Asia Pacific Equity Research 25 November 2025 China Technology 2026 outlook: Upstream favored; downstream squeezed End demand uncertainty will be the top overhang in 2026 in our view; this is especially true for consumer electronics and automotive application in 1H26, due to an elevated base and an unfavorable (memory) cost. Therefore, we prefer upstream supply chain, such as WFE and foundry sub-sectors, with: (a) sustainable fab capex, largely driven by China indigenous AI supply chain, and (b) "China-for- ...

Group 1 - The Vanguard Information Technology ETF (VGT) is being added to custodial accounts to secure the financial future of children, focusing on the anticipated growth of artificial intelligence (AI) in the economy by the mid-2030s [1][2] - The ETF holds over 300 technology companies, weighted by market capitalization, allowing for automatic capital allocation to the largest and most successful firms [4] - Nvidia, Apple, and Microsoft are the top three holdings in the fund, comprising approximately 18%, 14%, and 13% of assets respectively, reflecting their dominance in AI technology [5][7] Group 2 - The fund's automatic rebalancing feature allows it to adapt to emerging leaders in the technology sector without the need for individual stock selection [6] - The Vanguard Information Technology ETF has a low expense ratio of 0.09%, significantly lower than the average technology sector fund, which charges over 1%, enhancing long-term investment returns [10] - The concentration of the fund's assets in its top three holdings results in higher volatility compared to broader market indices, which is a consideration for long-term investors [7]

Core Insights - Investing in AI infrastructure leaders like Amazon and Broadcom could yield significant returns as they are positioned to capitalize on the growing demand for AI and automation technologies [1][2]. Amazon - Amazon is a key player in the global AI infrastructure, holding a 29% market share in cloud computing as of Q3 [3]. - The company has doubled its data center capacity to 3.8 gigawatts in the past year and plans to double it again by 2027 [3]. - AWS achieved an annualized revenue run rate of $132 billion in Q3, with a backlog of $200 billion, which is expected to grow further [5][6]. - A notable partnership with OpenAI worth $38 billion will enhance AWS's revenue streams and validate its role in AI model training [6]. - Analysts project AWS growth of 25% in 2026, with each $15 billion added to its backlog translating to a 1 percentage point growth [7]. - Amazon's revenue is expected to rise from $714.4 billion in 2025 to $1.2 trillion by 2030, potentially leading to a market cap of nearly $4.1 trillion by the end of the decade [8]. - Current market capitalization stands at $2.36 trillion, indicating a potential appreciation of nearly 73% over the next five years [9]. Broadcom - Broadcom's custom accelerators and networking solutions are in high demand, leading to a 22% year-over-year revenue increase to $16 billion in Q3 [10]. - The company expects significant deployment of its XPUs by major hyperscaler customers, estimating a serviceable addressable market of $60 billion to $90 billion by 2027 [12]. - Broadcom has partnered with OpenAI to develop next-generation AI clusters, anticipating AI revenue growth exceeding 60% in fiscal 2026 [13]. - Networking products are crucial for AI clusters, enabling efficient data movement and communication [14]. - Broadcom's infrastructure software business is also a high-margin opportunity, contributing to its growth [15]. - Analysts forecast revenue growth from $63.3 billion in fiscal 2025 to $189.3 billion by fiscal 2030, with a potential market cap exceeding $3.2 trillion [16]. - Current market capitalization is nearly $1.72 trillion, suggesting a return of 68% to 86% over the next five years [17].

Core Insights - Berkshire Hathaway has acquired 17,846,142 shares of a prominent AI stock, valued at $4.3 billion, making it one of its top 10 holdings by value [1][2] - This marks a significant shift in Warren Buffett's investment strategy, as he has historically avoided AI stocks [1][2] - The recent purchase of Alphabet (Google's parent company) suggests a growing bullish sentiment towards AI within Berkshire Hathaway [8][11] Company Holdings - Berkshire's largest position remains in Apple, valued at over $60 billion, despite a previous peak of over $200 billion [4] - Berkshire has also held a multibillion-dollar position in Amazon since Q1 2019, with Amazon Web Services (AWS) being a key player in AI infrastructure [5] - The recent acquisition of Alphabet stock indicates that Berkshire now has three major companies with direct ties to AI: Apple, Amazon, and Alphabet [11] Investment Strategy - The decision to invest in AI stocks may not have been solely made by Buffett, as portfolio managers Todd Combs and Ted Weschler have been instrumental in previous significant purchases [6][9] - Buffett has expressed regret for not investing in Alphabet earlier, indicating a potential shift in his investment philosophy towards technology and AI [9][10]

