Cash flow determines may things along the growth curve of a company’s lifecycle.

It dictates whether a company can pay their day-to-day bills, survive economics downturns, maintain purchasing power, take on debt, and even hire the right talent within the organization.

Most investors understand that cash flow matters, but far fewer understand how cash flow, reinvestment opportunities and leverage work together to create some of the greatest wealth-generating businesses in history.

Cash flow can be the sole reason certain investors will turn away from an opportunity.

Let’s get into it.

Subscribe now

Cash Flow Drives Equity Value

Free cash flow is the cash a business has left after covering its operating costs and the reinvestment needed to keep running — the cash actually available to the people who own it. The “take home pay”.

A share of stock is, at its core, a fractional ownership claim on the future cash flows of a business.

This is why finance theory dictates the intrinsic value of any asset is the sum of its future cash flows, discounted back to the present day (why people run DCF models).

You cannot pay dividends, buy back stock, fund M&A or pay off debt with net income. You can do all of those things with cash.

Earnings can be shaped in a dozen ways due to various accounting rules, but the cash a business actually generates is what ultimately sets the value of the equity, so for a growth company the central question is whether it produces consistent, growing cash flow.

Antonio Linares makes this point constantly:

Over long periods of time, stock prices tend to follow free cash flow per share

While earnings can fluctuate due to accounting rules and timing differences, it is ultimately the cash generation power of a business that determines equity value (equity value = market cap).

The Cash Conversion Cycle Creates the Growth Flywheel

If cash is what ultimately sets the value of the equity, then how quickly a business turns its sales into cash matters just as much as how much cash it produces.

The faster a company collects cash and puts it back to work, the faster it can grow.

Take the below for example:

Company B has a huge lag time before it can collect cold, hard cash from its customers.

Company A can immediately invest that cash it collects back into the business.

That is the most important point here.

Company A has a faster cash conversion cycle (converting inventory or a service into cash), which allows the business to reinvest back into the business more quickly.

This stronger cash conversion cycle creates a powerful growth flywheel.

Businesses that convert earnings into cash more quickly can reinvest that capital sooner into high-return opportunities — whether that’s hiring salespeople, expanding capacity, entering new markets, acquiring customers or funding strategic initiatives.

The faster cash is generated and recycled back into the business, the faster the company can grow. That growth produces even more cash, which can then be reinvested into additional value-creating projects, creating a compounding effect over time.

In many ways, the cash conversion cycle is a key enabler of scale.

Companies that can efficiently turn revenue into cash have a structural advantage because they can fund growth internally, reduce reliance on external capital, and accelerate the pace at which they compound value.

Why Software Gets Premium Valuations

This dynamic is also one reason why software and other asset-light businesses often command higher valuation multiples than industries such as retail, apparel, distribution or manufacturing.

Because these businesses require relatively little incremental capital to grow, they can reinvest cash more quickly and earn higher returns on invested capital (ROIC).

In contrast, more capital-intensive businesses often have cash tied up in inventory, receivables, equipment and working capital, slowing the pace at which they can reinvest and compound growth.

This is particularly true in software, where the cost of serving each additional customer is often minimal once the product has been built. As a result, successful software businesses can scale rapidly without a proportional increase in capital requirements.

—> This combination of efficient cash conversion, low incremental costs, and attractive reinvestment opportunities creates one of the most powerful compounding engines in business.

It is also a major reason why venture capital has historically gravitated toward technology companies and why ecosystems such as Silicon Valley emerged around them — these businesses can reach scale faster, generate ROIC and create significantly more value from each dollar invested.

While a strong cash conversion cycle and ROIC create the foundation for growth, debt can accelerate this process even further when used responsibly.

Amplifying the Growth Flywheel with Debt

Debt is simply a tool that allows a business to invest more capital into attractive opportunities than it could using internally generated cash alone.

I personally view debt as accelerated capital allocation — a way for a great business to put more money to work today than its own cash flow alone would allow.

—> If management can borrow capital at a cost below the return generated by the business, that spread accrues to equity holders, amplifying returns on equity (ROE) and accelerating growth. So, if the return exceeds the interest payments, it’s a profitable decision, all else equal.

In this sense, debt acts as a multiplier on an already attractive business model.

The growth flywheel sequence:

1. Start with high-ROIC business.

2. Generate cash.

3. Debt adds more capital.

4. That capital gets invested at the same high ROIC.

5. ROE rises.

The key caveat is that debt only creates value when the borrowed capital is reinvested into initiatives that generate incremental cash flow at returns above the cost of borrowing.

Simply adding leverage to a business does not improve the economics but rather increases risk.

In fact, under-utilized debt can become a drag on performance by consuming cash flow through interest payments while producing no corresponding return!

BUT, for a cash-generative businesses, leverage can create a powerful growth engine:

The business generates cash, reinvests that cash at attractive returns, supplements those investments with low-cost debt (additional capital), and then uses the resulting increase in cash flow to further expand the business and repay lenders.

—> This dynamic is one of the primary reasons us evil private equity people utilize leverage in acquisitions!

It accelerates the value creation generated by a business with strong underlying economics, and returns capital to investors more quickly (I promise we aren’t evil… only sometimes).

Here is something that I have noticed in the private markets that plays out similarly in the public markets:

Debt imposes a degree of discipline on management teams.

The obligation to service interest payments forces scrutinized capital allocation decisions, reducing the temptation to pursue ‘pet’ projects, empire building, or other uses of capital that fail to maximize shareholder value.

When used prudently, debt encourages management to focus on initiatives that generate the highest returns on invested capital.

BUT.

If cash flows deteriorate or reinvestment opportunities fail to generate the expected returns, you are still obligated to pay back interest payments + principal.

In these situations, leverage can quickly destroy equity value… and, in extreme cases, transfer control of the business from shareholders to lenders (also known as Chapter 11 / bankruptcy).

Thus, debt is most effective when paired with businesses that generate durable cash flows, strong unit economics and a proven ability to reinvest capital at attractive rates of return.

Debt does not create a great business, but simply allows a great business to become great faster.

The Ultimate Compounding

The best businesses share a common set of traits:

• Strong free cash flow generation

• Efficient cash conversion

• High ROIC

• Long reinvestment runways

• Prudent use of leverage

When these characteristics exist together, management can repeatedly turn every dollar of capital into multiple dollars of future value. Great for stocks!

Companies like Amazon are exceptional because they continuously convert capital into even more capital.

Ultimately, investors should focus less on reported earnings and more on how quickly a business turns earnings into cash, what returns it earns on that cash and how many opportunities it has to reinvest it.

Those factors are what drive sustainable growth and long-term value creation.

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

AI is creating opportunity everywhere.

The AI infrastructure buildout, the physical robots about to walk into every warehouse, factory and eventually home on earth, autonomous land, air and maritime defense systems, the grid infrastructure rebuild, quantum computing, biotech and biology engineering breakthroughs, nuclear fusion, orbital and deep-space manufacturing.

This is a generational, once-in-a-lifetime setup that has the ability to create real wealth for the people actually paying attention. I've never been more excited to be an investor.

And I want to help you capitalize on it.

Subscribe now

I've gone back and forth on this post more times than I'd like to admit. The last thing I want is to sound like every other guy on here who slaps up a paywall and acts like he's doing you a favor.

Let me explain this in the best way I’m able.

For 8 months I've put everything out for free — the deep dives, earnings notes, monthly portfolio updates and others.

I stepped it up last month and went all the way and showed you:

• Every single dollar I've got in my portfolio

• Where it’s allocated

• How it moved from the prior month

• Various analysis/insights on portfolio performance

• How much is in my individual vs. Roth and why

This is sensitive information. But I want to commit to being as transparent as possible and allow this community to follow the portfolio for years to come.

And at the end of the day, my following will all come down to performance. And I’m confident I can beat the market. I’m already dominating the index the previous 3+ years…

I’ve built the institutional analysis skills through investment banking and private equity, and have paired these skills with almost 8 years of investing in the public markets.

But none of that matters to you unless it actually makes you money and makes you a better investor.

You don’t need an institutional background to beat the market anymore. Times have changed.

It’s always a great strategy to follow someone’s portfolio you trust, who lays out their work in public and who has consistently outperformed the index YoY.

—> That is what I am offering here on Substack.

And I’m playing with real money.

Here you can watch a portfolio grow (and shrink!) in real time — and see why every buy, sell and hold actually gets executed.

Here you can build your own instincts right alongside mine — so that a year from now you’re not just following me, you’re a sharper and more confident investor capitalizing on the biggest wealth-creation window any of us will ever see.

So with that — here is what changes going forward for Paid Members vs. Free Supporters:

At the end of the day, I want this Substack to be something I can run for years without burning out and dumping random AI takes in your feed just to keep posting.

One piece a week.

And a portfolio you can follow right alongside me as it appreciates in value — so over time I can actually help you get better at this and, yeah, help you beat the market.

Almost nobody on this platform opens their whole portfolio like this. I do.

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

April was a fireworks show — the best month on record for the portfolio. The AMD leaps did roughly 90% of the work and the account crossed seven figures.

May answered it — and beat my expectations.

The portfolio grew +69.68% and finished the month north of $1.3M — the AMD leaps again carried roughly 90% of the portfolio gains. The leaps are now deep in the money and I am thinking about taking profits here over the summer. Still waiting for the San Francisco Advancing AI 2026 Summit.

Quick note before we get into it: this is the last monthly portfolio update going out to everyone. Starting next month, the full breakdown will be available only to paid supporters of ThePrivatePublicInvestor.

Founding member pricing locks in at a discounted price for life and is now live for a limited time. More at the end.

Let’s get into it.

Subscribe now

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor, as I try my hardest each week to give you custom, in-depth analysis on stock investments, market insights and portfolio strategies.

With that, enjoy this piece and let me know if you have any questions!

May Compounded at +69.68%

The portfolio returned +69.68% in May.

I added meaningfully to Celsius during the month and started exiting the last of my Micron, as the memory trade is louder than ever and I believe expectations are being steeply priced into the market. And when a downtrend begins in memory, it will be quickly and aggressively red.

The rest of the portfolio did not move much except one new add which I will discuss below.

Portfolio Holdings Update

I sold a piece of my December 2026 AMD calls this month and rolled the proceeds into shares. This is just me deliberately stepping down in leverage to be more conservative as the leaps are up +500-700% across the board.

“You don’t fold a winning hand, but you can slide a few chips back to your stack while it’s still your hand to play.”

What I’m not doing is selling the thesis.

I’m still holding 29 contracts across the 2026 and 2027 expirations, and the plan is to carry them into late July or later.

AMD’s Advancing AI 2026 Summit in San Francisco is exactly the kind of event where historic partnership announcements and a next-gen roadmap reveal make sense

It gives the company / stock some time to cool down after the massive run-up as well.

The only thing that pulls me out earlier is a genuinely silly move — think $700+, where the math forces me to close most of the options contracts.

And to be clear about where we actually are: even after this run, AMD’s GPU business is nowhere close to priced in.

The April move was data-center strength and the market waking up to a GPU-to-CPU ratio in AI buildouts approaching 1:1.

The bigger thesis, in conjunction now with the massive CPU shortage and identity shift, is the Helios-rack architecture rollout and the MI400 ramp in shipments.

None of these have pulled through the P&L just yet.

More partnership announcements and more transparency at the July event are the next catalysts.

Separately, the software space has been a graveyard this year.

I own 3 separate SaaS exposures in my portfolio, with one added in May.

I started a position in ServiceNow and believe it is one of the most undervalued SaaS companies in the entire market with a wide moat.

I trimmed a slice of Adobe to free up some temporary cash for opening a position in ServiceNow.

I intend to hold these 3 SaaS plays for years, and I’ll rank them here by the durability of their moat:

1. Veeva Systems

2. ServiceNow

3. Adobe

Veeva is the FDA-validated operating system for life sciences. ServiceNow is becoming the enterprise workflow engine. Adobe is the enterprise document and creative standard.

I’m spreading exposure across all three rather than betting on one. I know this may go against my core thesis around concentration, but I genuinely think all 3 of these names will do well for years to come.

Everything else is largely as it was. Coinbase, Nike, and the other core long-term holds — Estée Lauder, Amazon, Meta, BitMine, ASP Isotopes — are unchanged in size.

The thesis on each is intact and none moved enough this month to earn a fresh write-up.

Just a quick note that I’m looking at reallocating my Estée Lauder position toward a different, overlooked beauty company with strong growth potential. If you’re interested in the ‘why’ behind that trade, I’ll be covering it in depth for my paid subscribers.

A Record Year of Realized Gains: +$145K

YTD, the portfolio is up +174.54%.

Extremely grateful for such a tremendous year so far, and thank all of you for supporting me along the way!

But the number I want to flag here isn’t the headline return — it’s the realized one.

Realized gains hit $145,240 YTD, against $15,240 in losses.

That’s more than double the figure from the April update, BUT it’s mostly the product of deliberate rebalancing: taking profits on AMD options and rolling into stock.

I also sold more shares of Micron and have been focused on recycling that capital into positions with more road ahead of them.

2025 in Review

For context, 2025 closed at +51.78% with a 95% gain/loss ratio at +$94K.

A choppy three quarters were carried by a Q4 rally that peaked near +100% in mid-October before consolidating into year-end.

That 2025 chart is the reminder that drawdowns happen and consolidation occurs, but staying patient with your conviction pays off. And sometimes the market is very sudden.

And to clarify this point:

April 2026 was a moment, NOT a baseline.

2025 is more reflective of a normal year in the market.

My annual goal, on average over time, is two-fold.

• Beat the market and/or

• Achieve 15%+ annual return

If both happen, I’m a happy camper.

Where My Next Big Dollars are Going

Here’s what’s on my mind as AMD runs.

When I do trim that position in size, it throws off a large pile of cash, and that cash will need a home.

So I’ve been spending my research hours on the next thing, and I keep landing in the same two places: grid infrastructure and robotics.

Grid modernization is the physical hardware and the distribution-edge software that let aging utilities carry the massive AI compute load. Much of it serves the small and rural operators the giants overlook. The clearest expression of that on my watchlist is Tantalus (TGMPF).

Regarding the robotics sector, my preliminary Humanoid Market Mapping is already live, with a first look at the thesis below:

Below are other names I am keeping my eye on.

None of these are positions yet.

My watchlist will be continually updated for Paid Supporters.

Paid Subscription Detail

As mentioned in the April portfolio update, this is the last monthly portfolio update going out to all subscribers.

After that, the full breakdown moves to paid only — cost basis on every position, % gain per name, sizing as a percent of portfolio, real-time alerts when I add or trim, and where I am looking next to add to my portfolio.

Deep dives and other select posts have already gone paid.

Founding member pricing is still available, which locks you in for life as a discounted rate.

Subscribe now to keep your spot: https://theprivatepublicinvestor.substack.com/0b128dba

Macro Catalysts this Month in June

• Wednesday, June 10: May CPI data (the most critical inflation report of the month) and Wholesale Inventories

• Thursday, June 11: Producer Price Index (PPI), Initial Jobless Claims, and EIA Natural Gas Inventories

• Friday, June 12: University of Michigan Consumer Sentiment report

• Tuesday, June 16 - Wednesday, June 17: FOMC Interest Rate Decision & Press Conference

• Thursday, June 18: Continuing Claims and Initial Jobless Claims

• Tuesday, June 23: New Home Sales data for May

• Thursday, June 25: Final Q1 GDP Revision and Corporate Profits data

Prefer the polished PDF version? LINK HERE

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

If you enjoy ThePrivatePublicInvestor, it would mean the world to me if you invited friends to subscribe and read with us. If you refer friends, you will receive benefits that give you special access to ThePrivatePublicInvestor.

How to participate

1. Share ThePrivatePublicInvestor. When you use the referral link below, or the “Share” button on any post, you'll get credit for any new subscribers. Simply send the link in a text, email, or share it on social media with friends.

Refer a friend

2. Earn benefits. When more friends use your referral link to subscribe (free or paid), you’ll receive special benefits.

• Get a 1 month comp for 1 referrals

• Get a 3 month comp for 3 referrals

• Get a 6 month comp for 10 referrals

Visit the leaderboard

To learn more, check out Substack’s FAQ.

Thank you for helping get the word out about ThePrivatePublicInvestor!

This is the last free Deep Dive before paywalls are put up — only paid subscribers will have access going forward.

The United States is undergoing its fourth Industrial Revolution.

• First: Steam power and early factories.

• Second: Electricity, steel, and mass production.

• Third: Computers, microchips, and the internet.

• Fourth: Artificial intelligence and robotics

Artificial Intelligence is already in full swing.

Robotics is not.

AI deployed into the physical environment we live in is still in development, and I want to be early.

The advancement of LLMs and GenAI has catapulted progress in the robotics field by accelerating how machines learn, reason and react to the world around them through simulation and continuous incremental context.

