Welcome to our brief overview of portfolio news from the past few days.

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AMD

• UK AI Investment: AMD announced plans to invest up to £2 billion in the United Kingdom over the next five years to accelerate AI research, scientific computing, and sovereign AI development.

• Strategic Academic Partnerships: The company is collaborating with Imperial College London, Oriole Networks, and the University of Cambridge to advance AI infrastructure.

Alphabet

• $80 Billion Equity Capital Raise: Alphabet announced an unprecedented $80 billion equity raise (which has since seen demand push it closer to $85 billion) to fund its artificial intelligence and data center expansion. Notably, this includes a $10 billion private placement to Berkshire Hathaway at a weird discount to what the price was at the time.

• Massive SpaceX Cloud/GPU Deal: Google has entered into a $920 million-per-month agreement with SpaceX to provide access to roughly 110,000 NVIDIA GPUs, plus CPUs and memory, from October 2026 through June 2029. Strict capacity milestones are in place.

• Green Energy Data Center in Texas: Google is partnering with Intersect to build the Meitner Energy Center in Texas, co-located with over a gigawatt of wind, solar, and battery storage.

• Alphabet choosing to raise equity rather than debt highlights the jaw-dropping capital intensity of the AI arms race. To put it in perspective, $80 billion covers less than half a year of Alphabet’s planned $180–$190 billion 2026 capex. However, Berkshire Hathaway anchoring a $10 billion tranche acts as a massive stamp of institutional validation that management is deploying this capital efficiently. That said we find the discount offered at the time somewhat unfair to minority shareholders.

Evolution AB

• Aggressive Share Buybacks: On May 18, Evolution’s board approved a massive EUR 2 billion share buyback program. Over the past three weeks, management has wasted no time executing the plan, consistently buying hundreds of thousands of shares daily on the open market, accumulating over 2 million shares to date.

• This buyback represents roughly 16.5% of Evolution’s market capitalization. The speed and aggression of these daily open-market purchases signal management’s extreme confidence in their cash flow generation and clearly indicate they believe the stock is fundamentally undervalued. We will soon publish our valuation update.

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Amazon

• Anthropic vs. The Pentagon: Amazon-backed Anthropic is facing a massive standoff with the US government ahead of its highly anticipated IPO. The Pentagon is threatening to label the company a “supply chain risk” after Anthropic refused demands to remove contractual restrictions prohibiting the military from using Claude for domestic surveillance or autonomous weapons.

• €10B+ European Automation Push: Amazon is investing over €10 billion to modernize European fulfillment centers. This includes deploying next-gen Proteus robotics by H1 2027 and committing $1 billion to worker upskilling by 2030.

• The European automation push is a brilliant dual-track strategy. Deploying advanced robotics while simultaneously investing heavily in human worker upskilling serves as the perfect “social hedge,” effectively mitigating regulatory and labor friction in a strict European labor market.

Autodesk

• Lowering Barriers for Small Businesses: Following the launch of Autodesk for Small Business, the company slashed the entry cost for its flexible consumption model. Starting June 4, the minimum purchase for Autodesk Flex dropped from 100 tokens ($300) to just 33 tokens ($99).

• Autodesk’s research notes that over 80% of small design business owners struggle with administrative overhead. Cutting the token entry price by 66% removes upfront financial risk. By lowering friction for solo designers today, Autodesk ensures these businesses scale on their software tomorrow.

Other Key Updates

• Index Shuffles: Pool Corporation, alongside Campbell, is being removed from the S&P 500 index effective June 22, to be replaced by Marvell Technology and Flex.

• Being dropped from the S&P 500 forces index-tracking funds to sell Pool Corp. This forced selling pressure often creates temporary mispricing, opening up a compelling entry point for active, long-term buyers.

• Adobe: RBC Capital Markets expects solid fiscal Q2 results, projecting total Annualized Recurring Revenue (ARR) to exceed the $26.6 billion consensus.

• ASML: BofA Global Research raised its price objective for ASML to EUR 1,921 / $2,268 and maintained its “Top Pick” status. With EUV capacity expanding and newer models driving up margins, ASML signals strong growth confidence through 2028.

That’s a wrap. See you soon.

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Disclaimer: The team does not guarantee the accuracy or completeness of the information provided in the newsletter. All statements express personal opinions based on own financial and business analysis. Any estimates or forward looking statements made are inherently unreliable. No statement of opinion is an offer or solicitation to buy or sell the financial instruments mentioned.

The content of our newsletter is not a trading or investment advice and we do not provide any personal investment advice tailored to the needs of any recipient. The information provided should not be considered as a specific advice on the merits of any investment decision. Securities trading involve risk and you might lose your capital and/or incur other damages. Investors should make their own research and consult their registered investment advisor or financial advisor before taking any investment decision.

Neither the team nor any of its affiliates accept any liability whatsoever for any direct or indirect loss however arising, from any use of the information contained herein. Any unauthorized copy of this newsletter or its contents is illegal.

Our posts may contain affiliate links, which means that we might get a commission if you decide to sign-up using any of these links. No extra cost is charged to you.

By subscribing / reading our newsletter or any affiliated social media accounts, you indicate your unconditional acceptance to the above and your unconditional acceptance to our terms and conditions.

Welcome to our brief overview of portfolio news from the past few days.

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Alphabet

• Clean Energy for Data Centers: Alphabet signed a 15-year power purchase agreement with Enlight Renewable Energy for 200 MW of solar energy in Oklahoma to power its data centers starting in 2029.

• Waymo Dominates Autonomous Vehicles: Waymo has 577 registered autonomous vehicles in Texas, more than 13x Tesla’s 42 robotaxis. Capitalizing on this momentum, Waymo is also rolling out its next-gen “Ojai” robotaxi (built with Geely’s Zeekr) in major cities. While competitor narratives lean heavily on future promises, Alphabet is quietly building an insurmountable operational lead on the ground.

Autodesk: Stellar Q1 or Optical Illusion?

Autodesk dropped its Q1 FY27 earnings, and at first glance, the top-line performance looked phenomenal. Revenue jumped 18% year-over-year to $1.93B, non-GAAP EPS hit $2.99, and the business remains an absolute cash machine, with free cash flow surging 58% to $876M. Management even raised full-year FY27 guidance.

Yet, the stock slipped in after-hours trading.

Why the disconnect?

The 18% headline growth is heavily distorted by Autodesk’s transition to its new direct-transaction model. When you normalize the metrics and look at constant-currency growth adjusted for this accounting shift, core growth is projected at a much cooler 8–9% for the full year.

Simultaneously, Autodesk announced a $3.6 billion all-cash acquisition of MaintainX, an industrial maintenance and operations software provider. Strategically, this is brilliant long-term positioning, it bridges the gap between design phase software and real-world asset management, capturing a massive operational dataset to feed its industrial AI tools. We view the after-hours weakness as a classic case of the market digesting accounting noise rather than structural deterioration.

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Other Key Updates

• ASML: Japanese rival Nikon is making a targeted push to win back market share in semiconductor photolithography by undercutting ASML on price, leveraging an in-house component cost advantage to near purchase orders with major chipmakers in the US and Asia for its argon fluoride lithography equipment. While this pressures ASML’s lower-tier mature node revenues, ASML’s core investment thesis remains intact due to its absolute, unchallenged monopoly over the cutting-edge EUV and High-NA systems required for advanced AI hardware.

• Intuit: Rolled out “Analytics AI” and a beta “AI Segment Builder” within its Mailchimp marketing platform to help businesses seamlessly analyze audience data. To further enhance its e-commerce AI marketing capabilities, Mailchimp has also expanded its integrations with Anthropic’s Claude, Wix, and WooCommerce.

• Adyen: Chief Financial Officer Ethan Tandowsky is stepping down effective August 31 to pursue an opportunity outside fintech. While sections of the market were critical of Ethan regarding capital allocation strategy, core operational execution during his tenure was exceptionally strong. C-suite departures of structural executives always introduce near-term sentiment volatility, but the underlying payments engine remains fundamentally unchanged.

That’s a wrap. See you soon.

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Disclaimer: The team does not guarantee the accuracy or completeness of the information provided in the newsletter. All statements express personal opinions based on own financial and business analysis. Any estimates or forward looking statements made are inherently unreliable. No statement of opinion is an offer or solicitation to buy or sell the financial instruments mentioned.

The content of our newsletter is not a trading or investment advice and we do not provide any personal investment advice tailored to the needs of any recipient. The information provided should not be considered as a specific advice on the merits of any investment decision. Securities trading involve risk and you might lose your capital and/or incur other damages. Investors should make their own research and consult their registered investment advisor or financial advisor before taking any investment decision.

Neither the team nor any of its affiliates accept any liability whatsoever for any direct or indirect loss however arising, from any use of the information contained herein. Any unauthorized copy of this newsletter or its contents is illegal.

Our posts may contain affiliate links, which means that we might get a commission if you decide to sign-up using any of these links. No extra cost is charged to you.

By subscribing / reading our newsletter or any affiliated social media accounts, you indicate your unconditional acceptance to the above and your unconditional acceptance to our terms and conditions.

1. Performance

a. Q3 FY26 Results

Intuit delivered a strong beat-and-raise quarter, topping Wall Street expectations while absorbing elevated costs from its strategic upmarket pivot. Revenue climbed 10.4% year-over-year to $8.56 billion, edging past the $8.54 billion consensus, driven largely by double-digit growth in the Global Business Solutions segment. On the bottom line, non-GAAP EPS reached $12.80 (up 9.9% YoY), comfortably beating the $12.57 consensus estimate and exceeding internal management guidance.

However, non-GAAP operating income grew at a slower rate of 7.8% to $4.7 billion, compressing operating margins by ~136 basis points to 54.7%. This compression and the 12.5% jump in overall key costs (specifically service costs, R&D, and marketing), were primarily driven by aggressive reinvestments into AI and sales capacity, alongside pricing headwinds in the low-end consumer tax market.

Despite this near-term margin squeeze, management signaled deep conviction in their cash flow trajectory by repurchasing $1.6 billion in stock, hiking the dividend by 15% to $1.20, and announcing a massive new $8 billion share repurchase authorization.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

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b. Segmental Analysis

Consumer Group

The Consumer segment reported sales of $5.3 billion, an 8.1% increase year-over-year. This growth was anchored by a 7.9% increase in TurboTax revenue to $4.4 billion alongside a 14.9% year-over-year acceleration in Credit Karma revenue to $631 million, which was heavily driven by broad product strength across personal loans, auto insurance, and home loans. In contrast, the mature ProTax division experienced flat year-over-year growth at $278 million for the quarter.

Source: StockOpine Analysis

However, the headline story is the divergence within the tax business. In an environment where total IRS filers are projected to decline by ~2 million units, the largest contraction since the pandemic, Intuit expanded its presence in the $37 billion assisted tax category. TurboTax Live revenue is projected to increase by 36% to $2.8 billion, accounting for roughly 53% of total TurboTax revenue and driving a 38% growth in TurboTax Live customers. This shift toward assisted offerings and faster refund options led to a projected 11% increase in ARPU. This growth in higher-value filers helped offset a reduction in overall market share, as free, pay-nothing customers decreased from 8 million to approximately 7 million.

