Industry Briefing

Software Bounced Exactly Where I Wanted; What's Next?

The iShares Expanded Tech-Software Sector ETF (IGV) has experienced an 11% rebound since late June, driven by a shift in capital from semiconductor stocks. This recovery is supported by a strategic increase in the ETF's allocation to cybersecurity leaders, which now comprises 21.27% of its holdings, as these integrated platforms have been outperforming both generic software and the overall market. Major contributors to this growth include Microsoft and Oracle, which together account for 14.33% of IGV and are nearing the end of their selloff, with most downside risks already reflected in their valuations. Amrita Roy, an investment strategist based in Vancouver, plans to increase her holdings in IGV and select software stocks if technical indicators confirm a positive trend. She emphasizes the importance of monitoring price movements relative to the 200-day moving average and broader market trends. Roy, who runs a family office fund focused on sustainable growth investments, aims to provide accessible financial insights through her award-winning newsletter, The Pragmatic Optimist.

Oracle's Post-Q1 Selloff Makes No Sense

Oracle's stock experienced a significant decline of approximately 10% following its fiscal Q4 FY26 earnings report, which raised concerns among investors regarding the company's projected capital expenditures for FY27, estimated between $90 billion and $95 billion. Despite this selloff, Amrita Roy, an investment analyst, maintains a "buy" rating on Oracle, citing a remarkable 363% year-over-year surge in the company's backlog, now totaling $638 billion, which outpaces all other hyperscalers. The anticipated capital investment is deemed essential for accelerating the conversion of this backlog, although it will necessitate an additional $40 billion in debt and equity, potentially diluting shareholder value amid increasing leverage. Roy highlights the promising growth trajectory of Oracle's cloud services, with expectations of a 120% revenue increase to $34 billion in FY27 and a projected 58-64% year-over-year growth in total cloud revenue for the first quarter. Despite the recent stock drop, Roy argues that Oracle's valuation remains attractive, with a forward price-to-earnings ratio of 22.9, expected to compress to 12 by FY29, and consensus price targets indicating a potential upside of 38.5%. As a result, she encourages investors to consider Oracle as a viable addition to their portfolios.

Rubrik: The Post-Earnings Dip Is A Gift

Amrita Roy, an investment analyst, has maintained a "buy" rating on Rubrik, Inc. (RBRK) following the company's impressive first-quarter results for fiscal year 2027. The firm reported a 39% year-over-year revenue increase, surpassing the 32% guidance, and has raised its full-year projections. Rubrik's competitive advantage in data and identity protection, along with trends in platform consolidation, is contributing to significant growth in customers generating over $100,000 in annual recurring revenue and expanding profit margins. The recent launch of Mythos is fostering more enterprise discussions about cyber resilience, which could lead to revenue growth exceeding 20% beyond fiscal year 2028. Despite a subdued market reaction after a substantial 90% stock rally, Roy views any decline below the 21-day exponential moving average as a potential buying opportunity. Her insights are part of her broader investment strategy, which focuses on sustainable, growth-oriented companies.

Hyperscaler's CDS Fears Are Rising

The recent rally in the S&P 500 is largely fueled by companies linked to artificial intelligence, as investor enthusiasm grows amid fears of missing out. Projections for AI capital expenditures have surged to an anticipated $1.2 trillion by 2027, although funding sources have shifted from operational cash flow to unprecedented levels of debt issuance. Concurrently, activity in credit default swaps for hyperscaler companies has increased, indicating that banks and investors are hedging against potential credit risks, driven by regulatory pressures and concerns over a possible AI bubble. As key economic indicators such as 10-year Treasury yields, oil prices, and the dollar fluctuate at precarious levels, analysts warn that any significant breakout could tighten liquidity conditions, posing risks for the AI sector. Amrita Roy, an investment strategist based in Vancouver, maintains a cautious approach, holding over 30% of her portfolio in cash while closely monitoring oil and dollar trends. She anticipates at least a 10% market correction in the near term, reflecting a broader sentiment of caution among investors as they navigate the complexities of the current economic landscape.