Core Viewpoint - The $5 trillion market cap threshold is expected to be reached by multiple companies by 2028, with Nvidia currently being the only company to have crossed this threshold, albeit temporarily due to market fluctuations [1][2]. Group 1: Nvidia - Nvidia currently has a market cap of $4.4 trillion and is well-positioned to reach the $5 trillion mark, primarily due to its dominance in the GPU market for artificial intelligence workloads [3][5]. - Nvidia's management anticipates $500 billion in AI chip sales from 2025 to 2026, indicating significant growth potential, which could propel its stock to the $5 trillion valuation level as early as next year [5]. Group 2: Apple - Apple is the second-largest company globally with a valuation of $4.1 trillion, requiring a 21% increase to reach $5 trillion by 2028, which may be challenging given its recent growth struggles [6][10]. - Despite an 8% revenue growth rate, which translates to a 26% overall growth by 2028, Apple's premium valuation compared to its peers may hinder its ability to achieve the $5 trillion mark [8][10]. Group 3: Alphabet - Alphabet's market cap stands at $3.86 trillion, and it has made significant strides in the AI sector, overcoming initial setbacks and becoming a leader in the AI arms race [11][14]. - The company reported a 15% year-over-year revenue increase in Google Search, with overall revenue rising at a 16% pace, positioning it well for potential growth to the $5 trillion level by 2028 [14]. Group 4: Microsoft - Microsoft currently has a market cap of $3.6 trillion and needs to grow by 39% to reach the $5 trillion threshold by 2028 [15][16]. - With an 18% year-over-year revenue increase and a strong performance from its Azure cloud computing platform, Microsoft is well-positioned to achieve the necessary growth to reach a $5 trillion valuation [17].

Core Insights - Broadcom is emerging as a significant player in the AI sector, outperforming the "Magnificent Seven" stocks with a 142% stock price increase over the past year [3] - The company is well-positioned to benefit from the ongoing expansion of data centers, which are crucial for AI adoption [4] Company Performance - Broadcom reported record revenue of $15.9 billion in Q3, a 22% year-over-year increase, leading to adjusted earnings per share (EPS) of $1.69, a 36% rise [7] - The company anticipates its AI opportunity could reach between $60 billion and $90 billion by 2027, with a significant deal with OpenAI expected to generate $10 billion in additional revenue next year [8] Market Position - Broadcom's Application-Specific Integrated Circuits (ASICs) are gaining traction as a viable alternative to Nvidia's GPUs, which dominate the data center GPU market with a 92% share [6] - The company is expected to generate revenue of $63.3 billion in 2025, with Wall Street estimating a 29% annual growth rate over the next five years [10][11] Future Outlook - If Broadcom can capture a portion of the projected $3 trillion to $4 trillion data center spending over the next five years, it could significantly enhance its market position [12] - The stock is currently valued at less than 32 times next year's expected earnings, with a price/earnings-to-growth (PEG) ratio of 0.42, indicating it may be undervalued [13]

Core Insights - Berkshire Hathaway, led by Warren Buffett, maintains a large equities portfolio valued at over $300 billion, demonstrating a commitment to core investing principles while exploring newer sectors [1][2]. Investment Focus - Berkshire Hathaway has invested significantly in the "Magnificent Seven" stocks, with nearly 24% of its portfolio allocated to just three of these companies [2]. - The three major holdings include Apple, Alphabet, and Amazon, which represent key areas of focus for the company [2]. Company Analysis Apple - Apple constitutes 21.3% of Berkshire's portfolio, with the initial investment made in 2016. The position was once as high as 40% [3]. - Concerns exist regarding Apple's AI strategy, but the company is expected to benefit from AI integration in its products [4]. - Despite being Berkshire's largest position, the company has sold 74% of its stake since early 2023, indicating a cautious approach amid market concerns [6]. - Apple has performed well during the AI sell-off due to its limited investment in AI infrastructure compared to peers, making it a long-term hold for investors [7]. Alphabet - Alphabet represents 1.8% of Berkshire's portfolio, with a new position initiated in the third quarter. The stock has been favored by hedge funds despite a challenging year [8]. - The U.S. Department of Justice's lawsuit against Google for monopolistic practices resulted in a weaker punishment than expected, allowing the company to continue normal operations [9]. - Alphabet's stock trades at about 30 times forward earnings, with strong growth potential in various sectors, including Google Cloud and YouTube [11]. Amazon - Amazon accounts for 0.7% of Berkshire's portfolio, with the initial purchase made in 2019 [13]. - The company operates a robust e-commerce platform and a significant cloud business, Amazon Web Services (AWS), which holds a 30% market share in the global cloud market [16]. - Amazon's stock trades at about 32 times forward earnings, reflecting its strong growth potential despite not being considered cheap [18].