The humanoid race is beginning and there is intense global competition among nations to develop these autonomous robots.

But first, why humanoids? Why do we need robots built like humans?

There sure are industrial cases where robotic arms and wheeled robots are needed in a manufacturing facility.

—> The answer is that our world is already designed for human bodies.

Jensen Huang said this best:

“Robots look like people because… the most important reason, is that we built the world for ourselves, and so the workstations of a factory, the manufacturing of a factory, was really created for people.”

Furthermore, because we share the same physical hardware, we have an unmatched dataset for training these machines to interact with the world, use human-centric tools, and operate the vast array of machinery built for our hands.

Walk the floor of almost any tech conference in 2026 and you’ll trip over a humanoid robot pouring coffee… an easy way to walk away convinced the future has already arrived.

Global humanoid installations came in around 16,000 units in 2025, up from essentially zero in 2023.

This is small, yes, but adoption is rapidly increasing.

KraneShares’ KOID, the first U.S.-listed humanoid ETF, launched just last June, and it has already been one of 2026’s standout thematic performers.

I think it’s time to dig into this space and find some standout multi-baggers.

Let’s jump in.

Subscribe now

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor.

With a subscription, you will receive deeply researched stock deep dives, insight into my personal portfolio, along with each position I own and the related weighting, along with my personal watchlist, custom templates for valuation and modeling, decision-making investment guides, and the personal chat feature for the community.

Subscribe now to receive ‘founding member’ pricing and exclusive benefits before we rollout standard pricing for the rest of the community here on Substack.

With that, enjoy this piece and let me know if you have any questions!

Robotics is Going to Have a ChatGPT Moment

Jensen Huang has spent a year telling everyone that physical AI is the next multi-trillion-dollar wave and that robotics is about to have its ChatGPT moment.

What’s new in 2026 is that retail finally caught the scent — discords, comment sections and early green signals in public securities have seen notable increased activity and volume.

The humanoid robot story is not a "who builds the best robot" story. It is, at least for the next five to seven years, a supply chain story, and the supply chain has very specific chokepoints that specific companies own.

What Makes up a Humanoid Robot?

A humanoid is simply a battery, a brain, a body, and a bunch of motors, gears, screws and other parts connecting it all together.

Read more

It’s the longest I have consistently tracked a name in the market on record.

And I think the time is now to build out a position, especially at the currently discounted valuation.

This Q1, Celsius delivered a double beat, yet the stock sold off.

While the integration of Alani executed near flawlessly, that was overshadowed by the core Celsius brand losing market share to Alani Nu. Domestic dependency on Pepsi is also deepening and near-term margins are suddenly feeling tariff whiplash in aluminum.

The past couple of quarters have fundamentally made investors re-think their thesis and where future growth will be driven from. The core Celsius brand? Alani primarily? Will Rockstar ever get on its feet? Is international growth a primary growth strategy?

I’ll tell you what I think.

Let’s jump in.

Subscribe now

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor.

With a subscription to the ThePrivatePublicInvestor, you will receive deeply researched stock deep dives, insight into my personal portfolio, along with each position I own and the related weighting, along with my personal watchlist, custom templates for valuation and modeling, decision-making investment guides, and the personal chat feature for the community.

Subscribe now to receive ‘founding member’ pricing and exclusive benefits before we rollout standard pricing for the rest of the community here on Substack.

With that, enjoy this piece and let me know if you have any questions!

Financials

• Revenue landed at $782.6M, +138% YoY

• Adj. EPS came in at $0.41 vs. the Street at $0.29-0.30

• Adj. EBITDA came in at $195.5M, beating consensus by ~28% and the corresponding margin expanded 3.8% to 25.0%, recovering from the Q4 trough at 18.6%

Per normal, no formal full-year 2026 revenue, margin or EPS guidance was issued or updated.

The stock closed +4.45% on earnings day before drifting back toward $30 over the following session(s). That reaction tells me the street is “iffy” on the future roadmap of Celsius, which is exactly where asymmetric trades are born.

Integration

Gross margins suffered this period, down to 48.3% from the low-mid-50’s in Q1-Q2 2025. The primary reasons for this GM compression was increased promotional activity, aluminum price increases and increased freight costs from integration commotion and weather-related drama.

These negative external market dynamics coupled with the Alani/Rockstar acquisition integration have impacted the overall margin profile this past quarter — there’s been a lot of short-term noise with Celsius’ business.

Regarding integration, the Alani Nu synergy target of $50M was captured in full, with management formally calling the integration complete on the call rather than pointing to it as a forward milestone.

In addition, distributor termination cleanup that was hanging over the balance sheet at $264M in December dropped to $40M by quarter-end, with $224M paid out in cash.

Great news!

Jarrod Langhans (CFO) also said the following on the call:

"We do have visibility into the low 50s and beyond with the initiatives and the programs that we have in place... probably as we look at 2026 in particular, Q2 is probably more of a side-step-type activity and then Q3 and Q4, where you're going to see the stair step and then continue on to 2027 with further stair steps."

So the back-to-50’s gross margin plan is structurally there, but the exact timing of this inflection will depend on external market factors — raw material costs (aluminum) and freight costs.

And get this.

Adj. EBITDA reached $195.5M, beating the Street's estimate by nearly 28%.

Gross margin was down during the period but Adj. EBITDA beat by 28% (and no, these weren’t caused by any crazy adjustments).

This means that operating leverage is already being realized post-integration on a cost basis, but revenue hasn’t caught up yet because the Company has been so focused on making the past 6 months of acquisition / integration as smooth as possible.

Now that Celsius has these brands mostly integrated (Rockstar still pending), the flow-through of the topline to the bottom line will inflate EPS meaningfully over the next 24 months.

The Multi-Brand Portfolio

The legacy Celsius brand grew +6% to $348M while Alani Nu came in at $368M, up ~60% PF.

On an LTM basis through Q1 2026, legacy Celsius and Alani Nu are roughly co-equal contributors at approximately $1.25-1.35B each. On a run-rate basis, Alani Nu has already passed legacy Celsius.

Rockstar landed at $66.6M with retail sales down 13% YoY, and Fieldly was clear that 2026 is a stabilization year on that brand rather than a growth year. The team has been focused on Rockstar SKU reconfiguration and resetting the brand maturely, rather than raw growth during integration.

And if you’re unsure about why Celsius acquired Rockstar in the first place, Rockstar essentially gives the portfolio access to convenience channel, gas station shelf and the male traditional energy consumer, which are areas where legacy Celsius and Alani both underpenetrate.

The combined market share of the brands of ~21% sounds great, but the legacy Celsius brand falling about 90 basis points YoY, from 10.8% to 9.9%. Not a great number to see. It’s what the business is built on.

But, the business model is changing, and Celsius is becoming a multi-brand portfolio.

The acquisition of Alani does show management is intelligent about competition and is focused on growing the business into a multi-brand portfolio long-term.

International Growth

International revenue came in at $35.3M, up 55% YoY, with Europe doing the heavy lifting at $25.4M (+36%) and the Asia-Pacific market a smaller base — $7.0M, and growing rapidly YoY at +212%.

That 55% growth looks fantastic, but some investors realized international share of total revenue shrank from 6.9% to 4.5%. This may seem troublesome, but this is simply because the U.S. business is growing that much faster, especially with Alani still on its rapid growth curve.

As of recently in March, Celsius formed an exclusive distribution agreement with Suntory Beverage & Food Spain, with Portugal next on the European footprint under the same partnership.

Fieldly framed the approach as one built on “key markets, strong local partnerships, disciplined launch plans and sustained marketing and distribution support.”

This is literally the SAME EXACT playbook Coke/Monster executed on — find a strong local distributor that already has the route, lean on their reps and skip the cost of building your own international infrastructure from scratch.

It’s a capital-light approach and ramps faster.

For now, I view the international growth plan as set-up to succeed — and just getting started.

What Am I Doing with My Money?

Celsius is currently a top 5 portfolio holding in my portfolio.

I plan for it to be a top 3 position sometime during the next few months, which means I will be continuing to accumulate shares.

This recent earnings report wasn’t great or bad. It was just good.

And good is where asymmetric opportunities are born.

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

Yes. I will be the first to say that I was too early in Nike.

I was overly excited with the appointment of CEO Elliott Hill and the turnaround story of the legacy brand.

I knew it was a turnaround and I knew turnarounds take time, but I underestimated what a distribution-led turnaround actually requires — which is to say I underestimated almost everything that matters about how Nike runs its business.

When a company’s competitive advantage runs through how it sells, where it sells, who it sells to, and how that ecosystem reinforces itself over decades, the rebuild isn’t a turnaround in the usual sense.

It’s an overhaul of the operating model itself, and that takes years… not quarters.

Q3 FY26 (CY Q1) was the quarter that made that reality unavoidable for me, and it’s also the quarter that, in my read, marked the floor.

Subscribe now

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor.

With a subscription, you will receive deeply researched stock deep dives, insight into my personal portfolio, along with each position I own and the related weighting, along with my personal watchlist, custom templates for valuation and modeling, decision-making investment guides, and the personal chat feature for the community.

Subscribe now to receive ‘founding member’ pricing and exclusive benefits before we rollout standard pricing for the rest of the community here on Substack.

With that, enjoy this piece and let me know if you have any questions!

The Beat Nobody Cared About

The earnings report itself wasn’t bad.

• Revenue of $11.28B came in ahead of $11.24B

• EPS of $0.35 beat the Street’s $0.29

• Gross margin landed 0.4% above consensus.

None of that mattered, because the Q4 guide was ugly.

Management estimated Q4 revenue (next fiscal quarter) to be down 2-4%, against Street estimates calling for positive growth. Greater China was also guided down approximately 20%.

JPMorgan downgraded the next day and cut its price target from $86 to $52, and twenty other analysts followed inside two trading sessions.

Not good.

The stock fell more than 15% the day after and hit a 12-year low of $43.17 forty-eight hours later.

12 years ago was when the iPhone 6 launched…

Also not good.

A distribution-led turnaround that's also a brand reset is structurally different from the kind most retail investors are used to seeing.

When the problem is the product, you can fix it in a design cycle. 18 months and a few good launches and the story can turn around.

When the problem is how you reach the consumer and what they think of you when you get there, you're untangling years of decisions compounded together over time.

Too much sold direct. Too little shelf space at wholesale. Aged Classics clogging the marketplace. Wholesale partners lost trust. Digital pricing that trained the consumer to wait for a discount. And a brand that drifted from sport toward lifestyle while HOKA and On built credibility in the lanes Nike used to own.

Every one of those issues feeds the others, and you can't fix one in isolation without making another worse.

• Pull sell-in down to clean the marketplace and revenue plummets.

• Push promotions to move inventory and you reinforce the discounting habit.

• Rebuild wholesale relationships and DTC margins suffer during the transition.

This is the spot Nike has been in, and the slowest-moving piece is Greater China, where Matt Friend (CFO) was honest enough this quarter to call the challenges "structural".

I think this statement rattled some investors, and honestly, Friend fback itand the team should have put that on the record a year ago.

Where is the Floor?

Underneath the ugly numbers and guidance, the operational picture IS doing what the team originally explained during the announcement of the Nike “Win Now” strategy.

North America gross margin fell (3.6%) on the surface but absorbed a (6.5%) tariff hit in the process, which means the underlying gross margin actually expanded by roughly +2.9% in the most important geography Nike operates in.

North America wholesale also grew 11%, Running was up over 20% globally, and February was the first month in 2 years where every channel in North America posted positive growth simultaneously.

Friend (CFO) gave the market the one number I wanted on the call: gross margin expansion begins in Q2 FY27, with Q1 FY27 as the final quarter of material tariff headwind.

As a reminder, Q2 FY27 for Nike is Oct-Dec of CY2026 (Q4)

I’d watch for Nike to deliver there.

In addition, late this year is when the “Win Now” actions are scheduled to be complete and the deliberate revenue drag from clearing aged, underperforming inventory falls off.

Elliott Hill (CEO) closed the call with a Camp Nou metaphor (FC Barcelona’s home stadium). Skim the quote if you don’t want to read in its entirety:

“Before we move to your questions, I want to leave you with an image that stayed with me from this quarter. I was in Barcelona meeting with athletes and leaders from FC Barcelona, a partner of ours since 1998, and I stood on the pitch at Camp Nou. If you’ve ever been there, you know it is more than a stadium. It is one of the most imposing stages in sport, a place built for pressure, belief, and unforgettable moments. And right now, Camp Nou tells another story, too.

Above the pitch, there is scaffolding. In the corners, there are cranes. Entire sections are unfinished. The stadium is being rebuilt tier by tier, piece by piece to accommodate over 100,000 supporters. The work is still underway. Capacity right now is limited and it requires patience and perseverance. And still, the supporters are in full voice. The players are still stepping on to the pitch focused on competing and winning. And all around them, the work is transforming what their home, their club will become.

What stayed with me was the reality of both things being true at once, competing today while building for tomorrow. FC Barcelona did not choose between performing in the present and preparing for the future. They are doing both at the same time. Standing there, looking up at the half-built stadium, it occurred to me, this is NIKE right now. We are taking deliberate actions that we believe will restore the health and quality of our business even when these actions create pressure in the near term.

We are removing what is not working. We are rebuilding parts of the foundation that needed to be rebuilt. And at the same time, we are continuing to innovate, to compete and to create for the future. That takes conviction. It takes patience, it takes belief, and it takes focus. Camp Nou is being rebuilt for the next — not being rebuilt for the next match, it is being rebuilt for the next era.

That is exactly how I think about the work we are doing at NIKE. I came back to help return this company to greatness and to build it the right way for the long term, to protect what has always made NIKE special and to modernize it for a new generation of athletes and consumers. So while the work is not finished, the direction is clear. Our focus is clear. And our comeback is within reach. And this fall, we look forward to sharing a fuller view of that path ahead at our Investor Day.”

That’s a fantastic, confident and patient response after a tough investor call.

Hard not to respect that response from Elliott Hill. He’s handling the pressure the right way.

That’s a CEO who isn’t pretending the timeline went as planned, and the recent insider buying could back it up.

• Hill bought roughly $1.0M of stock at $42.27 on April 13

• Tim Cook bought $1.06M at $42.43 three days earlier

There has been notable selling as well.

Bill Ackman (Pershing Square), who had been long on the turnaround since 2024, exited Pershing Square’s entire Nike position in late 2025 at approximately a 30% loss.

This is a contradiction worth naming. Trying to say only bulls are showing up at the bottom would be incorrect.

What I’m Actually Doing Here

Nike isn’t the asymmetric opportunity I thought I was buying a year ago.

It’s a staple consumer brand in the middle of a multi-year operational rebuild, and the stock is going to move slowly upward through late Q3 and Q4 of this calendar year as the “Win Now” actions complete, inventory health normalizes, and the China drag stabilizes.

I believe the floor on this business is meaningfully higher than the recent trading has implied.

Now, none of that adds up to a stock that doubles in twelve months.

Rather, it equates to a stock that grinds back over the next eighteen.

So I’m long, but I’m not adding, and I’m not selling.

Nike has become a value anchor in the portfolio rather than a high-conviction growth bet. It’s a position I hold because the floor is visible.

Sure, there are better short-term opportunities, and I’m putting capital toward them elsewhere. But every portfolio needs a couple value names to anchor the portfolio. Nike has become one of them for me.

The work is taking longer than I’d like, too.

But the direction is clear.

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

The portfolio returned 323.53% in April and crossed $1M for the first time. AMD leaps did roughly 90% of the heavy lifting.

And yes — this really is a coincidence. I’d already planned to start monthly portfolio updates this spring, before April happened. The timing is genuinely coincidental and honestly a little inconvenient, because every future month will look pedestrian by comparison.

Quick note: Paid subscriptions are coming soon. The next monthly update will be the last one going out to free subscribers — more on what changes at the end.

One disclosure up front: I haven’t publicly disclosed my long-term AMD or Nike options before now. They aren’t core to my investing strategy and this was a one-off opportunity, and the most confident I’ve ever been in a position.

Too good to pass up.

The leaps have since exploded.

Let’s get into it.

Subscribe now

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor, as I try my hardest each week to give you custom, in-depth analysis on stock investments, market insights and portfolio strategies.

With that, enjoy this piece and let me know if you have any questions!

April Compounded at +323.53%

The portfolio compounded 323.53% in 30 days.

The total account value of the portfolio crossed $1M+ by month-end, with $45.5K in cash and $6K in crypto.

The inflection started April 23, where AMD exploded, inflating the leaps on AMD by near 100%. Micron also began its second wind, having generated a 100%+ in the past month. AMD leaps did the heavy lifting, contributing ~90% to the total portfolio gains during April.

Since my options have driven a majority of the gains in April, let’s look at how my portfolio would have done without the owning the AMD leaps:

In this image, I am taking just my individual portfolio performance vs my Roth, since I house all of my options in my Roth IRA (seen in holdings screenshot blow).

