You didn’t need to find Nvidia. You just needed to buy Microsoft, let it compound at ~15% a year plus dividends, and get rich slowly over 25 years. Buying quality and being patient pays off.

$NFLX Netflix earnings tonight. Profitability has improved enormously, but slower growth and concerns about US viewing are putting its next phase of expansion under scrutiny. Stock: down 25.5% YTD | down 2.7% over 1 month | down 6.4% at last earnings Revenue growth recovered strongly after the 2023 slowdown, but Netflix now expects a slower pace. With margins already at historically high levels, maintaining that growth is becoming more important. WHAT HAPPENED AT LAST EARNINGS ◆ Revenue grew 13% YoY, but management guided to around 12% growth for Q3 while maintaining its 31.5% full-year operating margin target. WHAT HAPPENED LATELY ◆ Netflix announced around 1,000 job cuts and a shake-up of its senior content leadership as concerns grew over US viewing and competition. WHAT MATTERS THIS EARNINGS ◆ Whether advertising and higher prices can sustain revenue growth and strong margins as competition for viewers intensifies.

$MSCI up around 6% premarket after earnings. Index-linked fees drove another quarter of double-digit revenue growth, while management kept its full-year expense outlook unchanged after raising it last quarter. HEADLINE PRINT 🟢 Revenue: $892M vs $887M expected 🟢 Adjusted EPS: $5.11 vs $5.03 expected WHAT CHANGED 🟢 Asset-based fees: +24.9% YoY 🟡 Recurring subscription revenue: +7.7% YoY 🟢 FY26 operating expense guidance: $1.535–1.575B, unchanged WHY THIS EARNINGS MATTERS ◆ MSCI’s index-linked fees continue to drive strong revenue growth, while the unchanged expense outlook is encouraging after last quarter’s cost concerns. However, margins have remained broadly flat, and subscription growth is considerably slower than asset-based fee growth. REMAINING QUESTION ◆ Can MSCI maintain strong profitability if growth in market-linked fees slows?

$MSCI earnings tomorrow before the US market opens. Its proposal to downgrade Indonesia has just shaken the country’s stock market, a reminder of how much influence its indexes carry. Stock: down 0.8% YTD | up 5.3% over 1 month | down 8.7% at last earnings MSCI scores well ahead of most financial-services companies for Business Excellence, while its valuation score sits much closer to the market’s middle. Its highly profitable business continues to grow, but rising expenses have become a focus for investors. WHAT HAPPENED AT LAST EARNINGS ◆ Revenue grew 12.2%, but MSCI raised its full-year operating expense outlook by $45M. That disappointed investors despite strong subscriptions and index-linked fees. WHAT MATTERS THIS EARNINGS ◆ Whether subscription and index-linked fee growth can continue to outpace rising costs, particularly if market volatility puts pressure on assets tracking MSCI indexes.

Big earnings week ahead across technology, industrials, financials and consumer companies. With AI stocks under pressure, we’ll get another look at infrastructure spending and demand. Here are the 6 earnings I’m watching this week: $MSCI $NFLX $TSLA $META $LRCX $WDC I’m travelling this week, so my earnings updates may come a little later than usual. I’ll still share my thoughts on the results as I get to them. $MSCI (Tuesday, before open): Subscriptions and index-linked fees are growing strongly, but higher expenses unsettled investors last quarter. Last earnings reaction: 🔴 ↓8.7% ◆ Question: Can fee growth continue to outpace rising expenses if financial markets remain volatile? $NFLX (Tuesday, after close): Netflix is still growing profitably, but slowing viewing engagement and recent job cuts have renewed concerns about its growth strategy. Last earnings reaction: 🔴 ↓6.4% ◆ Question: Can advertising and pricing sustain revenue growth and strong margins as engagement slows? $TSLA (Wednesday, after close): Tesla has already reported 486,532 vehicle deliveries for Q3. Now attention turns to profitability and the cost of its autonomy ambitions. Last earnings reaction: 🔴 ↓15.6% ◆ Question: Can stronger deliveries translate into better margins and cash generation while investment in autonomy continues? $META (Wednesday, after close): Advertising remains strong, but Meta’s enormous AI investment programme is putting pressure on free cash flow. Last earnings reaction: 🔴 ↓9.2% ◆ Question: Can advertising growth generate enough additional cash to support the AI buildout without further squeezing free cash flow? $LRCX (Wednesday, after close): Lam Research is benefiting from strong investment in advanced chip manufacturing, particularly memory. But the recent AI sell-off has raised questions about how long spending can accelerate. Last earnings reaction: 🟢 ↑10.4% ◆ Question: Are memory and advanced chipmaking investments still strong enough to support Lam’s ambitious growth outlook? $WDC (Thursday, after close): Western Digital is benefiting from strong cloud storage demand, with higher sales and expanding margins. Expectations have risen sharply too. Last earnings reaction: 🔴 ↓17.7% ◆ Question: Can data-centre storage demand sustain strong pricing and further margin expansion? Every earnings report reshapes the Top Percentile rankings.

