Core Insights - December is historically a strong month for the S&P 500, averaging a 1.4% gain since 1950, with a 73% chance of finishing higher [1][2] Seasonal Performance of Stocks - Carnival Corp. has an average December gain of 5.4% over the last 30 years, with a 67% winning rate, peaking in 1998 with a 39.1% increase [4] - Royal Caribbean Cruises Ltd. averages a 4.4% gain in December, with a 57% winning rate, and its best performance was a 46% jump in 2008 [5] - Western Digital Corp. shows a 4.66% average gain in December, with a 67% winning rate, and its standout year was 2001 with a 33.1% surge [6] - Seagate Technology Holdings PLC has an average December gain of 4.2% since 2002, with a 64% winning rate, and its best December was in 2012 with a 21.2% gain [7] - Mohawk Industries Inc. enjoys a 4.1% average gain in December, with a 60% winning rate, and its best December was in 2008 with a 39.79% rally [8] - Eli Lilly & Co. averages a 3.1% gain in December, ranking as its third-best month, with a peak of 17.9% in 2008 [9] - Goldman Sachs Group Inc. has a 3% average December gain since 1999, with its best performance in 2000 at 30.2% [10] - JPMorgan Chase & Co. posts a 2.5% average gain in December, with a 57% winning rate, and its best run was a 23.2% jump in 2000 [11] Summary Table of Key Stocks | Stock Name | December Average Gain | Winning Rate | YTD Gain/Loss (Dec. 1, 2025) | |---------------------------|-----------------------|--------------|-------------------------------| | Carnival Corp. | 5.4% | 67% | +2.39% | | Western Digital Corp. | 4.66% | 67% | +251.7% | | Royal Caribbean Cruises | 4.4% | 57% | +16.2% | | Seagate Technology | 4.2% | 64% | +215% | | Mohawk Industries | 4.1% | 60% | -0.3% | | Eli Lilly | 3.1% | 57% | +35.8% | | Goldman Sachs Group | 3% | 62% | +41% | | JPMorgan Chase | 2.5% | 57% | +28.8% | [12]

Summary of TMT Overview and Key Insights Industry Overview - The report focuses on the Global Technology and Communication Services (TMT) sectors, highlighting their performance and outlook for 2026 [2][5][20]. Core Insights 1. **Performance Metrics**: - Both Global Technology and Global Communication Services sectors have increased by 20% over the past year, outperforming all other global sectors [5][20]. - CFROI (Cash Flow Return on Investment) and Economic Profit for both sectors are projected to reach all-time highs, with nearly 15% for Technology and 8% for Communication Services in 2026 [20][21]. 2. **Valuation Levels**: - Technology sector valuations are considered elevated, while Communication Services present more attractive valuation levels [4][13]. - Global Technology is trading at a lower market implied yield compared to the overall market, indicating a more expensive valuation [13][16]. 3. **Sector-Specific Trends**: - **Hyperscalers**: Significant increases in CapEx (Capital Expenditures) and R&D (Research and Development) spending are expected, with CapEx forecasted to double over the next two years and R&D spending to increase by 40% [35]. - **AI Landscape**: The AI Winners basket has risen by approximately 45% this year, while the AI Risk basket has declined by around 30%, leading to a decade-high valuation premium for AI Winners [52][71]. - **Semiconductors**: The sector is expected to achieve a CFROI of 25% in 2026, driven by higher margins and demand from the AI revolution [78][87]. 4. **Economic Profit**: - Economic Profit for hyperscalers is forecasted to reach an all-time high of $400 billion in 2026, primarily driven by growth [48][50]. 5. **Market Implied Sales Growth**: - AI Winners are priced for double-digit sales growth over the next decade, contrasting with low-single digit growth for many AI Risk firms [73][100]. Additional Important Insights - **Tech Hardware**: The industry has maintained a stable CFROI of around 8% and is expected to improve to 10% in 2026, despite trading at a discount to the broader tech sector [122]. - **Software Sector**: The median 10-year sales growth CAGR for high-quality software companies is priced at 11%, with some firms like PLTR priced for growth as high as 27% [109][110]. - **Valuation vs Momentum**: A matrix contextualizes valuation and momentum, indicating firms in the top right offer both attractive valuations and strong momentum profiles [104]. This comprehensive overview highlights the robust performance and evolving dynamics within the TMT sectors, emphasizing the potential investment opportunities and risks associated with these industries.