Even stripping-out the options, the portfolio still returned ~29% vs. the market at ~10% during April.

The AMD Position I’m Not Selling

I’m holding 33 AMD call contracts across four expirations: $300 strikes for Dec 2026, and $350 strikes for Dec 2026, June 2027, and Dec 2027.

My blended cost basis approximately $35.08 per contract, and the blended price of the options today is $185.87.

Am I selling? I am thinking about selling a portion and replacing it with stock. The Dec-26 expiration leaps will be my first sleeve of options to cash out.

But.

My thesis hasn’t even started playing out yet on AMD.

The April runup came from data center strength and a shift in market psychology around the GPU-to-CPU ratio in AI buildouts approaching 1:1.

This is the warmup longer-term.

My actual thesis is the rollout of the MI400 and the Helios rack-scale platform. We haven’t seen a single dollar of topline contribution from this yet. No margin expansion. Nothing is flowing through the P&L, and I don’t think the analysts have been pricing in the actual demand this emboldens.

I keep asking myself: How am I supposed to sell when the thesis hasn’t delivered yet?

The hardware story is definitely already getting transparent, but the new tech hasn’t reached the customer yet.

If AMD gets this right and they continue closing the gap of ROCm vs. CUDA, they can easily compete with Nvidia on both axes, hardware AND software. That’s when this becomes a company that can rival Nvidia in scale, not just be the credible #2.

I’m holding all 33 contracts. I’ll flag the Chat if that changes and I decide to sell.

YTD Performance is 400%+

YTD return is +401.28% through May 8, outperforming the general market by ~393%.

And YTD excluding the options contracts, the portfolio outperformed the market by 23.5%+.

• ThePrivatePublicInvestor Portfolio: +31.4% YTD

• S&P500: +7.9% YTD

Realized profit YTD sits at +$70,036 in gains versus $15,240 in losses (net +$55k) — I am continuing to rebalance the portfolio as big gainers such as Micron have exploded the past year, and I’ve decided to take gains on most of those shares.

2025 in Review

For context, 2025 closed at +51.78% with a 95% gain/loss ratio at +$94K.

A choppy three quarters were carried by a Q4 rally that peaked near +100% in mid-October before consolidating into year-end.

That 2025 chart is the reminder that drawdowns happen and consolidation occurs, but staying patient with your conviction pays off. And sometimes the market is very sudden.

And to clarify this point:

April 2026 was a moment, NOT a baseline.

2025 is more reflective of a normal year in the market.

My annual goal, on average over time, is two-fold.

• Beat the market and/or

• Achieve 15%+ annual return

If both happen, I’m a happy camper.

Current Portfolio Holdings

A few names worth flagging here:

1. Coinbase (49 shares): This thesis needs to be revisited with the CLARITY Act, but I am comfortable with the regulatory outcome and think Coinbase will succeed long-term.

2. Veeva (172 shares): I called the CRM attrition fear overblown two quarters ago. Holding this position for the long-term and will continue accumulating shares over the coming months. I would like this to be a top 3-4 holding.

3. Nike (363 shares + 20 leaps at $90 strike, Dec 2026): Nike has been a lagger, and these options have lost almost all of their value. Clothing is a sentiment-driven industry, and Nike is still viewed as a dinosaur. Hoping Nike posts a clean quarter before year-end that finally puts the turnaround on the tape. That’s when we exit the options. I will be holding the stock for the long-term.

4. Adobe (160 shares): Adobe has also been a lagger, but this red avalanche has occurred with the rest of the software names in the market. One thing to note: I am thinking of offloading some Adobe shares and loading up in NOW. Would like to have cash on the sidelines still and don’t want to be overexposed to software, as I already own Veeva Systems and Adobe.

5. Micron (15 shares): I’ve offloaded most of my shares in Micron this year, as I believe the sentiment on memory chip stocks is becoming overinflated and expectations will start to dramatically outweigh performance. At some point, any outperformance won’t be able to move the stock.

The rest of my positions in EL, BMNR, ASPI, AMZN and META have not changed in size and I remain bullish on these going forward into the remainder of 2026 and into 2027.

Paid Subscription Detail

The next monthly portfolio update is the last one going out to all subscribers.

After that, the full breakdown moves to paid only — cost basis on every position, % gain per name, sizing as a percent of portfolio, and real-time alerts when I add or trim.

Deep dives, earnings notes and market commentary go paid-first — with select pieces still released free.

Founding member pricing locks in for life and goes live before that transition (pricing detail to come).

Subscribe now to keep your spot.

Five Macro Catalysts in the Next Five Days

Wanted to note here at the end that this week is loaded with events, so stay tuned-in!

• Warsh confirmed as Fed chair

• April CPI (Tuesday)

• April PPI (Wednesday)

• April retail sales (Thursday) — same day Trump flies to Beijing

• Trump-Xi summit (Friday)

Prefer the polished PDF version? LINK HERE

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

AMD just printed an all-time high above $340 on Friday without a single piece of company specific news.

Intel blew out Q1 estimates and guided with a story of a severe shortage of CPUs — analysts immediately connected the dots and inferred that if CPU demand is melting up THIS hard, AMD is a HUGE structural winner.

AMD has certainly rallied dramatically from their semi-volatile, no-man’s land malaise since October of last year, but I believe this is only the beginning of AMD’s to-be, most dramatic rally in the lifetime of the company.

I am writing this article in real-time, as I am performing this analysis on the current valuation of AMD.

I didn’t prepare this analysis ahead — rather I am currently working through excel and conducting this analysis in real time.

I want to lay my thoughts out here regarding the current valuation of AMD, and where I realistically see this company’s stock price performing over the remainder of 2026 and forward.

Subscribe now

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor, as I try my hardest each week to give you custom, in-depth analysis on stock investments, market insights and portfolio strategies.

With a subscription to the ThePrivatePublicInvestor, you will receive insight into my personal portfolio, along with each position I own and the related weighting, along with my personal watchlist, custom templates for valuation and modeling (coming soon), additional in-depth analysis on my portfolio holdings, decision-making investment guides, and the personal chat feature for the community.

As this channel grows, paid subscriptions will start to be incorporated, so subscribe early and stay subscribed to receive ‘founding member’ pricing and exclusive benefits.

With that, enjoy this piece and let me know if you have any questions!

The Street’s View on the Valuation

The majority of the market’s view on AMD is that it is considerably overvalued when compared with Nvidia, and I would highly disagree with this statement.

Let’s take a look at the below analysis I ran comparing AMD vs Nvidia on a P/E basis and P/S basis through 2028 based on street consensus.

Based on the current street view, AMD is overvalued on an earnings basis but trading at a discount on a revenue basis.

This makes sense given the current state of AMD’s business.

AMD has lagged Nvidia for the past several years, but has been picking up the pace in compute innovation and breadth.

With the rollout of the MI400 GPUs, the Helios rack-scale architecture, Venice EPYC and the Ryzen AI 400 series all hitting through the back half of 2026, AMD is on the precipice of the most aggressive product cycle in the company's history.

And this will be reflected in their revenue first and flow down to earnings afterwards.

The CPU shortage Intel just exposed will only add fuel to this rally. The Meta $60B / 6 GW deal, the OpenAI 6 GW commitment and Oracle's 50,000 MI450 Helios cluster ALONE imply a step-function in 2026/2027 financials the equity analysts are still scrambling to model.

Bank of America frames it as:

$15-20 billion of revenue per gigawatt of installed AI capacity.

With 12+ gigawatts already locked in across these three deals + implied incremental hyperscaler interest after the Intel earnings = the contractual revenue floor through 2028 is enormous for AMD.

I think we are at mile 6 of the marathon. Still 20 miles to go…

My 5-Scenario Model Build

I built a 5-scenario model — Low / Below Average / Base / Above Average / High — for FY2026, FY2027, and FY2028.

Read more

— Sir John Templeton

Let me be blunt.

Almost every bearish indicator I track is flashing red right now.

I always treat markets like this the same — I buy incrementally throughout the downturn and through the recovery.

Sometimes it may feel like you’re doing everything wrong in times like this.

That is normal for investors 1-10 years into their investing journey, including me (currently 7 years in).

I still feel like I’m doing things wrong sometimes!

But, for some reason, I picked up a good trait in the family and can stomach these downturns, however long and deep in the red (test me market!).

But I will say, I used to feel very worried in times like this.

But over time, incremental preparation compounding over time simmers those worries and gives comfortability in decisions.

I’m not here to scream doomsday, but I want to show you what the overall market dashboard actually looks like so you can make your own decisions.

Subscribe now

The Sentiment Picture is Ugly

The market is currently in a state of "Extreme Fear" (Index: 0-25), supported by deeply oversold technicals (RSI: 27) and a yield curve that has recently normalized to a +51 bps spread, which is historically a high-risk signal for an impending recession.

The VIX has been moving between 25-30 the last few weeks, remaining below the spike of 40 often seen at definitive bottoms.

I called this out earlier this week as a sign of the market potentially reaching a bottom in the coming couple of months.

The Indicators

The CNN Fear & Greed Index almost hit 10 this week, with the index sitting at 16 today, April 1st.

We are in deep Extreme Fear, the lowest reading of 2026, and comparable to the COVID crash and 2022 bear market lows.

Below depicts the LTM trend of the index.

Separately, the AAII Investor Sentiment Survey shows bearish readings at 49.8%, nearly 19 points above the historical average.

Bullish sentiment has sat below average for six consecutive weeks.

The University of Michigan Consumer Sentiment final March reading also came in at 53.3, which is a bottom 1st percentile historically.

People are scared.

Google Trends searches for “recession” and "stock market crash" have reached a one-year high, showing a significant acceleration as we’ve moved into Q1 2026.

Moody’s puts recession probability at 48.6%.

Goldman raised theirs to 30%.

Bear market talk is mainstream.

The CBOE SPX put/call ratio has also surged to ~1.3x, as it seems investors are aggressively hedging at the index level, which is the classic defensive posture you see during risky times.

The put/call ratio serves as a diagnostic for fear, measuring the volume of bets placed on a downturn against those betting on a recovery.

BUT, in the current climate, we are witnessing sentiment divergence:

• While the daily Volume Ratio has spiked as traders scramble for downside protection (buying puts), the Open Interest Ratio (total # of active contracts actually held in the vault) is hitting a 1-year low.

This tells the story of a “washout” in progress.

While the broader crowd is currently in a state of panic-buying insurance through purchasing puts, the smart money is quietly closing out their bearish positions and taking profits.

This could mean institutional big money is preparing for the clouds to break and the market to turnaround green.

I believe this means one thing, that has stood true historically:

—> Stay invested and prudently buy

The Technicals

The S&P 500 sits roughly 5-10% below its January all-time high (on the upper end if you discount the past couple days rally, and probably will go lower after Trump’s announcement after market close yesterday).

The index is trading below both its 50-day and 200-day moving averages, and a death cross confirmed around March 28-29.

We have since bounced from that death cross, which could be market support, but I don’t bet on moving averages. Algorithm traders (algos) could easily have been the reason for this short term bump the past couple of days.

The relief day rallies have been low-conviction, short-covering events that evaporate within a day.

More notably, the VIX closed at ~25 on April 1, up ~70% YTD from the 13-15 range where it started the year.

Historically, when the VIX spikes above 30-40, the S&P 500 has delivered strong forward 12-month returns

• Above 30% on average when VIX exceeds 40, with positive returns over 90% of the time since 1990.

We’re not quite at that 40 threshold yet, but we’re certainly knocking on the door.

The Macro Picture is Ugly Though

Oil first. The oil shock derived from the Iran conflict isn't just about gas prices.

Oil is used in plastics, fertilizers, pharmaceuticals, personal care products, clothing and more — it touches virtually every corner of the economy.

Those cost increases are already showing up on factory floors, with Chinese plastic suppliers raising prices roughly 15% according to CNBC.

And the full pass-through to consumer prices typically takes three to six months, meaning the worst of this inflation is potentially ahead of us, and is a reason why investors are pulling out and the market is red.

Core PCE already sits at 3.1%, which is well above the Fed's 2% target, while the labor market is softening (January added just 130K jobs; February shed 92K).

—> That puts the Fed in a brutal spot.

Futures markets have pushed the probability of a rate hike by year-end to 52%, but raising rates into a weakening economy risks tipping the U.S. market into recession.

The Fed cannot cut with inflation re-accelerating, and it cannot tighten without crushing growth.

This is CLASSIC stagflation — and the market hates it.

Stagflation: High unemployment + inflation + slow economic growth

Meanwhile, the yield curve has un-inverted after its historic 2+ year inversion, and this is actually a dangerous signal.

Recessions typically begin after the curve normalizes, not during the inversion.

We’re there now.

And then there’s AI.

The Magnificent 7 are down 20%+ from their highs.

Approximate as of 3/31/2026:

• $MSFT: Down 31-33%

• $META: Down 25-33%

• $TSLA: Down 25-27%

• $AMZN: Down 20-22%

• $NVDA: Down 19%

• $GOOGL : Down 15-20%

• $AAPL: Down 12%

The hyperscalers plan to spend $650-700B in 2026 capex on AI, yet we haven’t seen the margin pull-through yet.

The market is waiting to see this spend pay off with MASSIVE revenue acceleration and subsequently margin pull-through.

I personally think analysts don’t really understand the scaling of AI and what that actually looks like compounding over time (parabolic growth), but that’s a story for another time.

—> We are in a digestion phase of AI.

Note: Andrei Jikh has been my go-to economic “keep up-to-date” YouTuber I watch regularly, and I highly recommend everyone reading this to check out his channel.

https://www.youtube.com/@AndreiJikh

So What’s Priced-in?

A lot, actually.

All of what we just talked about is pretty common knowledge.

• Tariff uncertainty at current ~10.5% effective rates.

• The Fed being on hold (51% probability of zero cuts in 2026).

• AI multiple compression.

• SaaS disruption fear, possibly even overdone

• Consumer sentiment is already terrible.

What’s not fully priced in is a prolonged Strait of Hormuz closure pushing oil above $130 or higher, AND whether AI capex actually translates to revenue.

Those are the 2 big whammies the market is waiting on.

Now, I know what some of you are thinking.

This time is different. AI is transforming everything. The geopolitical landscape has fundamentally shifted. Fiscal policy dynamics are unprecedented.

And those folks are right!

Today’s market does have unique characteristics.

But people say “this time is different” every single cycle.

They said it in 1999 about the internet. They said it in 2007 about housing. They said it in 2021 about stimulus. They said it in 2022 with the inflation crisis. They said it during the tariff crises 12 months ago last April.

Human behavior does not change.

But, I’m not waiting for confirmation, as the market will have already moved dramatically up by then.

And if it’s bad news?

Great, I have cash to buy more.

Just remember: Stay invested, prudently buy into the market periodically, stay knowledgeable, be patient and stick to your plan.

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

I’ve realized THIS is what all the buzz is regarding “I now have a junior analyst and operations assistant living on my desktop!”

Cowork is where the real acceleration of workflow starts, and where we can enable tools to work for us in the background.

I usually wouldn’t post about something like this, but I feel it’s that important, and can save everyone reading this, hours during the work week.

In this post I’ll show you what Cowork actually is, how skills and plugins fit in, and a few concrete workflows you can steal for your own investing process and everyday work.

Subscribe now

What is Claude Cowork?

First let’s start out with what Claude Cowork is.

Claude Cowork is a platform capability that allows users to sync their drive and company information into one prompted conversation.

It’s essentially a mode inside Claude where the AI can plan and execute multi‑step tasks on your behalf instead of just responding one message at a time.

Anthropic describes Cowork as using the same agentic architecture as Claude Code, but packaged for non‑technical knowledge work right inside the desktop app.

Cowork works directly with a folder or project on your computer, reading, editing and creating files. This allows AI to continually live within your workflow, instead of starting from almost ground-zero within a chatbot.

I’ve been using this at work for a multitude of tasks such as data cuts, modeling questions, market landscaping, industry deep dives, company specific questions and other simple tasks like notes summaries, quick data pulls and general questions that require drive-level context (aka specific folders).

Doing these things regularly within Cowork has legitimately saved me 15-20 hours a week… and has provided more value at the same time.

For Substack, it's a great resource because the AI can continually learn from current posts, portfolio holdings, and general activity across the app.

It’s also great for measuring audience demographics and content-specific interests, and subsequently giving you trend-level feedback based on your highest or lowest performing pieces.

Regarding personal investing (the audience likely reading this), there are a multitude of ways you can leverage this, which I will get into later in this writeup.

I'll be the first to admit this is ironic given the writeup you're reading, but the best way to learn Cowork is to just buy it and start tinkering.

Doing always beats analyzing through instructions and tutorials, in my opinion.

Share

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor, as I try my hardest each week to give you custom, in-depth analysis on stock investments, market insights and portfolio strategies.

