Core Viewpoint - Saputo Inc. has entered into a definitive agreement to sell an 80% interest in its Dairy Division (Argentina) to Gloria Foods, valuing the business at approximately $855 million, with expected net proceeds of about $543 million after tax [1][2][3] Financial Summary - The Dairy Division (Argentina) generated approximately $1.2 billion in revenues over the last four quarters, accounting for about 7% of Saputo's consolidated revenues [2] Strategic Implications - The divestiture is part of the company's strategy to refine its global footprint for long-term growth, enhancing financial flexibility and allowing for targeted reinvestment in higher growth opportunities [3] - The company will maintain a 20% ownership interest in the Dairy Division (Argentina) and continue to manufacture select items on behalf of Saputo [1][2] Operational Details - The transaction includes two manufacturing facilities and local brands such as La Paulina, Ricrem, and Molfino [2] - The closing of the transaction is expected in the first quarter of fiscal 2027, pending customary closing conditions and regulatory approvals [1]

Core Insights - Bernstein conducted an extreme scenario stress test on Oracle, estimating a valuation floor of $137 per share, indicating a 15% downside from the current level of approximately $160, providing a clear margin of safety for investors [1] - In an optimistic scenario, if execution goes smoothly, the target price could rise to $313, highlighting a strong asymmetric risk-reward profile [1] Customer Concentration and Capital Expenditure Concerns - Bernstein addressed market concerns regarding customer concentration and capital expenditure, particularly related to AI clients like OpenAI, suggesting that fears are overvalued [1] - The report indicates that even if all AI contracts fail to convert into revenue, Oracle's core database, SaaS, and non-AI OCI businesses would continue to grow normally [1] Lease Liabilities Analysis - Bernstein analyzed Oracle's $248 billion lease liabilities, arguing that the risk of clients defaulting is significantly overstated [2] - The long-term nature of these leases (15 to 19 years) means that the maximum annual risk exposure is only $13 to $16.5 billion, peaking in FY2030 [2] - The global demand for data centers is expected to remain high, allowing Oracle to utilize or sublease any idle space [2] Hardware Capital Expenditure Risks - Bernstein noted that the actual exposure to hardware capital expenditure risks is limited, as Oracle can cancel or delay orders without incurring significant penalties [3] - Most computing assets are highly versatile and can be repurposed for traditional SaaS and OCI businesses, mitigating risks associated with client cancellations [3] Core Business Fundamentals - The report highlights Oracle's core business value, projecting total revenue of $101 billion by FY2030, even without AI-related income [4] - After accounting for interest costs from debt incurred for AI infrastructure, the estimated earnings per share (EPS) could still reach $9.00, suggesting a valuation of $137 per share based on industry peers' price-to-earnings ratios [4] Financial Projections - Oracle's total revenue is projected to grow from $50 billion in FY23 to $221 billion by FY30, with a notable increase in revenue from AI expected to reach $120 billion by FY30 [5] - The operating income is expected to grow from $13.2 billion in FY23 to $39.8 billion by FY30, indicating a strong upward trend in profitability [5] Valuation Comparisons - Oracle's projected EPS growth rate of 18.2% positions it favorably against peers like Microsoft and SAP, with a reasonable price-to-earnings ratio of 27.3x suggesting a stock price of $137 excluding AI revenue [6] - Bernstein believes that Oracle's current stock price reflects overly pessimistic expectations, presenting an attractive risk-reward ratio for investors [6]