Summary of Key Points from the Conference Call Industry and Company Overview - The report focuses on the **China & Hong Kong equity market** with a specific outlook for **2026** and investment strategies for **1Q26** [2][5]. Core Themes and Arguments 1. **Constructive Stance on MXCN/CSI300**: The report maintains a positive outlook on MXCN and CSI300, predicting further rallies in 2026 with targets set at **100** for MXCN, **5,200** for CSI300, and **16,000** for MXHK, based on consensus EPS estimates [2][7][9]. 2. **Investment Themes for 2026**: - **Anti-involution**: Expected to accelerate post-March NPC, improving margins and ROE for MXCN/CSI300 [5]. - **AI Infrastructure Growth**: Strong global capex in AI is anticipated to boost demand for computing power and localization plays in China [5]. - **Global Macro Support**: Positive macroeconomic conditions, including easing fiscal and monetary policies in developed markets, are expected to enhance overseas sales [5]. - **K-shaped Recovery in Consumption**: This will favor food & beverage and premium luxury sectors while negatively impacting mid-tier consumption [5]. 3. **Risks Identified**: - **Geopolitical Tensions**: Ongoing tensions between the US and China, particularly ahead of the US mid-term elections, and rising tensions with Japan [5]. - **Consensus EPS Growth Concerns**: Potential downward revisions in consensus EPS growth for MXCN from approximately **15%** to **9%** due to intense competition in quick commerce platforms [5]. - **Property Market Weakness**: Reports of declining luxury sales and price drops in mainland China may trigger policy changes [5]. Sector Recommendations and Top Picks 1. **Under-owned China Equity**: The report suggests that China equity is under-owned both domestically and internationally, indicating potential for increased allocation [6]. 2. **Sector Preferences**: - **Overweight (OW)**: Communication Services, IT, Materials, and Staples. - **Underweight (UW)**: Energy and Utilities [6][12]. 3. **Top Picks for 1Q26**: - **China**: Baidu, NetEase, Midea, MIXUE, PDD, Pop Mart, Trip.com, Tingyi, Futu, Innovent, CATL, COLI. - **Hong Kong**: AIA, HKEX, Futu, Galaxy, MGM China, Techtronic, Link REITs, MTR, China State Construction International [6][13][15]. Important but Overlooked Content - **Valuation Normalization**: Since September 2024, MXCN/CSI300 has shown a return of **29%/30%** in USD terms, indicating a shift from a valuation discount to a more favorable investment narrative [20]. - **EPS Recovery**: The report highlights a broadening recovery in earnings across various sectors despite weak headline EPS growth, with significant recoveries noted in Healthcare, IT, and Communication Services [41][42]. - **Quantitative Macro Indicator (QMI)**: The JPM China QMI indicates an expansion phase, suggesting positive momentum in the market [47]. Conclusion The report presents a comprehensive outlook for the China and Hong Kong equity markets, emphasizing potential growth areas, sector preferences, and the importance of monitoring geopolitical risks and market dynamics as 2026 approaches.

Group 1: Market Overview - The holiday season has positively impacted market gains, with the market advancing for a third consecutive day on November 26, 2025 [1] - The CBOE Volatility Index (VIX) is significantly low at 17, down 27% over the last week, indicating reduced investor anxiety [2] - The S&P 500 rose by 0.7%, driven by a notable increase in Robinhood's stock, while the Nasdaq Composite and Dow Jones Industrial Average also recorded gains of 0.8% and 0.7% respectively [8] Group 2: Robinhood's Market Activity - Robinhood's stock has surged by 244% year-to-date, reflecting strong investor interest [3] - The company has acquired a 90% stake in MIAX, a financial exchanges platform, in partnership with Susquehanna, enhancing its position in the predictions market [4] - Following the acquisition news, Robinhood's stock rose by 11%, contributing to its overall 245% year-to-date rally [5] Group 3: Predictions Market Insights - The predictions market, which gained traction during the 2024 Presidential elections, now constitutes approximately 3-8% of the US sports betting market, with Kalshi being the leading player [5] - The overall sports betting market could exceed $1 trillion, presenting significant growth opportunities for Robinhood amid regulatory considerations [6] - Robinhood is actively exploring future partnership opportunities to develop products tailored to its customers' needs [6]