Application Plugins

Two capabilities that contribute to the efficiency of Cowork are skills and plugins.

Read more

— Shantanu Narayen

Contents

1. CEO Transition

2. FireFly & AI Monetization

3. Financial Performance

4. Innovator’s Dilemma

5. Watch Items

6. Bull Case

Subscribe now

CEO Departure

Let’s get this out of the way.

Yes, the CEO of Adobe has left.

The man who took over ‘Adobe Systems’ back in 2007 before the Financial Crisis.

The man who took Adobe through the financial crisis and built one of the most successful enterprise SaaS companies in the world.

Under Narayen's 18 years, Adobe grew from a sub-$1B packaged software company to a $25B+ cloud subscription juggernaut, multiplying the stock price more than sixfold versus ~350% for the S&P 500.

Narayen’s tenure is one of the greatest CEO runs in enterprise software history.

This does sting for long-term Adobe holders!

But, note that Narayen will stay on as Chair of the Board while the company finds his replacement.

I don’t think this departure is necessarily a bad thing. I think it’s natural, and will be a planned, orderly transition.

Narayen is approaching his mid-60’s, and with the world changing so rapidly today, I think it does make sense that he is resigning as CEO.

The board has appointed Lead Director Frank Calderoni to chair a special committee that will evaluate both internal and external candidates…. and the internal bench is deep.

The frontrunner in my view is David Wadhwani, President of Creativity & Productivity. Wadhwani was previously CEO of AppDynamics and actually helped architect the original Creative Cloud shift during his first stint at Adobe.

CNBC has previously reported that Wadhwani was being groomed for the role and former Adobe executive Brad Rencher called him “made in Shantanu’s image”

Wadhwani is currently the executive leading Adobe’s AI transformation and Firefly strategy, which is exactly the skillset needed for this next decade!

Anil Chakravarthy, President of Customer Experience Orchestration, is the other internal contender. He joined from Informatica and oversees the enterprise CXO business (smaller business segment).

Regardless of who gets the appointment, I actually think this is a net positive on a 2-3 year horizon.

Adobe needs a forward-thinking leader who will aggressively push AI-first product innovation and isn’t anchored to legacy business decisions.

Narayen framed the opportunity perfectly on the call:

“Our mission to empower everyone to create represents an even larger opportunity in the AI era.”

Narayen also highlighted that AI-first offering ARR more than tripled YoY, and that Adobe surpassed 850M MAU (monthly active users) across Acrobat, Creative Cloud, Express and Firefly (17% YoY growth).

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor, as I try my hardest each week to give you custom, in-depth analysis on stock investments, market insights and portfolio strategies.

With a subscription to the ThePrivatePublicInvestor, you will receive insight into my personal portfolio, along with each position I own and the related weighting, along with my personal watchlist, custom templates for valuation and modeling (coming soon), additional in-depth analysis on my portfolio holdings, decision-making investment guides, and the personal chat feature for the community.

As this channel grows, paid subscriptions will start to be incorporated, so subscribe early and stay subscribed to receive ‘founding member’ pricing and exclusive benefits.

With that, enjoy this piece and let me know if you have any questions!

Firefly Growth Ramping

Let’s talk about the AI monetization story because this is where the thesis gets hot.

Firefly ARR was $250M+ in Q1, with subscription/credit pack ARR growing 75% QoQ. Generative credit consumption also grew 45%+ QoQ, with video-generative actions surging 8x YoY.

Creative freemium MAU crossed 80M, up 50% YoY, which is a direct feeder in Adobe’s paid conversion funnel.

This is an intentional strategy for conversion.

The monetization architecture/strategy is smart.

First, users get a base amount of generative credits included in their subscription.

Once they exceed that limit, they buy credit packs or upgrade plans.

—> This drives higher ARPU without requiring new seat additions, which is exactly the model I highlighted in my original deep dive.

Even if just 15-20% of Creative Cloud users exceed base AI usage and spend an incremental $10-15/month, that’s hundreds of millions in high-margin revenue!

And remember, Adobe isn’t directly competing with the new, innovative AI models to realize this growth within their existing customer base.

Adobe’s partnerships with Runway (video AI), OpenAI (Sora integration in Firefly Studio), and Google (Gemini models) create a model-agnostic platform, so, if someone builds a better model, it still runs inside Adobe’s software.

Consequently, Firefly Enterprise new customer acquisition grew 50% YoY, with over 2,500 custom models created via Firefly Foundry since launch.

GenStudio and AEP & Apps ARR each ALSO grew over 30% YoY, and there are 650 customer trials underway for Adobe’s agentic web products (LLM Optimizer, Sites Optimizer, Brand Concierge).

The enterprise AI pipeline is building, and customers are buying in….

Q1 Performance: Beats across the Board

Now let’s dig into the general report.

• Total Adobe ARR: $26B+, +11% YoY

• Q1 Revenue: $6.4B vs. $6.3B expected — BEAT (+12% YoY reported)

• Q1 Non-GAAP EPS: $6.06 vs. $5.86 expected — BEAT (+19% YoY)

• RPO: $22.2B+, +13% YoY, which is strong forward visibility!

• Operating Cash Flow: ~$3B (+19% YoY), which is a Q1 record apparently!

• Non-GAAP Operating Margin: 47%+

That’s a great earnings report if you ask me.

Note: there was some tax noise I noticed in the EPS calcs as well, so stripping those out would have realized even more margin expansion and, thus, a larger EPS beat.

One thing I’d like to note here is the accelerating growth of Adobe, which is highly attractive for a mature enterprise SaaS business like this.

The below table shows that Adobe’s product suite is not becoming less attractive or archaic for business or creative users, but rather augmented from AI and AI model integration.

In more detail:

• Subscription revenue across both business segments hit ~$6.2B (+13% YoY)

• The Business Professionals & Consumers segment grew to ~$1.8B (+16% YoY)

• Creative & Marketing Professionals grew to ~$4.4B (+12% YoY)

• Acrobat AI Assistant ARR tripled YoY

• Express is now used in 99% of U.S. Fortune 500 companies

Guidance also came in pretty good with revenue of $6.4-6.5B (slightly above Street), non-GAAP EPS of $5.80-5.85 (above consensus of $5.68-5.70).

The Innovator’s Dilemma: Is Adobe Falling into the Trap?

Clayton Christensen’s Innovator’s Dilemma warns that incumbent companies get disrupted when they over-serve high-end customers while ignoring cheaper, good-enough alternatives that eat them from below.

Is Adobe falling into this trap? I’d argue no.

Adobe is doing something most incumbents fail to do, which is investing aggressively in the disruptive technology itself rather than protecting legacy revenue streams. They are also focused on democratizing access to this technology through their model-agnostic strategy.

Firefly, Adobe’e new AI platform for creative workflow, isn’t a defensive product, but rather an all-in-one creative AI studio with a broad portfolio of the industry-leading models, a $250M+ ARR business growing 75% QoQ and a clear future monetization framework.

Also, Adobe markets to everyone. Not just their high-value customers.

The one area where the Innovator’s Dilemma does have relevance in conversation is the Stock business decline.

Management admitted this erosion is “happening faster than planned”.

The traditional stock photography/content licensing business (about $450M ARR) is getting cannibalized by Adobe’s own Firefly tools, free AI alternatives and likely competitors.

This is a self-cannibalization trade-off, but I’d rather have Adobe cannibalize its own revenue than let Midjourney or Figma do it for them.

In case you missed it, here are some of the best investing insights for 2026:

• 5 Stocks Worth Your Attention in 2026

• Adobe & the AI Pivot

• Deep Dive on AMD

What to Watch Going Forward

Despite the strong numbers this quarter, there are legitimate risks that I am not agnostic to:

CEO Succession Uncertainty: Until a successor is named, there’s lost strategic at a very critical time.

An internal pick like Wadhwani would signal continuity and aggressive AI execution, which I think is the right move, but if this gets prolonged, it could extend uncertainty and a continued decline on the stock price.

Competitor AI Momentum: Figma, MidJourney and Canva are strong competitors in the space and are not slowing down.

Figma, for example, is growing at 40% topline and announcing strategic partnerships, such as with Anthropic, integrating Claude Code for AI-powered workflows.

MidJourney also continues to release newer and newer AI models on its platform, challenging industry incumbents like Adobe to keep up.

Canva, Adobe’s biggest competitor, hit $4B in ARR, growing 35% YoY, with 95% Fortune 500 penetration. Their anticipated H2 2026 IPO will bring additional capital and competitive visibility, encroaching on Adobe’s territory.

The SaaSpocalypse: This is the major reason why Adobe’s stock has taken a gigantic hit the past year. About $300B in software market value was wiped in early February 2026 alone!

$IGV, the iShares SaaS ETF, is down (~25%) the last 6 months.

The entire SaaS sector is getting re-rated to lower multiples based on fears that agentic AI will destroy seat-based licensing models, and anyone will be able to vibe-code their way through custom workflows.

I believe this risk is overblown, but it is yet to be seen with certainty whether these re-ratings are appropriate or justified.

Stock Business Erosion: As mentioned, this headwind is accelerating faster than planned and creates a drag on total ARR growth. But, Firefly is accelerating faster than the decline in this business and could successfully replace the traditional creative software offering going forward.

Cash Position & Buybacks: Adobe repurchased roughly 8.1M shares in Q1, leaving ~$3.9B remaining on the $25B authorization. The buyback program was approved in March of 2024, so they’ve burned through almost ALL of that in 2 years.

Adobe’s $25B buyback program will be exhausted by mid-2026, ~2 years ahead of its formal expiration.

Given 7 consecutive buyback program renewals, I would guess they will reinstate this program.

The Semrush acquisition does create a temporary funding pinch, but I don’t think this will be a huge deal considering the operating FCF that Adobe produces.

I’d be on the lookout regarding the size of this buyback program though, as historically, each sequential buyback program has doubled compared to the last, which would infer a $30-40B buyback program this go-around.

A more conservative sizing could acknowledge a tighter balance sheet and growing R&D dollars needed for AI investment.

I’m guessing this announcement will be during the June 2026 earnings call.

I’m Bullish and Staying Long

Despite the SaaS’pocalypse noise, I’m supportive of the bullish thesis on Adobe and think the following are justifiable reasons to invest / stay invested:

Commercial Safety Moat: Firefly is trained exclusively on licensed content with full IP indemnification.

Enterprises will need legal certainty for AI-generated content, and this is a massive differentiator versus Midjourney or other open source tools that can’t offer the same protections.

AI Growth Acceleration: AI-first ARR tripled YoY.

Firefly ARR is growing 75% QoQ, generative credits are growing 45% QoQ and MAU are growing 17% YoY.

The AI business is growing rapidly and faster than anticipated.

Cheap Valuation: Adobe trades at roughly 15-17x trailing P/E, which is about 63% below its 10-year average.

The forward P/E is lower around 11-14x and the PEG ratio sits at 0.90 (which below 1.0 is traditionally considered undervalued).

For comparison, ServiceNow trades at 53-73x trailing, Intuit at 28-30x and Salesforce at 21-25x.

Adobe is the cheapest large-cap SaaS stock by trailing P/E, despite generating $10B+ in annual operating cash flow and carrying 47% operating margins and an expanding bottom

Wall Street Doesn’t Like It

The analyst community is already cautious.

• TD Cowen cut its price target to $325 from $400 CNBC (Hold)

• Benzinga HSBC lowered to $302 from $388

• Goldman Sachs holds sell rating at $290

• Piper Sandler has warned that Adobe sits in software categories “among the least insulated from AI disruption”

• UBS reduced to $340 from $375 (Neutral)

• Stock Observer Citi trimmed to $315 from $387, expecting an uneventful quarter

• Oppenheimer had already downgraded to Perform in January

RBC Capital was among the few bulls, maintaining Outperform with a $430 target.

I like that the Street doesn’t like Adobe now… it only creates opportunity for more upside if the big money decides to jump in later!

Overall

Adobe is accelerating topline growth at 12% for the most recent quarter, with compounding EPS at 19% and trading at a valuation usually reserved for ex-growth businesses.

The math REALLY doesn’t add up unless you believe AI permanently impairs Adobe’s business.

I think these Q1 results suggest the opposite…

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

— Philip Fisher

The P/E Multiple: A Good Refresher or Helpful Guide

Most investors learn about the P/E ratio (“earnings multiple” or “multiple” or “P/E” for purposes of this discussion) in the first 5 minutes of their investing journey.

Price divided by earnings… seems simple enough!

But I’ve noticed over the years that most investors, usually the new’er’ retail investors, are still using it incorrectly years later… or at least looking at it from a narrow scope.

Today I want to fix that.

Let’s start from first principles, then discuss how to use the metric on a relative basis and dig into some one-off, use case strategies to make this metric more dynamic.

Feel free to skip around this post —> I know many of you are familiar with some of these concepts but maybe are newer to other concepts.

Let’s dive in.

Contents

1. What You’re Actually Looking At

2. The Forward P/E

3. Run-Rate Analysis

4. Growth Adjusting with PEG

6. Relative Expansion & Contraction

7. Comparing to Industry & Peers

8. When the Multiple Breaks Down

9. The Balancing Act of Putting it All Together

Subscribe now

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor, as I try my hardest each week to give you custom, in-depth analysis on stock investments, market insights and portfolio strategies.

With a subscription to the ThePrivatePublicInvestor, you will receive insight into my personal portfolio, along with each position I own and the related weighting, along with my personal watchlist, custom templates for valuation and modeling (coming soon), additional in-depth analysis on my portfolio holdings, decision-making investment guides, and the personal chat feature for the community.

As this channel grows, paid subscriptions will start to be incorporated, so subscribe early and stay subscribed to receive ‘founding member’ pricing and exclusive benefits.

With that, enjoy this piece and let me know if you have any questions!

What You’re Actually Looking At

When you pull up a stock on Yahoo Finance or Google and see a P/E ratio, you’re almost always looking at a trailing twelve months (TTM) figure.

That’s the current stock price divided by the last four quarters of reported earnings per share (EPS).

It’s backward-looking. And that’s fine as a starting point!

But the direction of the earnings multiple matters just as much as the ratio itself.

A stock trading at 30x earnings that was at 40x six months ago is telling you a different story than one at 30x that was at 20x.

• Is the multiple compressing because earnings are growing into the valuation?

• As in, the denominator is growing faster than the numerator

• Is it expanding because the market is getting ahead of itself?

• As in, stocks are trending to the upside, pushing up valuations

Tracking the trend helps tell the story of how the market has viewed the valuation of the business over time.

Pairing this ‘valuation over time’ with other aspects of your investment thesis such as your financial model (projections, KPIs, etc.) can help craft a more fulsome investment thesis.

So, remember to track the trend, not just the snapshot.

Forward P/E: The Market’s Expectations

Stocks are priced based on future earnings, not historical earnings.

The trailing P/E tells you what the market paid for yesterday’s business while the forward P/E tells you what the market is paying for what this business is expected to look like in the future.

—> This is arguably the most important variation of the metric in my opinion.

The forward P/E uses analyst consensus estimates for the next twelve months of earnings as the denominator (aka Wall Street’s estimates), rather than the company’s reported, actual last twelve months of financial performance.

This is why it matters:

Imagine a company just went through a rough year. Maybe they had company or a complete product portfolio restructuring to meet market demand.

The trailing P/E might look absurdly high, say 60x, because the company just had a bunch of expenses to realize on their P&L.

But, if analysts expect earnings next year to double because they are betting on or “pricing in” a successful turnaround of the business, the forward P/E could be 25-30x.

Those are two completely different investment stories. Ignoring the forward P/E because the trailing number looks “expensive” could mean you miss a turnaround thesis playing out.

But it’s not just turnarounds, that was just an example. Let me give you a better example:

Let’s think of a high-growth tech firm that just finished some heavy R&D spending on a new product. Its trailing P/E might be 100x because past earnings were suppressed by all of that R&D spending.

However, if the business is rolling out or just launched that new product, next year’s earnings could quintuple.

Let’s say the forward P/E being priced in is 20x: the stock is actually cheap relative to its imminent scale.

—> Using only trailing data is like driving a car by only looking in the rearview mirror; it tells you where you’ve been, but the forward P/E shows you the turn ahead.

Here’s my challenge to you:

Don’t just look up the forward P/E. Build your own.

Even a simple model works. Take your projected revenue, apply the margin you think is realistic, back into EPS, and divide the current price by that number.

Now you have your own forward P/E.

Compare it to the Street’s consensus. If the Street says 25x forward and your model says 18x, try to understand that gap.

• Are you more bullish on margins?

• Are analysts underestimating a revenue headwind?

• Are they being too conservative on a new product rollout?

Try this for practice even if it seems like a waste of time. Writing this down will help you conceptualize this concept.

This is the difference between reading someone else’s opinion and forming your own.