Core Viewpoint - Barclays highlights a critical technological distinction: AI tools are indeed encroaching on the application layer of SaaS companies, but they cannot shake the foundational "system of record" infrastructure, which is the core moat for companies like Salesforce and SAP [1][2]. Group 1: Impact of AI on SaaS Companies - The recent release of products like Claude Cowork by Anthropic has led to a significant decline in enterprise software stocks, with Salesforce and Workday dropping over 40% in the past 12 months [2]. - Investors are confused about the boundaries of AI capabilities, leading to a panic sell-off as they believe new AI tools will completely replace traditional SaaS software, resulting in a zero valuation for legacy companies [2][3]. - Barclays' report argues that a simplistic "one-size-fits-all" logic does not apply to most enterprise software companies [3]. Group 2: AI Capabilities and Limitations - Generative AI excels in pattern recognition and "draft generation," but its probabilistic nature poses fundamental limitations, particularly in scenarios requiring absolute accuracy [5]. - Traditional software operates on deterministic rules, ensuring consistent outputs, while AI software is probabilistic and cannot guarantee the same level of consistency [5][6]. - This indicates that AI operates at a higher level of abstraction and is not a direct replacement for traditional software [6]. Group 3: Mispriced Software Companies - Barclays identifies three categories of enterprise software companies that have been mispriced during the sell-off, starting with system of record companies like Salesforce, which provide critical data requiring certainty [9]. - SAP's position is even more secure, as it manages essential business data and workflows that cannot be handled by advanced generative AI models [9][10]. - The report suggests that AI will not replace these systems but will increase their importance, as AI agents will create more data touchpoints, raising the complexity that system records need to manage [10]. Group 4: Additional Misjudged Investment Opportunities - Besides system of record companies, Barclays points out two other categories that have been misjudged: beneficiaries of AI agents and AI computing providers [11]. - Companies like JFrog, Snowflake, and MongoDB may see increased usage due to the demand for more code and data driven by AI expansion [11]. - There is a logical contradiction in the market's reaction; if AI is powerful enough to disrupt the software industry, the demand for computing power should surge, yet companies like Oracle and CoreWeave have also faced significant sell-offs [11]. Group 5: Reevaluation of Software Sector Valuations - The market correction is deemed necessary for the application layer of enterprise software, which has long enjoyed inflated valuations due to controlling both infrastructure and interface [15]. - If AI technologies can overlay on system records, they may begin to erode the pricing power of SaaS companies [15]. - Barclays concludes that the era of easy high profits for bloated application layers may be over, but this does not signify the end of the entire industry [15][16]. Group 6: Market Sentiment and Future Outlook - The indiscriminate nature of the current sell-off indicates that investors with limited understanding of the software industry are making decisions based on extreme viewpoints [16]. - As understanding of AI capabilities and SaaS business models deepens, the market may reprice companies incorrectly categorized as "AI victims" [16].

Core Insights - The focus of sustainability efforts by European enterprises is shifting from regulatory compliance to achieving measurable financial and operational outcomes [1] - European firms are aligning their strategies with the renewable energy transition to manage energy exposure, support decarbonization, and capture new growth opportunities [1] Group 1: Sustainability Practices - Enterprises are investing in integrated environmental, social, and governance (ESG) data architectures that connect sustainability information across various functions such as finance, procurement, HR, and operations [1] - Organizations are seeking solutions for supply chain and product-level transparency to gain deeper insights into carbon emissions and workforce practices [1] - Digital sustainability solutions are being adopted as the region's energy mix shifts toward renewables and emissions decline [1] Group 2: Market Trends and Provider Insights - The digital sustainability market in Europe is maturing, with providers focusing on clear, outcome-driven use cases [1] - Enterprises are looking for providers that can deliver concrete environmental, social, and economic outcomes through transparent, data-driven models [1] - The report evaluates 70 unique providers across three quadrants, naming leaders such as Accenture, Capgemini, and IBM in multiple categories [1] Group 3: Technology and Data Integration - By integrating sustainability data with real-time decision-support tools, organizations are gaining visibility into industrial processes, which supports cost control and reduces environmental impact [1] - Providers are facilitating this shift with data-driven blueprints and operating models that clarify roles and responsibilities across various functions [1] - The deployment of GenAI is noted for producing qualitative narratives for corporate sustainability reporting [1]

Core Insights - The recent release of Anthropic's products has triggered a significant sell-off in enterprise software stocks, revealing an overreaction in the market regarding AI threats [1][3] - Barclays highlights that while AI tools are encroaching on the application layer of SaaS companies, they do not threaten the foundational "system of record" infrastructure, which is crucial for companies like Salesforce and SAP [1][3] Group 1: Market Reaction and Misunderstandings - The release of Claude Cowork by Anthropic has been described as the tipping point for the decline in enterprise software stocks, with Salesforce and Workday seeing over a 40% drop in the past year [3] - Investors are confused about the capabilities of AI, mistakenly believing that new AI tools will completely replace traditional SaaS software, leading to a devaluation of established companies [3][12] - Barclays' report argues that the simplistic view of AI as a total replacement for software does not apply to most enterprise software companies [3] Group 2: AI Capabilities and Limitations - Generative AI excels in pattern recognition and initial draft generation but has fundamental limitations due to its probabilistic nature, making it less effective in scenarios requiring absolute accuracy [4][5] - Traditional software operates on deterministic rules, ensuring consistent outputs, while AI software functions probabilistically, lacking guaranteed consistency [5][6] Group 3: System of Record Companies - Barclays identifies three categories of enterprise software companies that have been mispriced during the sell-off, starting with system of record companies like Salesforce and SAP, which provide critical data requiring certainty [7][8] - SAP's position is particularly strong, as it manages essential business data and workflows that generative AI cannot handle effectively [7][8] - The report suggests that AI will not replace these systems but will instead increase their importance as AI creates more data touchpoints [8] Group 4: Misjudged Investment Opportunities - Besides system of record companies, Barclays points out two other categories that are misjudged: beneficiaries of AI agents and AI computing providers, which may see increased demand due to AI expansion [9] - There is a contradiction in the market logic; if AI is powerful enough to disrupt the software industry, the demand for computing power should rise, yet companies like Oracle and CoreWeave have also faced sell-offs [9] Group 5: Application Layer Challenges - The market's panic is not entirely unfounded, as SaaS companies have struggled with poor user interfaces, high prices, and security vulnerabilities, leading to customer dissatisfaction [10] - Companies like Klarna are moving away from traditional SaaS products in favor of smaller firms, utilizing AI tools to build their own applications, which highlights a genuine threat to the SaaS model [10] Group 6: Future Market Dynamics - The current market correction is seen as necessary, as SaaS companies have enjoyed inflated valuations by controlling both infrastructure and interface [11] - The emergence of AI technologies that can operate above system records may erode the pricing power of SaaS companies, indicating a shift in the profitability landscape [11] - As understanding of AI capabilities and SaaS business models deepens, the market may begin to re-evaluate companies incorrectly labeled as "AI victims," while those relying on poor application layers may face continued valuation pressure [12]