Core Insights - The article discusses the potential struggles of three companies: Beyond Meat, GoPro, and Lucid Motors, questioning whether this holiday season could be their last [4][10][14][17]. Beyond Meat (BYND) - Beyond Meat reported a loss of $111 million in Q3 2025, with revenue declining by 13% to $70 million, driven by a 20% drop in U.S. plant-based meat sales [6][8]. - The company experienced a peak in sales in 2022, but inflation and premium pricing led to a significant decline in demand, with U.S. plant-based meat sales falling by 19% in 2023 [8]. - Despite slight improvements in gross margins to 15% through cost-cutting, the company faces a net debt of $215 million and is projected to potentially go bankrupt by 2027 [10]. GoPro (GPRO) - GoPro's Q3 revenue fell by 37% to $163 million, with GAAP losses more than doubling from the previous year [13]. - The company has struggled due to competition from smartphones and drones, which have eroded its market position [12]. - Analysts have set a target price of $0.75 per share, with current shares at $1.63, indicating a challenging outlook for the company [14]. Lucid Motors (LCID) - Lucid Motors reported a Q3 revenue increase of 68% to $336 million, but net losses reached $1.03 billion, equating to a loss of over $250,000 per vehicle sold [16]. - The company has faced production delays and increased competition, leading to a significant cash burn nearing $1 billion quarterly [16]. - Although backed by Saudi Arabia's Public Investment Fund, there are concerns about the sustainability of continued financial support if losses persist [17].

Both of these stocks have underperformed in 2025. But they could crush the market in 2026 and beyond.After a big run-up in many tech stocks this year, many of Wall Street's darlings now trade at stretched valuations. But not all of Wall Street's most popular tech stocks have fully participated in this year's rally. Surprisingly, several names in the "Magnificent Seven" have underperformed the Nasdaq Composite's sharp gains -- and two look particularly attractive: Apple (AAPL +0.46%) and Amazon (AMZN +1.77%) ...

Core Insights - Berkshire Hathaway's portfolio includes significant investments in technology stocks, particularly in the field of artificial intelligence (AI), with Apple, Amazon, and Alphabet identified as key players poised for long-term growth in this sector [2]. Group 1: Apple - Apple constitutes 22.69% of Berkshire Hathaway's portfolio and remains its largest holding despite recent share sales [3]. - The company is gradually enhancing its AI capabilities, integrating more AI features into its latest iPhone models, which are experiencing strong demand [3][4]. - Apple's supply constraints on the iPhone 16 and 17 models are limiting its ability to meet high demand, but a strong renewal cycle is expected to boost sales in the coming years [4]. - The company is significantly increasing its investments in AI, aiming to leverage its large installed base to enhance its ecosystem and drive growth in both hardware and services segments [6][7]. Group 2: Amazon - Amazon represents 0.82% of the portfolio and is a leading provider of AI services through its Amazon Web Services (AWS), offering products like SageMaker and Bedrock [8]. - The company is utilizing AI in its warehouses to optimize operations, which aligns with its focus on customer service and is expected to positively impact financial results [9]. - Amazon's cloud computing business is experiencing a resurgence in sales growth, and its robot-related initiatives are anticipated to reduce costs and improve margins [10][11]. Group 3: Alphabet - Alphabet accounts for 1.62% of the portfolio and is a newcomer to Berkshire Hathaway's investments, having initiated a position in the third quarter [12]. - The company is establishing itself as a leader in AI, successfully adapting its business model to incorporate AI technologies despite initial concerns about disruption from chatbots [12][14]. - Alphabet's latest AI model, Gemini 3, is being touted as its best yet, contributing to the company's growth in its cloud segment, which is its fastest-growing area [14].