It was a bloody Halloween on the stock market. More about that later in this Overview Of The Week, of course.

The Overview Of The Week is stable. Sun or rain, green or red, greed or fear, on Sunday, you get your weekly dose of stock market context.

Let’s go!

Articles In The Past Week

Just like in the last few weeks, you got four articles this week, including this one. To make sure you don’t lose track, here are the three previous ones.

The first article this week was on my personal portfolio, the Forever Portfolio. I sold two positions and added to 7.

Sea Ltd has gone down a lot lately. In the second article this week, I assessed the earnings and the reasons for the sell.

You also got the second Adyen article in two weeks. The company gave a business update and the stock dropped 13%. In my article, I separated facts and sentiment.

Memes Of The Week

Multi Flo, our Meme King, posted this.

Interesting Podcasts Or Books

This week, I read the book How Great Ideas Happen by George Newman.

It's a good book for anyone whose job involves some creativity. Don't take this too literally. It's about ideas, so, many jobs or even your personal life can benefit from the book. It has interesting insights on why originality matters, how being too creative can be a disadvantage, how to generate better ideas, why the quantity of ideas is more important than you might think, and more.

It’s an easy read but I still learned a few things.

The markets in the past week

Sometimes, you have these weeks, weeks in which you don’t have to wonder what the stock market did because you already know. This was such a week.

The Greed & Fear Index was in EXTREME FEAR last week, but it inched up a little bit and it’s now in FEAR, but still very close to EXTREME FEAR.

Quick Facts

1. The Bloody Halloween Day

On Thursday, but even more on Friday, some AI-related stocks dropped on their earnings results. Here are some examples.

If you want a 15% discount for Fiscal, you can get it through this link.

But just like Halloween monsters, these drops may scare you, but only as far as you allow.

What I mean is this. You all know that the Halloween monsters, ghosts, severed heads (or hands, looking at you, Heidi Klum), zombies and other creatures are not real. And as adults, they mostly don’t scare us because of that knowledge.

(Heidi Klum in costume, source)

In the same way, these big drops can only scare you if you believe they are real. Now, I know this is quite a jump. You may have seen money disappear from your broker account and that money is definitely real. The same goes for your fear if you allow it.

The market goes up and down. It goes up more often than it goes down, but when it goes down, it can feel horrifying. It’s important to keep your goals in mind in such periods. For many, including myself, the goal is more than ten years out. You just know that the markets will go up and down over such a period.

Now, don’t get me wrong. I don’t want to brush this off. Many stocks are down, even when the indexes are still up. I have already written twice about the bear market beneath the surface.

The equal-weight S&P 500, which lets every stock in the S&P 500 account for the same amount (about 0.2%) beat the regular, market cap-weighted S&P 500 by 5.85 percentage points in October.

That’s the biggest outperformance for the equal-weight S&P 500 since April 2009 and the second best since 1990. In September it was the other way around: the cap-weighted index won by 4.61 points. That means a swing of 10.46 percentage points in one month, the largest in either direction since at least 1990. That’s what you are feeling.

Source

Before this month, there were only four months where equal-weight won by 5 points or more: April 1999, December 2000, November 2002 and April 2009. In April 1999, the market continued up for a while, in December 2000, there was a bear market already and the two others were shortly after the bottoms of the bear markets. But the most frightening thing was that none was far from a bear market.

There’s also this chart.

This chart

Now, don’t get me wrong. I don’t predict an impending market crash. Timing the market is very, very, very hard. But it sure feels like the bull market is losing some of its steam.

On the other hand, healthy bull markets need to let off some steam every now and then. And there’s also this chart, which shows we go in the statistically best period of the year.

You could argue, with good reasons, that the differences are not that big. But if you look at years with midterm elections, that’s different.

Source

Since 1950, so 76 years ago, every midterm single November-April period after midterms has been positive, with an average of 14.8% and a median of 15.2%. That’s remarkable. But it’s not a guarantee, of course.

As always, we will have to wait to see what the market brings. Having some cash ready is always good in such periods, but on the other hand, don’t forget this Peter Lynch wisdom.

So yes, it was a scary week. But fear is exactly when you need to know what you own and why. That’s what the rest of this Overview is for.

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Adyen published its Q3 2026 business update this morning (here in Europe), and the stock fell about 13% when I’m writing this. That means the stock is down 45% over the last year.

Very disappointing. Let’s look at what happened. Before we dive in, I have to say that management will talk in about an hour after this article is published, so that could still move the stock. But to me, most of the story is already clear.

If this article's language is somewhat less polished than usually, it's because I wanted to get it out fast.

The Numbers

• Net revenue: €738.1M, +23% YoY, +22% in constant currency

• Talon(.)One and Orb contributed about 2 percentage points to that growth

• Processed volume: €451.1B, +30%

• Digital: €387.4M, +14% in constant currency, volume +28%

• Unified Commerce: €250.5M, +27% in constant currency, volume +22%

• Platforms: €100.2M, +44% in constant currency, volume +55%

• FTEs: 5,596, including 399 from Talon(.)One and Orb

Those are actually strong numbers. Let’s look at a few things in more detail.

Organic growth was about 20%, very reliable again. Full-year guidance remained at 21% to 23%.

Volume grew 30%, very strong. But it also means that the take rate dropped again: from about 0.173% a year ago to 0.164% now. Talon(.)One only brings in subscriptions and no payments, so if you strip that out, it would have been 0.161%.

The reason is the same as always: tiered pricing. The more the volume existing customers bring, the lower the take rate. I emphasized in my recent article that this is just inherent to the business, but some continue to see this as a negative. But it’s just the consequence of big merchants bringing more and more volume to Adyen. In that sense, it’s a positive, not a negative.

Co-CEO Ingo Uytdehaage gave an interesting data point in the pre-recorded prepared remarks: 10% of Adyen’s volume now comes from the hyperscalers and cloud companies. That’s a lot of volume with very few customers. I’m very happy to hear that. We know that OpenAI is an Adyen customer, just like Microsoft, Google, and Meta. The fact that they have 10% of volume is confirming what I have said for a long time already: AI or no AI, Adyen picks up the biggest customers, while Stripe is better for startups.

Platforms keeps performing outstandingly. 46 platforms now process more than €1 billion a year, up from 37 last quarter and 31 a year ago. Active business customers grew 48% to 312,000.

Unified Commerce is also strong. 499 big customers now use Adyen both in their stores and online. Big means at least €10M on both sides and more than €50M in total. That’s up from 486 in Q2.

The Reason for the Drop

With these results, it’s hard to see why the stock dropped. And, as often, the reason isn't in the results but in what management sees for the future.

Strong numbers, and still the stock dropped 13%. The reason is not in the results. It’s in one decision management announced this morning, and I’m not happy with how it was handled.

Below: what management did, the calculation that shows how big the impact really is, what the drop means for Adyen’s valuation, my updated Valuation Score and my verdict.

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On October 20, 2017, founder and CEO Forrest Li stood on the NYSE podium, waiting to ring the bell for Sea’s IPO.

Last week, exactly 9 years later, he sent his employees a memo that raised eyebrows in investing circles. The memo announced two key changes: Sea will sell its in-house cloud to other companies, and Monee, its fintech arm, could one day go public on its own. The stock dropped 9.1% that day to $80.43, and it has since fallen to $74.73 right now.

Since that jump on August 11, after the earnings, the stock has dropped 35.5%.

As you can see, the drop had already started before the announcement of this week. So, what has happened? Let’s first analyze the Q2 results, then the memo (on which I will share my opinion), and then look at the Quality Score and valuation to decide whether Sea (SE) is a BUY now.

Sea Limited Group Results

Let’s start with the group results, then focus on the company’s different arms.

Revenue came in at $7.79B, up 48.1% YoY and almost 10% above expectations. That’s exceptionally strong. Growth even accelerated after that strong 47% revenue growth in Q1.

Gross profit grew 47.3% to $3.55B, for a gross margin of 45.6%. That’s also great. Higher revenue resulted in similar growth in gross profit.

Operating income rose 33.3% to $650M.

Net income rose 10.6% to $458M, or $0.70 per diluted share, while analysts expected $0.83 to $0.86. That looks bad, but most of it comes from taxes. Income tax expense jumped 74% to $251M, with an effective tax rate of 35%, up from 25% a year ago. At last year’s rate, EPS would have been about $0.11 higher, so around $0.81.

The rest of the miss comes from Monee’s higher loss provisions and lower interest income. If you remember from NU or MELI, if a bank or fintech lends out money, it has to provide provisions for losses. If the loan book grows more than analysts expected, it means that the loss provisions are higher, and that eats into profitability. That’s accounting, and it’s also weird to see a company being punished for growing faster than expected.

All in all, strong results. This is an overview from the earnings slide deck.

Slide deck via Fiscal AI. Wanna try it? With this link, you get a 15% discount.

Stock-based compensation fell 18.5% to $132M, while Sea bought back 4.7M shares for $416.8M, more than 2.5 times as many as in Q1, at an average price of about $89. Buying more when the stock is cheaper is exactly what you want. Of course, the stock has dropped more, but you can’t easily foresee that. I don’t think Forrest Li let the stock drop on purpose to buy more shares, haha.