Run-Rate Analysis: An Alternative Lens

A strategy I’ve taken from my experience in the private markets and applied to valuing public companies is applying a run-rate to a company’s last fiscal quarter or quarters. This involves:

Taking the most recent quarter’s EPS, annualizing it (multiply by four), and using that as your denominator in the P/E ratio. This gives you the “last quarter run rate” P/E.

Why does this matter?

Because businesses change.

If a company just posted a breakout quarter, maybe margins expanded? Maybe a new revenue stream kicked in?

Personally, I like to use 2 quarters for businesses because it strips out possible single-quarter noise such as macroeconomic supply/demand changes or maybe something like raw material price volatility. Using the last two quarters smooths that out while still giving you something more current than the full TTM figure.

The TTM number is dragging along three older quarters that no longer reflect the current business.

The run rate P/E can give you a more insightful snapshot of what the business actually looks like right now.

Quick example: say a company earned $1.00 EPS over the TTM, but the most recent two quarters came in at $0.35 and $0.40. Annualizing those two quarters gives you $1.50 ($0.75 × 2).

• On a $40 stock, the TTM P/E is 40x, but the run-rate P/E is ~27x. Very different valuation!

You can also get creative here by stripping out one-time charges, normalizing for seasonality if the business is cyclical or adjust for SBC if it’s distorting GAAP earnings.

The point here is to get closer to the true earnings power of the business.

Try this as well:

—> Compare your run-rate P/E to the forward P/E

If the run rate P/E is 27x and the consensus forward P/E is 22x, the market is expecting earnings acceleration.

• Is that realistic?

• What needs to happen for the business to get there?

• Where is that margin expansion coming from?

  • Is there new technology in place that will help accelerate this?

  • Did they make recent hires in the previous year that will ramp during the next year(s)?

Ask these questions first.

If you think the margin acceleration is coming, you might have a compelling entry point.

If you think the Street is too optimistic, maybe wait it out. I’ve found this to be a useful quick-check in my analysis.

Note that run-rate analysis is only helpful for companies without dramatic seasonality. For example, this wouldn’t be super helpful for a company like Abercrombie if you are run-rating the last 2 quarters of the calendar year (inflated financials from the holiday season).

Run-rate analysis would be helpful for valuing a company like Adobe with more recurring-based revenue without seasonality.

Performing this run-rate analysis for metrics like ARR for tech businesses are a popular use case — but this run-rate analysis can be applied to multiples such as P/E as well.

One more practical note:

• If a company is days away from their earnings report, be cautious about making valuation judgments based on the current P/E. That denominator is prone to change short-term, and as investors, we don’t want to hinge on short outcomes.

In case you missed it, here are some of the best investing insights for 2026:

• 5 Stocks Worth Your Attention in 2026

• Adobe & the AI Pivot

• Deep Dive on Coinbase

Growth Adjusting Your P/E

Once you’re comfortable with forward P/E, the next step to rounding out our understanding of earnings multiples is asking:

“Is this P/E justified given how fast the company is growing?”

I personally use this ratio less than most people, but the PEG ratio, in theory, addresses this question on a relative basis.

PEG = P/E ratio ÷ expected earnings growth rate (expressed as a #, not a %)

So, broadly, a PEG below 1.0 suggests a stock may be undervalued relative to its growth, while above 1.0 signals the market may be paying a premium.

So, a stock trading at 30x earnings with 30% expected growth will have a PEG of 1.0

Let’s say you’re comparing two companies in the same industry providing a very similar product/service offering.

• Company A trades at a 20x P/E with projected 10% growth for the next year (PEG of 2.0)

• Company B trades at 35x with 40% growth (PEG of 0.88)

• On a P/E basis, Company A looks cheaper

• On a PEG basis, Company B is the better deal

• Company B looks cheaper because you’re paying less per unit of growth

This ratio is ONLY useful for comparing businesses in the same sector though, as a PEG ratio for a utility business would be much different than a AI-enabled SaaS business.

It does have its drawbacks due to it’s:

• Reliance on forecasts, which are not always accurate

• Ignores capital structure (cash and debt levels)

• Meaningless measure for smaller companies with little profitability

• Ignores businesses with cyclicality such as in energy or materials

The PEG ratio should be used as an additional metric to round-out an analysis, not a standalone measure of growth relative to earnings power.

Relative Expansion & Contraction:

I’ll start by saying I use this methodology a lot, as it’s great for relative analysis.

A stock can grow earnings 15% a year for five years, but if the P/E compresses from 30x to 15x over that same period, due to investors becoming bearish on the stock or future of that industry (like SaaS businesses in the market right now) your return is roughly flat.

Also, a company with “okay” earnings growth can deliver huge returns if the market re-rates the business, which can expand the multiple (this would be the inverse of the above, as investors would become bullish on the company or industry).

• An example of this is the “picks and shovels” of the AI infrastructure industry, such as businesses who provide cleaning services to fabs, or electrician businesses that service datacenters.

  • These businesses may not have had crazy historical growth, but the growth expectations are sky-high due to the future buildout needs of AI infrastructure.

Think about what actually drives multiple expansion:

• Improving growth expectations

• Business model transformation (transaction-based to subscription revenue, for example)

• Market sentiment turning positive on a sector

Multiple contraction is the opposite:

• Slowing growth

• Deteriorating sentiment

• Competitive threats

• Commoditized products

Understanding what could expand or contract the multiple is just as important as analyzing the earnings themselves.

This is also when comparing a company’s current P/E to its own historical range becomes very useful!

Let’s look at Adobe, as I think this company is undervalued currently, compared to where it’s traded historically on an earnings multiple.

Adobe is trading at a ~15x multiple right now, when it’s traded at a ~45x average multiple over the last decade! Even if we take a more recent 5-year average, the multiple stands at 40x!

This is where it comes down to your own personal conviction.

Some folks believe this business’s service offering will become commoditized, which will re-rate the SaaS multiple down, which has driven the stock price meaningfully down over the past ~6 months, hence the “SaaS’pocalypse”.

I don’t think this is true, which would lead me to believe that this P/E is offering up a great deal!

—> This is where real risk/reward can become asymmetric

Your total return from a stock is a combination of earnings growth and the change in the multiple the market assigns to those earnings.

Comparing to the Industry

Stop comparing against the S&P 500’s overall P/E as your benchmark.

The spread between sectors is massive.

Energy stocks might trade at 7-8x earnings while tech trades at 30x+!

Comparing your Sandisk semiconductor play to P&G’s P/E is comparing apples to oranges. I hope you get this one, haha. Always compare within the sector, and ideally within the specific sub-vertical and provide similar services (sometimes you will have to broaden your comparisons, but you get my drift).

Even within the same industry, you need to ask why a company trades at a premium or discount to its peers. A company growing revenue at 25% deserves a higher multiple than another business growing topline at 5%.

Margin profile matters as well. Same with capital intensity.

A software company trading at 35x with 80% gross margins is fundamentally different than a manufacturer at 35x with 30% margins.

Simply ask the question: is this premium or discount justified by the underlying business quality?

A stock trading at 2x its sector average P/E isn’t overvalued if it’s growing 3x as fast, and a stock trading at 20% of its sector average might be cheap for a reason (classic value trap)!

Dig into the why before making a judgment.

When P/E Breaks Down

Firstly, don’t use the P/E ratio when a company isn’t profitable or is barely profitable. It’s useless. A company earning $0.01 per share trading at $50 technically has a P/E of 5,000x. It doesn’t mean crap.

Think of Tesla back during their growth cycle in 2020 when their stock skyrocketed 700% —> they just became profitable that year and were valued at $750B+ by the end of the year!

For early-stage or high-growth companies that are reinvesting aggressively, you’re better off using a revenue multiple (EV/Rev) to get a sense of valuation relative to the scale of the business.

Even for profitable companies, watch for earnings that are inflated short-term by one-time expenses, heavy SBC or accounting changes.

P/E also doesn’t reflect capital structure!

Two companies can have the exact same P/E, but one might be loaded with debt generating those earnings while the other is debt-free.

Always ask : are these earnings real, recurring and representative? And what is the strength of the balance sheet?

The Balancing Act of Putting it All Together

It’s never just one metric. It’s the interplay between all of them.

When I look at a stock, I’m running through a mental back and forth:

• What’s the TTM P/E?

• How does that compare to the forward multiple?

• What does the last two-quarter run rate tell me?

• Is the market pricing in acceleration or deceleration of growth?

• Is the PEG ratio telling me I’m paying a fair price for growth?

• Where is the P/E relative to the historical range and sector peers?

• What catalysts could drive multiple expansion?

• What headwinds could compress the multiple?

When you layer these frameworks on top of each other, a picture emerges.

Maybe the run rate P/E is compressing, the forward P/E looks reasonable, the PEG is below 1, and the stock is near the bottom of its historical valuation range while the business is inflecting with tailwinds ahead.

—> That’s what a compelling setup looks like.

This balancing act is what real fundamental analysis looks like, and once you get good at it, you’ll be able to run that checklist above in 15min, especially with the power of AI these days.

It’s not about memorizing formulas.

It’s about developing the instinct to cross-reference multiple signals and form a novel view.

Takeaway This

The P/E ratio is a starting point.

Use the TTM to orient yourself, the forward P/E to understand what the market expects, the run-rate to gauge the business right now and the PEG to contextualize the growth.

Study the historical range for expansion and contraction signals and compare multiple with relevant peers.

Layer these frameworks.

Some of these ratios won’t work for certain businesses and you’ll have to use other analyses’ in your mental toolkit to evaluate the business. Just remember to think.

That’s the toolkit. Now go use it!

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

You may have noticed that energy drink stocks are still on a tear.

• Red Bull sold a record ~14B cans in 2025 (+10.2% YoY), with global sales jumping 8.6% to about $14B+.

• Monster had a banner Q4 as well with net sales rising 17.6% to $2.1B, the first time the quarter topped $2B.

The whole category is booming, which makes the backdrop for the Celsius story much more interesting, as the 3rd biggest player now competes in a much fiercer landscape.

Subscribe now

Q4 & FY2025 Earnings

Celsius’ Q4 & FY2025 earnings were very strong:

• Q4 revenue of $721.6 M (+117% YoY)

• FY2025 sales of $2.5B (+86% YoY)

• Q4 Adj. EBITDA doubled to $134.1M (+113% YoY)

• FY2025 Adj. EBITDA was $619.6M (+142% YoY)

• Adj. EPS of $0.26 in Q4 (+86% YoY)

• Adj. EPS of $1.34 for FY2025 (+91% YoY)

In short, Celsius exceeded expectations on topline growth, EBITDA and EPS across the board, except for gross margins.

Gross margins were 47.4% in Q4 (down 2.8% YoY) due to integration costs, including Rockstar’s lower-margin mix, tariffs and one-time Pepsi distribution transition fees. However, full year gross margins finished at 50%+ (roughly flat vs. 2024).

Adj. EBITDA margin expanded massively with scale this last report — as Celsius transitions to a multi-brand business, the operating leverage is showing up in the financials.

Management also on the earnings call that as the remaining integration work completes for Alani and Rockstar, margins should rebound to low-50s% in 2026.

Celh Q4 2025 Investor Presentation Final Version

1.53MB ∙ PDF file

Download

Download

The Core Celsius Brand

I drew this up as a major risk in my last post on Celsius.

Investors have been worried about the legacy Celsius brand deteriorating with slower growth YoY.

Based on the latest earnings report, the underlying Celsius brand is still growing.

For Q4, Celsius legacy brand sales were down (8%). This may seem very weak, but U.S. tracked retail sales for the legacy brand actually increased 12.8% during Q4.

The gap between the 8% revenue decline and 12.8% retail growth was attributed to “integration-related timing dynamics” and the sequencing of orders from Pepsi…

Moving Alani Nu into the Pepsi system was a majority contributor in the temporary noise and order misalignments for the legacy brand.

The legacy brand did grow revenue 7.5% for FY2025 and maintained their 10.9% dollar share (essentially market share) of the U.S. energy drink category!

In addition to that, Circana tracker data shows ACV (All Commodity Volume) for the legacy brand has reached nearly 98.5%. Total business ACV reached 99.5%.

—> Essentially, this means that if you walk into almost any store in the U.S. that sells energy drinks, you are very likely to find a Celsius on the shelf.

That is very impressive, but does show us that revenue growth from improved distribution from the legacy brand will be much tougher, as they are already everywhere. Further growth will have to come through more shelf space with existing wholesalers, improved marketing and current customer wallet sell-through.

The Company also guided for a projected 17% increased shelf space for the legacy brand in 2026, which bolsters the foundation for the legacy brand going forward.

Legacy Celsius growth is certainly moderating from its hyper-growth days, but it’s doing so at very high volume and under complex integration conditions, so this feels reasonable and makes me comfortable with the performance.

Alani Nu Integration

This was the main highlight for the earnings report.

Alani Nu added about ~$1B of revenue for 2025, including a record ~$370M in Q4.

YoY retail sales for Alani Nu soared +101% in 2025, driven by aggressive distribution and consumer demand, as the brand has been successfully integrated into Pepsi’s system (not fully).

Alani also released new flavors during the period, which sold out in record time! This flavors include ‘Cherry Bomb’ and ‘Lime Slush’.

One of the craziest stats in the presentation was that the Alani brand surged to 94.2% ACV by the first week of Feb 2026, versus ~87% ACV when Pepsi took over in early Q4. That’s astonishingly successful integration.

—> More ACV means more shelf space and sales velocity.

In addition, Alani Nu's Q4 revenue of $370M (PF growth of 136%), run-rated through 2026 gets you ~$1.5B. Prior to the Alani Nu acquisition, Celsius’ Q1-25 LTM revenue was $1.33B at the time.

This will be a much larger business.

Once Alani becomes full integrated, I think we’ll see extended revenue growth through 2026, along with beneficial synergistic cost realization.

Management noted the Alani transition will be fully complete by end of Q1 2026, which includes supply chain, back office and commercial operations

Rockstar Integration Continues

As a reminder, Rockstar rights for the U.S. was acquired in late August 2025 for $585M. This remains the weakest link of the business.

Rockstar contributed $45M for Q4, and its underlying U.S. sales were down (~10%) in Q4 and (~11%) in FY2025.

Honestly, that decline isn’t surprising to me, as the brand was already in a slump prior to the acquisition, and is now in the process of a distributor handoff.

BUT, at CAGNY, Fieldly described a two-phase strategy for the integration here:

1. Stabilize by sharpening positioning, improving execution and focusing on the SKU set

2. Then rebuild by modernizing the brand for today's consumer

—> Management framed this rebuild of the brand as a "handful of years,“ so this transition will be slow

Based on the earnings report, Pepsi is on track to fully transition Rockstar into its system by this summer and project annual revenue post-integration is ~$250M.

We don’t have evidence of the recovery yet, but the integration is proceeding as planned and we’ll be watching to see if the retail declines slow… and eventually show signs of true reversal.

A successful turnaround would allow Celsius to optimize the portfolio, streamline sales teams and leverage Pepsi's network to drive further synergies.

CAGNY 2026 Strategic Foundation (1 week before earnings)

On February 19, leadership presented at the Consumer Analyst Group of New York (CAGNY) conference, revealing key data on portfolio scale and distribution, which actually caused an 8-10% jump in AH trading.

The most impactful data points from CAGNY were distribution-related:

• Shelf Space: Expanded by over 25%, with an additional 17% increase forecasted for the legacy Celsius brand and a 100%+ increase for Alani Nu during the upcoming spring reset (when stores refresh their products and Alani supply chain distribution becomes fully integrated), primarily in convenience stores.

• Market Reach: The fulsome portfolio now sells through more than 250,000 retail outlets at 99.5% ACV (already talked about this)

• Consumer Engagement: 52% of repeat consumers purchase products 5 or more times. This shows brand loyalty and a sticky customer base. The brand is expanding into new occasions as well, with 37% of consumers now drinking Celsius with meals and 33% in social settings.

Celsius Cagny Presentation 2026 Final

7.53MB ∙ PDF file

Download

Download

The Aggregated Portfolio

Celsius is fast becoming a multi-brand player.

As of Q4 2025 the combined Celsius/Alani/Rockstar brands command roughly 20% of the U.S. energy drink category by dollar share (+8% YoY).

This combination of brands is the #3 portfolio behind Red Bull and Monster.

Each brand occupies its own niche as well:

• Celsius hits the health/fitness consumers

• Alani Nu resonates with females/premium functional space

• Rockstar covers the traditional energy segment (maybe a bit more gamer’ish / adventure oriented)

This multi-brand approach allows the Company to go to retailer and say “We have a shelf solution for every energy drink segment.”

This is a major advantage over its competitors Monster and Red Bull.

I also think one of the biggest growth categories within the energy drink market is the zero-sugar segment, and the Celsius (legacy) brand, Alani Nu and Rockstar collectively drove ~33% of the zero-sugar energy sub-category growth in 2025. This should continue through 2026.

