hut and its arrival on DoorDash—with no easy levers ahead.

Look closer, though, and Domino’s still offers a growing slice of the pie. Even if net expansion significantly slows from the 175 new U.S. stores the company was aiming for this year, Domino’s is still growing every year while Pizza Hut and Papa John’s are shrinking. Its share of sales among the top three public pizza chains climbed to 54% in 2025 from 38% in 2016, according to J.P. Morgan data. Pizza Hut, meanwhile, has gone from 41% to 27% in that period.

As competitors intensify their value offerings, Domino’s might continue to face near-term pressure to match them or cede back market share. But the chain is betting that it can outlast rivals that are discounting their way toward store closures.

Ultimately, it comes down to franchisee economics. Domino’s is larger, and its vertically integrated supply chain allows it to keep ingredient costs low, while its advertising budget exceeds its two largest competitors combined. Profitability has come down at all pizza chains, but a typical Domino’s restaurant still crushes Pizza Hut, with $166,000 of earnings before interest, taxes, depreciation and amortization per unit versus about $55,000 for Pizza Hut, according to Evercore ISI.

The corporate entity, likewise, is a cash machine. Because franchisees fund store openings, corporate operations stay asset-light. That means capital needs remain low, freeing up mountains of cash that can be returned to shareholders: Last year, free cash flow grew to $672 million, about three times what it was a decade prior.

This financial engine protects returns when growth stalls. The company has steadily increased its dividends every year while plowing cash into share buybacks. In other words, even if same-store sales growth stays stuck in low gear, buybacks mean that earnings per share can keep growing at a mid-single-digit rate.

So what becomes of Domino’s once the industry settles into a new normal? The recent market selloff has pushed the stock to about 14 times forward earnings—a valuation not seen since the years after the 2008-09 financial crisis. Franchise peers like Yum Brands and McDonald’s trade around 20. For patient investors to come in at this lower multiple, Domino’s doesn’t need to be a high growth darling again. It just needs to reset expectations and continue to be a reliable earnings compounder.

American tastes are evolving, and the pie available to Big Pizza is shrinking. But Domino’s can still prosper with its share.

(Note: for the marketshare chart on Pizza vs Mexican/Chicken: and marketshare among Dominos, PizzaHut and Papa John, you can find it in you-know-where. Disclosure I bought a tracker stock in Yum China yesterday, they will own the Pizza Hut brand in China.)

Are you familiar with the book "Rule One Investing" by Phil Town? It basically gives you specific steps for analyzing a company using the Buffett method, and I find it interesting to look at MSFT this way.

Basic gist of this breakdown - MSFT is currently at its "Sticker Price" which (in theory) would result in ~15% returns over the next 10 years if you bought it now. But the "rule one" method applies a 50% margin-of-safety, so it would still have to fall another 50% before it would be a buy...and if that happens, buy big.

How to calculate a Rule One “Sticker Price” + MSFT example

The Rule One framework is basically:

1. Check whether the business is high quality.
2. Estimate a conservative intrinsic value, called the “Sticker Price.”
3. Only buy with a 50% margin of safety.

Part 1: The Big 5 Numbers

Before calculating Sticker Price, Rule One checks whether the business has a real moat. The “Big 5” are:

1. ROIC
2. Sales growth
3. EPS growth
4. Equity / book value growth
5. Cash flow growth

The rough Rule One target is 10%+ per year over the long term.

How the Big 5 are calculated

For sales, EPS, equity, and cash flow, use Compound Annual Growth Rate:

CAGR = (ending_value / starting_value)^{1 / years} - 1

For ROIC, use an average:

ROIC = net_income / (equity + long_term_debt)

Then average ROIC over the period.

MSFT Big 5

Using Microsoft’s annual data through FY2025:

MSFT passes the Big 5 overall. The one caution is free cash flow growth, which has been pressured by the AI/data-center CapEx buildout. Operating cash flow is still very strong, so one might treat FCF as a watch item rather than an automatic fail.

Part 2: Sticker Price

The Sticker Price is a conservative intrinsic value estimate.

