V i e w p o i n t | 25 Jun 2025 16:16:30 ET │ 19 pages Thematic Equity Strategy A Global Perspective on Artificial Intelligence CITI'S TAKE AI remains one of our top Growth themes in the US given its premium growth expectations at justifiable valuations. In this report we take a broader look at AI across the globe and our Enablers versus Adopters value chain delineation. We reiterate the need for value chain diversification within the theme while also stressing geographic reach. Investors solely focused on ...

Core Viewpoint - Mastercard has been found in violation of European competition law for imposing excessive interchange fees, which restrict competition and lack justification, similar allegations are faced by Visa [1][10] Group 1: Legal and Financial Implications - The ruling exposes Mastercard to significant financial liability as U.K. retailers can seek damages, potentially leading to sizable payouts for both Mastercard and Visa [2][4] - The U.K. Payment Systems Regulator may impose stricter oversight and cap interchange fees across the industry due to rising card fees [2] - A trial is ongoing to determine if merchants passed these costs onto consumers, with both Mastercard and Visa expected to appeal the decision [3] Group 2: Competitive Landscape - Legal and competitive pressures, including the rise of fintech disruptors, may challenge the duopoly of Mastercard and Visa, although their robust business models and profitability remain strong [5] - Merchant interest in alternatives like stablecoins is likely to grow, as they offer lower transaction fees and faster settlements, potentially impacting Mastercard's market share [6] Group 3: Company Developments - PayPal launched its stablecoin, PYUSD, in August 2023, and is registered with the Financial Conduct Authority in the U.K., indicating readiness for expansion [7] - Mastercard has launched its Multi-Token Network and piloted USDC settlements to integrate blockchain into its payment system [8] Group 4: Financial Performance and Valuation - Mastercard shares have gained 4.5% year to date, outperforming the broader industry's growth of 3.2% [9] - The company trades at a forward price-to-earnings ratio of 31.81X, which is higher than the industry average, and carries a Value Score of D [12] - The Zacks Consensus Estimate for Mastercard's 2025 earnings implies a 9.5% rise year over year, followed by 16.7% growth in the subsequent year [13]

Core Insights - Circle's business model shows significant profit potential, and the role of stablecoins in daily financial activities is indispensable [1] - Circle's stock price surged dramatically after its NASDAQ listing, reflecting strong market confidence in stablecoins and regulatory support [2][3] Group 1: Stock Performance and Market Position - Circle's stock price increased from an initial listing price of $31 to a peak of $290, resulting in a market capitalization nearly eight times Ripple's previous valuation of $50 billion [1][2] - The surge in Circle's stock is attributed to a broad consensus among lawmakers and the market regarding the future application and adoption of stablecoins, reinforced by bipartisan support for the GENIUS Act [2] Group 2: Competitive Landscape - Circle's profitability is significantly lower than that of its competitor Tether, with Circle earning $156 million compared to Tether's $13.1 billion in profits last year [2][3] - Circle's focus on institutional clients and its transparent corporate structure have made it more appealing to U.S. cryptocurrency traders compared to Tether, which operates in less regulated environments [3][4] Group 3: Operational Strategies - Circle has opted to manage its reserves through BlackRock and pays Coinbase to maintain USDC reserves, sacrificing potential profits from reserve management [4] - The operational model of Circle, which emphasizes transparency and regulatory compliance, contrasts with Tether's offshore operations, which have faced governance challenges [4] Group 4: Future Applications of Stablecoins - Stablecoins have the potential to replace traditional payment systems, commercial banking needs, brokerage services, remittance services, and trade financing, offering lower costs and increased efficiency [7][8][9][10][11] - The introduction of stablecoins could fundamentally reshape the financial system, providing innovative solutions and enhancing user experience in various financial transactions [11] Group 5: Limitations of Stablecoins - Stablecoins are not suitable for consumer loans due to the need for credit risk assessment and the complexity of traditional lending processes [12] - In certain economies with established payment systems, such as China and India, stablecoins may struggle to gain traction despite their advantages in cross-border transactions [13] Group 6: Valuation and Market Potential - Circle's valuation is not solely based on its current performance but also on its potential to disrupt traditional payment and consumer finance sectors, with a market opportunity in the trillion-dollar range [14] - While Circle may not surpass Tether's market share, it stands out as the only stablecoin company attracting investor interest in the U.S. stock market [14]