Guidance: Sea kept its target of around 25% GMV growth for 2026 (GMV = gross merchandise volume, the value of all goods sold on Shopee), though currency fluctuations could have some negative impact. Forrest Li is now “optimistic that Shopee will achieve the milestone of US$1 billion in adjusted EBITDA for the full year.“ Great.

Let’s go to the different branches.

The market has made up its mind about the memo. I took my time to think it through and came to my own conclusion.

Below: what a Monee IPO would mean for us as shareholders, my take on Sea Cloud, the accounting change that will confuse many investors next quarter, what Shopee’s Brazil numbers mean for Mercado Libre shareholders, the updated Quality Score, the full valuation and what I did with my own position this week.

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Let me be clear from the start: I didn’t sell because I lost trust in these companies. I sold because I wanted more cash to add to the positions I have the most conviction in today. That’s it.

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As I start writing this Overview Of The Week, the autumn sun is shining in my home office, and I’m listening to some of my favorite music (AC/DC’s Thunderstruck just switched to Joy Division’s Love Will Tear Us Apart Again).

In other words, the conditions are perfect for one of my favorite weekly activities: writing the Overview Of The Week.

Here we go!

Articles In The Past Week

Just like last week, you got four articles this week, including this one. Let’s look back at the three previous articles.

The first article this week was a review of Hims & Hers, from everything in Q2 to what happened up to now. You can read it here.

Adyen has been a disappointing stock over the last years, but its business keeps growing reliably. What happened exactly? You can read more about that here.

Since my last analysis, when I rated Global-e a Strong Buy rating and gave it a 9.5/10 Valuation Score, the stock has shot up 35%. So it’s time to analyze the results and update the valuation. You can find the conclusion here.

Memes Of The Week

I had to laugh with this meme, because it captures what I have been experiencing myself.

It’s now the consensus between funds and the ‘smart money’ that this is a bubble. But what these people often have in common is that they look from the outside in. That can sometimes be an advantage, but sometimes insiders just know more and I hear completely different opinions there.

Not really a stock market meme, but one many who follow tech will still chuckle about. Thanks, bep, for sharing.

Interesting Podcasts Or Books

This week, I listened to Patrick O’Shaughnessy’s Invest Like The Best, one of my favorite podcast series. His guest was David Vélez, founder and CEO of Nubank. The episode was released almost two weeks ago, but I only listened to it this week.

If Nubank was not a big position yet, after this interview, I would definitely consider it, haha. David Vélez shows why so many think he’s one of the best CEOs out there. It’s 1 hour and 21 minutes, and worth every second.

The markets in the past week

We have seen some strange patterns in the returns lately, and this week was no different. The S&P 500 lost 0.47%, the Nasdaq even lost 0.71, but the Russell 2000 was up 2% this week.

The Nasdaq has done worst lately. That’s spurred by the losses in the semiconductor sector. The Semiconductor ETF is down 19% over the last three weeks.

Semiconductor ETF decline(Fiscal.ai)

The Greed & Fear Index remained in EXTREME FEAR.

Quick Facts

1. AI Chips: Prices up, not down

You often hear that AI chips lose their value very fast. Nvidia ( NVDA) launches a new generation every year, so the older chips should be worth less and less. The rental prices paint a different picture.

This week, a16z posted this:

It’s a chart of AI chip rental prices year to date. As you can see, all are up and all but the A100 multiplied.

This graph is probably even more important.

It’s important to understand this graph. The dotted line shows where the rent would be if it went down steadily, as if the chip lasts 6 years. The green area is where the rent is above that line.

That 6-year depreciation period is the one Michael Burry called a fraud. He shorted chip stocks because he believed depreciation should be 2 years, maybe 3 at most. This chart proves how wrong he was.

As you can see in the chart, every chip is above that supposedly aggressive depreciation baseline. The H100 is 54% above, the B200 111%, and the H200 even 143%. Even the A100, which is already 6 years old, is still 9% above the line.

The older chips should be cheaper to rent than they are right now. Granted, for a while, rent was under the line, but this is just from this year.

Right now, it costs about $57B to build a gigawatt and you can expect a return of $40B per year. In other words, the costs are paid back for 70% in year one. Suppose you could pay back the cost of a house in less than a year and a half, would you buy more houses? That’s basically what happens, except you fully expect demand for the houses to explode for years to come in a way that’s actually unrealistic for houses.

There’s another strong data point that proves that there’s no slowdown in AI demand; to the contrary: Amazon ( AMZN). On the a16z podcast with Ben Horowitz and Erik Torenberg, CEO Andy Jassy said that AWS is sold out for 2026, largely sold out for 2027, and that a good chunk of 2028 is sold out too. He doesn’t think the memory shortage ends in 2027 either. It’s the same we hear from chip and memory companies.

Amazon expects to spend about $220 billion on capex this year. That’s about $600 million per day. And still, Jassy says Amazon is leaving a meaningful amount of demand on the table. Amazon reports its Q3 results on Thursday.

So, why the sell-off then?

The market starts to differentiate. Interest rates are up and that means that companies like CoreWeave, that borrowed a lot of money to buy chips, are questioned. For good reasons. If CoreWeave were a Potential Multibagger, it’d sell it because of this alone:

Elon Musk, never too shy to express his opinion, wrote this on X:

I think he’s already waiting to scoop up the GPUs from the neoclouds.

2. The Bear Market Under The Surface, pt.2

Last week, I already wrote about the bear market under the surface. This is another element in that same story.

If you only looked at the S&P 500, you’d think nothing happened but under the surface, many stocks are suffering. This week, I saw this chart.

Tech hedge funds lost about 10% in October and Asian hedge funds about 9%, according to Reuters.

The consequence is easy to predict: money rotated out of AI infrastructure into the rest of the market.

3. The Anti-AI Bubble Starts Working

Do you remember the term I used so many times in the first half of this year? The Anti-AI Bubble.

What I meant was that everything seen as potentially impacted by AI was sold as if it were already dead. Every Anthropic product release was received like manna from heaven. Semiconductors were growing like there was no tomorrow but SaaS, cybersecurity and many other stocks were sold off.

Guess what happened in the second half of the year? Look at this chart:

So, in the first half of the year, semis did 65 percentage points better than software, but in the second half so far, software did 44 percentage points better so far.

Here are three of the stocks I bought (ServiceNow) or added to (CrowdStrike and Cloudflare), from April to now.

Of course, I added some stocks that were much less successful, but a few outsized winners lift you up.

In other words, the anti-AI bubble was that, a anti-bubble and that is starting to suck in air again now.

There’s now more net selling, comparable to March, almost the bottom then.

This Goldman Sachs chart shows that a lot came from tech, that saw the biggest selling pressure in the last decade.

Short leverage, so how much a hedge fund borrows to bet on stocks dropping, is close to the highest level in 5 years.

But that also means that if traders who sold the stocks have to buy those stocks back, there could be a furious rally.

And valuations? Liz Ann Sonders of Schwab shared this chart.

The forward P/E of the S&P 500 has compressed quite a bit from its peak in October 2025 and is now slightly below its 10-year average, around 19x.

Tech is even cheaper and it’s quite a bit below its 5-year and 10-year average.

That’s mostly because earnings grew, not because prices fell. So, it all comes back to what you believe: there’s earnings inflation, with AI showing unsustainable earnings, or this is healthy. But of course, that’s very black-and-white thinking. I think it’s perfectly possible it’s a bit of both.

There are even rumors that some hedge funds have blown up again. Leopold Aschenbrenner’s Situational Awareness is even named again. That would be the third time, but I don’t know whether to take this rumor seriously.

Just before I finished this Overview, there was news that might change what I buy tomorrow or Tuesday. It’s in quick fact 10.

Also below: the company that just made its internal AI up to 98% cheaper, the invention from one of our companies that makes the whole internet safer, all the news about our stocks and the earnings calendar for the crazy weeks ahead. Don’t want to miss what I’m buying on Monday?

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Global-e (GLBE) reported its Q2 2026 results on August 12. I expect Q3 earnings in a month or so. Before the earnings flood opens, I think this is a good time to review how Q2 went and what to watch for in Q3. I can already tell you you may be confused by Q3 if you don’t read this article for context.

In my Q1 article, I said that Global-e kept delivering but the stock didn’t respond to the good earnings. Well, that changed.

Just before the Q1 report in May, the stock traded around $27; when I wrote the Q1 analysis, it traded at $30.64, and I gave it a 9.5/10 Valuation Score and a STRONG BUY rating. Since then, the stock is up 35% from that day.

Is the stock still attractive now? Let’s find out.

If you’re new here, Global-e helps brands sell online in other countries as if they are a local shop.

Q2 earnings slide deck, via Fiscal

The shopper in the other country sees prices in their own language and currency, uses their usual payment method, and gets the package shipped to their door. For brands, Global-e takes care of the duties, taxes, translations, shipping and returns. In other words, it takes the annoying stuff off brands’ plates and does it for them. As a result, brands sell more and become more profitable. That’s always a strong selling argument.

It works with big international brands. This quarter, it added Ferrari as a customer. You'll know many more of its customers.