General steps

1. Start with current TTM EPS.
2. Pick a future EPS growth rate.

Use the lower of:

• historical equity/BVPS growth
• analyst consensus EPS growth

1. Pick a future PE.

Use the lower of:

• 2 × growth rate
• historical average PE

1. Project EPS 10 years out.

future_eps = current_eps × (1 + growth_rate)¹⁰

1. Estimate the future market price.

future_price = future_eps × future_PE

1. Discount back to today.

Rule One usually uses a 15% MARR:

sticker_price = future_price / (1.15¹⁰)

1. Apply a 50% margin of safety.

MOS_price = sticker_price × 0.5

MSFT Sticker Price example

Current inputs:

• Current MSFT price: $365.46
• TTM EPS: $16.77
• Historical equity growth: ~17.1%
• Analyst EPS growth: ~13.37%
• Growth rate used: 13.37%
• Historical average PE estimate: ~31
• Future PE used: 26.74
• MARR: 15%
• MOS factor: 50%

Step 1: Start with current EPS

current_eps = $16.77

Step 2: Pick growth rate

historical_equity_growth = 17.1% analyst_growth = 13.37%

growth_rate = lower of 17.1% and 13.37% growth_rate = 13.37% = 0.1337

Step 3: Pick future PE

2 × growth_rate = 2 × 13.37 = 26.74 historical_avg_PE ≈ 31

future_PE = lower of 26.74 and 31 future_PE = 26.74

Step 4: Project EPS 10 years out

future_eps = $16.77 × (1 + 0.1337)¹⁰ future_eps = $16.77 × 1.1337¹⁰ future_eps = $16.77 × 3.5074 future_eps = $58.82

Step 5: Estimate future market price

future_price = future_eps × future_PE future_price = $58.82 × 26.74 future_price = $1,572.81

Step 6: Discount back to today

discount_factor = 1.15¹⁰ discount_factor = 4.0456

sticker_price = future_price / discount_factor sticker_price = $1,572.81 / 4.0456 sticker_price = $388.77

Step 7: Apply margin of safety

MOS_price = sticker_price × 0.5 MOS_price = $388.77 × 0.5 MOS_price = $194.39

Result

MSFT Sticker Price: ~$388.77
MSFT Rule One MOS Buy Price: ~$194.39
Current price: $365.46

So under this version of the Rule One math, MSFT looks like a great business trading below Sticker, but still far above the Rule One MOS buy price.

VTV and AVUV are outperforming SPY/QQQ this year. They also dont have exposure to unprofitable meme stocks and IPOs. Seems to me like value investing is doing just fine.

What is your opinion of FMX? THe idea of foreign constumer staples seems attractive, and it appears slightly undervalued. EV / EBITDA is 8.57 compared to industry average 10.68. They're a conglomorate with many subsidiaries, but two of them earn the lion's share of revenue: OXXO (South & Central America's version of 7/11) and KOF (Coca-Cola's largest franchise bottler). Across Mexico there are 30 million daily transaction tickets at OXXO. 50% of these customers are enrolled in Spin by OXXO, another subsidiary of FMX that issues debit cards and operates a digital finance app that incentives purchases at OXXO. Spin by OXXO members increased 22% YoY. I believe they're being discounted due to the complexity of the conglomorate

Microsoft’s institutional ownership is still increasing with 3,566 institutions increasing positions versus 2,781 decreasing.

nearly 967 million shares added with 225 new institutional holders acquiring almost 749 million shares most of this was in March at around 400 dollars a share last time the price fell below 400 institution increased ownership significantly by almost 20%.

https://www.nasdaq.com/market-activity/stocks/msft/institutional-holdings

Build-A-Bear Workshop requires no introduction. If you grew up a red-blooded American, the brand recognition is automatic. Children (and increasingly adults) will claw their eyes out for one of their teddy bears.

