Core Insights - Oracle's stock surged by 25% following a $60 billion annual promise from OpenAI for cloud computing services that Oracle has yet to develop, highlighting a significant shift in the tech capital cycle [2] - The tech industry is experiencing a potential transformation as companies like Oracle increase borrowing, with its debt-to-equity ratio at 500%, compared to 50% for Amazon and 30% for Microsoft [2] Company Performance - Alphabet (GOOG) was a top contributor to portfolio performance, driven by strong growth in advertising and cloud computing, with a 12% revenue increase attributed to new AI features [11][14] - Taiwan Semiconductor Manufacturing Company (TSMC) generated approximately 60% of its revenue from AI and high-performance computing chips, benefiting from its manufacturing capacity and flawless execution [19] - Microsoft has significantly increased its data center capacity, resulting in gross cash flow growth from $60 billion in 2020 to over $140 billion in 2025, showcasing attractive returns on capital [17] Market Trends - The AI sector is witnessing unprecedented growth, with forecasts predicting trillions in infrastructure spending, yet the current demand for AI services exceeds supply [25][29] - Companies are increasingly relying on debt financing to support their capital expenditures, with over $157 billion raised by tech companies in 2023 alone [37] - The AI ecosystem is expected to require different business models and capital structures, as companies like Nvidia and Meta Platforms are making substantial investments in data centers and AI capacity [39][42] Financial Metrics - The Wedgewood Composite Net performance for the third quarter was 5.9%, underperforming compared to the S&P 500 Index at 8.1% and Russell 1000 Growth Index at 10.5% [5] - PayPal Holdings, despite an 18% increase in earnings per share, was a leading detractor in portfolios due to market rotation towards AI-focused tech [21] - Booking Holdings reported a 16% revenue growth and a 32% increase in earnings per share, but still detracted from performance due to market perceptions [22]