Conversely, the DIY segment faced headwinds among price-sensitive filers earning less than $50,000. CEO Sasan Goodarzi noted the company lost on price in this niche but plans to evolve the business model to monetize these users through the broader consumer platform.

“Build on our momentum with TurboTax Live, where we have the largest TAM and a significant ARPU opportunity. Second, evolve our DIY business model to deliver the right value at the right price point for the most price-sensitive filers, and monetize beyond tax with our consumer platform. We’re confident in our platform assets and proof points to deliver on our long-term growth goals.”

To mitigate headwinds in the low-end consumer segment, Intuit utilized its platform network, reporting that ARPU is approximately 30% higher for customers using both TurboTax and Credit Karma compared to those using TurboTax alone. This cross-platform integration allowed Credit Karma members with simple tax situations to have up to 80% of their data pre-filled. Consequently, the number of tax filers beginning their filing process within the Credit Karma interface increased by 54%.

Global Business Solutions (GBS)

GBS revenue grew 15% to $3.3 billion, with the Online Ecosystem revenue increasing 19% year-over-year. Excluding Mailchimp, Online Ecosystem growth was even more robust at 22%. Total international online revenue grew 10% on a constant currency basis.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

QuickBooks

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Welcome to our brief overview of portfolio news from the past few days.

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AMD: Winning the Next-Gen Fabric Game

AMD has begun ramping production of its next-generation EPYC data center processor, codenamed “Venice,” utilizing TSMC’s advanced 2nm process technology. This marks the industry’s first HPC product to enter 2nm production. AMD is ramping up production in Taiwan with future expansion planned for TSMC’s Arizona facility.

AMD also announced over $10 billion in investments across the Taiwan ecosystem to co-develop next-gen 2.5D bridge interconnect technology (EFB architecture) with ASE, SPIL, and PTI, leading up to the high-volume deployment of its “Helios” rack-scale platform in H2 2026. The roadmap also introduces “Verano,” a 6th Gen EPYC processor utilizing LPDDR memory designed for power-constrained applications. CEO Lisa Su revealed that soaring demand for agentic artificial intelligence and inferencing has dramatically accelerated these server compute requirements.

INTUIT: The Software Transition Tax

Intuit delivered a modest Q3 top-line beat, with revenue reaching $8.56 billion (+10% YoY). Global Business Solutions remained the primary driver (+15% to $3.3B), powered by strong momentum in QuickBooks Online Accounting (+22% YoY). However, the Consumer segment experienced a visible deceleration, with TurboTax growing just 7% versus 11% in prior periods.

While management raised full-year FY26 revenue guidance to $21.34B–$21.37B, operating margins compressed from 56.0% to 54.7%. To offset this and streamline operations, Intuit announced a major 17% workforce reduction, which will incur $300M to $340M in restructuring charges. We will shortly publish a full earnings review and inform you if we are taking any action in our portfolio.

Alphabet: Monetization vs. CapEx Reality

Alphabet’s recent Google I/O updates highlighted multi-faceted revenue opportunities, including its new $100 AI Ultra plan tailored for developers and power users, app integrations across Gmail/YouTube, and Gemini Spark. On the corporate infrastructure side, Google Cloud partnered with Thales to establish a sovereign cloud solution in Germany.

Simultaneously, alternative ecosystem scaling is picking up speed through a massive joint venture with Blackstone, where Blackstone will invest an initial $5 billion in equity to build data center capacity powered directly by Google’s custom Tensor Processing Units (TPUs). By putting their custom TPU chips inside these Blackstone data centers, Google is establishing its own hardware footprint to challenge Nvidia’s monopoly on AI chips.

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ASML: The Ultimate Bottleneck in the Chip Super-Cycle

Global semiconductor supply remains incredibly tight as demand from AI, satellites, and robotics outpaces industry production—a trend ASML CEO Christophe Fouquet expects will drive a prolonged investment cycle lasting into 2028. ASML is poised to release its first batch of advanced logic and memory chips produced using its cutting-edge High Numerical Aperture (High-NA) machines within the next few months, which is expected to drastically reduce patterning costs, product defects, and cycle times.

Analysis suggests ASML’s 2027 capacity can support a >50% YoY expansion in leading-edge wafer output. Additionally, the company signed an agreement with Tata Electronics to deploy its lithography tools in an $11 billion chip fabrication plant in Gujarat, India.

Other Key Updates

• Amazon’s multi-year effort to build custom in-house hardware is gaining significant ground: both Anthropic and OpenAI have signed agreements to rent large-scale capacity on Amazon’s custom Trainium chips.

  On the industrial software side, AWS finalized a multi-year cloud expansion deal with AVEVA to host its CONNECT platform and leverage AI analytics via Amazon Bedrock.

• Allegion announced the launch of its “Campus-to-Community Student Living” solutions, a mobile-first hardware and software integration ecosystem aimed at the off-campus student housing market. Built around Schlage’s Resident Key technology integrated into Apple Wallet and Google Wallet, the platform allows end-users to seamlessly use standard smartphones and smartwatches to manage security across residences, common amenities, and campus facilities. The rollout follows successful real-world testing with property managers at the University of Oklahoma, demonstrating optimized property operations and a visible reduction in after-hours lockouts.

• Evolution AB has commenced a massive share repurchase program of up to €2 billion on the Nasdaq Stockholm exchange to significantly reduce its outstanding share capital.

• Grab Holdings: Grab is consolidating the Indonesian digital lender Superbank after Singtel transfers its stake. Superbank recently posted its first full-year profit and has grown to over six million customers. It will be fully folded into Grab’s Financial Services segment, significantly expanding their digital banking footprint and cross-selling potential in Indonesia.

That’s a wrap. See you soon.

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Disclaimer: The team does not guarantee the accuracy or completeness of the information provided in the newsletter. All statements express personal opinions based on own financial and business analysis. Any estimates or forward looking statements made are inherently unreliable. No statement of opinion is an offer or solicitation to buy or sell the financial instruments mentioned.

The content of our newsletter is not a trading or investment advice and we do not provide any personal investment advice tailored to the needs of any recipient. The information provided should not be considered as a specific advice on the merits of any investment decision. Securities trading involve risk and you might lose your capital and/or incur other damages. Investors should make their own research and consult their registered investment advisor or financial advisor before taking any investment decision.

Neither the team nor any of its affiliates accept any liability whatsoever for any direct or indirect loss however arising, from any use of the information contained herein. Any unauthorized copy of this newsletter or its contents is illegal.

Our posts may contain affiliate links, which means that we might get a commission if you decide to sign-up using any of these links. No extra cost is charged to you.

By subscribing / reading our newsletter or any affiliated social media accounts, you indicate your unconditional acceptance to the above and your unconditional acceptance to our terms and conditions.

Let’s break down the results to see if this is a visionary leap or a desperate scramble.

1. Financial Results

• PayPal’s revenue increased to $8.4 billion in the first quarter, representing a 7% year-over-year increase (or 5% when adjusted for currency fluctuations). While this is an acceleration from the 4% seen in Q4’25, it is still low relative to the broader payments industry as the company continues to lose market share on its branded checkout business.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

• PayPal’s non-GAAP operating income fell 5% to $1.5 billion, resulting in a 229-basis-point contraction of the operating margin to 18.4%. This squeeze was primarily driven by an 8% surge in non-transaction related operating expenses, which exceeded the company’s initial guidance of a mid-single digit growth. Management attributed this spending spike to a strategic pivot to pull forward critical investments in AI technology, marketing and product development into the first half of the year. However, this margin erosion remains highly concerning, as it indicates that the core business is becoming structurally more expensive to operate.

• Non-GAAP EPS was $1.34, up 1% YoY, as opposed to the company’s internal guidance of mid-single digit decline. This was largely boosted by the aggressive share repurchases reducing the number of shares.

Source: PayPal filings, StockOpine analysis

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2. Payment Volume and Operating Metrics

a. Total Payment Volume

In Q1 FY26, TPV reached $464 billion, reflecting an 11% increase year-over-year (8% FXN), with growth driven mainly by PSP (Unbranded) and Venmo. Branded Checkout TPV grew at just 2% on a currency-neutral basis, a slight sequential improvement of 1%. When compared to Visa and Mastercard, whose payment volumes grew at 9% and 7% respectively, it is clear that PayPal's Branded Checkout continues to lose market share.

On the other hand, volume growth for PSP (Unbranded) accelerated to 11% (up from 8% in Q4’25). Within this segment, Enterprise Payments showed notable strength in the mid-teens, supported by high retention and growth within the existing merchant base.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

Source: PayPal filings, StockOpine analysis

Growth was particularly strong in the US market, where TPV increased 11% year-over-year due to the combined momentum of unbranded processing (PSP), Venmo and core branded experiences. PayPal’s International TPV reached $163.8 billion, accounting for ~35% of the company’s total TPV. This figure represents an 11% increase on a spot basis year-over-year, though growth was a more modest 2% on a currency-neutral (FXN) basis. Management attributed the slowdown to the travel sector, broader macroeconomic softness, intense local competition and market saturation across Europe, particularly with persistent pressure in the U.K. and moderating growth in Germany.

To counter these challenges, management conducted deep-dive reviews and is rebalancing its focus toward the consumer side of the network. Key initiatives to revitalize international growth include the launch of the PayPal+ loyalty program in the U.K. and the aggressive scaling of localized checkout innovations, such as NFC-based solutions in Germany, to capture higher-value transaction verticals.

“There are also specific verticals, high-value verticals where we can have a more differentiated value proposition, especially we combine with financial services. This combined with an improvement in execution that by really understanding what our priorities are and simplifying how we make decisions, we think the combination of all that will have a significant impact in the business going forward” - Enrique Lores, CEO

b. Venmo

Venmo continues to serve as a critical high-growth engine for the portfolio, delivering $86.2 billion in TPV for Q1, representing 14% FXN growth. This marks the platform’s sixth consecutive quarter of double-digit expansion that helped overall transaction margin dollar growth despite broader organizational headwinds.

Pay with Venmo surged 34% in the quarter. Though Venmo debit card and tap-to-pay adoption contribute a small share to branded experiences volume, they grew an impressive 60% year-over-year. Paypal’s Monthly Active Accounts (MAA) grew 1% to 225 million, but this growth was largely driven by Venmo, suggesting the core PayPal wallet may be seeing engagement fatigue.

Source: PayPal filings, StockOpine analysis

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Fortinet

Fortinet delivered an exceptional first-quarter performance for 2026, exceeding the high end of its guidance on both revenue and profitability. Revenue grew 20% year-over-year to $1.85 billion, driven by a powerful 41% surge in product revenue to $645 million. Additionally, billings expanded 31% to $2.09 billion. While product sales grabbed the headlines, Fortinet’s recurring service revenue grew 11% to $1.21 billion.

Fortinet also posted a non-GAAP operating margin of 36%, operating cash flow of $1.08 billion (+25% YoY) and free cash flow of $1.01 billion (+26% YoY). Non-GAAP earnings per share grew 41% year-over-year to $0.82. This strong execution prompted management to raise its full-year 2026 revenue guidance to 15% year-over-year growth, within a range of $7.71 billion to $7.87 billion. Fortinet’s expansion is fueled by two major trends: the structural merging of networking with security, and a rapidly evolving threat landscape supercharged by AI. Far from being a headwind as many assumed, AI is driving demand. Furthermore, management signaled strong confidence by executing $827 million in share repurchases during the quarter.