Let’s dive into the numbers.

The Numbers

• Revenue: $299M, up 39% YoY, $16M or 5.6% above the consensus. Very strong!

• Non-GAAP EPS: $0.37, up from $0.22.

• GAAP EPS: $0.27, up from $0.06 and $0.05 or 22.7% above expectations. So it wasn’t just revenue that was strong; earnings were, too.

• GMV (Gross Merchandise Value, the total value of everything sold through the platform): $2.09B, up 44%. Again, very strong.

• Gross profit: $135.4M, up 36%

• 45.3% gross margin versus 46.5% a year ago.

• Adjusted EBITDA: $62.4M, up 62%, a 20.9% margin, vs. 17.9% last year.

• GAAP net profit: $47.7M, up from $10.5M a year ago, up 354%.

• Free cash flow: $73.2M, a FCF margin of 24.5%.

If you add up the revenue growth (39%) to the FCF margin (24.5%) and you get 63.5. As a reminder, the Rule of 40 says a company like this is in great shape when that sum is above 40. Management likes to have a Rule of 50, and Q2 blew that goal out of the water.

Global-e’s FCF margins are very volatile from quarter to quarter because of seasonality, so let’s take the last-twelve-months numbers for that Rule of 40 calculation as well. Then we see 31.4% revenue growth and 26.2% FCF margin, which adds up to 57.6, still an elite score.

In May, I rated Global-e a STRONG BUY at $30.64. The stock is up 35% since. The question is now: after this jump, is it still interesting to buy? The answer may surprise you.

Below: why Q3 may confuse investors (and why you shouldn’t be one of them), the metric I stop watching from now on and what I watch instead, the Shopify story that could become a major growth driver, the Selling Rule I just removed (and the ones I kept, of course, the updated Quality Score, the valuation and my verdict after the 35% run. Don’t want to miss opportunities like this anymore?

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Adyen has been a disappointing stock, whether you look over the last year, the last three (up, but still underperforming the market), or the last five (down 65%).

There are basically three reactions you can have in such a situation and the most common should absolutely be avoided. Let’s start with that one.

Many investors look only at the stock price and conclude their investment thesis was wrong. But the stock price alone is a poor measure for that conclusion.

Many things can happen in the stock market. Very often, over stretches of time, sentiment is much more important than the fundamentals. That’s often reflected in valuations that contract simply because the market mood shifts. And that happened to Adyen.

Its valuation has dropped 80% in the last three years. Wow.

So, what are the two other possible behaviors?

Well, simple. The first is to do nothing. While often, that’s a good thing, people are very bad at doing nothing when a stock moves against them. You have the feeling you are just lazy or stupid. But also, your money is tied to that stock and maybe you can invest it in something better.

So, the best approach is to do deep research to evaluate if the market had good reasons to sell off the stock or not. That’s exactly what I will do in this article. That information can help you to make an informed decision on what to do: buy more, sell or just hold.

In February, Adyen (ADYEY) dropped 20% because its 2026 guidance came in not even 0.2% below consensus. That’s how ‘efficient’ the market is, y’all. On August 13, the day it reported its H1 2026 results, the stock closed 16.4% higher at about €1,059. But after that initial reaction, the stock sold off again without any real catalyst. It was down 7.3% from the pre-earnings price on September 24. Right now, it’s up a paltry 3.6%.

I was very happy to see co-founder and co-CEO Pieter van der Does back on the conference call for the Q&A.

And what he said made sense, a lot of sense:

But now consistent growth as we have delivered like the last 3 half year reports, always 21%, that’s the sort of boring numbers which we should bring forward.

In this case, boring is beautiful. Let’s look at those boring numbers.

The Numbers

• Net revenue: €1,302.9M, +19% YoY, +21% in constant currency

• Processed volume: €803.8B, +24%

• EBITDA: €641.5M, +18%, a 49% margin (50% excluding €6M in one-time acquisition costs)

• Net income: €544.1M, +13%, EPS €17.18

• Free cash flow: €553.4M, +17%, 86% conversion (87% a year ago)

• CapEx: €64.1M, 5% of revenue

• Take rate: 16.2 bps (16.8 bps in H1 2025)

Q2 was better than Q1. Q1 grew 20% in constant currency, so Q2 must have been around 22%. You could see that in the volume as well. In Q2, new volume was up €88 billion YoY, up from €67 billion in Q1. In-person volume (Adyen’s term for POS, or point-of-sale) grew even faster: 28% to €175.7 billion, now 22% of total volume. Adyen has 838,000 transacting terminals, 27% more than a year ago.

The slight EBITDA miss (0.87%) was a nothingburger. Bad debts and provisions went from €2.6M to €16.1M. Adyen says two isolated events caused this: an impairment on a single counterparty and a clean-up of old merchant accounts that were never closed. Without that extra €13.5M, EBITDA would have beaten expectations.

The 50% EBITDA margin is the same as in H1 2025. H2 is usually stronger. Last year, the EBITDA margin went from 50% in H1 to 55% in H2. These remain very high margins.

Net income grew slower than EBITDA because Adyen earned less interest on its cash at central banks (€95.5M instead of €100.3M) and because depreciation rose 27% with the new data centers (more on those later). Employee costs grew 15%, slower than revenue, even with 249 new hires.

The take rate fell from 0.168% to 0.162%, which shouldn’t surprise anyone who follows Adyen. Each and every time, though, people talk about ‘competition’ as the reason for this. Founder and CEO Pieter Van der Does about competition:

But if you look at our data, you don’t see it back in our data. Our existing merchants give us more and more volume and therefore, come to lower tiers, and that’s the only explanation behind the take rate development.

That’s tiered pricing: the more a merchant processes through Adyen, the lower the price per transaction. I’ve been saying this for years. This is just inherent to this industry. For every other player in this industry, it’s the same game. Even for Visa or Mastercard. Do they suffer from competition as well?

Sometimes, I hear that Adyen is too dependent on the big customers, and that’s why the take rate drops. Nope. Adyen actually depends less on a few big customers. Three years ago, 300 merchants brought in more than 70% of the growth. Now, this has dropped to about 60%.

Let’s look at some more numbers.

• Digital: €719.7M, +15% in constant currency, volume €427.9B (+17%)

• Unified Commerce: €417.7M, +27% in constant currency, volume €240.9B (+27%)

• Platforms: €165.5M, +40% in constant currency, volume €135.0B (+42%)

It’s good to see that Digital is growing faster again. In H2 2025, Digital grew just 10% in constant currency, now 15%. The biggest content and subscription customers shifted more of their payments to Adyen.

Unified Commerce and Platforms grew a bit slower: 27% and 40%, compared to 33% and 49% in H2 2025. Those are still very strong numbers, and together these two pillars now make up almost 45% of revenue.

Adyen now has 486 big customers that use Unified Commerce, so in their stores and online. ‘Big’ means at least €10M on both sides: POS and e-commerce, and more than €50M in total. That’s 19 more than six months ago.

In Platforms, 37 customers process more than €1 billion a year, up from 32 a year ago, and total active business customers grew 51% to 293,000. The growth came from what Adyen calls vertical SaaS. We know this better as VMS, the companies that Constellation Software, Topicus and Chapters Group buy. VMS in financial services and food & beverage were especially strong.

Let’s look at the regional numbers:

• North America: €358.1M, +30% in constant currency

• EMEA: €722.5M, +15%

• APAC: €136.9M, +26% in constant currency

• LatAm: €85.3M, +35% in constant currency (43% reported)

The best news was that North America is accelerating. From 20% in H1 2025 to 30% now. As you may know from my Selling Rules, that’s the region I watch most. It’s the biggest payments market in the world and the home market of Stripe, PayPal and Fiserv, just to name a few.

EMEA is the biggest market for Adyen, with 55% of revenue. It showed slower growth, down from 21% to 15%. Interim CFO Hwa Tsao explained that Adyen manages global merchants per customer, not per region. European merchants sell all over the world and US merchants sell into Europe, so the regional split doesn’t tell the full story. And the US investments of the last years are paying off now. That makes sense.

For almost twenty years, Adyen never bought a single company. This year, it bought two in less than two months. Something changed.

When I updated the Quality Score and valuation, I saw a something I had never seen before.

Below:

• What changed at Adyen

• The take rates

• The AI giant that just became a customer

• The number that shows how long the growth can go on

• My take on Adyen’s famous cash pile

• The full Quality Score, the valuation and my verdict.

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Hims & Hers (HIMS) reports its Q3 results on November 9. Before that, I want to go over Q2 and everything that happened since August 10, when they reported their Q2 numbers. The reason is not just that you will be well-prepared for the Q3 numbers, but also because a lot happened: an FTC lawsuit, the CEO on CNBC, penalties from Visa, the launch of both the Hims and the Hers brand in Australia and the potential legalization of peptides.

The stock is still extremely volatile. It dropped after the earnings but then, on August 19, it jumped 13.5% after founder and CEO Andrew Dudum gave an interview on CNBC. Then it dropped again but shot up on October 15, on the news that peptides may be legalized. Meanwhile, it remains one of the most shorted stocks. Consistently, more than a quarter of the float is sold short. That’s one reason for the high volatility. Today, the stock closed at $29.21, 22.5% higher than when I published my previous earnings analysis ($23.85) and I gave it a 9/10 Valuation Score. So, what is it now? Is the stock attractive right now? We will find out at the end of this article.