Wall Street’s Upgrade Cycle

Post-earnings reactions were overwhelmingly positive, led by BofA’s upgrade from Underperform to Buy, raising their price target to $65.

Broader Analyst Wave:

• B. Riley: Raised to $85

• JP Morgan: Raised to $77

• Needham: Raised to $75

• UBS: Raised to $72

• Piper Sandler: Raised to $65

• Deutsche Bank: Raised to $56

Consensus on Celsius now stands at a Strong Buy with an average price target of $64–68, implying 20–30% upside from where the stock sits today.

What’s Next?

What I’m watching for is:

• Margin stabilization: We’ll want to see gross margins tick back up now that integration and distribution shifts are nearly finished. Synergies should be realized as SG&A leverage continues.

• Legacy organic growth: I want to see continued, stable growth from the core brand, with no signs of deceleration.

• Rockstar’s integration progress: I want to see stabilized Rockstar sales and ACV lift as it comes fully onto Pepsi’s system.

• International momentum. This is a huge growth vector, with the Company having almost no exposure abroad. The international business grew ~24% this past year to ~$92.8M, but I want to see this growth accelerate. If Celsius can replicate the U.S. growth playbook abroad, that’s huge long-term upside.

At the end of my last write-up on Celsius, I mentioned:

“I am definitely formulating a plan for selling these shares within the next several months unless organic growth accelerates, integration synergies are successful, distribution is seamless (doesn’t have to be perfect), and the business continues to execute on their core offering.”

This last earnings report certainly got me more comfortable with my current ownership in the business, and I plan on holding these shares for most of 2026.

I would still say I am cautiously optimistic, but this quarter’s execution definitely puts Celsius right on the path we mapped out:

• The base Celsius brand stayed strong enough

• Alani is integrating on schedule

• The setup is laid out for Rockstar to follow

• International growth is getting stronger

In addition to this, the current forward P/E of ~28-30x (well below its 5-year median of ~77x) illustrates a reasonable valuation for a company growing revenue 85%+ with a path to mid-50s gross margins with one of the most popular energy drink brands for younger consumers.

While execution risks regarding inventory timing and stabilization remain, the risk/reward profile has shifted meaningfully in favor of shareholders heading into the remainder of 2026.

If the team stays focused and avoids any more negative surprises, the multi-brand thesis story looks alive and well.

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

I transferred $300 into Coinbase and bought $300 of Bitcoin and Ethereum.

I was so excited. I thought I was going to be rich.

But no. One year later, Bitcoin was trading at ~$3,700/coin and Ethereum materially lower. I quit. I concluded that crypto was dumb and just a gambling addition.

But later in 2020 around Covid, Bitcoin exploded again. Then fell. Then exploded again in mid-2023/early-mid 2024.

I wasn’t invested in either of those 2 runs… and it made me very angry! Although, I also realized I was more of a stock investor than a crypto trader.

I started to realize Bitcoin traded in cycles. Lately, I’ve read into the supply/demand patterns and delved into the world of Stablecoins and Tokenized Deposits.

There is actually material utility within crypto and Blockchain technology as a whole.

^That is objective, not an opinion.

I want to be part of this era of crypto/blockchain adoption and believe, apart from outright owning crypto, that Coinbase will be a direct beneficiary.

Subscribe now

Executive Summary

Coinbase is no longer a crypto casino (revenue is no longer driven solely on fees from trading volume).

It hasn’t been a casino for a while now, but the market still treats it like one and that’s where the opportunity sits.

Coinbase is down over 60% from its $400+ all-time high last July. The bears have had their days, and frankly, some of their arguments are valid.

Crypto prices are soft. Q4 showed a $667 million GAAP net loss for Coinbase.

Sentiment is ugly and could get worse.

But, while everyone is staring at Bitcoin’s price chart over the past years, Coinbase has been rebuilding itself into a regulated financial infrastructure company; what the internet is calling “a tollbooth” on the rails that institutional money is increasingly forced to travel through.

Assets on the platform have grown 3x over the past three years, with Coinbase now storing over 12% of all crypto globally.

In 2025, total revenue grew 9% to $7.2B despite a soft Q4, with subscription and services hitting $2.8B, up 23% YoY and now 41% of total topline revenue.

Transaction revenue is still $4.1B and very cyclical (floats with trading volume), but the other pieces — USDC, cold storage custody, Coinbase One and derivatives are what actually drive the valuation debate now.

The question for this investment opportunity isn’t whether crypto is going to have another bad quarter. It probably will.

The question is whether Coinbase has built enough durable revenue to survive it, whether it can withstand the multitude of regulatory changes and statues going through government, and whether the long-term structural tailwinds via stablecoins, tokenized assets and regulatory clarity can be materialized and implemented successfully within the economy.

Let’s dive in.

Share

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor, as I try my hardest each week to give you custom, in-depth analysis on stock investments, market insights and portfolio strategies.

With a subscription to the ThePrivatePublicInvestor, you will receive insight into my personal portfolio, along with each position I own and the related weighting, along with my personal watchlist, custom templates for valuation and modeling (coming soon), additional in-depth analysis on my portfolio holdings, decision-making investment guides, and the personal chat feature for the community.

As this channel grows, paid subscriptions will start to be incorporated, so subscribe early and stay subscribed to receive ‘founding member’ pricing and exclusive benefits.

With that, enjoy this piece and let me know if you have any questions!

An Updated View on How Coinbase Makes Money

Before we go further, it's worth grounding ourselves in how this business actually makes money. There are really two buckets of revenue.

In summary:

• 59% of the business is transaction based

• 41% of the business is subscription / recurring based

—> If you are already familiar with the business model as of late, feel free to skip this section

Bucket 1: Transaction Revenue ($4.06B in 2025, ~59%)

This is the legacy business, which essentially can be boiled down into fees charged when someone trades crypto on the platform. It breaks down into three pieces:

• Consumer trading ($3.32B): This is you or me buying Bitcoin on our phone. Coinbase charges a % spread on each trade, typically around 1-2% for simple trades. This is still the single largest revenue line, but it’s the most volatile. When crypto sentiment dies, this number can fall off a cliff within weeks.

• Institutional trading ($480M): Hedge funds, asset managers and other institutional corporations trading in large amounts. The fees are much lower per trade (think 0.05-0.06% of volume) because they are enormous orders.

  • This line item surged in 2025 due to the Deribit acquisition, which instantly made Coinbase the global leader in crypto options and derivatives. Deribit hit all-time high revenue in Q4.

• Other transaction revenue ($253M): These are fees from instant transfers (when you move money to your bank account quickly), Base network transaction fees and payment processing.

Note: Consumer trading margins have been trending down as competition from Robinhood, Kraken and others intensifies — this bucket will always move with crypto sentiment

Bucket 2: Subscription & Services Revenue ($2.83B in 2025, ~41%)

This is the new Coinbase — the part the market undervalues, in my opinion. These are revenue streams tied to assets sitting on the platform, not people actively trading. It breaks down into four pieces:

• Stablecoin revenue ($1.35B): Through the partnership with Circle (issuer of USDC), Coinbase earns a share of the interest dollars generated by the reserves backing USDC, which are parked in T-bills and cash equivalents (essentially a revenue-sharing agreement).

  • Think of it like this: every dollar of USDC sitting on Coinbase is effectively a deposit earning Treasury yields, and Coinbase gets a cut of that rate

• Blockchain Rewards / Staking ($677M): When you “stake” your Ethereum or Solana through Coinbase, the network pays you rewards for helping validate transactions. Coinbase takes a 25-35% commission on those rewards. (I honestly don’t know the exact nature of how this technically works in the blockchain system).

  • This revenue is denominated in crypto, so when ETH or SOL prices drop, the dollar value of rewards drops too. The nature of this actually caused a decline recently on their P&L in Q4

• Interest and Finance Income ($247M): Interest earned on customer cash balances held at banks + income from Coinbase’s institutional lending business.

• Other Subscription & Services ($555M): This comprises of Custodial fees (charged to institutions like BlackRock for storing crypto assets), Coinbase One subscription revenue (paid platform subscribers) and other platform services.

  • Coinbase holds over 80% of U.S. Bitcoin and Ethereum ETF assets in custody

“Bucket 3”: Other Revenue ($298M in 2025)

This consists of corporate interest income and other miscellaneous items. This is not a driver of the thesis but worth noting, as $11.3B in cash generates meaningful interest income on its own.

The flywheel in the shareholder letter describes the the business pretty well:

Build trust → assets concentrate on Coinbase → users and institutions adopt more products around those assets (staking, borrowing, trading, payments) → revenue grows and is reinvested back into better products and compliance

The Business Model Shift

If you asked me about Coinbase in 2021, I would’ve told you it was a leveraged bet on retail trading crypto euphoria.

• Revenue went up 80% when crypto pumped and fell off a cliff when it crashed. That was the old Coinbase!

—> The new Coinbase looks meaningfully different

In 2025, the company generated $7.18B in total revenue, with subscription revenue making up a much larger portion of sales YoY.

This subscription number is 5.5x higher than the 2021 cycle peak!

Inside that subscription bucket, the standout revenue piece is stablecoin revenue, which produced $1.35B in 2025, up 48% YoY. Stablecoin revenue alone now represents ~20% of Coinbase’s total revenue.

Note: In the last period, the ‘Other Subscription & Services’ line item and ‘Interest & Finance Income’ line items have been lumped together for reporting standards, so those 2 bar graphs may have slightly off numbers… but you get the point

The reason this breakdown matters is that it tells you what kind of company Coinbase is becoming versus what it was.

If you model forward several years and assume subscription revenue grows at 15-20% annually while transaction revenue grows steadily or stays flat, you get to a business where the majority of revenue is recurring and asset-based rather than trading-dependent.

Now that is a business that I want to own!

Small caveat: This isn’t true “SaaS” though. If ETH drops 50%, the dollar value of staking rewards, custody fees and even some USDC flows will fall too, even if nobody leaves Coinbase’ platform/ecosystem. I like to think of this as a more stable stream of revenue.

In case you missed it, here are some of the best investing insights for 2026:

• 5 Stocks Worth Your Attention in 2026

• Adobe & the AI Pivot

• Deep Dive on AMD

Stablecoin Utility is an Asset to Coinbase

If you’re going to own Coinbase, you have to understand stablecoins because this is a big part of where the thesis lives or dies in my eyes.

Read more

Nvidia is a Great Business

I want to start with saying NVIDIA is arguably one of the best companies on the globe.

With 60%+ revenue growth, ~70% gross margins and 50%+ net margins, Nvidia is a beast business that has taken the world by storm in this AI driven era of the economy.

Nvidia has had a CRAZY run in the market these past few years, driven by their dominance in AI hardware.

Total returns have exceeded +1,120% over the last 5 years! The company also became the world's first $4 trillion company this past summer, with revenue growing from $27B in FY2023 to over $130B in FY2025.

Unfortunately I missed out on this one!

Regardless, we sit here today on February 15, 2026, and I think there are better opportunities in the market.

In this article today I’m going to tell you why… let’s jump in!

Subscribe now

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor, as I try my hardest each week to give you custom, in-depth analysis on stock investments, market insights and portfolio strategies.

With a subscription to the ThePrivatePublicInvestor, you will receive insight into my personal portfolio, along with each position I own and the related weighting, along with my personal watchlist, custom templates for valuation and modeling (coming soon), additional in-depth analysis on my portfolio holdings, decision-making investment guides, and the personal chat feature for the community.

As this channel grows, paid subscriptions will start to be incorporated, so subscribe early and stay subscribed to receive ‘founding member’ pricing and exclusive benefits.

With that, enjoy this piece and let me know if you have any questions!

Pricing Power will get Tested

AMD is coming to the market later this year with its MI400 series, which is expected to offer competitive compute performance at materially lower prices (some early price signaling is at a 50% discount).

If AI customers can get comparable compute capabilities for meaningfully less cost, customers will migrate portions of their compute infrastructure over to competitor chips like AMD.

If customers move some of their business away from Nvidia’s closed-system, Nvidia may have to retaliate with lowering their prices, which will materially affect their bottom line, negatively affecting EPS and signaling bearish sentiment in the market, materially driving down the stock price.

Nvidia must maintain their ability to price their chips and compute stack at a premium by continuing to offer the latest and greatest technology on the market.

I don’t think this is sustainable.

Ecosystem Strength Creates Incentives to Escape

AI infrastructure buyers would really like if other semiconductor players like AMD came into the market with competing technology at scale, as this would allow them to escape the ecosystem lock-in that Nvidia is trying to push into the market.

It’s similar to the Apple smartphone story. We all wish we weren’t locked into the Apple ecosystem. But we are. And it’s likely too late for this to change.

Full concentration risk for customers means total pricing and relationship control from the other side (Nvidia’s side), which customers do not want, especially with a revolutionary technology like AI that will change the future of humanity.

Hyperscalers such as Meta, Amazon and Google don’t want to get locked into buying solely from Nvidia. This is also a reason these conglomerates are developing their own chip technology — they don’t want to get stuck into the ecosystem and want customization of their infrastructure.

A Nvidia-dominated battleground in semiconductor development would not allow for this.

As hyperscalers start to develop their own chips (Amazon with Trainium, Google’s TPUs, Meta’s MTIA, Apple currently creating one) and competition starts to rise from competitors like AMD, the incentives to escape from the closed Nvidia ecosystem rises day after day.

Priced to Perfection

This isn’t an argument that Nvidia is wildly overvalued on traditional metrics like earnings or revenue.

It’s an expectations argument.

Earnings releases are now events where anything short of a flawless ‘beat-and-raise’ will disappoint investors. When the bar is set at “another historic quarter,” execution has to be nearly perfect every quarter.

That asymmetry matters for material increases in price per share.

The stock doesn’t just need strong numbers. It needs continued blowouts

• Sky-high double-digit revenue growth

• Sky-high triple-digit earnings growth

• Expanding guidance

• No hints of slowing capex from hyperscalers

That’s a tough standard to maintain indefinitely!

Overcrowded Ownership

Lastly, and this is a softer argument, but the ownership profile in the public markets for Nvidia is saturated.

Nvidia has become the default AI trade.

Everybody and their mom wants to be a shareholder of Nvidia.

With the fugazi-fugazy days of AI over, everyone wants exposure to this new technology innovation. And with most people not familiar with public equities, the default option is to invest in Nvidia.

This includes institutional portfolios, passive index funds, retail flows and financial advisors. When everyone already owns the stock as their AI proxy, marginal new buyers becomes harder to find.

I believe that stocks move on incremental demand and if positioning is already heavy, even strong fundamentals don’t guarantee upside acceleration.

I Could be Wrong!

None of this changes the core reality that Nvidia is a phenomenal business.

It may continue to innovate, growth rapidly and compound earnings at an impressive rate, and I may miss out on another massive Nvidia run.

But for me personally, the risks, increased competition and high performance hurdles are too strong for me to take part in betting on continued upside.

I sold my entire Nvidia position last week for $192/share.

If you think differently about Nvidia’s future roadmap and growth and earnings potential, please feel free to leave a comment — I’d love to chat about it.

Enjoy the rest of your weekend!

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

Last week was a BIG week. One of the most action packed weeks I remember since April tariffs in early 2025.

But volatility is fun… I love it.

Usually means there are great opportunities in the market. Great businesses on sale.

Despite this, Index-level moves weren’t crazy, but under the surface was ugly in software and anything touching tech.

The S&P500 was actually flat YTD this week while some retail investor portfolios were getting smoked, some by 50%+.

Subscribe now

Why Markets were Red this Week:

• Capex Budgets: Between Google, Amazon and other hyperscalers, investors are looking at ~$600B of planned AI and datacenter Capex spend for 2026. Investors were looking for ROI on historical Capex spend during this earnings season, and it has not shown up credibly thus far. Tbh, I don’t know why investors were expecting it this early. These things take time, especially when it’s a new, innovative technology.

• Software Valuations: The S&P ‘Software and Services’ index was down ~8% this past week, wiping out about $1 trillion of market cap value as investors are suddenly price in AI displacement / disruption risk to legacy enterprise SaaS providers such as Intuit, ServiceNow, Adobe, Salesforce, Workday, Hubspot and many more.

• Rates: The 10‑year sits around 4.2%, offering an attractive yield for the first time in awhile. Vanguard’s CIO was actually on TV telling people to tilt their capital exposure toward bonds. This will naturally compress multiples investors are willing to pay.​

• Macro & Policy Noise. Investors are pulling back because new data showed job growth is weaker than expected (hypothetically signaling a cooling economy). This combined with new Federal Reserve chair Kevin Warsh has created a “de-risk” mood in the market amongst investors, with some floating to safer bets.

I do think after this week of hurt, we should see a modest recovery in the market… but that is not certain whatsoever. I can also see the market selling off further. A 5-10% correction in the indices / S&P500 would not surprise me at all.