PayPal

During the first quarter of 2026, PayPal posted net revenue of $8.35 billion, a growth of 7% year-over-year. Non-GAAP EPS remained flat at $1.34, exceeding Wall Street’s $1.27 forecast. However, the earnings beat was quickly overshadowed by weak guidance for the upcoming quarter. The company expects Q2 non-GAAP EPS to slide approximately 9% year-over-year to $1.27, falling short of the $1.34 analyst expectation.

In response to persistent operational hurdles, PayPal announced a major structural restructuring, including plans to downsize the workforce by roughly 20% over the next two to three years and reorganize operations into three distinct business units: Checkout Solutions & PayPal, Consumer Financial Services & Venmo, and Payment Services & Crypto. Even the restructuring is slow at PayPal!

At least this reorganization is projected to unlock $1.5 billion in gross savings. PayPal reiterated its full-year 2026 non-GAAP EPS outlook to range from a low-single-digit decline to slightly positive growth.

That said, with TPV growing 11% but transaction margin only increasing by 3% it is obvious that PayPal has a questionable earnings quality at the moment.

Grab

Grab reported a revenue growth of 24% year-over-year to $955 million in Q1 FY26. The regional giant recorded a GAAP net profit of $120 million, compared to the $10 million net profit reported in Q1 2025, marking Grab’s second consecutive quarter of GAAP profitability. Adjusted EBITDA surged 46% year-over-year to $154 million, with margins expanding by 250 basis points to 16.2%, despite the ongoing fuel price crisis. This profitable expansion reflects strong operating leverage across its core segments, and was supported by a 23% and 25% increase in Mobility and Deliveries GMV, respectively. Management also noted on the earnings call that new AI-powered initiatives, such as a ‘Turbo’ driving mode, has already boosted driver earnings by 23%, highlighting how technology is actively improving their business model and driving higher GMV growth.

Underpinning this momentum was a 43% surge in Financial Services revenue to $107 million, alongside a loan portfolio that more than doubled to $1.4 billion. The company also marked its first major international expansion beyond Southeast Asia by announcing the acquisition of Taiwan’s foodpanda.

AMD

AMD’s Q1 revenue grew 38% year-over-year to $10.3 billion, outperforming the $9.3 billion expected by analysts. Non-GAAP EPS rose 43% year-over-year to $1.37, beating the $1.29 consensus. The massive expansion was driven by the Data Center segment, which surged 57% year-over-year to $5.8 billion, now representing 56% of AMD’s total sales. Looking ahead, AMD issued a confident Q2 revenue guidance of $11.2 billion (up 46% year-over-year), ahead of the $10.5 billion consensus. CEO Lisa Su revealed that soaring demand for agentic artificial intelligence and inferencing has dramatically accelerated server compute requirements. This prompted AMD to double its server CPU TAM forecast to more than $120 billion by 2030, projecting an annual growth rate of over 35% vs its prior 18% estimate. Wall Street responded with enthusiasm and BofA Securities noted that AMD is well-positioned to capture roughly 50% of this expanded market, leaving rivals Intel and Arm to split the remainder. Maintaining a 55% gross margin while generating $2.6 billion in quarterly free cash flow (+ 253% YoY) shows that AMD has the financial muscle to heavily fund continuous R&D and secure leading-edge foundry capacity.

Adyen

During Q1, Adyen delivered a net revenue of 621 million euros, a rise of 16% year-over-year (+20 % YoY at constant currency basis), slightly exceeding consensus expectations of 19.5%. All segments depicted a double-digit constant-currency net revenue growth.

Processed volume reached €382 billion (up 21% year-over-year), driven by a growth of 26% in Unified Commerce and 38% in Platforms.

Management showed confidence by affirming that operational trends have remained highly stable heading into the second quarter, contrasting sharply with the deteriorating performance reported by its payment peers like PayPal.

That’s a wrap. See you soon.

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Disclaimer: The team does not guarantee the accuracy or completeness of the information provided in the newsletter. All statements express personal opinions based on own financial and business analysis. Any estimates or forward looking statements made are inherently unreliable. No statement of opinion is an offer or solicitation to buy or sell the financial instruments mentioned.

The content of our newsletter is not a trading or investment advice and we do not provide any personal investment advice tailored to the needs of any recipient. The information provided should not be considered as a specific advice on the merits of any investment decision. Securities trading involve risk and you might lose your capital and/or incur other damages. Investors should make their own research and consult their registered investment advisor or financial advisor before taking any investment decision.

Neither the team nor any of its affiliates accept any liability whatsoever for any direct or indirect loss however arising, from any use of the information contained herein. Any unauthorized copy of this newsletter or its contents is illegal.

Our posts may contain affiliate links, which means that we might get a commission if you decide to sign-up using any of these links. No extra cost is charged to you.

By subscribing / reading our newsletter or any affiliated social media accounts, you indicate your unconditional acceptance to the above and your unconditional acceptance to our terms and conditions.

1. Performance

a. Results

Revenues grew 17% year-over-year (15% excluding foreign exchange) to $182 billion in Q1 FY26. This performance was driven by a resurgence in unit growth in the Stores business and accelerating cloud demand. This performance allowed the company to beat the higher end of its management guidance and consensus estimate by a narrow 1.7% ($179 billion) and 0.9% ($177 billion), respectively.

Q1’26 operating income stood at $24 billion, surpassing the high end of guidance ($22 billion) and consensus estimate ($21 billion). Margin increased to a record 13.1% (+ 130 basis-point year over year) compared to 11.8% in Q1 FY25. Efficiency gains in the fulfilment network and high-margin AWS growth contributed to this improvement.

Amazon reported EPS of $2.78, a jump of 75% from $1.59 in Q1’25. The reported EPS exceeded the consensus estimate of $1.64 billion. It is important to note that net income included pre-tax gains of $16.8 billion from non-operating income related to Amazon’s investments in Anthropic.

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Despite Operating Cash flow increasing 30% year-over-year to $149 billion (TTM), free cash flow (TTM) plummeted 95% to $1.2 billion in Q1 FY26. This decline was driven by the massive surge in capital expenditures, with TTM purchases of property and equipment reaching $147 billion (net CAPEX in Q1 stood at $43.2b an increase of 78%). Management remains confident in these investments, noting that AWS must lay out cash for data centers and chips 6 to 24 months before monetization. Growth acceleration does support their confidence in investing for the future so we are fine with that.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

b. Segmental analysis

North America

The North America segment reported sales of $104 billion, a 12% year-over-year increase in Q1 FY26. Operating income surged 43% YoY to $8.3 billion, resulting in an 8% margin (an expansion of 173 bps).

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

This momentum was driven by a 15% year-over-year surge in unit growth, the highest since the pandemic era. The addition of over 600 new brands such as Ted Baker, PAPATUI by Dwayne Johnson, ONDO, and rapidly scaling grocery business now places Amazon as the second largest grocer in the US. With over $150 billion in 2025 gross sales, the company has seen perishable sales skyrocket over 40x year-over-year, with fresh items now accounting for nine of the top 10 products ordered for same-day delivery. The shift into perishables has significantly improved consumer engagement, as same-day grocery shoppers build baskets nearly three times larger and spend over 80% more than non-grocery customers.

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Whole Foods Market is maintaining its upward trajectory, operating over 550 locations today with a pipeline of 100 additional stores set to open over the next few years. By becoming a primary destination for perishables, Amazon has successfully moved from being a discretionary store to a daily utility.

CEO Andy Jassy highlighted that this growth is underpinned by aggressive delivery speeds, including new one and three hour options on 90,000 items on Prime. The company has delivered over 1 billion items same day overnight so far in 2026. To improve the efficiency of their fulfillment team, new, advanced robotics and automation systems are currently being installed in their large U.S. shipping centers opening in 2026.

Furthermore, the average prices of products on the website decreased compared to previous year as a pricing strategy. Its ability to decrease average prices while expanding margins suggests superior supply chain efficiency and strong bargaining power with vendors.

In Q1 2026, third-party seller services generated $41.6 billion in revenue, representing a 14% year-over-year increase (12% excluding foreign exchange). These sellers remain a cornerstone of Amazon’s marketplace, accounting for 60% of total paid units sold during the quarter. Amazon views third-party sellers as essential contributors to its broad selection and competitive pricing. In Q1 2026, seller performance was particularly strong in the U.S., as well as in Europe and Brazil, where Amazon recently lowered seller fees to incentivize growth.

“We’re seeing our investments in the seller experience resonate and, in turn, grow our business. Prime continues to fuel our growth and reflects the value members receive from the program. Prime Video is a key pillar of the Prime value proposition, an important driver of new member acquisition”- Brian Olsavsky, CFO

International

Net Sales grew 19% year-over-year to $39.8 billion in Q1 FY26. The segment reported an operating income of $1.4 billion (+40% YoY), with a margin of 3.5% (+41.6 bps YoY).

The growth was led by their super-fast delivery service, Amazon Now, which brings thousands of items to your door in 30 minutes or less.

“We continue to expand our ultra-fast delivery service, Amazon Now, which offers delivery in 30 minutes or less on thousands of items. It started last year in India, where orders are increasing 25% month-over-month, with Prime members tripling their shopping frequency once they start using it.” Andy Jazzy, CEO

The service is already available to tens of millions of people in nine different countries. They have recently expanded the service to parts of Tokyo and eight major cities in Brazil, with plans to bring it to even more locations soon.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

Advertising

The advertising segment generated $17.2 billion (up 24% or 22% YoY in constant currency) in Q1 FY26. On a TTM basis this is $72m and to put this in perspective it is 1.7x TTM YouTube Ads revenue.

Amazon Ads is aggressively expanding its footprint through high-impact CTV partnerships. The deepening of its Netflix partnership via Amazon Audiences now allows advertisers to layer Amazon’s vast first-party shopping data directly onto Netflix’s premium content for highly precise targeting. Furthermore, a new deal with Comcast Advertising unlocks Prime Video’s massive viewership to local and small-to-medium businesses. Finally, a new integration with Samsung TV Plus introduces Interactive Video Ads, allowing viewers to seamlessly add products to their Amazon carts directly from their television screens using their remotes.

The advertising segment continues to benefit from a two-pronged AI approach. On the one hand, tools like Creative Agent are automating ad campaign generation for brands across seven major international markets, including Canada, France, and the U.K.. On the consumer-facing front, Amazon is successfully monetizing its AI shopping assistant, Rufus. Rufus has evolved into a highly capable agentic tool, able to research products, track prices, and even auto-buy items in the store when they reach a set price. Adoption is surging, with Rufus monthly active users growing by 115% and engagement up nearly 400% year-over-year. This massive engagement is translating to advertising success: nearly 20% of shoppers who interact with sponsored brand prompts inside the Rufus interface continue their conversation to learn more about the brand.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers) / Note: We share this chart for completeness in comparing Amazon to peers.

AWS

AWS net sales surged 28% year-over-year to $37.6 billion in Q1 FY26, reaching an annualized revenue run rate of $150 billion. Operating income jumped 23% to $14.2 billion, maintaining an operating margin of 37.7%.

Key highlights for AWS include:

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1. Financial results

Despite the geopolitical headwinds, the company continued to execute, showing momentum in unaffected regions and expanding its margins.