Let’s find out what happened.

The Numbers

Revenue: $753M, up 38% YoY, beating the conservative guidance of $680-700M and beating the consensus of $730M by $23M or 3.15%. Very strong.

US revenue: $622M, up 16% YoY.

International: $131M, up 17x or 1,700% YoY.

Subscribers: 2.89M, up 19% YoY, more than 300K added in Q2.

Monthly ARPU: $92, up from $76 a year ago. (ARPU = average revenue per user)

Gross margin: 64%, down from 76%. More about this later, obviously.

Adjusted EBITDA: $60M, an 8% margin, down from $82M and 15% in Q2 2025, but up from $44M and 7% in Q1.

GAAP net income: -$86M, versus +$42.5M last year. EPS of -$0.37 versus -$0.05 expected. In other words, a miss and that’s what the market probably reacted to.

Free cash flow: -$68M

Guidance Q3: revenue $880-900M (+47% to 50% YoY), adjusted EBITDA $75-95M.

Guidance

FY2026: revenue raised to $3.1-3.3B (from $2.8-3.0B), adjusted EBITDA lowered at the top to $275-325M (from $275-350M).

2030 target: reaffirmed $6.5B+ revenue and $1.3B+ adjusted EBITDA.

I’m happy to see these numbers. Don’t forget, in Q1 revenue growth was just 4%. 38% is a totally different world. Subscriber growth also doubled.

From the Q2 slide deck, through Fiscal

The market focused on other things: the gross margin dropped, the top of the EBITDA guidance came down and free cash flow turned negative. That’s why the stock fell after earnings. But as always, context matters.

In my Q1 article, I told you the acceleration would come and it came, even more than management expected. The stock is up 22.5% since that analysis. That’s what you get as a Multi: the analysis before the market figures it out.

Below this line: more than 4,750 words of analysis you won’t find anywhere else.

With a full analysis, a clear catalyst for 2027, the Selling Rules, the updated Quality Score and the valuation, including a reverse DCF (next to the correct ratios to look at). And my clear answer: buy, hold or sell before the Q3 earnings on November 9.

That’s 19 days from now. Free readers will know what I think after the stock moves. Paying Multis know now.

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I hope you had a fine week, despite the market drop.

These drops never feel great, but without them, the market wouldn’t be healthy. It’s like your energy level. Your energy drops when you exercise, but over the long term, you will have more energy if you work out.

Of course, more pain could be coming. We don’t know. But I do know that he who persists will eventually win. So, just stay calm, stay the course, grab a cup of coffee, and read this Overview Of The Week.

Articles In The Past Week

This is the fourth article this week. Let’s look back at the three previous ones.

The first article this week was completely exclusive for paying members. So if you are, you can find it in your email inbox.

On the 15th of the month, you get the Best Buys Now. This month, all six stocks are Potential Multibaggers, which is pretty exceptional. You can find out which stocks I see as the Best Buys Now here.

On Saturday, I published the article about Datadog. Revenue grew 36% YoY in Q2 and the growth keeps accelerating. But after the sell-off of this week, the stock is down 12.8% from its pre-earnings level. So, is it a buy now? You can find the answer in this article.

Memes Of The Week

No memes this week.

Interesting Podcasts Or Books

I listened to the two podcast episodes I talked about last week, but nothing else worth sharing.

I got this question in a DM from one of the Multis this week: “What investing books would you recommend?” And of course, I answered it. You may be interested as well, so I share it here.

The markets in the past week

I think most of you will know that the market was red this week. Let’s see how big the damage was.

As you can see, the Nasdaq was the biggest loser this week, down 4.48%. The Russell 2000 was down 3.05% and the S&P 500 dropped 1.95%. Pretty big moves for the indexes.

The Greed & Fear Index dropped from NEUTRAL last week to EXTREME FEAR.

Quick Facts

1. A Bear Market Below The Surface

Semiconductors had a rough week. Or rather, a rough two weeks. The SOXX semiconductor ETF fell 9 days in a row, from October 6 to October 16. That is the longest losing streak in over 20 years, with a cumulative loss of 16.31%.

Source

Rumors are circulating on Wall Street that the VARA AI fund (Value Aligned Research Advisors) blew up. This fund has $26.4B in assets under management. If the rumors are true (and often they are), then this could definitely be the reason for the sell-off or at least speed it up. There are also rumors that Leopold Aschenbrenner’s fund, Situational Awareness, blew up for the second time. If that’s true, it would accelerate the sell-off even more.

VARA has positions in Nebius, Bloom Energy, Lumentum, CoreWeave, Iren, bitcoin miners and other AI infrastructure plays and Situational Awareness in SanDisk, Micron, Bloom Energy, Nebius, CoreWeave and IREN, among others.

This Goldman Sachs chart focuses on the valuation of semiconductors. The forward P/E of the PHLX Semiconductor Index peaked at 38x two years ago. Now it’s at 18x, the lowest it has been in more than three years.

Source

And what about memory? Michael Dell says Dell has $95 billion in backorders for AI server racks. The real bottleneck is getting enough memory chips to deliver them. And next year, “It’s gonna get worse.”

Source

The different elements look confusing and may suggest memory is undervalued. Maybe a part of the answer is in another Goldman Sachs chart. It estimates how much hyperscaler capex contributes to S&P 500 EPS growth: 2 percentage points in 2024, 5 in 2025 and 11 in 2026. After that, it goes: 7 points in 2027 and -1 point in 2028, as depreciation catches up with capex.

Source

So, semiconductor stocks fell 16% in two weeks, and memory even more, while the biggest customers say they can’t get enough chips. It’s confusing, especially when you add Goldman Sachs data suggesting capex growth from hyperscalers will disappear.

I also saw this.

So, maybe the market already anticipates the next quarters, where growth is still strong but declining. Of course, if you look at the past quarters, the actual results blew the expectations out of the water. I think that’s what the market will need. The earnings season and the midterms coincide in a few weeks (mostly early November) and the two together will determine the short-term trajectory of the market.

It would be a mistake to think that this is just semis. The indices still look OK, more than 5,000 stocks are down 20% or more from their 52-week high. Nearly 4,000 are down 40% or more.

And if you look at the biggest stocks, those in the S&P 500, it doesn’t look great either.

Source

Last week, we saw that 134 stocks in the S&P 500 are down 40% or more from their all-time highs. This is the same picture, but broader. And it’s not just the US. The Indonesian stock market had its worst crash in 28 years.

Source

It looks almost like a black hole. Ongoing fires in Indonesia and the government’s denial of a disaster make investors bearish. People have been breathing in the smoke for months now.

How about valuations? The Nasdaq 100 trades at 23x forward earnings, above its 20-year median of around 20x. But the equal-weight S&P 500 is at 15x, right at its median, and the S&P Midcap 400 at 15x is even below it.

Source

And then there’s the inevitable bearish prediction. Paul Tudor Jones said on CNBC that “2027 is going to be really, really challenging for the stock market“, with the most negative flow picture since 2002.

Take those predictions with a big grain of salt, though. Jones was also on CNBC in October 2023, when he said a recession was likely in the first quarter of 2024 and that stocks would probably fall about 12%. Instead, the US economy grew 2.8% in 2024 and the S&P 500 gained 23.3%.

This game is all about ‘Told ya.’ 12 wrong predictions don’t count for these people if they have one right, they will tell you: “I told you so, but you didn’t want to listen.” And the weird thing is that many media outlets celebrate this as if these people have something special, almost god-like. Well, I can predict that there will be a next bear market. If I repeat it enough, I can always point at it and say: “Told ya.” But that’s fake.

Below: the AI debt is quietly cracking, the one neocloud I’d pick if I had to choose, the a16z founder calling a frontier model company “one of the most negligent we’ve ever seen,” why a cloud giant just kicked one of my picks out of its own conference (and why I think that’s a gift), and much more. Don’t want to miss anything?

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Datadog (DDOG) reported its Q2 2026 results on August 6. The stock dropped 26% in the three weeks that followed but the stock climbed back up and last week, the price was even up 3.6% from the pre-earnings level. The sell-off of the last week turned that around again and now the stock is down 12.8%.

This is another example of how fickle the market is and how volatile Potential Multibaggers can be.

So, is the stock attractive already? We will find out in this article. Let’s first take a deeper look at the earnings.

The Numbers

Datadog’s Q2 revenue came in at $1.121B, up 36% YoY. The company had guided for $1.07B to $1.08B, and analysts expected about $1.078B. So, that’s a $43M beat. Strong.

Revenue grew $115M QoQ, a record “by a significant margin,” according to CFO David Obstler. If we look at the revenue, we see that Datadog has accelerated its revenue growth considerably since Q1 2025.

That’s exceptional for a company this mature already. The main driver isn’t new customers, but existing customers spending more. You can see that in these charts from the earnings call slides.