With that market summary, let’s now jump into this week’s earnings, specifically 4 positions in my portfolio: PYPL, AMD, EL and AMZN

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor, as I try my hardest each week to give you custom, in-depth analysis on stock investments, market insights and portfolio strategies.

With a subscription to the ThePrivatePublicInvestor, you will receive insight into my personal portfolio, along with each position I own and the related weighting, along with my personal watchlist, custom templates for valuation and modeling (coming soon), additional in-depth analysis on my portfolio holdings, decision-making investment guides, and the personal chat feature for the community.

As this channel grows, paid subscriptions will start to be incorporated, so subscribe early and stay subscribed to receive ‘founding member’ pricing and exclusive benefits.

With that, enjoy this piece and let me know if you have any questions!

PayPal Q4 Earnings

PayPal had a pretty poor performance this quarter, and canning Alex Chriss did not help with the stock performance. PayPal announced before the bell on February 3rd, reporting a double miss:

• Revenue miss of $8.68M, missing expectations of $8.82

• EPS miss of $1.23, missing expectations of $1.29

PayPal also reported lackluster 2026 guidance:

• FY2026 Adj. EPS guidance to decline by mid single digits % YoY

• Transaction margin dollars to be roughly flat or slightly down

Management also withdrew its prior 2027 long-term outlook and stated the Company will now provide guidance only 1-year at a time due to the pace of change in the industry.

For my portfolio, this report informed me that my thesis was not materializing, and it would likely take awhile before the Company does execute on my envisioned thesis.

The new strategy of the new product roadmap and branded checkout re‑acceleration has been failing, and I think there are better opportunities in the market.

Part of the thesis was also my belief and confidence in Alex Chriss turning around the organization. Since he has been pushed out, I have decided to sell my full position in this stock.

I took a ~35% loss on this position, which is a tough loss. I do believe the rest of my portfolio will make up for this during 2026, and I will still outperform the market.

I did learn a lot with this trade, to be honest:

• I didn’t understand the value proposition fully when entering this position, and was not super familiar with the payment processing (FinTech) industry

  • Can’t make this mistake going forward — know the industry well, the competitive threats and the KPIs a company tracks

  • There’s also usually a reason for low valuations of a business when the rest of the industry is trading higher; it’s not always disconnect, but rather objective

• Do not put too much confidence in management; focus on the numbers, competitive moat and financial performance

  • Numbers and the moat speak louder than management usually. Even if management is a stellar group of individuals, the business may not be strong and capable of turning around

At the end of the day, PayPal might still work out from here, but it no longer fits what I’m trying to target and build in my portfolio.

There’s too much strategic drift and uncertainty around the core checkout business, and there isn’t enough evidence that the turnaround will materialize.

I’d rather accept the loss, free up my mental bandwidth and redeploy that capital into other names where the growth runway, competitive moat and leadership are all heading positively in the same direction.

Advanced Micro Devices Q4 Earnings

AMD earnings showcased superb performance in Q4 and FY2025.

AMD’s beat on revenue and margins.

Q4 Revenue: $10.3B (+34% YoY)

Data Center Revenue: $5.4B (+39% YoY)

GAAP EPS: $0.92

This ramping revenue growth was driven mainly by EPYC CPU adoption and the GPU portfolio scaling rapidly.

But, the stock got hammered AH because guidance came in slightly below expectations and investors were pricing in nonstop upside.

Wall Street was looking for more near-term AI revenue upside rather than the softer guide that was delivered.

AMD actually experienced their worst single-day decline since 2017, falling over 17%. What do I call that? Stupidity. Dumb. Short-sighted. That’s what I call that.

Remember though: Lisa Su rarely overspeaks

In a post-earnings CNBC interview, she said demand for AI compute has been “accelerating at a pace I would not have imagined” over the last 60-90 days.

Su also signaled:

• Real pull-through demand later this year as MI400/MI450 volumes ramp

• CPU orders have been strengthening over the last 60+ days

• AMD expects data center revenue to grow >60% annually over the next 3–5 years

Although revenue performance was impressive and “technically” beating expectations (despite the stock getting hammered), earnings (EPS) results were lackluster on a GAAP basis, which helped drive the stock down AH.

Analysts and the rest of the market are tied to the financial engineering of margins with GAAP vs NON-GAAP accounting adjustments.

GAAP EPS: $0.92

Non-GAAP EPS: $1.53 (64% uplift purely from accounting adjustments)

Let me bridge this for you below:

Starting Point: $0.92 GAAP EPS

• Stock-Based Compensation: +$0.29 (shareholder dilution and non-cash)

• Amort of Acquisition Intangibles: +$0.34 (Xilinx/prior acquisitions and non-recurring)

• Other Adjustments: ($0.02)

Ending Point: $1.53 Non-GAAP EPS

Let’s look at the full year 2025 adjustments:

Starting Point: $2.65 GAAP Diluted EPS

• Stock-Based Compensation: +$1.00 (shareholder dilution, non-cash)

• Amortization of Acquisition-Related Intangibles: +$1.38 (Xilinx/prior acquisitions and non-recurring)

• Release of Reserves for Uncertain Tax Positions: ($0.52) — one-time IRS benefit from reasonable cause relief for dual consolidated losses which was approved in Q2 2025; this won’t repeat in 2026

• Other Items: ($0.34) — miscellaneous items

Ending Point: $4.17 Non-GAAP Diluted EPS

The argument here is that headline beats for Q4 and and full-year 2025 are being manufactured through these adjustments, not through genuine business improvement.

AMD needs to show that the underlying GAAP margins can hold and expand as they scale, rather than relying on adjustments and one-time benefits. The operational momentum is great, but the multiple paid for the business is increasingly being questioned by the market.

But it’s important not to throw the baby (the business) out with the bathwater (the accounting).

The company outlook is still more bullish than ever:

AMD has the stage to showcase their banner year with the rollout of the MI400 series and the Helios architecture, which Lisa mentioned on the earnings call will have no delays.

In addition, AMD’s FCF is legitimate. 2025 FCF hit $5.5B versus $2.4B in 2024; there is definitely some real growth and operational leverage being realized.

The data center segment’s 39% Q4 revenue growth in Q4 is also genuine demand, not “accounting magic” like the margin story.

Lastly, the Company is clearly winning share in high-performance GPUs, continuing to grow their CPU and gaming business and scaling AI inference workloads.

Estée Lauder Q2 2026 Earnings

Estée Lauder reported their Q2 2026 earnings last Thursday (Feb 5th), beating top and bottom line estimates for the quarter.

• Quarterly Adj. EPS of $0.89 per share, surpassing estimates of $0.83–$0.84

• Quarterly Revenue reached $4.23B (~6% YoY), slightly exceeding expectations of $4.22B

The Company also raised 2026 guidance, but did warn of a $100M tariff hit in the second half of the CY. The overall guidance fell short of analyst estimates.

The guidance triple-miss led to one of the worst performing earnings report reactions for the Company, with the stock tanking ~20% before / during market open.

This was an overreaction, in my opinion, and I think Citigroup agrees, as they upgraded the stock to Buy on Friday (Feb. 6), suggesting they believe the 20% pullback offers an attractive entry point, as the company’s ‘Beauty Reimagined’ strategy continues to improve the underlying fundamentals.

Back to the earnings report:

Organically,

• Skincare and fragrance grew ~6%

• Haircare grew ~5%

• Makeup fell (~1%) (seems to be the problem child)

From a regional standpoint, China performed very well with roughly +13% organic growth, with strong brand contributors to this growth from La Mer, Tom Ford and Le Labo, both online and in travel retail.

Europe/UK/Middle East/Africa grew +2%, while the Americas were flat, which tells me the demand recovery isn’t fully back (but rather in progress).

Overall, the 3 big bullish signals in this report (besides WholeCo revenue and earnings) were:

• Double-digit growth in China

• Significant operating margin expansion (14.4% vs. 11.5% in prior year)

• Accelerated product innovation

  • China Innovation Center

  • High growth categories (dermatological beauty and luxury fragrance)

  • AI and predictive analytics for predicting trends

I really liked seeing the increase in online sales, which grew to a record 31% of FY25 sales, driven by more brands rolling onto Amazon and other popular platforms such as TikTok Shop.

Estée Lauder actually first launched on Amazon with the debut of Clinique in March 2024, and since then have introduced more brands to the platform, including Too Faced, Bumble & Bumble, Lab Series, flagship Estée Lauder and several more, with the most recent debut to Amazon being Bobbi Brown, which was released on Amazon last fall in November.

The Company now has 12 brands available on the Amazon Premium Beauty store in the U.S.

Separately, during the earnings call, CEO Stéphane de la Faverie framed remaining FY2026 as the inflection point in the Company turnaround.

He said “With three fiscal years of sales decline and operating margin erosion behind us, we enter fiscal 2026 with signs of momentum and the start of our turnaround, a return to top-line growth… and the pursuit of a solid double‑digit operating margin in the years ahead.”

This is great news and signals to investors the “Kitchen Sink” earnings reports are over, and Estée Lauder is on its way towards profitable growth as the turnaround continues.

I remain bullish on the turnaround, but there are 3 key obstacles the Company must overcome if they are to succeed:

• Tariffs and Resulting Margin Drag

  • Didn’t seem to be an issue this latest quarter

• Travel Retail and Asia Volatility

  • Weak conversion and volatile Chinese travel demand

• Sluggish America Consumer and Category Mix

  • American growth flat and makeup is still slightly declining while the market is growing

So, Estée Lauder must defend premium pricing, reignite core brand growth, boost new brand performance and sustain China momentum, while preserving margin gains and navigating the economic headwinds ahead.

Amazon Q4 2025 Earnings

A classic MAG7 reaction this earnings season.

Report objectively strong revenue and earnings with a high capex budget, and then selloff after hours.

I would say Amazon’s Q4 2025 headline numbers were objectively strong:

• Net sales: $213.4B (+14% YoY) beating estimates of $211.5B

• Earnings: EPS of $1.95, just a penny shy of the estimated $1.96

1. AWS (Cloud Computing)

AWS continues to outperform with revenue growth accelerating to 24%, its fastest rate in over three years. This was driven by GenAI services and their custom Trainium/Graviton silicon.

2. North America

The retail business remained highly efficient with operating margins improving to 9% (up from 8% last year). North America same-day delivery also saw a 30% increase in Prime member usage.

3. International

Revenue growth came in at 17%, although it was heavily bolstered by currency conversion rates. Operating profit dipped to $1.0B from $1.3B last year, as the business has been trying to cost cut to gain market share in emerging regions.

4. Advertising

This is not a reported segment, but definitely an important part of the business to mention. Advertising revenue reached $17.3B (+22% YoY), and Prime Video ads are now reaching an audience of 315M, which is providing a margin boost to the retail business.

Guidance came in at:

Amazon’s projected $200B of Capex came in sharply higher from an already massive $125B‑ish run‑rate.

Aaaannnnnd it spooked investors who thought the AI buildout would be a bit more gradual… causing Amazon to selloff 10%+ after hours.

For context, most of that spend is going into AWS infrastructure:

• Data centers

• Custom silicon (Trainium)

• Networking gear

• Low-orbit satellites

• Robotics and logistics automation

Amazon is really leaning into the AI arms race, which has honestly surprised me.

Along with the increased Capex spend, Amazon has been laying off numerous corporate positions, totally around 30,000, with 14,000 last October and 16,000 this past January.

At the same time, it has over 1M robots in its fulfillment network with plans to automate hundreds of thousands of warehouse roles over the rest of the decade…

… investors are waiting patiently to see if the operating leverage will be realized here. I DO think this will take longer than the market expecting (maybe a year or two rather than a quarter or two).

There’s two different stories you can subscribe to here:

1. Bull Case: Capex pays off big, FCF explodes, AWS sustains 20%+ growth with expanding margins and robotics/AI investments deliver notable operating leverage, North America retail and ads compound at double-digits, and the International segment flips to high-teens growth

2. Bear Case: $200B Capex drags FCF negative through 2027–2028 without clear AI ROI, AWS decelerates amid hyperscaler competition, retail margins revert under consumer slowdowns and operating leverage disappoints

These are two extremes, but you essentially have to lean one way or another if you hold Amazon in your portfolio, or refuse to own shares.

I am going to subscriber to the former —> I own 250 shares of Amazon and will hold these shares confidently for years to come.

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

Subscribers: Check your email or the live chat for a link to the full portfolio. I’ll share this bi-weekly. Short-form portfolio is shown as a link on my profile homepage.

Subscribe now

This is a snapshot of where my capital is allocated today, including position sizes, cost basis, and unrealized gains/losses.

I’ll update this bi-weekly as share positions change — this is meant to be a living reference point that’s continually updated.

I’m sharing this for transparency and context — so when I write about a company, you all can clearly see what level of capital I have behind the thesis.

Regarding the Portfolio:

Followers and non-subscribers will have access to:

• Portfolio positions (only share count)

Subscribers will have access to:

• Detailed portfolio including position sizes, cost basis, unrealized gains/losses, portfolio size, along with my investment watchlist

—> As this publication continues to grow, subscriptions will transition into paid subscriptions for full access to my portfolio and template library for financial models, valuation models, summarized thesis’ for each portfolio position, and last 4Q earnings’ summaries for each portfolio holding.

If you would like to see my detailed personal portfolio, subscribe to receive an email with a Google Sheets link to view

⬇️ Personal Portfolio ⬇️
(Click on image; share counts updated as of 2/6/2026 close)

View-only. Not investment advice. Do your own work.

This is not a model portfolio or a list of recommendations. It’s simply where my capital is allocated today, along with names I’m actively tracking as market dynamics change.

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor, as I try my hardest each week to give you custom, in-depth analysis on stock investments, market insights and portfolio strategies.

With a subscription to the ThePrivatePublicInvestor, you will receive insight into my personal portfolio, along with each position I own and the related weighting, along with my personal watchlist, custom templates for valuation and modeling (coming soon), additional in-depth analysis on my portfolio holdings, decision-making investment guides, and the personal chat feature for the community.

As this channel grows, paid subscriptions will start to be incorporated, so subscribe early and stay subscribed to receive ‘founding member’ pricing and exclusive benefits.

Let me know if you have any questions!

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

— Albert Einstein

What Is the MEGA Backdoor Roth?

As we kick off the new year and folks are already thinking about their 2026 strategy for their retirement contribution plans, I want to highlight a strategy that higher-income individuals can use to max out their Roth accounts.

Historically, you’ve probably been told:

• You make too much money to contribute to a Roth IRA, or

• The most you can put in your 401(k) is $24,500 (2026 limit)

—> Both of those statements are technically true, but kinda false in practice.

By utilizing a specific maneuver within your workplace retirement plan, you can ignore the income phase-outs and ~triple your Roth contributions.

Here is your guide to the Mega Backdoor Roth:

—

The MEGA backdoor Roth is a legal strategy that allows you to contribute up to an additional $47,500 in 2026 to a tax-free Roth account, even if your income exceeds Roth IRA limits.

It's simply a secret for maxing out retirement savings…

A strategy for people who have already maxed out their standard 401(k) contributions.

The IRS allows up to $72,000 total into your 401(k) each year (this limit includes employer matches). For the people that max out their 401(k)s with $24,500 annually, there's still a massive gap remaining, and the MEGA strategy lets you fill it with after-tax money that converts to Roth.

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor, as I try my hardest each week to give you custom, in-depth analysis on stock investments, market insights and portfolio strategies.

With a subscription to the ThePrivatePublicInvestor, you will receive insight into my personal portfolio, along with each position I own and the related weighting, along with my personal watchlist, custom templates for valuation and modeling (coming soon), additional in-depth analysis on my portfolio holdings, decision-making investment guides, and the personal chat feature for the community.

As this channel grows, paid subscriptions will start to be incorporated, so subscribe early and stay subscribed to receive ‘founding member’ pricing and exclusive benefits.

With that, enjoy this piece and let me know if you have any questions!

Subscribe now

Step 1: The Three Buckets

To understand the strategy, you have to look at the three ways you can put money into a 401(k):

• Pre-tax: You get a tax break now, pay taxes later (Limit: $24,500 in 2026)

• Roth 401(k): You pay taxes now, it’s tax-free later (Limit: $24,500 in 2026)

• After-Tax (The Secret Bucket): This is different from a Roth 401(k). You pay taxes now, but the earnings are usually taxable later also... UNLESS you use the Mega Backdoor Roth conversion strategy

Step 2: How the Strategy Works

1. Contribute “After-Tax” money: Once you hit your $24,500 limit for the year, some 401(k) plans allow you to keep contributing into the “After-Tax” bucket until you hit the total plan limit (which is $72,000 for 2026)

2. The Conversion: Immediately move (convert) that After-Tax money into a Roth IRA or a Roth 401(k)

By moving this capital into a Roth account, future growth and interest becomes tax-free forever. If you leave it in the “After-Tax” bucket though, you’d eventually have to pay taxes on those gains in the account.