Revenue

Revenue came in at $5.5 billion, representing year-over-year (YoY) growth of 16% (10% YoY on a constant currency basis). The weakness of the USD against other currencies benefited revenue, as Booking generates a large chunk of its revenue outside the US. However, this is a temporary benefit as currencies naturally fluctuate over time. This result exceeded the high end of management’s guidance (14%-16% reported or 7%-9% on constant currency basis). The outperformance benefited from higher merchant revenues, which carry a higher take rate.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

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For Q2 2026, management expects 4%-6% YoY (2%-4% on constant currency) revenue growth. While the growth deceleration of approximately 7 percentage points on a constant currency basis appears steep, it is largely driven by the escalation of the Middle East conflict, which caused a sharp drop in new bookings and elevated cancellations throughout March (with global room night growth plummeting to just 1%). Since those lost March bookings were largely intended for Q2 travel, Q2 is effectively absorbing the revenue hole created by that initial demand shock. This is compounded by management’s conservative guidance assuming the conflict’s impacts will persist for the entire second quarter, compared to just a partial-quarter impact in Q1.

Adjusted EBITDA

Adjusted EBITDA for Q1 2026 was $1.3 billion, up 19% from the prior-year quarter. The Adjusted EBITDA margin was 23.3%, an expansion from 22.9% in Q1 2025, driven by leverage in fixed operating expenses.

Despite the steep revenue deceleration expected in Q2, management guided for Adjusted EBITDA to grow 4% to 6%, perfectly in line with revenue growth. This highlights the beauty of Booking's asset-light business model: their largest expense, marketing, is highly variable and naturally scales down alongside softening demand.

Adjusted EPS

Adjusted EPS for Q1 2026 was $1.14, up 14% from the prior-year quarter. The growth in EPS was lower than EBITDA growth due to a higher tax rate, though this headwind was partially offset by the heavy repurchase program, which lowered the share count by 4%.

Capital Returns

A massive $4.0 billion was returned to shareholders in the quarter, consisting of a record $3.6 billion in share buybacks and $343 million in dividends.

Booking Holdings has consistently bought back shares over the last decade. CEO Glenn Fogel commented on this aggressive strategy:

“Since 2014, we have reduced our share count by over 40%, even after accounting for the dilutive impact of stock-based compensation by opportunistically investing in this long-term vision through our share buyback program.

No one is better positioned than we are to understand what our long-term value can and should be relative to market fluctuations on any given day or quarter. As I just mentioned, we have reduced our share count by over 40% in 12 years. Importantly, we have done so at the average price per share of $93, thereby generating significant incremental investment returns for our shareholders by betting on ourselves at the right times, and while always preserving and exercising the flexibility to invest in both the organic and inorganic growth of our business. It is a strategy that we are very committed to.”

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

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2. KPIs

a. Nights Booked

Nights booked for the quarter reached 338 million, up 6% YoY. Management estimated that the Middle East conflict negatively impacted room night and GBV growth by about 2 percentage points. Excluding this impact, room nights would have been up by approximately 8% (exceeding management's prior guidance of 5% to 7%).

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

• The U.S. accelerated for the fourth consecutive quarter, growing in the low teens (Vs low double digit in Q4 2025), driven mainly by domestic travel.

• Europe was up mid-single digits (Vs high single-digit in Q4 2025). While the region was negatively impacted by bookers traveling to the Middle East, intra-regional demand from European bookers remained strong, up high-single digits.

• Asia was up high-single digits. Within Asia, intra-regional demand from Asian bookers was up low-double digits.

• Rest of World (which includes the Middle East) was down low-single digits.

Looking ahead, 2%-4% room night growth is projected for Q2 2026, assuming the conflict’s impacts continue through the end of June.

To quantify the regional exposure: bookers in the Middle East (including Turkey and Egypt) represented approximately 4% of global room nights in 2025. If we include inbound travel to the Middle East, the region represents approximately 7% of global room nights.

Following the onset of the conflict, Booking saw elevated cancellations and lower travel demand, resulting in overall March room night growth dropping to 1%. The impact in March was about 6 percentage points (half from reduced bookings, half from increased cancellations). Therefore, if it was not for the conflict, room nights would have grown at a healthy rate of 7% in March.

b. Gross Bookings

Gross Bookings in Q1 2026 reached $53.8 billion, a 15% increase (8% on a constant currency basis). Growth was driven by the 6% room night growth, a 1% increase in constant currency ADRs, and a 28.5% growth in airline tickets. Looking ahead, Booking projects 4%-6% gross bookings growth for Q2 2026 (2%-4% on a constant currency basis, which is in line with room nights).

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

3. Alternative Accommodation

Alternative accommodation room nights on Booking.com grew 5.5% YoY. At first glance, this appears to be the first quarter that alternative accommodations grew at a slower pace than the company's total room nights (6%). However, that 6% figure applies to the entire Booking Holdings parent company, which was lifted by strong regional growth from sister brands like Agoda and Priceline in the U.S. and Asia.

On the core Booking.com platform, alternative accommodations actually outpaced traditional hotels, allowing the segment's mix to successfully expand to 38% of Booking.com’s room nights, up from 37% in Q1 2025. Furthermore, the underlying supply engine remains highly positive, with active listings reaching 8.8 million, a 9% increase YoY.

Source: Booking Holdings Q1’26 presentation

4. Direct and App Bookings

The shift to direct, high-loyalty bookings remains strong, validating the company’s brand power.

• The TTM mobile app mix was in the high-50% range, up from the mid-50% range last year.

• The TTM B2C direct mix, which excludes performance marketing channels, held steady in the mid-60% range. This remained resilient despite the conflict, as the Middle East traditionally has an above-average direct mix, offset by continued declines in SEO traffic (which is only a small contributor to the overall direct channel).

• Genius level 2 and 3 customers accounted for a high-50% share of TTM room nights, up from the mid-50% range last year.

As the mix of direct bookings increases, the company can gain further operating leverage on marketing expenses.

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5. Merchant Bookings

Merchant gross bookings reached 72% of the total this quarter, highlighting a massive multi-year evolution from just 23% in Q1 2019, 51% in Q1 2023, and 67% last year. This expanding mix is a strategic win: it enables the Connected Trip by allowing Booking to seamlessly bundle multiple travel verticals into a single customer transaction. Financially, it boosts revenue yield by capturing payment processing economics alongside standard commissions, while generating a massive float of upfront cash that earns substantial interest income.

6. Connected Trip

The Connected Trip strategy continues to expand customer wallets and lock in loyalty.

• Flight tickets booked grew 28.5% YoY, while attractions tickets jumped 25%.

• Connected Trip transactions (trips booked across more than one vertical) grew in the high-teens range YoY. These transactions now represent a low double-digit percentage of Booking.com’s total transactions.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

7. Outlook

Due to the conflict in the Middle East, management adjusted their revenue guidance expectations for the full year. Assuming the conflict is sustained until the end of June and is followed by a recovery in bookings in the second half of the year, they expect high single-digit revenue growth compared to low double digit expected in prior guidance. Despite lowering the bottom end of the ranges, management kept the high end of guidance for Gross Bookings and Adjusted EPS in line with their prior expectations.

Source: Booking Holdings Q1’26 presentation

8. Thoughts on valuation

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Welcome to our brief overview of portfolio news from the past few days.

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The Hyperscaler Flywheel: Cloud, Chips, and Capital

• Alphabet smashed Wall Street expectations in Q1, reporting a 22% revenue surge to $110 billion and an EPS of $5.11, nearly doubling the prior year’s $2.81. The standout performer was Google Cloud, which skyrocketed 63% to $20 billion as enterprise AI demand intensified. With a massive cloud backlog of over $460 billion and its Gemini AI models processing 16 billion tokens per minute, the company is effectively leveraging its vertically integrated AI flywheel. Highlighting its strong financial health, Alphabet also raised its quarterly dividend and maintained robust operating margins of 36.1%.

• Amazon’s revenue grew 17% to $182 billion and net income jumped to $30 billion, driven significantly by a $17 billion gain from its Anthropic investment. AWS was the star of the show, accelerating to 28% growth (its fastest in 15 quarters) while the company’s custom silicon business surpassed a $20 billion annual run rate. Despite negative free cash flow due to a massive $43 billion net CapEx push into AI, Amazon’s strategic partnerships with OpenAI and Meta for its Trainium and Graviton chips underscore its growing dominance in the AI infrastructure layer.

• Microsoft delivered a robust performance in the March quarter, with revenue reaching $83 billion (up 18%) and earnings per share of $4.27, both comfortably exceeding analyst expectations. This growth was primarily fueled by cloud and AI momentum, as evidenced by a 123% year-over-year surge in AI-related revenue, which hit a $37 billion annual run rate. The Microsoft Cloud segment generated $55 billion, while Azure specifically grew 40%, outperforming forecasts. In addition, commercial remaining performance obligations (RPO) skyrocketed 99% to $627 billion, signaling long-term revenue visibility through massive multi-year enterprise contracts. Despite heavy investments, Microsoft demonstrated strong operational leverage, expanding its operating margins to 46.3% and reinforcing its dominant competitive stance in the enterprise AI market.

• Meta delivered a strong Q1 with revenue surging 33% to $56 billion, driven by robust advertising fundamentals as ad impressions grew 19% alongside a 12% increase in average ad pricing. Despite 35% cost increases, the company maintained a 41% operating margin and generated over $32 billion in operating cash flow. While Meta’s revenue growth outpaced its hyperscaler peers, investors remain cautious due to a significant hike in full-year capital expenditure guidance, now reaching up to $145 billion, reflecting the high costs of data centers and AI infrastructure. This $10 billion CapEx upward revision triggered an 8%+ stock sell-off, wiping out roughly $175 billion as investors punish the company for the unclear AI ROI. Additionally, Meta is proceeding with an aggressive workforce reductions (10% cut) to offset AI investments.

Other Key Updates

• PayPal Reorganizes: CEO Enrique Lores (who took over very recently) is simplifying the giant into three units: Checkout, Consumer/Venmo, and Payment Services/Crypto. A key highlight of this move is the elevation of Venmo into its own standalone segment, a decision accompanied by the departure of executives Diego Scotti and Michelle Gill. By making Venmo a standalone segment, PayPal is making it easier for the street to value the asset independently or potentially prepare it for a future sale.

• Booking’s Middle East Headwinds: Q1 was mixed as regional disruptions weighed on guidance. While gross bookings expanded 15% to $54B, management lowered full-year guidance to high-single to low-double-digit growth due to increased cancellations and regional headwinds that peaked in March. Despite these pressures, the company maintained strong market share gains and returned $3.6B to shareholders through repurchases and dividends.

• Adobe is collaborating with Alluvium and has completed the acquisition of Semrush Holdings. The partnership with Alluvium integrates Adobe Experience Platform’s demand-generation tools with supply orchestration to help healthcare providers align clinical capacity with patient demand. Simultaneously, the Semrush acquisition bolsters Adobe’s ability to drive brand discoverability and conversion, specifically targeting the shift toward AI-driven interfaces and autonomous agents as the primary way customers now engage with brands.

That’s a wrap. See you soon.

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Disclaimer: The team does not guarantee the accuracy or completeness of the information provided in the newsletter. All statements express personal opinions based on own financial and business analysis. Any estimates or forward looking statements made are inherently unreliable. No statement of opinion is an offer or solicitation to buy or sell the financial instruments mentioned.