Book #25: Don’t BLAME the SHORTS by Robert Sloan “A market without bears would be like a nation without a free press.” -Bernard Baruch During the 2008 financial crisis, short sellers were blamed for driving down bank shares. US regulators responded by temporarily banning short selling in hundreds of financial stocks. But the banks’ problems were real: bad loans, excessive leverage and fragile balance sheets. Banning short sellers couldn’t fix any of that. Subsequent research found the ban damaged market liquidity and did little to support share prices. Short sellers can be wrong, but they also have an incentive to uncover problems that others overlook and challenge excessive optimism. Even if you never short a stock yourself, a well-researched bearish argument can be valuable in testing your own investment thesis. One idea from a great investing book each week. Book #26 next Sunday.

Sun setting in Hong Kong. Good morning to everyone on the other side of the world. Doing a bit of research on the balcony after a rough week in markets and ahead of a very busy earnings week.

Quick recap of the week. Tech plunged 7.7% and the VIX jumped nearly 35%. Even strong AI earnings couldn’t stop the selloff, as inflation and concerns over AI financing weighed on markets. ASML said demand could exceed its planned capacity through 2028, and TSMC delivered another strong quarter. Yet semiconductor stocks fell, while CoreWeave’s bonds came under heavy pressure. AI demand remains strong, but investors are increasingly questioning the cost and returns of building all that infrastructure. Inflation added to the concerns. US annual CPI rose to 3.7% in September, producer prices jumped and oil remained elevated amid Middle East tensions. Yet Treasury yields fell as investors sought safety despite the hotter inflation data. Bank earnings opened the season with mixed results. Goldman Sachs benefited from strong trading, while JPMorgan’s fixed-income trading disappointed. Finally, Tesla grabbed attention with its spectacular Roadster reveal. That’s it for the week. Have a great weekend everyone.

$TSLA up 4% pre-market following the Roadster reveal. Tesla certainly knows how to put on a show. Doubt the Roadster will make much difference to Tesla’s economics, but maybe the publicity is worth the effort. What do you think?

Really good breakdown by @SixSigmaCapital of how $CRWV is financing its huge AI expansion. The FT reports some CoreWeave bonds are now trading below 80 cents on the dollar. Even bonds financing data centres leased to major tech companies are falling. Strong customer contracts help, but if borrowing becomes more expensive, so does the AI buildout, squeezing profitability.

Quite a mix today. Ericsson rallied on strong earnings, Zillow benefited from falling Treasury yields, and TransUnion joined a broader credit-data rally, having also announced a Bankrate partnership the day before. Meanwhile, AI infrastructure hardware remained under pressure.