Group 1: Private Credit Market Overview - The private credit market in the U.S. has grown to nearly $1.3 trillion, accounting for about 10% of total commercial bank credit as of 2023[3] - Private credit primarily serves small and medium-sized enterprises (SMEs), with non-bank investors like pension funds and insurance companies participating through private credit funds and Business Development Companies (BDCs)[3] - BDCs are required to disclose data regularly, providing a window into the private credit market, with BDCs managing assets that have tripled since 2020[19] Group 2: Credit Quality and Returns - Cash flows for many mid-sized companies are recovering post-rate cuts, but BDC shareholder returns are declining due to lower profitability and mandatory profit distribution requirements[4] - The average dividend coverage ratio for publicly traded BDCs fell from 1.34 in mid-2023 to 1.08 by September 2025, indicating weakened ability to cover dividends[4] - Non-accrual investments in BDCs have increased from 0.8% in 2022 to over 1.2% by Q3 2025, suggesting rising credit risk[4] Group 3: Rising Default Risks - Credit rating agencies report an upward trend in default rates within the private credit market, with "invisible defaults" also on the rise, indicating hidden risks[5] - The software and healthcare sectors are particularly vulnerable, with software companies facing high leverage and potential disruption from AI advancements[5] - Nearly 14% of commercial real estate loans are in negative equity, raising concerns about the stability of this sector[5]

Financial Data and Key Metrics Changes - Astera Labs reported Q4 2025 revenue of $270.6 million, representing a 17% increase from the previous quarter and a 92% increase year-over-year [6][24] - For the full year 2025, revenue reached $852.5 million, up 115% compared to the prior year [6][7] - Non-GAAP gross margin for Q4 was 75.7%, down 70 basis points from the previous quarter [25] - Non-GAAP operating margins for Q4 were 40.2%, down 150 basis points from the previous quarter [25] Business Line Data and Key Metrics Changes - Scorpio P-Series exceeded the target of 10% of revenue, becoming the only PCIe 6 fabric shipping in volume [8] - Aries portfolio grew nearly 70% year-over-year in 2025, driven by demand for custom AI accelerators [9] - Taurus revenue grew by more than 4x year-over-year in 2025, supported by new 400G designs [10] Market Data and Key Metrics Changes - The market opportunity for Astera Labs' intelligent connectivity platform is expected to expand to $25 billion over the next five years [13] - The demand for AI infrastructure is being driven by significant capital expenditures from major hyperscalers, with Google and AWS guiding nearly $400 billion in total CapEx spending for 2026 [7] Company Strategy and Development Direction - Astera Labs is strategically investing in expanding its team and capabilities, including the establishment of a new design center in Israel [14] - The company aims to deliver technology enhancements across its core portfolio while expanding into new categories, including custom connectivity solutions and optical engines [17][21] - Astera Labs is focused on building multi-generational partnerships with leading AI platform and cloud service providers [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential driven by increasing AI infrastructure deployments and the complexity of high-speed interconnect architectures [13] - The company anticipates continued growth for Scorpio P-Series and Scorpio X-Series, with significant revenue opportunities expected in 2026 and beyond [8][19] - Management highlighted the importance of maintaining a strong execution mindset to capitalize on the expanding market opportunities [14][23] Other Important Information - Mike Tate will transition from CFO to a strategic advisor role, with Desmond Lynch joining as the new CFO effective March 2nd [15] - The company is engaged in discussions with multiple customers regarding the adoption of UALink and NVLink Fusion technologies [31][34] Q&A Session Summary Question: What is the visibility on UALink adoption for next-gen designs? - Management confirmed that AWS and AMD have publicly endorsed UALink, indicating strong support and readiness for deployment in 2027 [31][32] Question: What is driving the increase in operating expenses? - The increase is attributed to significant revenue opportunities presented by customers, necessitating investment in R&D and the recent acquisition of a capable team for the Israel Design Center [41][42] Question: How does Astera view the coexistence of UALink and ESUN technologies? - Management believes both technologies will coexist, with customers likely to stick with solutions that align with their existing software stacks [43][44] Question: What is the growth outlook for Scorpio? - Scorpio P-Series has exceeded 15% of sales and is expected to continue growing, with Scorpio X-Series ramping up in the second half of 2026 [47][66] Question: How will customized solutions impact average selling prices and margins? - Customized solutions are expected to have a higher attach rate, although average selling prices may vary due to partner contributions [75]