Non-GAAP EPS came in at $0.65, $0.07 above the consensus. The non-GAAP operating margin rose to 23%, from 20% a year ago. Free cash flow was $279M, a solid 25% margin. Very strong again.

This gives a good overview. This is not from the quarter but on a trailing-twelve-month basis.

So, very strong numbers.

For a while, the big fear was that AI would make most cloud software obsolete. But Datadog’s non-AI customers, the banks, retailers, insurers and software companies are doing very well. Founder and CEO Olivier Pomel on the Q2 call:

Revenue growth for our non-AI customers also accelerated again this quarter to the high 20s percent YoY, up from the mid-20s last quarter and 18% in the year ago quarter.

From 18% to the high 20s in one year in the segment AI was supposed to annihilate.

But only looking at existing customers and ignoring new customers would be a mistake as well. New customers accounted for about 30% of revenue growth, up from 25% in Q1, and the bookings of new customers in enterprise more than doubled.

And the runway is long. Founder and CEO Olivier Pomel said at the Citi Global TMT Conference in September that Datadog has about 13% to 14% of the observability market, a market growing at 15% to 30% a year. And then Olivier Pomel said something we love to hear as Multis:

And so you do not have to have a lot of imagination to understand how we can grow 5 or 10x from that.

So, non-AI customers doing well, new customers strong, how about AI customers? Datadog now has over 750 AI customers and 31 spend more than $1M a year, up from 22 last quarter. 8 spend more than $10M, 3 more than last quarter. All of the top 10 AI leaders are Datadog customers. From Datadog’s Investor Day slides:

So, you can say without hesitation that Datadog is firing on all cylinders and the company is accelerating more and more.

So the business is accelerating on all fronts. And still, the stock dropped quite a bit initially, then slowly regained the lost territory and is now down again. The reason for the drop was one small detail from the earnings call.

By the way, last quarter I wrote that 2026 growth would end above 30%, when the guidance still said 25% to 27%. Guidance is now 30%.

Below: All the crucial data about Datadog you need to know, its new AI launches, an update of the Quality Score and the valuation.

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It’s the 15th of the month and if you have been a Multi for a while already, you know what that means: The Best Buys Now!

For newer Multis: these are not trades. These are stocks I want to own for a very long time. No buy low, sell high, but buy low and hold for a very long time. And remember that being right can feel wrong for a surprisingly long time.

This month, there are six stocks. All of them are Potential Multibaggers, which is pretty exceptional. Usually, I pick one or a few other stocks as well. Three of them are the three most recent Potential Multibaggers picks. That’s not a coincidence. I scale into new picks over time, and right now, the prices make that easy.

As usual, I put my money where my mouth is. Tomorrow, I’ll buy for the PM Forever Portfolio.

I have ranked the Best Buys Now alphabetically. It’s not a ranking.

So, without further ado, let’s jump in.

If you want to know which 6 stocks I see as the Best Buys Now, feel free to subscribe!

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In the past, a backlog of articles built up for some of the picks. For the most recent picks, I want to avoid that for the last three picks and then gradually work through the backlog going back from the most recent to the older picks.

So, here is the third article on Axon Enterprise (AXON), one of the three most recent Potential Multibagger pic…

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I hope your week was as much fun as mine.

It was not that mine was anything special, but that’s what I loved about it. Last week was my birthday, and I traveled to Bonn for a conference, which I really liked too. But just being at home and writing articles still feels like such a great week for me. After all these years, I still enjoy this so much, especially when I have a week where I write a bit less, like last week. This week, therefore, you got more articles than usual.

Articles In The Past Week

This is the fifth article this week. Let’s check the four previous ones.

I had already promised you the first article in last week’s Overview Of The Week. It was the second article in the Rocket Lab series.

This week, I sold a position in my portfolio. Not a Potential Multibagger. I added to my positions in the three most recent Potential Multibaggers picks. You can read about the position I sold and why here.

In the third article, we looked at Topicus. Robin Van Poelje stepped down as the CEO. Should you be worried about that? You can find the answer in this article.

The fourth article was about Cloudflare. The stock has shot up a lot. In this article, you can find what I think about this.

Memes Of The Week

No memes this week.

Interesting Podcasts Or Books

I listened to several podcast episodes in Dutch this week, but none in English. For the people who understand Dutch, I listened to two episodes of Geld Is Al Wat Telt, episodes 40 and 41, with two people I know: Tom Simonts and Tim Nijsmans.

You can find the podcast here.

But for Multis who are better in English, I have a tip as well. I have not listened yet, but it will be the first thing I’ll listen to in the upcoming week. It was only released today.

David Senra is a good interviewer and he interviews Alexander Wang, who created Meta’s Muse, which is going viral. You can listen to the episode here.

And there’s a second episode I put on my list to listen in the upcoming week after I saw this post on X. It was also only released today.

Michael Moritz is a living legend, so I’m definitely listening. You can find the episode here.

The markets in the past week

So, what did the markets do this week? Let’s have a look.

A strange pattern this week, with the Russell 2000 down 0.91%, the Nasdaq up 0.64% and the S&P 500 up 1.15%.

The Greed & Fear Index popped from FEAR last week at 31 last week to 45 and Neutral.

Quick Facts

1. Should You Be Worried About Interest Rates?

It's the question I've gotten most often in the last few weeks: “Kris, shouldn’t we be worried about the interest rates?”

Well, no. At least not yet. As I wrote in the Overview Of The Week a few weeks ago after the Fed raised the interest rate:

Overall, the markets don’t seem to really care too much. The reason is that the earnings expectations are high.

When it comes to interest rates, I think you should do what you should do in every situation: put things in context. If the economy and especially the profits of companies (so not just government spending) grow fast enough, more than the interest, then value is created.

The estimate for GDP growth for Q3 is 5.1%. Now, that’s just pure growth. If you add inflation, you get a nominal growth of more than 8%, which is the number to weigh against the interest rate. So, right now, I don’t think the interest rate hikes are a problem for the economy or investing.

This week, I saw this chart. It shows US real yields: the 10-year Treasury yield minus headline CPI (Consumer Price Index, or in other words, inflation).

With the 10-year yield at 4.99% in September and inflation (CPI) at 3.4% year-over-year in August, real yields are only around 1.6%. As you can see, that’s well below the historical peaks of the early 1980s and below the average for 1950-2026.

Of course, as always, if something goes wrong, things can always change fast. But for now, I’m not yet worried about the interest rates.

2. 134 S&P 500 Stocks Down 40% Or More

Fiscal ai shared that 134 stocks in the S&P 500 are now in a 40% drawdown or worse versus their all-time high.

Source

AIG is at the bottom of the list with -96%. The Trade Desk (TTD) is second with -91%. Ouch... AppLovin (APP) is there as well, just like Adobe at -65%, Axon (AXON) at -52% and Netflix at -47%. Now, it has to be said that this is versus the all-time highs. Those were sometimes unreasonably high. Still, it shows there are always opportunities. It’s always important to distinguish between a broken stock and a broken company.

3. Burry’s Crash Calls

I have repeated this so many times, but I can’t repeat it enough: Pessimism sounds smart, optimism makes you money.

Michael Burry is famous for The Big Short. Since then, for 18 long years, he has been calling a crash constantly. Shay Boloor shared this Burry Crash Tracker.

The S&P 500 is up 1,058% from the March 2009 low. The first call on the tracker: December 2015, “Waiting for the bubble to burst.“ Since then, the S&P 500 is up 281% and the Nasdaq even 430%.

He released his latest bearish call this week: “The stock market is quite obviously in its first stage of grief, denial.”

But when a crash comes, whenever that is, people will say: “He was right!” A broken clock is much better than this... It’s right twice a day. Burry has been wrong for at least a decade.

The problem is human psychology. If someone says everything is OK, they sound like a snake oil salesman. If someone warns you, he must be doing it to warn his fellow human being, right? That system is deeply ingrained in our human psychology. But many people know that negativity sells. Negative headlines get three times as many clicks as positive ones. That’s why you are worried about the “AI trade” about interest rates, about oil, the war in Ukraine, tariffs and so many other things.

But if you zoom out, as a species, we have done incredible. Everyone who says otherwise hasn't lived long enough or sees the past distorted. And for the stock market, the same goes.

I shared that I became 50 last week. I looked at the return from the day I was born until now.

Up 7,180% or a CAGR (compound annual growth rate) of about 9%. That means that every $10K invested in the stock market became $718,000. With reinvested dividends, that would have been even much more.

That includes Black Monday in 1987, the Dotcom crash of the early 2000s, the Great Financial Crisis of 2008-2009, COVID, the interest rate crash of 2022 and much more.

The stock market was down more than 10% at least 25 times. It was down more than 20% at least 7 times, 30% at least 3 times, 40% twice, and once (during the Big Financial Crisis) more than 50%.

Over the long term, investing just works, no matter what the prophets of doom tell you.

If you are a free reader, it stops here for you.

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In this article, for example, whether AI capex is really about to peak, why cheaper AI tokens are good news, not bad news, the two stocks I added to my radar this week, the deal that could bring one of my picks to a totally different scale, and so much more. Don't want to miss anything?