Summary of Key Points from the Conference Call Industry Overview - The report discusses the performance of the Chinese equity market, specifically the MXCN and CSI300 indices, which dropped by 5.5% and 3.8% respectively amid a global selloff in equities [1][1]. - The offshore Internet sector underperformed, with the HSTECH index declining by 7.2% [1][1]. - The report highlights the introduction of the GS 15th Five-Year Plan Portfolio, which includes 50 mid-cap companies positioned to benefit from policy tailwinds over the next five years [1][1]. Core Insights and Arguments - **Market Performance**: The report notes that 88% of all listed companies in China have reported earnings, with 9M/3Q25 earnings rising by 7% and 13% year-over-year [36][36]. - **Policy Developments**: There are indications that Chinese policymakers are considering a new property stimulus package, potentially including mortgage subsidies for first-time home buyers [1][1]. - **Fiscal Data**: On-budget fiscal revenue growth has slightly increased, while fiscal expenditure growth has significantly declined [1][1]. - **Investment Inflows**: Southbound investment saw inflows of US$5.0 billion this week, with year-to-date inflows totaling US$175 billion [1][4]. Earnings and Valuations - The forward price-to-earnings ratios for MXCN and CSI300 are reported at 12.3x and 13.9x respectively [9][9]. - Earnings growth estimates for 2025 and 2026 are projected at 3% and 15% for MXCN, and 15% and 14% for CSI300 [9][9]. - Financials and Materials sectors have seen the most upward revisions in earnings estimates [9][9]. Sector Performance - The report indicates that certain sectors such as Real Estate (3.9%) and Dividend Yield (3.7%) outperformed, while Information Technology (-2.7%) and Momentum (-3.8%) lagged [8][8]. - The analysis of past Five-Year Plans suggests that following Chinese policy could yield significant rewards in the equity market, with top-performing sectors historically including Autos, Telecom Services, and Materials [12][12]. Additional Insights - The report emphasizes the importance of the 15th Five-Year Plan, which focuses on modernization, security, and science/technology [10][10]. - The portfolio introduced is expected to outperform the benchmark, driven primarily by earnings growth and delivery [21][21]. - The report also highlights that the equity market has lagged nominal growth over the past decade, indicating potential for future recovery [14][14]. Conclusion - The overall sentiment in the report suggests cautious optimism for the Chinese equity market, driven by policy support and potential recovery in earnings growth. The introduction of the GS 15th Five-Year Plan Portfolio is positioned as a strategic move to capitalize on upcoming policy shifts and market opportunities [1][1][21][21].

Investment Rating - The report indicates a positive outlook for the Chinese equity market, particularly aligned with the 15th Five-Year Plan (FYP) [3][40]. Core Insights - The 15th FYP emphasizes high-quality, secure, and balanced growth, with a focus on technology, innovation, and improving people's livelihoods as key priorities for 2026-2030 [1][12]. - Historical analysis shows that aligning investment strategies with the FYP can yield significant alpha, with a potential 13% annualized alpha if portfolios are aligned with policy trends [2][18]. - The report identifies a universe of 35 GICS3 Industries that are expected to benefit from policy support, representing a total market cap of US$13 trillion, which is 66% of the full universe [3][40]. Summary by Sections 1. Historical Performance and Policy Alignment - MSCI China and CSI300 have delivered 8-10% total return CAGR since the 10th FYP, trailing nominal GDP growth of 11% [2][18]. - The report highlights that specific sectors mentioned in the 14th FYP significantly outperformed the benchmark, with average returns of 41% compared to -3% for the CSI300 [24][25]. 2. 15th FYP Portfolio Construction - The report screens for 50 mid-cap stocks across 21 sub-sectors, which have returned 68% in the past year, outperforming MSCI China by 33 percentage points [4][54]. - These stocks are expected to deliver a 30% EPS CAGR over the next two years, compared to 15% for MSCI China, indicating strong growth potential [4][54]. 3. Key Themes and Investment Opportunities - The report identifies several investment themes, including the return of private-owned enterprises (POEs), Going Global, AI, Anti-Involution, and Shareholder Returns, which are expected to outperform in a slower market [3][40]. - Emerging technologies such as 6G, bio-manufacturing, and hydrogen/nuclear fusion are highlighted as new areas of focus in the 15th FYP [12][15]. 4. Sectoral Analysis - The selected industries predominantly reside in Technology, Consumer, and Materials sectors, with a strong emphasis on tech-related industries expected to receive policy support [40][41]. - The report notes that the 15th FYP universe is expected to grow faster than the broader market, with higher profitability and growth capex intensity [40][39].

Core Viewpoint - Morgan Stanley has issued downgrades for Dell, HP, and HP Enterprise due to rising memory costs and weakening demand for non-hardware products, while maintaining a bullish outlook on the memory sector [1][3][5]. Summary by Category Market Reaction - Dell, HP, and HPE stocks are down between 3% and 7% following the downgrades from Morgan Stanley [1][2]. - Dell experienced a double downgrade, leading to a decline of over 7% in its stock price [6]. Downgrade Details - Dell's price target was reduced from $144 to $110, with concerns over increased memory costs and a shift towards AI servers impacting margins [6][7]. - HP's rating was downgraded from equal weight to underweight, with a price target decrease from $26 to $24, citing potential margin compression despite a possible PC refresh cycle [7][8]. - HPE's rating was adjusted from overweight to equal weight, with a price target reduction from $28 to $25, acknowledging rising component costs as a profitability constraint [8][9]. Industry Trends - The memory sector is experiencing a "super cycle," with ND and DRAM spot prices increasing by 50% to 300% over the past six months, which is expected to impact hardware companies' earnings in 2026 [3][4]. - Historically, hardware OEMs face gross margin compression 6 to 12 months after memory costs rise, with expectations for this trend to affect earnings in 2026, contrary to previous forecasts of slight expansion [4][5].