The content of our newsletter is not a trading or investment advice and we do not provide any personal investment advice tailored to the needs of any recipient. The information provided should not be considered as a specific advice on the merits of any investment decision. Securities trading involve risk and you might lose your capital and/or incur other damages. Investors should make their own research and consult their registered investment advisor or financial advisor before taking any investment decision.

Neither the team nor any of its affiliates accept any liability whatsoever for any direct or indirect loss however arising, from any use of the information contained herein. Any unauthorized copy of this newsletter or its contents is illegal.

Our posts may contain affiliate links, which means that we might get a commission if you decide to sign-up using any of these links. No extra cost is charged to you.

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The company delivered exactly that, surpassing expectations on both the top and bottom lines. Net sales increased 6% to $1.1 billion in the first quarter of 2026. Diluted EPS came in at $1.45, representing an increase of 2% year-over-year. When excluding the impact of ASU 2016-09 tax benefits in both periods, adjusted earnings per diluted share actually increased by 8% to $1.43.

The quarter confirmed that the resilient maintenance base remains strong, while the discretionary side of the business is continuing its gradual recovery. Here is the breakdown of the key drivers.

1. Revenue

The 6% top-line growth was a refreshing beat, driven by solid demand for maintenance products, strong equipment sales, and continued improvement in discretionary categories like building materials. This is the first meaningful acceleration after nearly 12 quarters of declines or flatness.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

Breaking down the growth, the quarter benefited from approximately 3% from pricing, 2% from volume in maintenance and discretionary categories, and a 1% combined tailwind from customer early buys and favourable foreign currency translation. The pricing contribution reflects a 1% to 2% lift from current year increases, supplemented by a 1% carryover from mid-season price hikes implemented in late April of 2025.

Source: Pool Corporation Q1’26 Earnings Presentation

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2. Gross Profit Margin

While gross profit dollars increased by $17.5 million, the gross margin percentage decreased by 20 basis points year-over-year to 29.0%. However, context is critical here. This contraction wasn’t due to a loss of pricing power.

The margin dilution was primarily driven by product mix, specifically a higher proportion of lower-margin equipment sales during the quarter. Additionally, Q1 saw an increase in customer early buy activity. While these early buys carry discounts that modestly pressure Q1 margins, they are a highly positive indicator that dealers are confidently stocking up for a strong core season. These headwinds were partially offset by ongoing pricing and supply chain optimization initiatives.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

3. Operating Margin and Potential Efficiencies

Operating margin expanded 10 basis points to 7.3% as operating income grew 7% to $82.6 million. Operating expenses increased 5% to $247.3 million, driven by the addition of six greenfield locations opened after Q1 of last year, technology investments, and general inflation.

Importantly, management expects the year-over-year expense growth rate to moderate in the coming quarters as the company laps prior-year investments and focuses on driving efficiency through its existing, expanded footprint. Therefore, if revenue continues to grow in the mid-single digit rate for the rest of the year, we should expect higher operating leverage going forward.

4. Performance by Product Category

The Q1 product mix provided several encouraging signals:

• Building Materials: Sales grew +5%. This builds directly on the green shoots we identified in Q3’25, supported by the national pool trend offering and signaling further stabilization in remodeling activity. Additionally, given the muted construction market, it appears that Pool is actively gaining market share in this category.

• Chemicals: Sales surged +8%. This strong volume growth was heavily supported by private label lines, which carry structurally higher margins. It is also worth noting that this category faced deflationary headwinds over the past few quarters. Management’s commentary indicates that pricing has stabilized, giving us the impression that the worst of the deflation is finally fading away.

• Equipment: Sales grew +7%. This was driven by both price and solid volume, likely indicating a normalization of the replacement cycle for older installed components.

5. Regional and End Market Performance

• Independent Retail & Pinch A Penny: Sales to independent retail customers grew 3%, setting up a solid foundation for the core season. The Pinch A Penny franchise network saw end-customer sales grow 4%, with franchisees opening seven new locations in the quarter.

• Regional Performance: Favourable weather aided the West, with California growing 10% and Texas growing 7%. Conversely, Florida declined 1%, pressured by weather and some softness in irrigation, while Arizona grew 1%.

• Commercial: Sales were flat for the quarter, largely due to project timing, but the segment exited Q1 showing slight growth.

6. New Construction Vs Maintenance

Management noted that new pool units for 2025 came in at roughly 58,000, marking four consecutive years of decline in new pools built. Management expects 2026 to hover close to that same 58,000 unit mark. Holding near these 2011 levels gives us confidence that we have finally hit the bottom in the new construction segment.

Source: Pool Corp 10-K Filings, Pool Corp Earnings Transcripts, StockOpine Analysis

While expectations are for 2026 to stay flat, the long-term thesis relies on the 5.5 million in-ground pools already installed. As we have consistently tracked, this installed base generates recurring maintenance revenue, meaning Pool Corp’s growth does not strictly require a massive recovery in new pool construction to succeed.

Below paywall, we break down why the outlook is a classic ‘sandbag’ setup and our live portfolio actions….

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Project Prometheus & The Anthropic Funding

Bezos’s new venture, Project Prometheus, is reportedly nearing a $10 billion funding round at a $38 billion valuation. With co-CEO and Google veteran Vik Bajaj, the company is building AI models targeting physical AI (to interact with the real world).

Meanwhile, the capital flowing into Anthropic is impressive. Google confirmed it is planning to invest up to $40 billion in the firm ($10 billion upfront, $30 billion based on milestones). While Anthropic already relies on Google Cloud for chips and infrastructure this partnership brings another 5 gigawatts of capacity over the next five years.

Amazon few days earlier, also increased its investment in Anthropic by contributing another $25 billion ($5 billion initial, $20 billion milestone-based) to a total of $33 billion. In return, Anthropic committed to spending over $100 billion on AWS over the next decade, securing up to 5 gigawatts of computing capacity through Amazon’s Trainium AI chips. Anthropic is hungry for compute power as its efforts already bear fruit with annualized revenues tripled quarter-over-quarter in April to top $30 billion, officially outpacing OpenAI.

On another note, the NSA is already reportedly leveraging Mythos’s defensive power to secure critical infrastructure.

Alphabet partners with Marvell & The 8th-Gen TPU

Google is in talks to co-develop custom AI inference processors with Marvell Technology. This suggests that in the AI era, amid supply chain constraints and rapid innovation, hyperscalers are diversifying their chip ecosystems, reinforcing the idea that there will be more than one winner.

Further cementing its infrastructure dominance, Google just introduced its 8th-generation custom Tensor Processor Units.

• TPU 8t (Training): Built to reduce frontier model development cycles from months to weeks. It delivers nearly 3x the compute performance per pod over the previous generation. A single superpod now scales to 9,600 chips and 2 petabytes of shared memory, delivering an incredible 121 ExaFlops of compute.

• TPU 8i (Inference): Designed for intricate, collaborative workflows where specialized agents “swarm” together. It pairs 288 GB of high-bandwidth memory with 384 MB of on-chip SRAM (3x more than the previous generation) to eliminate idle processors, all powered by Google’s custom Axion Arm-based CPUs.

When CEO Sundar Pichai posted the announcement on X, even Elon Musk stated: “TPUs are underrated”. This further justifies the importance of this development and the place that TPUs have in this AI shift to agentic AI.

The Hardware & Silicon Surge

• AMD: Jefferies noted that Intel’s recent earnings serve as validation of the massive AI tailwinds boosting server CPU demand into 2027. Following this, D.A. Davidson upgraded AMD to “Buy,” viewing Intel’s results as a precursor for a huge step-up in AMD’s CPU franchise. We believe as long as there is a shortage of AI chips, AMD has incredible pricing power. In fact, AMD is rapidly approaching the $389 target price we modeled back in November 2025 when it was trading at just $206.

• AWS & Meta: In a massive win for Amazon, Meta has committed to tens of millions of Graviton CPU cores for its Agentic AI workloads. Complex multi-step orchestration, real-time reasoning, and code generation at scale are highly CPU-intensive. Amazon’s purpose-built Graviton5 instances deliver up to 33% lower latency between cores, cementing the fact that Agentic AI is becoming as much of a CPU story as a GPU story.

Software, Commerce & The Experience Economy

• Adyen: Shifting from its traditional organic growth mindset, Adyen announced its first-ever acquisition: buying loyalty and incentives platform Talon.One for €750 million in cash. Talon.One expects to generate €60 million in ARR this year (a 12.5x multiple - sounds a bit expensive right?). By connecting Adyen’s dynamic payment identification with Talon.One’s SKU-level data, merchants can apply real-time, dynamic pricing and promotions directly in the cart, perfectly positioning Adyen for the emerging Agentic Commerce space.

• Adobe is co-developing an industry-specialized AI agentic operating model with Omnicom to automate marketing workflows. Meanwhile, Adobe has also announced a massive new $25 billion share buyback program through 2030, a signal from the board that they believe the market is undervaluing their pivot to AI.

• Fortinet received the 2026 Google Cloud Partner of the Year Award. Fortinet’s FortiCNAPP platform is gaining traction among enterprises by combining deep network visibility with cloud protection in a unified solution, reflecting a broader shift toward integrated cloud security platforms.

Earnings Watch: EVO & POOL

• Evolution Ab: Q1 ‘26 results are mixed. Sales declined 1.5% overall but grew 6.8% in constant currency. Asia is still struggling but managed a 2.2% QoQ growth, while Europe dropped 5.9% QoQ. On the bright side, LATAM grew 29.3% YoY (aided by a competitor exiting Argentina) and North America grew 10.1% YoY, while it launched a second Michigan studio and there were positive regulatory developments in Maine. Overall, operations are stable, but cutting the dividend and a somewhat shady approach to their new 10% share repurchase authorization raised some governance concerns. After all, what was the purpose of delaying the announcement of their capital allocation policy??

• Pool Corp: After a brutal three-year cycle of post-pandemic normalization, we see clear signs of a return to growth. Q1 ‘26 delivered a 6% bump in net sales and a 7% YoY growth in operating income, the first meaningful acceleration after nearly 12 quarters of flatness. The industry seems to have bottomed out at 58K new pools built in 2025 (similar to 2011 levels), and chemical deflation has officially stopped acting as a headwind.

That’s a wrap. See you soon.

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Disclaimer: The team does not guarantee the accuracy or completeness of the information provided in the newsletter. All statements express personal opinions based on own financial and business analysis. Any estimates or forward looking statements made are inherently unreliable. No statement of opinion is an offer or solicitation to buy or sell the financial instruments mentioned.

The content of our newsletter is not a trading or investment advice and we do not provide any personal investment advice tailored to the needs of any recipient. The information provided should not be considered as a specific advice on the merits of any investment decision. Securities trading involve risk and you might lose your capital and/or incur other damages. Investors should make their own research and consult their registered investment advisor or financial advisor before taking any investment decision.

Neither the team nor any of its affiliates accept any liability whatsoever for any direct or indirect loss however arising, from any use of the information contained herein. Any unauthorized copy of this newsletter or its contents is illegal.

Our posts may contain affiliate links, which means that we might get a commission if you decide to sign-up using any of these links. No extra cost is charged to you.