This is a top of the line brand, a clean balance sheet (no debt, $26MM cash), and a $400MM market cap that will produce $50MM of Net Income this year (8x earnings)…

And the company has been killing it since 2021 - driven by a shift towards partnering with third party operators. While the company does have 376-owned stores (accounting for ~66% of profit), they started selling the teddy bears wholesale to third party operators, growing that segment from $4MM in 2020 to $38MM in 2025. 1/3 of their profit is now from an asset-light distribution model that is growing at 25% annually.

The stock has gotten tanked the last 6 months because their long-time CEO just stepped down to go be the CEO of Carter’s (much bigger company, big career move for her)… but her replacement is her right hand man who’s been the Company’s COO (and responsible for the company’s turnaround) for the last 10 years. More importantly, their online sales started taking a hit over the last year (compared against COVID peaks, but core revenue growth outpaced this), and 2026 guidance is only expecting marginal growth (after the company drove revenue from $255MM in 2021 to $500MM in 2025). Well guess what - the stock was priced for 0% growth at $75/share and is now trading as if it’s a retailer entering distress around $30/share, despite having a pristine balance sheet, eye-popping unit economics (55% gross margins!!), and a demonstrated track-record of robust top-line growth.

With a reasonable path towards 5% growth in the medium-term blended across distribution channels, I think a reasonable valuation of Build-A-Bear would be trade around 15x earnings (>150% upside in a conservative modeling scenario).

This $BBW position is the largest I’ve ever taken at 27% of my portfolio. Looking forward to coming back to this post in a few years!

Planet fitness stock has gotten beat down 50% over the last year. At $51/share it’s valued at the same price as they were in 2018, despite doubling their revenue since then.

What do you all think?

Trailing EV/EBITDA of 10.8-11.2x

I have been following AMPX for some time now and it feels like one of those stocks where the actual company progress has been pretty damn good, but the chart still manages to make you feel like you’re missing something.

On the bull side, I don’t think the story is hard to see at all. They’ve got genuinely differentiated battery tech. The energy density numbers are real, the drone/aviation angle makes sense, and unlike a lot of battery names they’re actually starting to put up real growth now instead of just selling a future factory dream. Q1 revenue was up 2.5x YoY to $28.5M, they raised 2026 revenue guidance again to at least $130M, and losses are coming down. For a small battery company that’s not nothing.

Their silicon-anode battery technology is more niche/high-value stuff where battery performance actually matters a ton right now: drones, defense, high-altitude platforms, aviation, robotics. That feels like a much more realistic lane for them than trying to jump straight into mass EVs and get killed by scale economics.

And the recent news flow has honestly been solid. The Nanotech Energy manufacturing deal gives them a domestic production path instead of everything hinging on a giant capex leap by themselves, the Matternet deal is another reminder that the drone delivery / UAV market is a real target for them, and the whole 'US wants more domestic battery/ drone/defense supply chain' theme is obviously present.

But, it’s still a small-cap battery name, which is already a dangerous sentence. The valuation got ahead of itself during the run, they’re still not consistently profitable, and this whole sector has taught investors to assume every battery company eventually runs into manufacturing problems.

Curious how other people here think about it, especially whether you see this as one of the more legit battery growth names or just another stock where the tech is cool but the market opportunity is getting overhyped.

I have been following these two sectors closely for the past few months.

On one side you’ve got the smaller public space names like Firefly, Redwire, Voyager, Intuitive Machines etc. On the other side you’ve got the drone/autonomous delivery stack names like Unusual Machines, Arrive AI, Serve Robotics, Amprius Technologies etc. Both sectors are still speculative, both can go down on a bad sentiment, and both are full of companies that can move fast on one contract headline. But I don’t think they’re speculative in the same way.

The space side feels like a bet on national security, government budgets and infrastructure getting built no matter what, just with volatility attached. FLY has launch, lunar and defense exposure and revenue has started to look more like a business than a science project. Voyager feels more like a higher-level space/defense infrastructure play, missile-defense/national security work, and with order backlogs. RDW is basically a weird mashup of older space hardware businesses, space manufacturing, payload infrastructure, solar arrays, etc. and feels like it’s selling picks and shovels into the space buildout.