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Ah, Cloudflare (NET). I’m always happy to write an article about it. Matthew Prince is one of my favorite CEOs and of course, the fact that it’s a Potential Multibaggers stock since it traded at $39 in 2020, also helps. It’s at $360 now, so it’s getting pretty close to being a tenbagger.

The company reported its Q2 2026 results on August 6. I was still on holiday then and when I got home, I prioritized more urgent earnings first. But in a month or so, the company will release its Q3 results and the price has surged 23% since the earnings. Year to date, the stock is up 84%.

(Seriously, why don’t you have a Fiscal subscription yet? With this link, you get a 15% discount.)

That’s why I wanted to write this article now. Of course, near the end of this article, as always, we will look at the valuation, but first the fundamentals.

On September 9, CFO Thomas Seifert spoke at the Goldman Sachs technology conference and I listened to that interview as well. And, in the week that it’s my birthday, the last week of September, Cloudflare always holds its Birthday Week. We will mention a few things from that event as well. So, there’s a lot to cover. Let’s go.

The Numbers

• Revenue: $696.1M, +36% YoY, another revenue growth acceleration, after 34% growth in Q1. It beat the consensus by $29.75M.

• Non-GAAP EPS: $0.29, $0.02 above the consensus.

• Free cash flow: $56.4M, 8% of revenue, up from $33.3M a year ago.

• RPO: $2.732B, +38% YoY. RPO is the remaining performance obligation, revenue that’s under contract but not booked yet.

• DBNRR: 120%, up from 118% in Q1. Dollar-based net retention shows what customers from a year ago spend now, including churn.

• Large customers (over $100K a year): 4,698, +27% YoY, up from 25% growth in Q1. These big customers bring in 73% of revenue.

• Paying customers: more than 80,000 added in the quarter, +74% YoY.

• U.S. revenue: +41% YoY, 51% of the total.

Cloudflare added 986 large customers over the past year, the most in its history, and every tier from $100K to more than $5M set a record. The acceleration is also clear in new customer bookings, which grew at the fastest rate in more than five years.

Guidance also did better than expectations. For Q3, Cloudflare expects revenue of $736M to $737M, or 31% growth. For the full year, revenue guidance rose from $2.805B-$2.813B to $2.864B-$2.870B (32% growth), and EPS guidance rose from $1.19-$1.20 to $1.25-$1.26. A lot of numbers, I know, but they are all good and rising.

In my Q1 article, I wrote that I was pretty confident that Q2 would come in higher than the guidance of $664M to $665M. It came in about $31M higher. The full-year raise is about $58M at the midpoint, so management also lifted its expectations for the second half by roughly $26M. And I’m confident that they will beat that guidance again.

More Than Half Of The Traffic Is No Longer Human

In Q2, for the first time, more than half of the traffic on Cloudflare’s network didn’t come from humans.

Source: Q2 2026 earnings slides found on Fiscal.

In the call, Matthew Prince said (my bold):

I think it’s a pretty wild time.

I was asked at the end of 2025, in November of 2025, when I thought that non-human traffic would pass human traffic. We pulled all the data, we ran all the numbers, and we were pretty confident that it was going to be the second half of 2027.

I was asked the same question again in March of 2026, and we did the same exercise, and we were surprised to see that it had moved up, that it would cross in the first half of 2027.

I was quite surprised when, in May of this year, our team came to me and said, “You won’t believe it, but non-human traffic has now passed human traffic online.”

To give you a sense of how this trend is playing out, and with the big caveat that I have called it wrong at every point along the way, if the current trends continue, we think in five years, non-human traffic will be as much as 1,000 times as much as human traffic.

It’s not just AI agents, to be sure. There are also hackers and scrapers. Cloudflare blocks those without charging its customers extra, living up to its mission statement:

to help build a better Internet

So more traffic doesn’t automatically mean more revenue. Cloudflare earns on the traffic its customers want, not on what they don’t want.

Most software is sold per seat, which means you pay for every employee who uses it. That’s a problem when companies need fewer people to do the same work because AI agents can do it. Cloudflare was never a seat business, but it wasn’t a consumption business either: most customers pay a fixed subscription for a usage tier. What’s changing is that a growing part of revenue is billed on what customers use: requests, compute and storage. Agents produce far more of those than people do, so that’s why Cloudflare’s revenue is accelerating.

In the Q1 article, I wrote about the T-shirt sizes: customers commit to a usage level and move up a size when they outgrow it. That means that revenue follows usage with a delay. Many large customers also have a pool of funds, a set amount they can spend on any Cloudflare product. In Q2, they used up those commitments faster than Cloudflare had forecast. CFO Seifert:

If it is a pool of funds contract, people burn through their commitments way faster. We renew mid-quarter.

And during Birthday Week, Cloudflare announced that three usage-based products start billing in Q4: Artifacts (code repositories built for agents), AI Search and the observability tools.

So what about the Q3 guidance of 31% growth, after 36% in Q2? That looks like a slowdown. But don’t forget that management guided 30% revenue growth for Q2 and came in at 36%.

Cloudflare ended the quarter with more than 7.4 million developers, up from 5.5 million three months earlier. Pretty impressive.

Matthew Prince was surprised as well:

I made the team triple-check the developer numbers because we added more developers in a quarter than we did in all of last year, and we thought last year was pretty good.

Many of these new developers never wrote code before. Prince gave an example from his own office:

My EA is using some of the vibe coding platforms in order to build tools in order to run things around her house, and she’s writing code and deploying it to Cloudflare, and that’s really remarkable.

Platforms like Lovable, Replit and Base44 let anyone build an app by describing it. A lot of that code runs on Cloudflare.

For years, management said that Workers, the developer platform, was about adoption and that revenue would come later. Prince now says this “has tipped“ and that Workers has become a meaningful contributor to revenue.

I also like how durable this revenue is. A customer who builds their product on Workers keeps paying for as long as that product is active. CFO Thomas Seifert said it’s still the fastest-growing part of the company, followed by the Zero Trust security products.

In June, Cloudflare bought VoidZero, the company behind Vite, one of the most-used tools for building web applications. We already mentioned that in the Overview Of The Week at the time.

Vite stays free and open source. Developers and their coding agents already build their apps with it, and Cloudflare wants to make its own platform the easiest place to run those apps.

Something else happened after the quarter closed. Five days after the earnings, Cloudflare issued $2.175B of convertible notes due 2031 at 0% interest. These notes only convert into shares above about $497, a 60% premium to the share price in August. Older notes of about $1.29B were due on August 15, so much of this is refinancing. But if you can borrow more than $2B for five years without paying interest, you would be stupid not to do it in this environment of rising rates. The company will invest in capex in H2 of this year.

If you remember, in Q1, Cloudflare let some people go. The restructuring cost more than planned. Cloudflare booked $151M in Q2 and now expects up to $165M for the year, up from $140M to $150M. CFO Seifert said the company chose speed, especially outside the US, so Cloudflare can stay focused on execution.

The $56.4M of free cash flow in Q2 came after $99M in severance payments. Without those, it would have been about $155M, or 22% of revenue.

Below:
> why more than half of the internet is no longer human (and why that makes Cloudflare more money, not less),
> the new Cloudflare plan that only works if the company builds something 1,000 times bigger than Visa,
> the $2 billion it just borrowed at 0% interest

So the numbers are outstanding again. But what to do with the stock?

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On Monday, September 14, Topicus (TOI:CA) (TOITF) sent out a short press release. Robin van Poelje retires as CEO on October 1, “for personal reasons.” After Mark Leonard, he’s the second fantastic CEO in the Constellation Software universe to step down. In my Quality Score, he got a 10/10 for management quality. So, I was pretty shocked that this happened and I needed some time to think about it.

I also still owed you an article about the Topicus Q2 2026 results. So, we’ll start with the numbers, then the situation with Robin van Poelje stepping down. As usual, we will also update The Selling Rules, the Quality Score and the valuation.

The Numbers

Revenue came in at €437.3M, up 17.5% from €372.0M. For the first half of the year, it was €872.9M, up 20%.

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That 17.5% is the slowest growth since Q1 2025. But actually, it’s pretty strong because of the tough comps. Last year in Q2, Topicus spent €210M on acquisitions, with Cipal Schaubroeck as the big one.

On top of that, the largest investment since then, a bit more than €400M for the stake in Asseco Poland, doesn’t add a single euro of revenue. Topicus owns 23% of Asseco, not a majority, so what it earns there is not in revenue. In that context, I think this 17.5% is still pretty strong.

Organic growth (growth without acquisitions) was 4%. It has been 4% or 5% in 8 of the 9 quarters.

Maintenance and other recurring revenue grew 6% organically. Here the consistency is even bigger, with 6% or 7% in all of the last 9 quarters.

If you look at Constellation without Topicus and Lumine, it had 0% organic growth in Q2, and Lumine 1%. Topicus did 4%. If you see this as a family, the European child is growing fastest. Great to see.

Operating profit before amortization was €103.4M, up 17% YoY. Net income rose 14% to €47.3M, €0.36 per share. In H1, net income was down 8%, but I already explained that in the Q1 article. H1 2025 had a one-off paper gain of €32.8M on the first Asseco shares. If you take that out, pre-tax income was up 26%.