By subscribing / reading our newsletter or any affiliated social media accounts, you indicate your unconditional acceptance to the above and your unconditional acceptance to our terms and conditions.

a. Results: Strong Execution Amid High Demand

ASML delivered Q1 2026 total net sales of €8.8 billion, up 13% year over year. Net income grew 17% YoY to €2.8 billion. The Installed Base Management segment, which includes service and field options, performed strongly at €2.5 billion (+25% YoY), driven by the expanding EUV installed base and high-margin performance upgrades requested by customers to increase immediate output.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

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In Q1 FY26, Net System Sales reached €6.3 billion, marking a 9% year-over-year increase. A significant driver of this growth was the EUV segment, which contributed €4.1 billion (approximately 65% of total sales), including revenue from two High-NA systems. This represents a substantial 28% increase in EUV revenue compared to the previous year. Despite a modest 3% rise in unit volume, EUV sales were primarily increased by higher ASP, as previously noted by the management. Sales of non-EUV (DUV) systems accounted for the remaining €2.1 billion. Memory captured the majority of net system sales at 51%, versus logic at 49%. This reflects the accelerating adoption of EUV in DRAM, as customers shift aggressively to gain performance and capacity.

“The reason for that is, of course, performance, but it’s also capacity, because if you are going to use more EUV layers, you are going to need less multi-patterning. Multi-patterning takes a lot of space also in the fabs. I think this is also definitely another argument in favor of EUV. I think this was mentioned, by the way, by this U.S. customer in their call.” - Christophe Fouquet, CEO

Source: Q1’2026 earnings presentation

China’s share of net system sales fell sharply to 19% in Q1 2026 (from 36% in Q4 2025), consistent with management’s expectation of ~20% for the full year, in line with backlog composition. This regional decline was effectively countered by a surge in South Korea, which jumped to 45% of total sales, highlighting ASML’s reduced vulnerability to export controls in China. A global shortage of high-end memory is forcing companies like Samsung to accelerate their equipment orders.

The gross margin reached 53.0%, supported by a very high-margin mix in the service and upgrade business.

Below the paywall, we dive into ASML’s upgraded outlook, critical technology developments, and what this means for the stock’s long-term trajectory…

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Big Tech’s Space Race & AI Alliances

• Amazon’s Satellite Leap: Amazon is making a massive leap into satellite connectivity by acquiring Globalstar for $90.00 per share ($11.57billion). The FCC-approved deal allows Amazon to provide direct-to-device (D2D) services via its Leo satellite network starting in 2028, and includes an established partnership to provide satellite connectivity for Apple’s iPhone and Apple Watch features. This effectively leapfrogs Amazon into the D2D market that SpaceX’s Starlink has been targeting. While legal investigations into the deal’s valuation are ongoing, the operational synergy with Apple provides a massive, immediate subscriber base.

• Anthropic’s Valuation: Separately, Amazon-backed Anthropic is seeing a valuation surge, with offers as high as $800 billion as it explores a potential IPO.

• Alphabet’s Windfalls & Expansion: Alphabet is poised for a potential $122 billion windfall from its 6.11% stake in SpaceX, should the latter reach a $2 trillion valuation in an IPO. This SpaceX windfall represents a staggering return on early investment that significantly bolsters Alphabet’s financials. On the operational front, Google Cloud is deepening its agentic AI ecosystem through strategic partnerships with Thoma Bravo and Cadence, optimizing Gemini models for enterprise-scale AI transformations.

• New Google Integrations: Further expanding its AI applications, Google is negotiating an agreement with the Department of Defense that would allow the Pentagon to deploy its Gemini AI models in classified settings. In the consumer luxury space, Kering aims to launch smart glasses under the Gucci brand in partnership with Google next year, positioning it as the first major luxury brand to enter the AI-powered eyewear sector.

• Regulatory Headwinds: Despite these wins, Alphabet continues to face regulatory headwinds, including a new antitrust lawsuit from Aptoide regarding monopolizing Android app distribution and billing systems.

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Software & Specialized Services

• Adobe: Adobe launched its Firefly AI Assistant, which automates complex multi-step workflows across Creative Cloud apps like Photoshop and Premiere. In a notable move toward an open ecosystem, Adobe is also integrating third-party models, including Anthropic’s Claude, directly into its platform.

• Autodesk: Autodesk expanded its long-term partnership with Globant, which was named an Autodesk Tandem Digital Twin Solution Provider. This collaboration aims to accelerate digital twin implementation in global logistics and smart manufacturing.

Other Key Updates

• ASML: Analysts have significantly increased their price target to $1,846, citing “substantial AI demand”. Supporting this outlook, ASML posted strong first-quarter 2026 earnings of €7.15 per share, up 19.2% year over year. Total net sales were €8.77 billion, increasing 13.2% from the year-ago quarter. As a result, ASML raised and narrowed its full-year outlook, now expecting 2026 total net sales between €36 billion and €40 billion. The company is also planning to double its EUV production capacity by 2027 to meet expected sales growth driven by global memory shortages and advanced EUV adoption. Meanwhile, a surge in sales from South Korea, which hit 45% of the Q1 total, is helping offset headwinds from evolving export controls in China.

• Advanced Micro Devices: The company is expanding its footprint in the autonomous driving sector through a $60 million joint investment in Wayve. Additionally, Supermicro introduced three new edge AI systems powered by AMD’s EPYC 4005 series processors, targeting high-performance workloads in space-constrained environments such as retail stores, manufacturing sites, healthcare environments, where data is processed locally.

That’s a wrap. See you soon.

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Disclaimer: The team does not guarantee the accuracy or completeness of the information provided in the newsletter. All statements express personal opinions based on own financial and business analysis. Any estimates or forward looking statements made are inherently unreliable. No statement of opinion is an offer or solicitation to buy or sell the financial instruments mentioned.

The content of our newsletter is not a trading or investment advice and we do not provide any personal investment advice tailored to the needs of any recipient. The information provided should not be considered as a specific advice on the merits of any investment decision. Securities trading involve risk and you might lose your capital and/or incur other damages. Investors should make their own research and consult their registered investment advisor or financial advisor before taking any investment decision.

Neither the team nor any of its affiliates accept any liability whatsoever for any direct or indirect loss however arising, from any use of the information contained herein. Any unauthorized copy of this newsletter or its contents is illegal.

Our posts may contain affiliate links, which means that we might get a commission if you decide to sign-up using any of these links. No extra cost is charged to you.

By subscribing / reading our newsletter or any affiliated social media accounts, you indicate your unconditional acceptance to the above and your unconditional acceptance to our terms and conditions.

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Additionally, the company finished the year with a normalized EBITDA of $1.99 billion for FY26. For context, in our valuation two years ago, we estimated FY26 EBITDA of $1.66 billion. While Autodesk significantly outperformed our expectations, the stock price remains at nearly the same levels, as the broader market re-rated Autodesk and other software companies lower due to the narrative surrounding the existential risk of AI.

In the last quarter, management struck a constructive but measured tone, pointing to broad-based momentum, particularly in AECO, construction, and emerging markets. However, they guided FY27 with appropriate caution due to temporary disruption from its sales optimization plan. Even so, the underlying fundamentals remain strong: full-year revenue reached $7.21 billion, free cash flow increased 54% to $2.41 billion, and Autodesk continues to generate substantial cash while maintaining disciplined profitability.

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1. Breaking the SEA Border: Why Taiwan?

For the first time in its history, Grab is stepping outside Southeast Asia into its 9th market. CEO Anthony Tan described this as a natural next step, and the data supports this move as Taiwan it’s a logistics dream given its population density.

Taiwan’s urban density is 3.6x higher than Grab’s Southeast Asian average. High density means shorter delivery routes (so better efficiency) and higher “drops-per-hour,” meaning that margins are generally higher.

Additionally over 4 in 10 households are single-person residences. These households don’t usually cook, making them the highest-frequency users of delivery apps. What a gift for Grab!!

But they are not just solo. They have money to spend, as Taiwan has the second highest household income in Grab’s footprint, trailing only Singapore.

Source: Grab M&A presentation

As Grab’s CEO, Anthony Tan, puts it:

“Taiwan’s population of approximately 23 million also has a high demand for mobile-first services, similar to the Southeast Asian consumers who Grab serves every day.”

2. The Valuation: Did Grab Get a “Steal”?

Grab is paying $600 million for a business that generated $1.8 billion in GMV in 2025. This implies a 0.33x EV/GMV multiple, that stands at a 51% discount to its own trading multiple of approximately 0.68x GMV (including mobility GMV).

To add on this, Uber was willing to pay $950 million for the same asset just 22 months ago before regulators blocked it. However you slice it, Grab has done a good deal.

3. Uber - The Elephant in the Room

The main ‘concern’ relates to the relationship with Uber which remains a major strategic partner and a shareholder in Grab (a remnant of the 2018 SEA exit). Grab will now go head-to-head with Uber Eats in Taiwan creating a potential conflict. When asked about this, Anthony Tan gave the response needed from someone focused on shareholder value:

“Our primary fiduciary duty is to all our shareholders, and driving long-term value creation for our ecosystem in all the countries that we serve.”

Grab is here to win for their investors. Addressing concerns over regulatory hurdles, management clarified that they are entering Taiwan as a new competitor rather than a market consolidator like Uber. This distinction provides a significantly smoother path with the Taiwan Fair Trade Commission.

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4. Financial Impact

Grab is buying a business that is already profitable on an adjusted EBITDA basis (before group cost allocations). As such they expect the following:

• The deal to be accretive to Grab’s 2026 Revenue guidance of $4.04B - $4.10B.

• The transaction to contribute at least $60 million in incremental Adjusted EBITDA by 2028. That stands at 3.3% of current GMV; above Grab’s average of 2% in FY25 and slightly below its long-term target of 4%. Effectively, it’s buying a profitable asset with room for growth.

5. Final Thoughts

This deal is a masterclass in capital allocation. For the past year, the market has been obsessed with rumors of a Grab-GoTo merger, a deal that many expected to be significantly more expensive (at ~$7b) and complex.

Instead of chasing this multi-billion dollar merger in a lower-income market like Indonesia, Grab pivoted to a cleaner, higher quality asset by grabbing the #1 player in a high-density market at just 0.33x EV/GMV multiple.

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Disclaimer: The team does not guarantee the accuracy or completeness of the information provided in the newsletter. All statements express personal opinions based on own financial and business analysis. Any estimates or forward looking statements made are inherently unreliable. No statement of opinion is an offer or solicitation to buy or sell the financial instruments mentioned.

The content of our newsletter is not a trading or investment advice and we do not provide any personal investment advice tailored to the needs of any recipient. The information provided should not be considered as a specific advice on the merits of any investment decision. Securities trading involve risk and you might lose your capital and/or incur other damages. Investors should make their own research and consult their registered investment advisor or financial advisor before taking any investment decision.

Neither the team nor any of its affiliates accept any liability whatsoever for any direct or indirect loss however arising, from any use of the information contained herein. Any unauthorized copy of this newsletter or its contents is illegal.

Our posts may contain affiliate links, which means that we might get a commission if you decide to sign-up using any of these links. No extra cost is charged to you.

By subscribing / reading our newsletter or any affiliated social media accounts, you indicate your unconditional acceptance to the above and your unconditional acceptance to our terms and conditions.

Welcome to our brief overview of portfolio news from the past few days.