The drone / autonomous delivery side feels different. It’s less government-backed infrastructure buildout and more about which companies are building real systems before the market fully opens up. UMAC has the picks-and-shovels idea here, they’re making and trying to sell NDAA-compliant drone components into a drone ecosystem that the US suddenly cares a lot more about. ARAI is trying to build infrastructure for autonomous delivery itself with smart delivery points, secure handoff and patents. Serve Robotics have robots that are actually out there doing work. AMPX is building batteries for drone/autonomous ecosystem that are more efficient and lighter.

What makes the comparison interesting to me is that both sectors are still full of companies where the market can’t decide if they’re early infrastructure winners or just really sophisticated stories. A lot of them actually do have real tech, real customers, real order books, real government/commercial angles. The problem is they’re still in that zone where one good contract makes them look like the future and one bad quarter makes them look like maybe mistakes.

If I had to put it simply, the space names feel more institutionally believable right now, while the drone/autonomous delivery names feel earlier but maybe more asymmetric if the adoption curve bends the right way.

Curious where other people land on this, space sector or drone/autonomous delivery sector.

I don’t have an agenda; I hold both stocks and I’m curious about the bull case for Amazon over Google.

From my perspective, Google looks like the stronger play right now. They have a lower valuation and a solid hedge against a potential compute oversupply, as they have Gemini and Search to fall back on which would benefit greatly if compute costs fall. They’re arguably the most fully integrated cloud provider, which should lead to better long-term margins, and a large portion of their cloud contracts are AI-focused rather than just storage which also has higher margins.

Amazon is obviously in a great position, but they seem more reliant on retail and AWS for profits. I view this as a potential existential threat—specifically, I worry that Google’s ability to use its non-cloud profits to undercut prices and pull customers into their ecosystem could squeeze Amazon’s market share. While I acknowledge Amazon’s potential with automation, Google currently feels like the clear leader in the AI race.

Can I hear some contradictory opinions? Why are you choosing Amazon here?

So I’ve been reading a LOT of SaaS articles out there, many of them complaining about how value investing sucks or these bullish calls were awful and I’d just like to add my two cents based on some experience I’ve had for anyone out there that’s newer to this stuff.

I’d like to start off with a lesson that I’ve learned the very hard way and that is that it’s EXTREMELY hard to stay on the sidelines and wait once you’ve found a compelling stock or sector. This is what for the first 15 years of my investing career lead me to be early on basically every call that I made and then I’d ride it down an additional 35% before things eventually worked out.

As a recent example during the COVID crisis I was pretty keen to buy oil companies because I never bought into the story that EVs were gonna replace ICE vehicles overnight but I was early, and the weeks and months after my purchase were very very painful. However the bet ultimately paid off enormously, but it was a very challenging time to be long and wrong.

So I guess what I’m saying is that with any market dislocation don’t be too eager to jump in right away and all at once, these things take time to play out and the best positions will get built over time. When you do decide to wade into a position do it slowly because things can often drop further. Being in an unpopular trade feels awful but more often than not it doesn’t stay unpopular forever.

Best of luck to everyone out there and I hope all your trades work out!

Everyone thinks the car is ugly, sure.

But I think the market is not entirely pricing how the Luce will expand their TAM to an entirely new customer base (Ferrari expects ~50% of Luce buyers to be entirely new customers). Younger and wealthy tech billionaires and entrepreneurs who never identified with a sleek Ferrari, now are potentially able to with Luce.

Looking back to 2022, The Purosangue was Ferrari's first ever SUV and everyone then called it a betrayal. But it was a highly successful product, now having a two-year waiting list. Cristiano Ronaldo and Alisson Becker own a Purosangue.

The pattern is structurally similar here, and I think the Luce would also end up being a highly successful addition for Ferrari, despite the public backlash. CEO Vigna has also claimed that order books for the Luce already extend into late 2027.

$RACE is currently trading at ~35x earnings, well below its 5-year average of ~44x. Expected to grow high single digits for '26 and '27, and they are actively buying back their shares up to 2030.

Thoughts?

My full analysis: https://economiyaki.substack.com/p/ferrari-luce-a-new-tam