Group 1 - Super Micro Computer, Inc. (SMCI) reported its Q1 FY26 results, leading to a significant decline in stock price from approximately $50.60 per share to $41.30 per share during intra-trading [2] - The decline in SMCI's stock price indicates a negative market reaction to the earnings report, which may suggest underlying issues or disappointing performance [2] - Tech Stock Pros, a team of former technology sector engineers, provides institutional-level company research to individual investors, focusing on demystifying technology sector investments [2] Group 2 - Tech Contrarians, an investing group, has achieved a realized return of 65.8% on closed positions since inception, offering exclusive insights and portfolio consultations [1] - The group utilizes a live portfolio with quarterly updates and bi-weekly newsletters to keep investors informed about high-focus stocks [1] - The services provided by Tech Contrarians aim to enhance individual investors' understanding and engagement in the technology sector [1]

Core Insights - Zebra Technologies Corporation (ZBRA) reported third-quarter 2025 adjusted earnings of $3.88 per share, exceeding the Zacks Consensus Estimate of $3.75, marking an 11.2% increase from $3.49 per share in the same quarter last year [1][9] - Total revenues reached $1.32 billion, surpassing the consensus estimate of $1.31 billion, with a year-over-year growth of 5.2% driven by strong performance in the Enterprise Visibility & Mobility and Asset Intelligence & Tracking segments [2][9] Financial Performance - Revenues from the Asset Intelligence & Tracking segment increased by 11% year over year to $455 million, exceeding the Zacks Consensus Estimate of $426 million, with organic net sales rising by 10.6% [3] - The Enterprise Visibility & Mobility segment reported revenues of $865 million, a 2.4% increase year over year, though it fell short of the consensus estimate of $887 million, with organic net sales growing by 2% [4] Margin and Expenses - Zebra Technologies' cost of sales for the third quarter was $686 million, up 6.9% year over year, while total operating expenses also increased by 6.9% to $451 million [5] - The company reported a net income of $101 million, down from $137 million in the same period last year [5] Balance Sheet and Cash Flow - At the end of the third quarter, Zebra Technologies had cash and cash equivalents of $1,053 million, an increase from $901 million at the end of December 2024, while long-term debt rose to $2.11 billion from $2.09 billion [6] - In the first nine months of 2025, the company generated net cash of $560 million from operating activities, down from $707 million in the previous year, with free cash flow amounting to $504 million compared to $666 million in the year-ago period [7] Guidance - For the fourth quarter of 2025, Zebra Technologies expects net sales to increase between 8-11% year over year, with adjusted EBITDA margin anticipated at approximately 22% and adjusted earnings per share projected in the range of $4.20-$4.40 [8] - For the full year 2025, the company has raised its adjusted earnings outlook to $15.80 per share from the previous range of $15.25-$15.75, with an expected net sales growth of 8% year over year [9][10]

Core Insights - Zebra Technologies Corporation (ZBRA) is expected to release its third-quarter 2025 results on October 29, with revenue estimates at $1.31 billion, reflecting a 4.4% growth year-over-year, and adjusted earnings estimated at $3.75 per share, indicating a 7.5% increase from the previous year [1][9] Revenue Performance - The Enterprise Visibility & Mobility segment is projected to generate revenues of $887 million, representing a 5% increase from the same quarter last year, driven by strong demand for mobile computing products and data capture solutions [3] - The Asset Intelligence and Tracking segment is expected to report revenues of $426 million, indicating a 3.9% growth year-over-year, supported by solid demand for printing solutions and RFID products [4] Strategic Developments - Zebra Technologies is focusing on acquisitions to enhance its product offerings and customer base, exemplified by the acquisition of Photoneo in March 2025, which strengthens its portfolio in 3D machine vision solutions [5] Cost and Operational Challenges - The company's performance may be adversely affected by high costs and expenses, particularly due to increased raw material costs and foreign exchange headwinds from a stronger U.S. dollar, which could impact its overseas business [6][9] Earnings Prediction - The Earnings ESP for Zebra Technologies stands at 0.00%, indicating no clear prediction for an earnings beat, with both the Zacks Consensus Estimate and the Most Accurate Estimate at $3.75 [7][8]