Core Viewpoint - Software stocks are expected to rebound from historic lows as the market has overly pessimistic expectations regarding AI's short-term disruption of the software industry, according to JPMorgan strategists [1][5]. Group 1: Market Sentiment and Stock Performance - The software sector has fallen to its lowest level since the market turmoil in April last year [4]. - Concerns over new AI tools potentially disrupting traditional Software as a Service (SaaS) business models have led to sustained pressure on U.S. software stocks [1][5]. - The recent sell-off did not differentiate between companies with AI partnerships or proprietary data assets, affecting nearly all related software companies equally [1]. Group 2: Company Resilience and Long-term Outlook - Companies like Microsoft and CrowdStrike are highlighted as resilient players in the AI space, likely to benefit from AI-enhanced workflow efficiencies [5]. - The high switching costs and long-term contracts in enterprise software provide a buffer against short-term disruptions [5]. - The long-term fate of traditional software companies in the face of AI remains uncertain, but current market pessimism appears to be an overreaction [5]. Group 3: Analyst Perspectives - Analysts from Morgan Stanley believe that U.S. tech stocks still have room for further gains, and the decline in software stocks has created an attractive entry point [5]. - Wedbush analysts argue that the market's reaction to AI risks is excessive, suggesting that the current sell-off implies an extreme assumption of widespread AI disruption, which is not feasible [6]. - The caution of enterprise clients regarding AI migration is emphasized, as many are reluctant to expose core data to immature new platforms [6]. Group 4: AI Integration and Market Dynamics - The narrative that AI will replace entire enterprise software stacks is overly simplistic; the value density of enterprise software lies in proprietary data and compliance structures [8][9]. - AI is more likely to integrate as embedded tools within existing software platforms rather than completely replacing them [6][9]. - The current sell-off reflects a market response to the question of how much profit pools in SaaS will be redistributed due to AI [10]. Group 5: Future Indicators and Investment Strategy - The rebound in software stocks may depend on two hard indicators: the speed of real deployment and payment expansion by enterprises, and the elasticity of SaaS companies' AI-related product revenues [10]. - Companies with strong data assets and solid fundamentals, such as Microsoft, MongoDB, Snowflake, Palantir, and SAP, are likely to experience a robust rebound post-panic [10].

Portfolio Strategy Research 6 February 2026 | 5:01AM GMT Strategy Espresso: Tech wreck: Sharp rotations and what is now priced Sharon Bell +44(20)7552-1341 | sharon.bell@gs.com Goldman Sachs International Guillaume Jaisson +44(20)7552-3000 | guillaume.jaisson@gs.com Goldman Sachs International Peter Oppenheimer +44(20)7552-5782 | peter.oppenheimer@gs.com Goldman Sachs International Giovanni Ferrannini +44(20)7051-2589 | giovanni.ferrannini@gs.com Goldman Sachs International Investors should consider this re ...

Group 1: Company Overview - Workday, Inc. (NASDAQ:WDAY) specializes in enterprise cloud applications, focusing on financial management and human capital management software, competing with Oracle and SAP [1] - The current market capitalization of WDAY is approximately $40.9 billion, indicating its substantial presence in the market [3] Group 2: Leadership Changes - The current CEO is stepping down, and cofounder Aneel Bhusri is returning to the CEO position for the fourth time, which could impact investor sentiment and the company's strategic direction [2][5] Group 3: Stock Performance - WDAY's stock price is currently $153.18, reflecting a decrease of 5.98% or $9.75, potentially influenced by leadership changes [2] - The stock has shown volatility, with a yearly high of $281 and a low of $147.35, indicating significant price movement [3][5] - Today's trading volume for WDAY is 6,454,204 shares, suggesting active investor interest [4] Group 4: Analyst Insights - Stifel Nicolaus analyst Brad Reback has lowered the price target for WDAY from $235 to $175, indicating a potential upside of approximately 14.33% [1][5]