The $TSM earnings call revealed a lot more than record profits. Management is checking US AI data-centre projects firsthand, preparing to more than double 2nm capacity and exploring a factory in Texas. However, that scale of expansion comes at a cost, particularly overseas, where new factories are putting pressure on margins. KEY TAKEAWAYS ◆ AI demand: No signs of slowing. The previous forecast of mid-to-high 50% annual AI accelerator growth through 2029 may even prove conservative. Demand from CPUs and networking is growing separately as AI agents gain adoption. ◆ Production expansion: TSMC expects to more than double 2nm capacity in 2027. It’s adding another 3nm factory in Taiwan for 2028, while its second Arizona factory is now scheduled for Q3 2027, slightly ahead of plan. ◆ Investment and margins: Capital spending in 2026–28 will be substantially higher than in the previous three years. Overseas factories are expected to reduce gross margin by 3–4 percentage points in the coming years, versus around 2 points in 2026. Equipment costs are also rising. ◆ Advanced packaging: TSMC is already producing AI chips at five times standard reticle size, with larger designs under development. It also confirmed a partnership with GlobalFoundries to address packaging capacity shortages. ◆ Consumer demand: Management remains cautious about 2027 in price-sensitive markets, where rising component costs are pressuring customers. Advanced AI demand remains exceptionally strong. WHAT ANALYSTS ASKED Laura Chen, Citi Q: Could financing, electricity and other infrastructure constraints undermine AI demand? A: TSMC includes these risks in its capacity planning but still sees demand exceeding supply. Its previous AI accelerator growth forecast may even prove conservative, although no formal revision was given. Gokul Hariharan, JPMorgan Q: Is TSMC planning additional US manufacturing in Texas, potentially involving Tesla’s TerraFab? A: Teams are evaluating Texas and discussions about TerraFab are underway. No decision yet, but any resulting factory would need to be operated by TSMC. Krish Sankar, TD Cowen Q: Could waiting until 2030 to adopt next-generation EUV equipment put TSMC behind competitors? A: Management wants the technology to reach the right maturity and cost efficiency before adoption. It remains confident in its leadership. Charlie Chan, Morgan Stanley Q: Can TSMC’s advanced packaging keep pace with increasingly large AI chips and competing technologies? A: TSMC highlighted successful production at five times standard reticle size, with larger designs underway. It remains confident in its competitive position and ability to support customers. Sunny Lin, UBS Q: Could higher equipment costs and rapid expansion push capital spending up faster than revenue? A: Management acknowledged cost inflation but still expects revenue growth to outpace capital spending growth if it executes successfully. Arthur Lai, Macquarie Q: Are power shortages affecting customer forecasts, and does the AI growth forecast include CPUs? A: Management’s checks haven’t revealed a major power-related constraint. CPUs used for AI aren’t included in its narrower AI accelerator growth forecast, despite becoming an increasingly important source of demand. Sahej Singh, Stifel Q: Do reported chip price increases apply to existing contracts or mainly new capacity? A: Management didn’t specify. Pricing varies by technology, market and manufacturing location, with the aim of capturing the value TSMC delivers. UNRESOLVED QUESTION ◆ Can TSMC expand fast enough to meet demand while keeping margins exceptionally strong as overseas production and equipment costs rise?

$TSM reported record earnings while the wider AI sell-off continued. Revenue grew 51% YoY, while margins remained exceptionally strong as its newest chip technology ramped up. HEADLINE PRINT 🟢 Revenue: NT$1.49T vs NT$1.47T expected. 🟢 EPS: NT$29.43 vs NT$28.89 expected WHAT CHANGED 🟡 Gross margin: 66.4% vs 67.7% in Q2, within 65–67% guidance 🟢 Operating margin: 58.7% vs 56–58% guidance 🟢 2nm chips: 8% of wafer revenue, up from 3% in Q2 WHY THIS EARNINGS MATTERS ◆ TSMC is absorbing the expected margin pressure from its 2nm production ramp while delivering record profits. Advanced chip demand remains strong, and the business is maintaining exceptional profitability despite the enormous investment required to expand production. REMAINING QUESTION ◆ Can TSMC sustain these margins as 2nm production and overseas manufacturing continue to expand?

$TSM Taiwan Semiconductor earnings before the US market opens. Chip stocks fell sharply today as higher inflation and concerns over financing the AI buildout rattled investors. TSMC’s results will offer an important check on the underlying demand and profitability. Stock: up 41.5% YTD | up 2.9% over 1 month | down 5.0% at last earnings TSMC currently ranks No. 1 in the market for Business Excellence, while its valuation is more attractive than 30% of the market. WHAT HAPPENED AT LAST EARNINGS ◆ Gross margin reached 67.7%, but management warned that ramping up 2nm chip production would reduce margins by 3–4 percentage points in the second half of 2026. WHAT HAPPENED LATELY ◆ Q3 revenue has already been disclosed at a record NT$1.49T, up around 50% YoY, reflecting continued strong demand for advanced chips. WHAT MATTERS THIS EARNINGS ◆ Whether TSMC can sustain its exceptional margins while accelerating 2nm production and expanding capacity to meet AI demand.