Just a reminder: Q1 is always a strong quarter for Topicus. Usually, maintenance invoices are sent in that quarter and that means a lot of money comes in that quarter. Q2 is usually the weakest quarter. That’s why you will see negative operating cash flow of €12.7M this quarter. It is better than last year’s Q2, which was minus €14.9M. In H1, this was €267.8M, up 4%. That money is great, because it can be redeployed into new businesses.

But the number that really matters for Topicus is free cash flow available to shareholders, or FCFA2S. Like Constellation Software, Topicus reports this every quarter. It’s the cash left for shareholders after interest, leases, equipment, and the minority partners’ share. In other words, despite the many adjustments, it’s actually the clearest number. It was €14.6M in the quarter, much better than the negative €16.7M in Q2 2025. In H1, it came in at €180.1M, up 24% YoY.

I have always said you shouldn’t look at a single quarter for Topicus (and Constellation Software), so here is what it looks like over the last twelve months.

That looks great but it’s a bit distorted. From the MD&A:

The increase in FCFA2S is primarily due to a dividend in the amount of €59.0M that was received from Asseco in Q2 2026 as compared to €7.7M in Q2 2025.

If you ignore the dividend in both years, you get €229.2M, compared to €223.0M. That’s 3% growth, not much better than the 2% of Q1. Of course, the Asseco deal is worth something, but still, you want to see some more growth.

So, is something wrong with it growing so slowly? I don’t think so. Operating profit before amortization is up 24% in H1, so the businesses are doing well. Timing is the main reason for the meager growth. Working capital brought in €71.3M, down from €93M last year. That seems alarming, but it’s not. This has nothing to do with the operations of the company. Customers brought in 14% more prepayments. But cash taxes were 55% higher than last year.

But back to the Asseco dividend. Topicus borrowed to buy that stake, and the interest on that debt is fully deducted from FCFA2S. So, that has a negative influence. That’s why throwing out the Asseco dividend is not fair. And it’s not as if Asseco will stop paying dividends. Just don’t expect the dividend to be that high every year.

This year, Asseco paid out triple last year’s dividend. Only 40% of this very high dividend was from last year’s earnings. The rest came from cash on the balance sheet. If you dive a bit deeper, there’s actually a funny detail.

Topicus bought the largest part of its stake directly from Asseco, the so-called treasury shares, shares a company holds in itself. Topicus paid 1.05B zloty. And how much has Asseco paid out in dividends? You guessed it, 1.05B zloty. It’s probably a coincidence, but still, it says something. The money that Topicus invested was already paid back in dividends for 23.14% in year one. Because that’s how big Topicus’ stake in Asseco is.

Now, as often with Topicus, you have to adjust things. The Asseco dividend is not in Topicus’ profit. The dividend lowers the value of the stake on Topicus’ balance sheet. On top of that, Asseco’s stock also dropped YTD, by about 28%.

Topicus has €323.3M in cash and €467.7M in debt. This Fiscal chart shows €561.6M because, in total debt, lease obligations are also included.

We will go with the numbers Topicus gives, because these are more about the operating part of the business, and they show you a crucial element. With Topicus’ numbers, net debt is €144.4M, down from €365.9M at the end of 2025. Over the past twelve months, Topicus generated €424M in operating cash flow. That means net debt is about a third of one year’s cash flow. That’s extremely conservative for a serial acquirer, especially if you know that Topicus has spent a record amount buying new businesses.

Topicus has €700M in a revolving credit facility, but it has used only €110M so far. If you add the cash, it means that Topicus could put more than €900M to work without needing any other form of financing.

The MD&A states this in the company’s typical matter-of-fact tone:

Management anticipates that it can continue to grow the business organically without any additional funding.

This is the internal flywheel that I find very attractive. Many private equity companies that often compete with Topicus are leveraged over their ears and are therefore very risky investments. Topicus is extremely conservatively managed and it can easily weather any storm. No, I should rephrase that. It is anti-fragile, as Nassim Nicholas Taleb described it in his great book with the same title.

The subtitle of the book says it all: “Things that gain from disorder.” If there is a crisis, Topicus will gain strength, while its competitors will suffer or even go out of business.

But that also means that Topicus’ acquisitions come in at an irregular pace. Last year was a record year for cash deployment, this year is slow up to now.

In the second quarter, Topicus closed acquisitions for €31.2M in cash, or €40.2M including milestone earnouts. That means €62.7M this year so far. Last year, in H1, that was €249.7M in cash for businesses plus €168M for the first Asseco shares (Topicus bought its stake in two times).

Of course, 2025 was a record year, a true outlier. But good deals that meet Topicus’ hurdle rate come at an irregular pace. For example, since the quarter ended, Topicus has completed or committed to deals worth €56.1M. That’s almost as much as the rest of the year combined. I see this as prudent and consistent with why I bought the stock. Topicus doesn’t lower its bar to just show growth. It waits patiently until it sees a good opportunity that meets the hurdle and only then it deploys money. That’s what sets it apart.

And there was a very public showcase of the attitude Topicus has. At the end of May, it made a public offer of 247M Australian dollars for ReadyTech, an Australian software company. ReadyTech’s Board refused the offer. As far as I know, Topicus has not put in a higher bid. But it shows that Topicus is ready to write a check €100M+ if it sees an opportunity. Probably, a higher price would not meet the hurdle rate. Or put differently, Topicus thinks its returns would not be high enough for a higher bid to make sense.

So the business is doing fine. But what about the CEO suddenly stepping down? Why so fast, after sixteen years? Why no explanation? And is it a coincidence that a second key person left at almost the same time?

I dug into it, and I found more than the press release tells you.

Below: what’s really behind the CEO change, the second departure few talked about, the three numbers that would show AI damage first, the two scores I just cut, the valuation at a level I have never seen before, and my rating.

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If you have been here for a while, you know I don’t often sell my positions. The biggest gains come from patiently waiting. I agree with Warren Buffett:

Now, I think many misread this quote. They read: “Our holding period is forever.” That’s definitely not the case. It’s their favorite holding period. You only hold a stock if everything goes right, if nothing damages the investment case. That’s very exceptional. But if it happens, don’t sell. Before you know, you have sold the next Amazon, Netflix, Apple or Nvidia. If you have found that exceptional company, just let it work for you. As Warren Buffett’s friend and partner Charlie Munger said:

If you look at what Warren Buffett does in his portfolio, you see this reflected. He has held a few positions for decades, which is pretty close to ‘forever’ in investing. But others come and go. Sometimes after just a few months, when he thinks the investment thesis doesn’t play out. People sometimes call him out then, saying things like: “I thought he never sold?” or “I thought his holding period was forever?” These comments are wrong and people saying this never understood what Buffett really said. Saying forever is your favorite holding period means you only don’t sell the stocks you think deserve to be kept. The others should be sold.

And that’s what I also do. And I did that this morning.

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I have recently bought this position and I’m very excited about it.

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This is unusual, as this Overview Of The Week is just the first article you get from me.

As I wrote last week, my 50th birthday was this week, so I took time to celebrate with my loved ones.

Then on Thursday evening, I spoke at an event in Ghent. Here’s a picture I took ten minutes before it started (so people were still coming in).

There were 500 people and it was great to see some Multis were there as well and came to say hi to me.

On Friday morning, at 5 am, my cab took me from the hotel in Ghent to the train station to take the train to Bonn. I was on the train at 5.21 am.

For the people who think my heart rate is quite high: I had to climb stairs with a bag and a suitcase. :-)

I am writing this on Sunday, on my way back home. Friday and Saturday, I attended a conference in Bonn I didn’t want to miss: the Financial Marketing Summit, where I met people who do the same thing I do, although I was a tiny player compared to everyone else. I thoroughly enjoyed it. I was there with my friend Pieter Slegers from Compounding Quality.

That doesn’t mean I didn’t do any writing. I wrote the second article about one of the new picks. I still have to edit it, but you can expect the article tomorrow.

Memes Of The Week

When markets are doing badly, the meme harvest is much bigger. It’s like rain for the crops. No memes this week.

Interesting Podcasts Or Books

I was so busy this week that I didn’t even listen to podcasts. I bought a new book, after a tip at the conference in Bonn. It’s called Return to Real: The Last Human Advantage In An Age of Artificial Everything.

As you can see, it’s from Ryan Levesque. I have read his books Choose and Ask, and I liked both of them a lot. So, I’m looking forward to reading this one!

But I can say the same about the next book, Stock Picker: How to Develop the Mindset, Temperament, and Strategy to Outperform Wall Street by Ian Cassel.

I had preordered the book and it finally arrived this week. Ian Cassel is an investor specialized in small caps, but I think you can learn from all angles of investing. I heard from multiple people that this book is outstanding.

The markets in the past week

So, what did the markets do this week? Because of my busy schedule, I feel like I don't know as well as I do in other weeks. Let's have a look.

As you can see, the S&P 5As you can see, the S&P 500 was down 0.27%, the Russell 2000 0.16% but the Nasdaq was up 0.45%.

Nvidia was up almost 4% this week and it has a bigger weight in the Nasdaq than in the S&P 500.