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Anthropic’s Security Push and Amazon’s Supplier Standoff

Amazon-backed Anthropic launched Project Glasswing, a major cybersecurity initiative, after its Claude Mythos Preview model was found to exceed skilled humans at detecting software vulnerabilities. The coalition is impressive, with Apple, Microsoft, Google, AWS, and others joining to use the model for defensive security work. The ability for an AI model to autonomously find critical vulnerabilities at scale has profound implications.

Away from the AI headlines, Amazon is refusing wholesale supplier requests to raise inventory prices. While this protects short-term margins, suppliers are forced to absorb higher tariff and oil-related costs. This dynamic is a double-edged sword that could squeeze selection if suppliers start redirecting inventory elsewhere.

Google: Gemini Rising & Waymo Expanding

Alphabet had a busy week across AI, autonomous vehicles, and cloud.

Alphabet signed a long-term agreement with Broadcom for custom Tensor Processing Units and AI rack components through 2031, a meaningful step toward hardware self-sufficiency. Waymo also launched fully driverless ride-hailing in Nashville with Lyft as its fleet management partner.

On the software front, Google updated its Gemini chatbot to surface a one-touch ‘Help is available’ interface for crisis support when conversations signal potential mental health distress. Additionally, Google Cloud shifted toward outcome-based, ROI-driven deployment models through a deepened enterprise AI partnership with Onix.

Massive Semiconductor Outlook Upgrade

In a new note to clients, Bank of America analyst Vivek Arya issued a massive upgrade to the firm’s global semiconductor outlook. He hiked its 2026 revenue target to $1.3 trillion, a $300 billion leap from the estimate the bank provided just four months ago. The bank expects the total semiconductor market to hit the $2 trillion milestone by 2030. This implies a 20% compound annual growth rate through the end of the decade. This is a very important development for our semi holdings like ASML and AMD.

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PayPal & Meta Integration

PayPal announced a partnership with Meta. The goal: one-tap shopping on Facebook. Users will be able to purchase products without leaving their feed, with Instagram integration coming soon. Users scroll through Facebook, see a product, and buy it with one tap. Given that both platforms have billions of users, the potential is massive. It is a good move, but if this isn’t shown in the underlying numbers, the price won’t move much.

Other Key Updates

• Evolution: Pareto Securities upgraded Evolution to Buy from Hold, raising its price target 17% to 700 SEK. This signals growing conviction in the live casino operator’s near-term earnings trajectory.

• Grab: Grab expects its new AI-powered “group ride” feature to tackle rising fuel costs and drive growth. The feature utilizes automated calculations to split fares more accurately, offering passenger savings of up to 40% per trip.

• Crocs: Shares are rising as traders rotate into unusually cheap, high-quality names. At just 7x forward earnings and 1.19x trailing revenue, the market is pricing in almost no growth.

• The stock market experienced a robust recovery today following a ceasefire agreement between Iran and the U.S.. Investors piled back into tech names, lifting Nasdaq 2.8% as geopolitical tensions eased and fear-driven trades reversed.

That’s a wrap. See you soon.

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Disclaimer: The team does not guarantee the accuracy or completeness of the information provided in the newsletter. All statements express personal opinions based on own financial and business analysis. Any estimates or forward looking statements made are inherently unreliable. No statement of opinion is an offer or solicitation to buy or sell the financial instruments mentioned.

The content of our newsletter is not a trading or investment advice and we do not provide any personal investment advice tailored to the needs of any recipient. The information provided should not be considered as a specific advice on the merits of any investment decision. Securities trading involve risk and you might lose your capital and/or incur other damages. Investors should make their own research and consult their registered investment advisor or financial advisor before taking any investment decision.

Neither the team nor any of its affiliates accept any liability whatsoever for any direct or indirect loss however arising, from any use of the information contained herein. Any unauthorized copy of this newsletter or its contents is illegal.

Our posts may contain affiliate links, which means that we might get a commission if you decide to sign-up using any of these links. No extra cost is charged to you.

By subscribing / reading our newsletter or any affiliated social media accounts, you indicate your unconditional acceptance to the above and your unconditional acceptance to our terms and conditions.

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Yet, LVMH’s world-class management is proving resilient in navigating these challenges. The Q4 2025 results beat expectations on the bottom line, with early signs of stabilization in China and strong US demand providing tailwinds. Fashion & Leather remains the powerhouse, while Watches & Jewelry and Selective Retailing (led by Sephora) show resilience. With “cautious confidence,” management emphasizes long-term brand investments and expects a modest rebound in 2026, aligning with consensus organic growth of 1–4%.

This blend of sector headwinds and enduring strengths creates a compelling opportunity for investors. The recent sell-off has compressed multiples to 14.6x EV/EBITDA—below historic averages—prompting the question: is the market overly pessimistic about LVMH’s ability to reclaim its growth trajectory? That brings us to the core of this update. Let’s reassess LVMH’s true worth today.

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But if we look past the headline figures, the picture gets a bit more complex. Adjusted EBITDA margins contracted 259 basis points, EPS missed consensus by 7.1% and top line revenue was essentially flat at $2.64 billion which was a negligible $5.5 million miss against expectations.

With the stock hovering about 21% below its peak, it’s worth asking: is the market missing the long-term story, or is this miss on expectations and margin pressure a sign to stay on the sidelines?

Source: Koyfin (affiliate link with a 20% discount for StockOpine readers)

1. The Top-Line Trend: Persistent Small Misses

That $5.5 million revenue doesn’t mean much in isolation. However, it fits into a broader pattern we have been tracking. Sunbelt has missed revenue consensus in the majority of quarters over the past two years. While these negative surprises are small in magnitude, their frequency indicates a recurring struggle to capture the top-line growth anticipated by the market.

Source: Koyfin (affiliate link with a 20% discount for StockOpine readers)

2. Q3 FY26 - the Numbers

Overall, the results were solid on the top line but missed analyst consensus across every profitability metric:

• Total Revenue: $2.64B (+2.7% YoY)

• Rental Revenue: $2.44B (+2.6% YoY, or ~4% excluding hurricane impacts)

• Adj. EBITDA: $1.08B (-3.1% YoY), with margin 41.0% (-259bps YoY)

• Adj. EPS: $0.78 (-3.7% YoY, missing the $0.84 consensus)

• YTD Free Cash Flow: $1.43B (+83% YoY)

The Story of the Quarter: Margin Compression

The top line was resilient with rental revenue growth accelerating quarter-over-quarter (4% Vs 3% in Q2’26 excluding the prior year hurricane impact), but margin compression is the story of the quarter. Two distinct drivers are weighting on profitability right now:

1. Revenue mix: The Specialty segment is growing faster than General Tool. Specialty naturally carries a lower EBITDA margin, though it boasts higher return on investment because it is less capital-intensive. We’re also seeing a boom in ancillary revenues (like cable installation for major events such as the Super Bowl or step-up and step-down transformers re-rented to support data centre projects), which carry lower margins than pure rental revenue. These services are currently growing at twice the pace of pure rental revenue. These dilute the margin percentage due to higher labor and logistics costs, but as CEO Brendan Horgan emphasized, this is still “highly profitable revenue” that increases the total dollar pool of earnings.

2. Internal Costs: Elevated internal repair and fleet repositioning costs which have been a significant headwind throughout the year. The good news? CEO Brendan Horgan signaled a pivotal turning point in Q3, indicating that these pressures are finally starting to tail off.

Source: StockOpine Analysis, Company filings

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Segment Performance

• North America General Tool - Sunbelt’s largest segment reported total revenue of $1,526 million, growing 1.3% year-over-year, with rental revenue up 1.6% or approximately 2% excluding hurricane impacts. Growth was led by volume improvement, with strength in mega projects and large strategic accounts offsetting moderating conditions in the local non-residential construction market. However, adjusted EBITDA margin contracted sharply by 282 basis points to 50.3%, primarily reflecting the mix effects of higher ancillary revenues and fleet repositioning costs discussed above.

Source: StockOpine Analysis, Company filings

• North America Specialty – The star of the quarter. Total revenue hit $897 million, up 5.2% year-over-year. Rental revenue grew 4.4% or approximately 7% excluding hurricane impacts. Demand was driven by broad-based momentum across flooring, temporary fencing, structures and walls, trench safety and power and HVAC. Adjusted EBITDA margin contracted 246 basis points to 45.4%, consistent with the group-wide cost pressures.

Source: StockOpine Analysis, Company filings

• UK- The United Kingdom segment continues to be the weakest in the group. Total revenue of $214 million grew 3.4% as reported, but declined 2% at constant exchange rates. This means that growth is entirely a function of currency movement rather than operational progress. Rental revenue grew 2.2% as reported and adjusted EBITDA margin fell 271 basis points to 22.9%. Management is undertaking restructuring actions to improve profitability and return on investment over the medium term.

Source: StockOpine analysis, Company filings

Dollar Utilisation

• North America General Tool: Dollar utilisation has declined slightly from 48% in Q3 FY25 to 47% in Q3 FY26. While rental revenue grew by 1.6%, this was offset by a larger 3.1% increase in average OEC (original equipment cost), as well as the impact of the internal repair costs and company repositioning of its fleet to maximize utilization in a mixed construction market.

• North America Specialty: Specialty achieved an increase in dollar utilization to 74%, driven by a 4.4% increase in rental revenue that outpaced a 2.8% increase in average OEC.

• UK: The slight decline in dollar utilization from 53% in Q3FY25 to 52% in Q3FY26 coincides with a period of operational restructuring in the UK.

Source: StockOpine analysis, Company filings

Capital Allocation & Free Cash Flow

Year-to-date free cash flow reached $1.43 billion (up 83%) from $782 million in the same period last year. This dramatic improvement reflects management’s disciplined capital allocation approach, with year-to-date capex falling 29% to $1.72 billion.

“When markets are experiencing the transitory headwinds, we have experienced over the last few quarters, we remain extremely disciplined in our deployment of capital to support strong utilization and rate discipline. When markets are growing more rapidly, we accelerate capital spending to capture opportunities in market share. In all cases, we generate significant free cash flow in excess of our investments, which we return to shareholders in the form of dividends, debt repayment, and share buybacks.” Alex Pease, CFO

And, they are using free cash flow aggressively to reduce leverage and return cash to shareholders:

• $1.35 billion returned to shareholders year-to-date through $1.05 billion of share buybacks and $307 million in dividend payments. Shares outstanding have declined from ~443M in early 2022 to 415M currently.

• A new share buyback program of up to $1.5 billion just launched alongside the NYSE listing, signaling management’s confidence at current price levels.

• Lowered net borrowings by over $200 million in last year to $7.6 billion. As of January 2026, net debt to adjusted EBITDA leverage is 1.6x, down from 1.7x a year earlier and within the 1.0x–2.0x target.

Now let's turn to the forward-looking metrics. Read on for a breakdown of Sunbelt's updated guidance, our thoughts on valuation, and exactly how we are handling our position.

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Meanwhile, the stock is selling at historically low valuation multiples and is about 64% below its peak.

Source: Koyfin (affiliate link with a 20% discount for StockOpine readers)

Adobe has also extended its run of earnings & sales beats over the past 5 years (it only missed sales consensus twice) by continuing to grow revenue and profitability at a consistent rate. The earnings beat magnitude has widened over the past three quarters driven both by performance and by the aggressive buyback program, reducing shares outstanding from 435 million in Q1’25 to 410 million in Q1’26 .