Coming out of the $ASML earnings call, management confirmed higher prices for its most critical chipmaking machines. The benefits begin in 2027, with the full impact expected from 2028. KEY TAKEAWAYS ◆ Pricing power: Higher prices have been agreed for critical high-volume manufacturing systems and upgrades. Management called this an unusual adjustment reflecting the technology’s value, not something it intends to repeat annually. ◆ Production capacity: ASML expects to produce around 65 Low-NA EUV systems in 2026, up from 44 last year. Further growth will come partly from better use of existing factory space and faster assembly and testing. No new 2027 or 2028 production targets yet. ◆ Order commitments: ASML checks customer demand against fab construction schedules. Orders require substantial down payments and carry cancellation costs, giving management confidence that demand isn’t inflated to secure production slots. ◆ Margins and earnings: Around €400M of higher-than-expected, high-margin upgrade sales helped lift Q3 gross margin. Expansion costs will weigh on near-term margins, while sustaining upgrade demand remains important. Around €500M of net income also came from revaluing its Mistral AI investment. ◆ Technology roadmap: The next Low-NA EUV system will increase throughput from 230 to 260 wafers per hour, while new DUV immersion systems target 330. High-NA EUV is progressing, with Samsung targeting high-volume manufacturing in 2028 and TSMC in 2030. WHAT INVESTORS ASKED Joe Quatrochi, Wells Fargo Q: How much further can ASML expand production in 2027 and 2028? A: Management sees more opportunities to increase output in 2028 than in 2027, but declined to provide new production targets. Krish Sankar, TD Cowen Q: Are customers exaggerating demand to secure machines, and could ZEISS become a production bottleneck? A: ASML validates orders against detailed fab plans and believes demand is genuine. ZEISS is not currently a bottleneck, even for the additional expansion being considered. Sandeep Deshpande, JPMorgan Q: Why is Q4 gross margin guided below Q3 despite higher revenue? How much will negotiated price increases boost profits? A: Expansion costs are temporarily offsetting benefits from higher volumes. Pricing should still improve margins materially, although some of the benefit will fund the production ramp. François-Xavier Bouvignies, UBS Q: Will ASML accept firm orders for 2029 and 2030, and how does it ensure customers are committed? A: Customers are requesting orders, but ASML wants to assess total demand and future capacity before allocating slots fairly. Lee Simpson, Morgan Stanley Q: Is demand extending into 2029 and 2030 largely coming from one potential new customer? A: No. Interest is much broader, including new EUV adopters in DRAM. Customer down payments also provide a useful, though lagging, indicator of order momentum. Alexander Duval, Goldman Sachs Q: Is memory becoming a larger growth driver than logic? A: Memory system sales are expected to grow around 75% this year, largely driven by DRAM, versus 10% for overall logic. Advanced logic is growing over 25%, and management still expects logic to remain larger in 2027. Tammy Qiu, Berenberg Q: Could ASML continue raising prices every year while industry capacity remains tight? A: Management said that isn’t the intention. Pricing should remain linked to the value of new technology rather than temporary shortages. UNRESOLVED QUESTION ◆ How much additional production capacity can ASML deliver in 2028, and can higher volumes and pricing outweigh the costs of expanding so quickly?

$ASML down 3% in US overnight trading after earnings. The company delivered a strong beat, but the bigger development is that planned production capacity for 2027 and 2028 is no longer enough to meet customer demand. HEADLINE PRINT 🟢 Revenue: €11.66B vs €11.56B expected 🟢 EPS: €12.95 vs €10.60 expected WHAT CHANGED 🟢 Gross margin: 57.5% vs 54.8% expected 🟢 Q4 revenue guidance: €14.2–15.2B vs €13.8B expected 🟢 FY26 revenue guidance: €44–45B, lower end raised by €1B WHY THIS EARNINGS MATTERS ◆ Demand is stretching further into the future, with some customers already interested in placing orders for 2029 and 2030. ASML is now investigating further capacity increases beyond the previously discussed 30% expansion for 2028. Stronger margins and higher guidance reinforce the growth outlook. REMAINING QUESTION ◆ How much additional capacity can ASML bring online for 2028, and how quickly?

A great thread that really captures the mindset of long-term investing. And a quote worth remembering: “The only event we control is whether we are right, not when we are right.” - Nick Sleep Thanks @DeCaignyCapital for putting this together. Great work!

$ASML earnings before markets open. Orders for its advanced chipmaking machines already stretch into 2028, and the company is considering another major expansion of production capacity. Stock: up 60% YTD | up 1% over 1 month | up 0.5% at last earnings ASML ranks in the top 1% for Business Excellence. The stock has had a remarkable run this year, with growing expectations for how much further the business can expand. WHAT HAPPENED AT LAST EARNINGS ◆ Orders nearly covered 2027 EUV capacity, even after a planned 30% expansion. ASML was already considering another 30% increase for 2028. WHAT HAPPENED LATELY ◆ In September, JPMorgan analysts reported that most new EUV orders were for 2028 delivery, with machine assembly becoming the main capacity constraint. WHAT MATTERS THIS EARNINGS ◆ Whether new orders justify another 30% increase in EUV production capacity for 2028.