These contribution limits change each year for 401(k)s and IRA’s, so I’ve outlined below how things changed YoY:

• 2025 IRA/Roth IRA: $7,000

• 2026 IRA/Roth IRA: $7,500

• 2025 Total Plan Limit (401k+After Tax Account): $23,500

• 2026 Total Plan Limit (401k+After Tax Account): $24,500

Note: If you are age 50–59, your total 2026 max limit is $80,000. If you are 60–63, it's max $83,250 due to the new SECURE 2.0 "super catch-up" rules.

—> Example

Let’s say you are under 50 and want to save as much as possible:

• Your Contribution: You max out your 401(k) at $24,500

• Employer Match: Your company puts in $10,000 as part of their matching program

• The Gap: The IRS allows a total of $72,000 in your 401(k) — you’ve only used $34,500

• The “Mega” Contribution: You can contribute an additional $37,500 as After-Tax funds and then convert them to Roth

Can you can do this?

You can only do this if your employer’s specific 401(k) plan allows two specific things:

1. After-tax contributions: Not all plans offer this

2. In-service distributions or conversions: Your plan must allow you to move that after-tax money into a Roth IRA or Roth 401(k) while you are still working there

Just ask your compliance or HR department if you can do this. If they don’t know, tell them to find out… lol!

Why do it?

• High Income: You can do this even if you earn $1M+ and are technically disqualified from a regular Roth IRA (although you can always do a backdoor conversion)

• Higher Limits: You can put away nearly triple the normal Roth limit.

• Tax-Free Growth: All the money you move into the Roth account side grows and is withdrawn totally tax-free in retirement.

Usually high-earners who care substantially about retirement and financial comfortability down the road are the individuals who pursue this strategy.

—> I personally don’t do this and would rather just contribute the max $24,500 401(k) amount to my Roth.

This is just my personal opinion though, as I think there’s a life balance between being conscious of your monetary goals at retirement, but also realizing the utility of money is greater at a young age… unless you make a WHOLE lot of dough!

Share

Step-by-Step: How to Execute at Schwab

I personally use Charles Schwab as my brokerage, so below is step-by-step instructions on how to execute on this through the desktop app.

Note: Always do this type of stuff on your desktop, as mobile doesn’t always have the same capabilities.

Making After-Tax Contributions:

1. Go to workplace.schwab.com and log in with your credentials

2. Click “Manage Account” from the main menu

3. Select “Change Contribution”

4. Look for an option labeled “Employee After-Tax Def” or similar

5. Enter the dollar amount you want to contribute after-tax each pay period

6. Click “Save Changes”

Setting Up Automatic Conversion (Recommended):

To avoid leaving after-tax contributions unconverted (which would accumulate taxable earnings), set up automatic conversion:

1. Log into workplace.schwab.com

2. Go to “Manage Account” > “In-Plan Roth Rollover”

3. Confirm you’re a U.S. citizen or resident

4. Select “Automatic In-Plan Roth Rollover Only” and click “Get Started”

5. Click the toggle to turn “On”

6. Check the box: “I understand and agree to the information provided”

7. Click “Submit” to finalize

This automation ensures your after-tax contributions convert to Roth immediately with each payroll, minimizing taxable earnings.

Manual Conversion (If No Automatic Option):

1. Log into workplace.schwab.com

2. Select “Move Money” or “Online Transfer”

3. Choose “From: After-Tax 401(k)” and “To: Roth 401(k)” (or Roth IRA if rolling out)

4. Enter the amount

5. Click “Submit”

If you don’t have the capital to do this or don’t have interest in putting this much money aside into retirement, again, that’s totally understandable. In the game of life, I don’t think it’s worth it unless you make a YACHT LOAD of money.

The Critical Timing Factor

Every day your after-tax contributions sit unconverted, they earn interest or investment gains.

Those earnings become taxable when you convert.

So don’t wait too long to convert — this is why I think automating the conversion is the best idea — then you don’t have to think about it as well.

Conclusion on the MEGA Backdoor Roth

The MEGA backdoor Roth is a powerful tool for high-income earners looking to maximize tax-free retirement savings.

By understanding the three contribution buckets and executing the conversion strategy, you can leverage the $72,000 annual limit to your advantage.

For someone earning $500,000 annually, contributing an extra $47,500 to the Roth compounds meaningfully over time. At an 8% annual return over 30 years, that single year's contribution (the $47,500) alone grows to ~$480,000, entirely tax-free.

Multiply that across three decades of contributions, and the compounding advantage becomes substantial. Whether through Schwab, Fidelity or another platform, find out if your employer offers this — the mechanics are straightforward once you know if your plan supports it.

Subscribe now

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.

Most of the Generative AI boom so far has been centered around GPUs and data centers, but the next chapter won’t live 100% in the cloud, but rather, will move to AI at the edge.

We’ve already seen a partial move of conversation past the narrow-focused raw compute scaling of power for datacenters via GPUs — with the newer talk of the town surrounding memory, as players like Micron and Sandisk have blasted higher in the past year.

The retail public is learning more every day on the tech stack of the semiconductor industry, as it has become the new ‘oil’ of the current world and economy as we see it.

Field-programmable gate arrays (FPGAs) are hardware that operates like software, and if we can make this chip technology cheap and usable enough, it could have massive potential for the world of AI and neural networks.

In this writeup, I want to unpack why FPGAs are genuinely a revolutionary technology, how much potential these chips actually have and how players like AMD, Intel’s Altera and Lattice Semiconductor might still turn them into the go-to brain for AI at the edge.

As always, I would really appreciate if you shared this post and subscribed to ThePrivatePublicInvestor, as I try my hardest each week to give you custom, in-depth analysis on stock investments, market insights and portfolio strategies.

With a subscription to the ThePrivatePublicInvestor, you will receive insight into my personal portfolio, along with each position I own and the related weighting, along with custom templates for valuation and modeling (coming soon) and the personal chat feature for the community.

As this channel grows, paid subscriptions will start to be incorporated, so subscribe early and stay subscribed to receive ‘founding member’ pricing and exclusive benefits.

Subscribe now

What are FPGAs and why do they matter?

FPGA technology is much different from a CPU, GPU and an ASIC.

CPUs are chips that are designed to handle a single task efficiently. GPUs use parallel processing to handle multiple tasks a once, but each task slower than a CPU. An ASIC is a single-purpose machine used for one singular job — less flexible than a general purpose CPU, but much faster.

An FPGA is a type of chip that can be programmed and reprogrammed after it is manufactured to perform any task. It’s the most flexible chip technology on the market.

Unlike a CPU running software instructions over and over, or a GPU executing thousands of data vectors in parallel, an FPGA can be architected as custom hardware for your exact workload.​

Let’s think about this using an analogy of transferring cargo from one location to another, with these different chip technologies representing the “vessel” for transferring the cargo:

• CPU (The Commercial Jet): It finishes one mission (task) at a time incredibly fast. If the mission changes mid-flight, it can pivot instantly. It can also travel anywhere (flexibility)

• GPU (The Cargo Train): It isn’t faster than the commercial jet, but it has 500 cars moving simultaneously. It’s perfect for when you have 10,000 identical cargo crates (or data) to move at once.

• ASIC (High-Speed Monorail): This is a permanent structure that is custom-built to move (process) one specific thing. It is the fastest and cheapest way to move the cargo, but the structure cannot be moved or changed (not flexible)

• FPGA (The LEGO Delivery): I like this LEGO analogy for the FPGA — a vehicle made of modular blocks. Before a trip/shipment, you can rebuild the chassis to be a cargo tanker. The next day, you can rebuild it to be a flatbed F-150. The next day, you can rebuild it to be a helicopter. It’s flexible, and it’s hardware that acts like software.

The Edge AI Application and Sweet Spot

For anyone who isn’t caught up on “AI at the Edge,” — it’s simply running inference AI locally on devices rather than in the cloud.

Why is this important?

Because latency. Latency can kill user experience.

Classic examples of this are autonomous vehicles (AV), military drones and medical devices.

An AV can’t afford a 1-second round trip to the cloud to decide whether to brake…

A military-grade drone camera can’t tolerate cloud dependency for threat detection or aerial maneuvering…

Your Intuitive Surgical ‘Da Vinci’ robotic system performing surgery can’t wait for network delays…​

FPGAs have 4 concrete advantages over other chips:

• Ultra-low latency

• 3-4x power efficiency over GPUs with specific use cases

• Runtime reconfigurability for algorithm evolution

• Sensor capabilities

In more detail:

Ultra-low latency: A GPU processes data in batches. It waits for a buffer to fill, then processes everything at once. This batching introduces variable latency, usually milliseconds, depending on workload.

FPGAs don’t batch. They process data as it arrives, processing “pixel-by-pixel,”.

Extreme power efficiency: A GPU like NVIDIA’s H100 consume lots of energy.

FPGAs can deliver comparable inference performance at a fraction of the power. In some edge AI workloads, FPGAs use 3-4x less power than GPUs while maintaining low latency. That translates directly to longer battery life, which illustrates the efficiency of this chip technology.

Flexibility: Once an FPGA is deployed and integrated within a system, you’re not locked into a fixed architecture of compute. You can reprogram it to adapt to evolving AI models without purchasing new hardware.

This is valuable in uncertain environments such as AVs, military technology and medical devices where the environment constantly changes and the variables are unknown. The algorithm can freely change.​

Direct sensor integration: Let’s think about our real-world examples again. Your AV “x-amount” of cameras, possibly LIDAR, radar and other technical sensors. Your Da Vinci robot has performance video processing, 3D visualization and precise motor control.

FPGAs excel at sensor control and taking multiple high-speed data streams, processing them in parallel and making decisions instantly.

IMPORTANT: GPUs and CPUs struggle here because they’re designed to pull data into memory, process it, then push out results.

FPGAs are architected for streaming data.

So Why Isn’t Every Company Rushing to FPGAs?

Because the reality is that FPGAs carry a high cost and complexity for programming that people can underestimate and is a brutal barrier for businesses.

According to a recent industry survey from Logic Fruit:

39% of engineers cite a “Time-Consuming design process” as the biggest obstacle to FPGA development. Another 30% mention high development costs as an issue.​

According to another survey from Logic Fruit:

44% of participants think that FPGAs will eventually replace ASICs due to the demand for more adaptable and reprogrammable hardware solutions.

According to research, this could be the biggest threat to mainstream FPGA adoption. When you’ve validated your AI workload and know it won’t change, an ASIC delivers superior performance and power efficiency. ASICs are expected to grow at a 30%+ CAGR in the AI chipset market, which is much faster than FPGAs’ projected 10-15% growth.

Another 31% of respondents emphasized the growing integration of IoT and AI since FPGAs provide the flexibility and processing capacity needed for these cutting-edge technologies.

So there is a real debate around the viability of FPGAs and whether they will be the future of AI compute at the edge.

But here’s where I think it gets interesting on the cost front… FPGAs are actually getting cheaper!

The low-end FPGA market (small devices for the edge) is projected to dominate by unit volume.

Companies like Lattice and AMD are now building specifically for this segment using mature and cost-optimized manufacturing.

FPGAs are now cheap enough for applications where you need deterministic latency, real-time reconfigurability and sensor fusion. This is a different market than it was five years ago, and it opens up actual volume opportunities in automotive, medical and industrial robotics.

With this, I do think the pragmatic and conservative roadmap is to assume GPUs will continue to be used broadly for flexibility and breadth, CPUs will be used for interconnecting with GPUs and the natural plugin hardware for laptops, ASICs will be used for fixed, high-volume workloads….

… and FPGAs will be used for niche applications where you need custom hardware acceleration, extreme power efficiency and the ability to iterate in real-time with ultra-low latency.

The Market Reality and Size

The global FPGA market is valued at roughly $10-12 billion in 2025, expected to reach $18-20 billion by 2030, which is a 10-15% annual CAGR.

The overall AI semiconductor chip market is worth hundreds of billions of dollars, with an annual CAGR of ~30%.

Doing rough math in excel based on the below image, ​FPGAs represent maybe 5-10% of the overall market, with slow growth relative to the broader AI chip boom.

This may seem very small, but I think this $ market opportunity is very relative, and it depends on the discoverable use cases of FPGAs, which could change the TAM overnight. These markets are where you would need low-latency and real-time processing with evolving algorithms.

Use Applications

FPGAs will dominate specific niche industries:

• Autonomous vehicles

• Industrial robotics

• Telecommunications infrastructure

• Aerospace & defense (drones and other tech)

• Medical devices

I also think mobile edge AI (smartphones), running local inference computation constantly everyday, could have important use cases (could be getting outside of my wheelhouse here though, I’m no AI tech expert).

If FPGA technology is acceleratingly adopted by these industries as the age of robotics and general AI advances, there could be a huge opportunity here.

That said, I am sure that cloud inference will continue to be dominated by GPUs, CPUs and ASICs. FPGAs will only complement these rack-scale stacks within datacenters.

So who could benefit the most from the FPGA Market?

The competitive landscape is pretty concentrated and narrow here, with AMD’s Xilinx subsidiary dominating 50%+ of the market, with Intel’s subsidiary, Altera, following with 35% and Lattice Semiconductor being the only other viable player at 5% (Image source: FPGATEK).

This market share data is actually a bit outdated, but based on skimming other recent articles, the markets share is relatively the same, with Xilinx increasing towards 60%, Altera losing share, down to 30%, Lattice increase share up to 6-8% (bit jump!), and the others filling the remaining gap (even more concentrated!)

Intel has really screwed up on the FPGA front, as they’ve been hyper-focused on the datacenter trend the past few years, restructuring their business with new management and have been trying desperately to catch up to NVIDIA, and recently, AMD. Altera’s FPGA business has suffered due to this.

Regarding the other competitors in the space:

AMD (with Xilinx) is going after high-performance AI engines for cloud, 5G and high-end edge. This is where the big money is, and Xilinx is the most powerful competitor.

AMD now has a complete computing portfolio: CPUs, GPUs, DPUs, FPGAs and accelerators. You don’t need to spec GPUs from NVIDIA for one component and FPGAs from someone else for another. For customers building edge AI systems, this is extremely valuable, as the whole stack is being offered to you from one supplier.

Lattice has alternatively doubled down on small, low-power FPGAs for edge compute, rather than chasing the biggest and fastest devices for datacenters. Lattice is basically playing a very different game from AMD and Intel, and that’s exactly what makes them interesting for edge AI.

They’re not trying to beat AMD or Altera, but rather, they’re trying to be the best in a specific niche. This is extremely valuable, as this is the company’s main focus.

So… yes… AMD, Lattice and Altera (Intel) would benefit disproportionately if this FPGA technology takes off in the future with edge AI applications.

Intel only if they get their s*** together!

For more information on the specific products each company offers, I’d recommend skimming the below website:

https://fpgatek.com/fpga-manufacturers-and-their-products/

So, Could FPGAs Be the Answer to AI on the Edge?

FPGAs are genuinely a revolutionary technology for AI, as mentioned in the beginning of this writeup... that’s for sure, but I think this is only for specific use cases until the TAM gets broadened when companies investigate, research and reveal other use cases.

If you’re building an autonomous vehicle and need to put together multiple high-speed sensors with sub-millisecond latency while running neural network inference, FPGAs are a better choice than GPUs.​

If you’re utilizing inference AI on a military-grade, weaponized drone that runs on battery power, FPGAs’ power efficiency and sensor capability enhancement can improve this product immensely.​

If you’re building medical imaging devices where latency is critical to patient safety and health, FPGAs are imperative and give you deterministic timing that GPUs can’t match.​

These are significant markets, but they’re not the majority of AI deployments.

So FPGAs will likely not be the highest revenue-generating chip anytime in the future, but I do think this industry is a bit overlooked with the current craze with raw datacenter compute.

What’s a more likely ecosystem of AI chips is where different technologies thrive in different domains:

• Datacenter cloud training: GPUs, CPUs and ASICs dominate

• Cloud inference: Mixture of GPUs, ASICs and FPGAs, depending on latency/throughput trade-offs

• Edge inference: FPGAs, edge TPUs, and other specialized processors

• Real-time embedded AI: FPGAs and ASICs

BUT, if FPGAs can carve out 10-15% of edge AI workloads in medical devices, robotics, autonomous vehicles and industrial applications, and those markets are growing at, say, 25%+ annually, then even a niche FPGA player could see 20-30% revenue growth for a sustained period of time.

Share

Disclaimer: The information provided in this publication is for informational and educational purposes only and does not constitute investment, financial, or other professional advice. ThePrivatePublicInvestor and its authors are not registered investment advisors or broker-dealers. All opinions expressed reflect personal views as of the date published and are subject to change without notice. While efforts are made to ensure accuracy, no guarantee of completeness or reliability is given. Past performance is not indicative of future results. The author may hold positions in securities discussed. Use of this content is at your own risk.