Source: Koyfin (affiliate link with a 20% discount for StockOpine readers)

In this article, we’ll break down Adobe’s Q1’26 earnings, analyse the ongoing AI transition, highlight key takeaways from the earnings call, assess Adobe’s valuation and let you know if we are doing any changes in our portfolio.

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1. Results Overview

Source: Koyfin (affiliate link with a 20% discount for StockOpine readers)

Adobe’s Q1 FY26 results exceeded expectations across the board, surpassing both analyst consensus and the guidance provided last quarter. Revenue hit $6.40 billion, growing 12% as reported and 11% in constant currency, the highest Q1 revenue in company history.

However, the top-line strength came alongside a modest operating margin contraction, as increasing AI-related investments weighed on profitability. GAAP operating margin came in at 37.8% in Q1 FY26, down from 37.9% in Q1 FY25 (a 10-basis point contraction). The underlying driver is sales & marketing ($1.71B, +14% YoY) and G&A ($463M, +26% YoY) which are growing faster than revenue.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

Remaining Performance Obligations (RPO) exiting Q1 stood at $22.22 billion, growing 13% year over year (12% in constant currency) while posting a sequential decline from $22.52B at Q4 FY25 end. Current RPO (cRPO) grew 12% year on year (+1.7% QoQ) and 11% in constant currency in this quarter. From FY24 to FY25, the ending cRPO coverage ratio (ending cRPO/Next 12M revenue) increased, reaching 56.32% in FY25 and edging up further to 57.26% in Q1 FY26, suggesting improving near-term revenue visibility.

Moving to ARR in Q1 it reached $26.06 billion, up 10.9% year over year.

While the YoY growth rate held steady, the sequential deceleration from 11.5% was possibly due to increasing usage of AI but slower materialization to RPO. Management reaffirmed the full-year FY26 ARR growth target of 10.2%, implying double-digit ARR growth for each of the remaining three quarters.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

Adobe generated a Q1 record $2.96 billion in operating cash flows, up from $2.48 billion a year ago. The company repurchased 8.1 million shares (~2% of shares outstanding), with $3.89B remaining of the $25B authorization. With the stock trading at historically low multiples, management’s continued buyback pace signals strong confidence in Adobe’s long-term value.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

2. Customer Group Performance

Adobe reports two customer subscription groups. Both delivered strong double-digit growth in Q1 FY26:

a. Business Professionals and Consumers – Revenue increased 16% YoY to $1.78 billion, contributing 29% to the total subscription revenue. With a single PDF or across documents in a PDF Space, Acrobat AI Assistant offers users conversational experiences that help them understand information more quickly and accurately. The connection between Acrobat and Express allows users to turn content they are consuming into audio summaries, infographics, presentations and more. Resonance with these features led the growth in AI Assistant MAU and ARR by 2x YoY and 3x YoY, respectively, in Q1FY26. Simultaneously, Express MAU was up 3x YoY and was integrated into 99% of U.S Fortune 500 companies.

b. Creative & Marketing Professionals – Revenue rose 12% YoY to $4.39 billion, exceeding management’s guidance of $4.33 billion and accounting for 71.2% of total subscription revenue.

• Creators & Creative Professionals: With over 30 AI models, including those from Google and OpenAI, sharing ideas using “Firefly Boards” and prompt-based editing capabilities with integrated photoshop and express web journeys, Firefly has changed from a basic AI tool into a professional creative hub. As a result, the total generative consumption has increased 45% QoQ in Q1FY26. The company reported rise in high value AI usage with video generative actions growing more than 8x YoY and audio generative actions expanding 2x YoY. Therefore, Adobe’s revenue from Firefly subscriptions and credit packed ending ARR jumped by 75% sequentially in Q1FY26. On the other hand, Firefly enterprise is experiencing new customer acquisition growth of 50% YoY. Tools such as Firefly services (provides API that allows creating of mass assets using automation) and Firefly foundry (allows the enterprise to train AI on their own IP without compromising on brand safety) have enabled large scale content creation at a faster pace and reduced costs.

• Marketing Professionals: Adobe’s Customer Experience Orchestration (CXO) is a strategy which connects the design and marketing team through AEP and GenStudio. Adobe Experience Platform (AEP) uses AI agents to analyse customer behaviour through interactions and automate marketing campaigns. In Q1FY26, Adobe enabled the usage of these tools to AEP users through their Try and Buy program. The AEP AI Assistant is already being used by 70% of AEP customers. Subscription revenue for this platform and its apps grew 30% YoY, indicating sustained momentum. GenStudio is a one stop destination which combines separate Adobe’s tools required for digital content and manages activities right from idea to final ad. Ending ARR for the Adobe GenStudio products grew > 30% YoY as global leading brands and agencies are investing in Adobe ecosystem to power their content supply chain. If those growth rates and adoption trends suggest that AI is eating Adobe’s lunch, then we just disagree.

  “In Q1, we introduced new AEP Agents along with expanded Agent Orchestrator capabilities, now available to all AEP customers, via a Try and Buy program. The scale of our platform has grown to over 35 trillion segment evaluations and more than 70 billion profile activations per day. Subscription revenue for AEP and native apps grew over 30% year over year, demonstrating continued momentum and value realization.” Anil Chakravarthy

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

In the sections below paywall we will dicuss AI developments, valuation and other highlights from the call.

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Source: Koyfin

But it wasn’t all bad. The quarter was fundamentally a story of tough comparisons. Pool faced a massive headwind in Q4'25 as it cycled against the hurricane-driven surge in Florida from late 2024. Despite this, the company delivered a 70-basis-point expansion in gross margins and introduced a 2026 outlook projecting a return to low single-digit top-line growth.

We’ll dive into the specific drivers behind these numbers below.

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1. Revenue

Net sales for the quarter were $982.2 million, a modest 1% decrease year-over-year. This slight decline was largely expected, as Q4’24 included a 2% benefit from hurricane recovery efforts. Excluding the impact of that tough repair comparison in Florida, the positive growth trends we saw over the last two quarters would have continued.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

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This quarter’s revenue dynamics were driven by a +2% benefit from net pricing, which helped offset a -2% drag from lower discretionary spending.

Source: Pool Corporation Q4’25 Earnings Presentation

For the full year, Pool achieved $5.3 billion in net sales, finishing flat compared to FY24 and reflecting a true year of stabilization. The industry has been in a broader decline for three consecutive years, fighting the hangover from the pandemic demand surge as well as a restrictive interest rate environment.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

2. Gross Profit Margin

Gross margin for the quarter was a major bright spot, coming in at 30.1%. This represents a robust 70-basis-point expansion compared to Q4’24.

This margin expansion was fueled by disciplined pricing, supply chain benefits, and an increase in private label sales. The company also benefited from a favorable product mix compared to last year, as Q4’24 saw an unusual spike in lower-margin equipment sales related to post-storm replacements. For the full year, gross margin landed at 29.7%.

Source: Fiscal.ai (affiliate link with a 15% discount for StockOpine readers)

3. Operating Margin

Operating margin for the quarter contracted by 80 basis points to 5.3%. Operating income came in at $52.0 million.

Operating expenses increased by 6% to $243.7 million. This expense growth was primarily driven by incremental investments in the POOL360 Unlocked technology rollout, costs associated with new greenfield sales centers, and rising self-insured medical costs.

For the year, operating income reached $580.2 million (11.0% operating margin) compared to $617.2 million in the previous year (11.6% operating margin)

4. Performance by Product Category

The Q4 product mix highlights the impact of the 2024 hurricane comps:

• Building Materials: Sales grew +4%. This marks another solid quarter of growth, driven by demand for National Pool Trends products. The trend continues from Q3'25 where we saw another +4% YoY gain.

• Equipment: Sales declined -3%. This drop was directly related to cycling against the significant equipment replacement activity following the major hurricanes in Q4’24.

• Chemicals: Sales fell -3%. This reflects both a tough comp with post-hurricane cleanup and continued pressure on chemical pricing.

5. Other End Markets

• Independent Retail: Sales to independent retailers declined by 4% in the quarter. This reflects softer retail demand compared to the hurricane-driven surge late last year.

• Pinch A Penny: The franchise network saw a 9% sales decline. This was heavily impacted by geographic concentration; most stores are in Florida, and Q4’24 saw a 15% jump in sales from hurricane activity. The network itself continues to expand, crossing the 300-location mark.

• Commercial: Sales fell -4% for the quarter, but finished the full year up +3%.

• Regional Performance: Florida declined 9%, heavily skewed by the tough comp, though it remains up 2% on a two-year stack. Texas provided early signs of recovery, growing +1% in Q4. California and Arizona declined 4% and 3% respectively.

6. New Construction Vs Maintenance

The industry saw just under 60,000 new pools built in the U.S. in 2025, representing a mid-single-digit decline from 2024. This is 25% lower than the pre-pandemic period and closer to the post-financial crisis years.

Source: Pool Corp 10-K Filings, StockOpine Analysis

Looking into 2026, management noted an encouraging level of optimism from dealers following the January show season. Many builders expect to construct at least as many pools as they did in 2025, indicating that the new construction market has likely found its floor.

For FY25, maintenance revenue was 64% of total revenue, while renovation and remodel made up 22% and new pool construction contributed 14%. This compares to maintenance revenue of 62% in FY23 and 58% during the construction peak in 2021. As mentioned in previous posts, this trend shares similarities with the financial crisis when the maintenance mix grew from an estimated 55% of sales at the housing bubble peak to 70% after the collapse.

7. 2026 Outlook

Management is expecting return to growth in 2026.

• Sales: Expected to grow in the low-single-digit range.

• Pricing: Anticipated to provide a +1% to +2% benefit.

• Gross Margin: Forecasted to be consistent with 2025 levels at 29.7%.

• Diluted EPS: Guided to a range of $10.85 to $11.15. This excludes any potential ASU tax benefits, implying growth in the low-single-digit range.

8. Quick Take: The POOL360 Digital Advantage

Pool’s continued investment in its B2B digital ecosystem is paying off.

• Record Adoption: For the full year, POOL360 sales reached an all-time high of 15% of total revenue.

• Q4 Momentum: Digital sales remained strong at 13.5% of total revenue in the fourth quarter, up from 12.5% in the prior year.

• Strategic Benefit: The company successfully launched POOL360 Unlocked in Q4, introducing new artificial intelligence features and expanded customer access.

9. Concluding Remarks

We believe Pool’s Q4 results validate that the company has successfully navigated the bottom of this cycle. With the discretionary business showing signs of firming up, a resilient maintenance segment, and the stock price trading at decade-low valuations, the long-term thesis remains firmly intact.

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Disclaimer: The team does not guarantee the accuracy or completeness of the information provided in the newsletter. All statements express personal opinions based on own financial and business analysis. Any estimates or forward looking statements made are inherently unreliable. No statement of opinion is an offer or solicitation to buy or sell the financial instruments mentioned.

The content of our newsletter is not a trading or investment advice and we do not provide any personal investment advice tailored to the needs of any recipient. The information provided should not be considered as a specific advice on the merits of any investment decision. Securities trading involve risk and you might lose your capital and/or incur other damages. Investors should make their own research and consult their registered investment advisor or financial advisor before taking any investment decision.

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