Coming out of the $JPM earnings call, JPMorgan expects net interest income to keep growing in 2027, driven more by loan and deposit growth than by further rate hikes. KEY TAKEAWAYS ◆ 2027 net interest income: JPMorgan’s preliminary outlook is $107bn excluding markets, roughly $5bn above the annualised Q4 run rate. Only about a quarter of that increase comes from expected rate hikes. The rest comes mainly from loan and deposit growth. ◆ Deposits: JPMorgan added 650,000 net new checking accounts in Q3. But higher rates could encourage customers to move more money into higher-paying deposits, increasing funding costs. ◆ Credit: Management said the wholesale reserve build reflected new lending rather than deteriorating credit quality. Consumers remain healthy, although prolonged high rates could eventually put pressure on repayments. ◆ Investment banking: Activity slowed in the second half of September as higher yields caused buyers and sellers to reassess valuations. The pipeline remains healthy, particularly in Europe, but Q4 is less predictable. ◆ Buybacks: Jamie Dimon explained why repurchases fell sharply despite around $30bn in excess capital. JPMorgan now sees better long-term returns from investing in its own businesses than buying back shares. WHAT INVESTORS ASKED Ebrahim Poonawala, Bank of America Q: Could AI agents disrupt banks by moving customer deposits? A: Management sees familiar competition from fintechs and rate-sensitive deposit flows. JPMorgan is developing its own capabilities but will restrict unsafe third-party access to protect customers. John McDonald, Truist Q: How much will JPMorgan spend in 2027? A: Management’s preliminary expense outlook is close to the current $114bn consensus, although the budget has not been finalised. Christopher McGratty, KBW Q: Where is JPMorgan becoming more cautious about lending? A: Dimon said some credit terms have become too loose, including weak governance and structures that disadvantage existing lenders. JPMorgan is tightening selectively rather than chasing deals. Mike Mayo, Wells Fargo Q: Where are the financial benefits from JPMorgan’s AI investment? A: Management acknowledged that generative and agentic AI benefits are not yet visible in quarterly earnings. Internal productivity improvements are promising, but it is too early to quantify their financial impact. Glenn Schorr, Evercore ISI Q: Could financing the AI infrastructure boom create excessive concentration risk? A: JPMorgan’s direct exposure is still relatively modest, but AI-related financing now extends across lending, capital markets and other businesses. Management is stress-testing the entire theme and warned that no institution would be immune to a major change in AI sentiment. Gerard Cassidy, RBC Q: Will deposit costs behave differently in this rate-hiking cycle? A: The bank has a mix of highly rate-sensitive and relatively stable deposits. Management expects broadly familiar behaviour, but admitted there is little historical precedent for rate increases starting from today’s elevated levels. David Chiaverini, Jefferies Q: Is JPMorgan’s 17% through-cycle return on tangible equity target becoming more relevant? A: Management said current conditions are unusually favourable across almost every business. The 17% target remains a long-term objective, rather than a forecast of imminent deterioration. UNRESOLVED QUESTION ◆ Can JPMorgan deliver its expected 2027 net interest income growth if higher rates push more customers into higher-paying deposits?

$JPM down 3.5% premarket after earnings. Lending income held up, but revenue and EPS missed expectations, with fixed-income trading falling short. HEADLINE PRINT 🔴 Revenue: $50.2B vs $51.2B expected 🔴 GAAP EPS: $5.57 vs $5.93 expected WHAT CHANGED 🟢 Net interest income: $27.1B vs $26.84B expected, +13% YoY 🟡 Credit-loss provision: $2.7B vs $2.5B in Q2 🟡 Markets revenue: $10.3B, +15% YoY. Equities beat expectations, while fixed income missed. WHY THIS EARNINGS MATTERS ◆ Loan growth is translating into higher net interest income, with credit losses still contained. Investment banking and trading remained strong compared with last year, but activity moderated from Q2’s record levels. A $658M securities loss also reduced reported earnings.

$UNH up 2.8% premarket after earnings. UnitedHealth’s profit recovery is gaining ground despite flat revenue, with medical costs taking a smaller share of premiums than last year. HEADLINE PRINT 🟢 Revenue: $112.7B vs $111.4B expected 🟢 Adjusted EPS: $4.69 vs $4.14 expected WHAT CHANGED 🟢 Medical care ratio: 88.4% vs 89.9% a year ago 🟢 FY26 adjusted EPS guidance: At least $20.50, raised from $19.50–$20.00 🟡 Favourable prior-period reserve development: $610M WHY THIS EARNINGS MATTERS ◆ Medical-cost improvement is helping restore profitability even without revenue growth. The higher guidance strengthens the recovery case, although favourable reserve adjustments again contributed to earnings. REMAINING QUESTION ◆ Can the improvement in medical costs be sustained without significant reserve benefits?