Core Insights - Mastercard is a leading corporate giant with a market cap of nearly $500 billion, ranking as the 16th-largest American company by market cap, surpassing major financial institutions like Bank of America and American Express [1] Business Model - Mastercard operates a payment processing business model, acting as a middleman that facilitates transactions between merchants, cardholders, and card-issuing institutions, charging fees for network usage [3] - The company generated $29 billion in revenue over the last 12 months, reflecting a 12% increase from $26 billion the previous year, driven by growing global payment volumes and a shift towards cashless transactions, particularly in emerging markets [4] Financial Performance - Mastercard's operating margin has improved from 53% to 58% over the last decade, with net income rising from $3.7 billion to over $13.1 billion, benefiting from economies of scale [5] - The stock has delivered a total return of 518% over the past 10 years, significantly outperforming the S&P 500's total return of 246% during the same period [7] Shareholder Value Initiatives - The company pays a quarterly dividend of $0.76 per share, yielding 0.55%, and has announced a $12 billion share repurchase plan to enhance shareholder value by reducing outstanding shares [8] - Mastercard generated $14.3 billion in free cash flow over the last 12 months, equating to $15.53 per share, supporting its dividend and buyback initiatives [9]

Core Insights - MasterCard is recognized as a dominant player in the traditional payments sector, known for its credit and debit card services, extensive scale, and global trust [1] Group 1: Company Overview - MasterCard is synonymous with credit and debit cards, indicating its strong brand presence in the payment industry [1] - The company operates on a significant scale, which contributes to its competitive advantage [1] - MasterCard has established a reputation for global trust among consumers and businesses alike [1] Group 2: Investment Focus - The analysis emphasizes the importance of identifying high-yield investment opportunities for individual investors [2] - The insights provided aim to simplify complex investment concepts, making them accessible for better decision-making [2] - The research is designed to support investors in achieving improved returns through expert analysis [2]

Bitcoin Market Analysis - Bitcoin's market capitalization is currently at $2 trillion, with potential to reach $4-5 trillion [1] - Bitcoin is considered undervalued in the low $100,000 price range by high-net-worth individuals [2] - Bitcoin represents only 2% of total global assets, with potential to reach 4-5% [4] - Publicly traded companies are increasingly investing in Bitcoin [5] Institutional Investment - Pro Cap BTC purchased $125 million of Bitcoin in two days, including 1,28 Bitcoin on the second day [5] - Nine publicly traded companies bought over 11,000 Bitcoin this week [9] - BlackRock's Bitcoin ETF bought over 6,000 Bitcoin this week and over 11,000 Bitcoin last week [9] Supply and Demand Dynamics - Only 450 new Bitcoin are mined per day, while demand from ETFs and companies exceeds this supply [8][10] - Over 94% of the total 21 million Bitcoin have already been mined [8] - Increased demand from ETFs, companies, and governments may exhaust sellers at $100,000 [11] Altcoin and Cryptocurrency Integration - Chainlink and Mastercard partner to enable over 3 billion cardholders to buy crypto on-chain [13] - Fannie Mae and Freddie Mac will allow borrowers to use Bitcoin and crypto assets for mortgage applications [16][17] - $3 billion of luxury real estate is being tokenized [18] Social Media and Cryptocurrency - 100,000 content creators have joined Snaps, a platform for earning free crypto [19][20][21] - Kookie, an infoi platform, rewards users for posting high-quality crypto Twitter content [20][21]

Partnerships - Mastercard expands relationship with Fiserv to promote FIUSD stablecoin [1]

Looks like Chain Link and Mastercard partner to enable over three billion card holders to purchase crypto directly on chain. This is big. And uh Visa is kind of hung up on the whole stable coin thing.So I don't know if they're there was a talk of a partnership with Visa before with Chainlink, but not for sure. But that's probably why you might see Chainlink pump recently is because they are going to be doing a partnership directly with Mastercard. Here's what it is.Card holders worldwide can purchase crypto ...

Hello everybody. Welcome to the Tuesday live stream. And uh today I almost got scammed and it was this close away.And I got to tell you, I am probably one of the more paranoid people you're going to meet in the digital asset space and I went through all the checks and it still came to this close and there was one thing that saved me. So let's just jump into it. Well, actually also talk about that and also we'll talk about Jerome Powell and inflation, Cardano and uh looks like there's an airdrop called midni ...

Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The news team covers medium and small-cap markets, as well as blue-chip companies, commodities, and broader investment stories [3] - Proactive has bureaus and studios in key finance and investing hubs including London, New York, Toronto, Vancouver, Sydney, and Perth [2][3] Group 2 - The company is a forward-looking technology adopter, utilizing various technologies to enhance workflows [4] - Proactive employs automation and software tools, including generative AI, while ensuring all content is edited and authored by humans [5]