The Greed & Fear Index dropped deeper into FEAR territory, from 37 last week to 31 this week.

Quick Facts

1. Micron’s earnings

Micron (MU) reported its earnings this week. It was another jaw-dropping quarter, but the stock didn’t move.

Revenue was up an incredible 379% YoY, to $54.23B. Adjusted EPS came in at $33.42, up a whopping 11x YoY. That’s nuts

This was Micron’s fiscal Q4, so that means that its fiscal year was also closed. Revenue for the year rocketed from $37.38B last year to $133.19 billion in the last four quarters, up 3.5x. Non-GAAP net income reached $86.76 billion, and operating cash flow skyrocketed to $89.68 billion from $17.53 billion a year earlier.

For fiscal Q1 2027, management expects revenue of about $61.5B, well above the consensus of $57.9 billion. Adjusted EPS is guided to be $38.15, versus the consensus of $35.9.

So, why didn’t the stock price jump after such blow-out results and guidance? The problem is the same for many chip stocks. Investors are afraid of the cycle. Especially memory chips, the ones Micron makes, have been notably cyclical.

But I think these cycles will become at least less extreme. Micron announced that it now has 26 SCAs (Strategic Customer Agreements), up from 16 last quarter. These deals bring in more than 35% of expected revenue in 2030. Some even run until 2031. 75% of the SCAs have fixed price brackets.

Micron already has 75% of its 2027 in commitments, which is extremely high. RPO, or remaining performance obligations, are now at $150 billion.

That is a big change for a business that couldn’t see into the future very well and just had to follow the cycles.

A second reason for the low enthusiasm for the stock after the earnings may be Micron’s capex plans. The company wants to invest more than $50B in the next twelve months. Normally, investors see that as the start of the supply glut.

But when you listen to what management says, a big part of that money is meant for building cleanrooms. Micron can build those first and install the expensive production machines later. It can decide based on the demand. That gives it more flexibility and reduces the risk of adding too much supply too fast.

HBM, or high-bandwidth memory, is a special way of packaging and connecting DRAM chips for very high bandwidth. Demand is incredible, which means it often gets priority over standard DRAM chips, which are also in high demand. This means Micron has pricing power.

You can see that in Micron’s numbers. DRAM revenue rose 27% QoQ, but shipments increased only in the mid-single digits. NAND revenue rose 42% QoQ, while shipments increased around 10%. In other words, the big jump in revenue came mostly from pricing power. This is the third reason why the market didn’t push Micron’s stock higher. Because that pricing power is also seen as a risk once demand and supply are more in balance.

But for now, Micron’s management doesn’t see that balance on the horizon. It expects even more imbalance in 2027 and 2028. Customers already try to make sure they have what they want for 2028.

This also means that Micron also has a much stronger balance sheet than in past cycles. Cash and investments reached $73.5 billion against just $5.2 billion of debt. Management has said that it will return more of that cash to shareholders.

I think that the valuation of the stock is attractive.

As you see, the consensus is still very bullish for the next year. But the market worries about what comes after 2027 and especially 2028. I think a lot of the negative news is already baked into the price at this moment and that the cycle may last longer than most think.

2. Results Presidential Election Brazil

As you may know, Brazil held elections today (Sunday). In the official polls, it was a close race, but the betting stats showed that Bolsonaro had a higher chance of winning.

98% of the votes have been counted; Flávio Bolsonaro leads with about 47.2–47.3%, while current President Luiz Inácio Lula da Silva has about 44.9%. That means there will be a second round on October 25, since one candidate must have over 50%. Of course, Flávio Bolsonaro is thought to win that second round.

If you wonder why I share this, Bolsonaro is seen as more business-friendly, which is good for Nu and Mercado Libre. The Brazil ETF is up 7% in overnight trading.

More important for us: Nu Holdings (NU) is also up more than 7% in overnight trading.

Mercado Libre was up about 3% so far.

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This is my last Overview Of The Week as a 49-year-old man. I’m turning 50 on Tuesday.

It’s funny how we look at age. When you are 16, someone of 28 is old; when you are 28, someone of 40 is old; one of my best friends is 44 years old and he still thinks of old people when he hears the age of 50, even if his best friends are all that age.

I’m about to turn 50 but I still feel young and energetic. The fact that I love what I do definitely contributes to that, so I want to thank you all for making that possible!

The upcoming week is busy, with my birthday and a conference in Bonn on Friday and Saturday.

On Thursday evening, I will be one of the speakers in Ghent at the Clash der Beleggingsstrategieën. I have three more free tickets to offer. Just comment to this article if you want to attend for free.

And please, come say hi during the reception after the debate!

Articles In The Past Week

This is the fourth article this week. Let’s look back at the three previous ones.

The first article this week was an update on Chapters Group.

I’m not often proud of an article I write. Maybe three times a year or so. But my Nu Holdings article was one of those. If you haven’t read it yet, you can do that here.

Twice a month, I buy stocks for the PM Forever Portfolio, my real-money portfolio. In this article, you can find out which stocks I bought on Friday and why.

Memes Of The Week

No memes this week.

Interesting Podcasts Or Books

This week, I listened to David Gardner’s Rule Breaker Investing podcast. Every quarter, he has a game show called the Market Cap Game Show. Two contestants have to guess a company’s market cap best. It’s light, so I often listen when I’m cooking, but it’s really fun and you still learn something. You can listen to the episode here.

The markets in the past week

So, what did the markets do this week? Let’s have a look.

We see the same pattern again. The Russell 2000 was down 0.80%, while the S&P 500 was up 1.21% and the Nasdaq even 2.06%. Smaller companies usually feel more impact from interest rates, so this is logical.

The Greed & Fear Index remained in FEAR territory, but last week, it was at 29, while it climbed to 37 this week.

Quick Facts

1. Do higher rates really help?

Bill Ackman posted an interesting thought this week. He says that the presumption is that higher interest rates reduce inflation. And that has indeed always been the underlying belief. But what if, Ackman wonders, this time, there won’t be an effect now, because the demand for AI and energy is not affected by higher interest rates.

There is something to be said about this, I think. If you look at the last 45 years, we have seen a long cycle of lower interest rates.

There were some exceptions, but you can clearly see the trend, down. During that time, there was generally deflation and asset inflation. Those are expensive words and they need nuance. There was no deflation for many things, like education, but many technological devices and services dropped in price. At the same time, stocks became more expensive. That’s asset inflation. With low interest rates, that makes sense.

We will have to see how this evolves over time. But it’s something to watch.

2. AI finances, the first cracks?

The problem with AI is that some companies have taken on deep debt to invest in infrastructure. As long as they can pay that debt, that's no problem. Once that's no longer the case, look out below.

In that context, what happened to Oracle (ORCL) is, in hindsight, hopefully not the first crack. The company sent a ‘force majeure’ notice on Project Jupiter, the huge New Mexico AI data center tied to the $400 billion Stargate project it started with OpenAI, SoftBank, Nvidia, and other partners.

The problem is power for the site. The plan is to use Bloom Energy fuel cells powered by natural gas, but the pipeline needed to provide natural gas to the data center location doesn’t get the necessary permits.

Force majeure is usually used when something disastrous happens. Think of a war, a flood, or another natural disaster. Oracle wants to delay its payment until 2028, so it gets more time to get the pipeline permit. This makes credit markets very nervous. If you look at Oracle’s balance sheet, you probably understand why.

With $156 billion in debt, $37B in cash and equivalents and negative free cash flow, Oracle looks weak. And that makes markets nervous.

I have always said that if one pin falls in the AI companies, many others would follow. I thought of OpenAI mostly, but Oracle is a weak link in the chain as well.

The opening of the data center was foreseen in 2028, but it will probably be later. Such things happen, but if this makes a company invoke the force majeure rule, that company is financially weak. And that could be dangerous.

Now, I think you all know I’m not a prophet of doom and things can work out fine. But it doesn’t mean that we have to close our eyes to potential problems.

This is where the article stops if you are a free reader. Premium readers get much more than you, obviously.

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Twice a month, I add to the Forever Portfolio, and today, I did that just after the market opened.

I bought 4 stocks and there’s a new position. If you’re a paying member, it won’t be that hard to guess which one it is. If you’re not a paying member yet, well, maybe this is a good moment to consider it.

Right now, you can get the VIP subscription, which will cost $1,500 soon, for $399. That’s the price of the normal subscription with $100 discount and a free upgrade to VIP.

With VIP, you can see my full portfolio and all trades, and soon, I will expand it with exclusive webinars and a Stock Of The Week.

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Before I go to the stocks, I want to talk about balance first. I always look at my portfolio before I buy stocks because allocation matters. I want to allocate most of my money to the stocks I have the most conviction in.

But allocation is also very personal. If you copy me exactly, you should be a bit like me, and if you’re not, you’ll have trouble staying convinced about the positions in your portfolio when things go south. As they say, you can borrow someone’s idea, but you can’t borrow someone’s conviction.

That’s also why I write so many deep dives. They should help you form your own ideas based on the information I provide. But you have your own life, your own experience, and your own personality, and all of that plays a role in how you build your portfolio.

But enough talk. Let’s go to the stocks I bought this morning when the market opened.

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