Axon Is About To Explode Higher

Amrita Roy, an analyst and contributor to The Pragmatic Optimist, has initiated a "buy" rating on Axon Enterprises (AXON) due to its promising risk-reward profile and strong growth potential in its Connected Devices and Software & Services segments. This recommendation comes as Axon undergoes a transformation into a comprehensive public safety platform, driven by its AI Era Plan, which is expected to enhance average revenue per user (ARPU) and boost recurring subscription revenue. Despite recent pressures on margins and free cash flow, Roy believes these challenges are temporary, as the AI Era Plan is anticipated to provide significant operational leverage. Management has raised its revenue guidance for fiscal year 2026, projecting a growth rate of 30-32%, with expectations that Axon will surpass its $6 billion revenue target by fiscal year 2028. Roy's analysis highlights that Axon's stock has declined over 56% since its peak in August of the previous year, prompting her to take a position in the company. Her investment strategy focuses on sustainable, growth-oriented companies that maximize shareholder equity. With a background in high-growth startups and venture capital, Roy aims to democratize financial literacy through her work, including her award-winning newsletter.

Rivian: A Reality Check Is Coming (Rating Downgrade)

Amrita Roy, an investment analyst, has downgraded Rivian Automotive Inc. to a 'sell' rating due to unfavorable risk-reward dynamics amid significant technical resistance and increasing margin pressures. Despite reporting a 49% year-over-year growth in its Software & Services division, Rivian's Automotive segment is struggling with negative gross margins and is expected to face further declines as production of its R2 model ramps up through the second and third quarters of the fiscal year. This situation raises concerns about the timing of potential improvements in earnings per share, compounded by various execution and macroeconomic risks. Current Wall Street price targets suggest a 36% downside risk to $9 per share, with only a 27% upside potential, making the investment outlook unattractive. The downgrade follows Rivian's recent Q1 FY26 earnings report, which, despite exceeding expectations, has not alleviated the stock's downward pressure, which has seen a 19% decline. Roy, who leads a family office fund in Vancouver, emphasizes the importance of sustainable growth in her investment strategies and aims to provide accessible financial insights through her work.

I'm Buying Reddit Despite The Google Headwind. Here's Why

Amrita Roy, an investment analyst, has reaffirmed her "buy" rating for Reddit (NYSE: RDDT) despite concerns surrounding a recent overhaul of Google Search. Following Google's announcement at its I/O 2026 developer conference, Reddit's stock experienced a 5.5% decline. However, Roy highlights that Reddit's AI-powered search capabilities and strong advertising revenue growth, with Q1 FY26 revenue increasing by 69% year-over-year, position the company favorably. Although Google Search accounts for 40-50% of Reddit's traffic, most of these users are logged out, which limits potential monetization risks from any declines due to the search updates. Analysts project a 46.5% revenue growth and an 89% increase in earnings per share for FY26, with a forward price-to-earnings ratio of 20.9 and a potential upside of 53% to the average price target. Roy, who leads a family office fund in Vancouver, emphasizes the importance of investing in sustainable, growth-oriented companies and aims to provide accessible financial insights through her award-winning newsletter, The Pragmatic Optimist.

Why I Made MercadoLibre My Third Largest Position

Meta At 17x P/E: Investing Doesn't Get Any Easier

Meta Platforms is facing scrutiny from investors due to concerns over increased capital expenditures driven by artificial intelligence and the potential for equity dilution. Despite these challenges, the company reported a 33% year-over-year increase in revenue for the first quarter of fiscal year 2026, attributed to rising ad impressions and pricing, fueled by its AI investments. The introduction of custom silicon and new revenue streams, including Business Agent, Meta One, and AI glasses, is expected to enhance long-term revenue and profit margins. Currently trading at a forward price-to-earnings ratio of 17 times, Meta is viewed as having over 45% upside potential relative to consensus price targets, leading analysts to maintain a buy rating. As the second-worst-performing hyperscaler year-to-date, Meta's performance is under close observation as it navigates its ambitious growth strategy.

Shopify: The Price Level I Plan To Load Up At

Shopify Inc. has reported a significant revenue increase, achieving over 30% growth for the fourth consecutive quarter, with a 34% rise in revenue for Q1 FY26. Despite these strong fundamentals and the positive impact of AI-driven initiatives like Sidekick and Catalog, which are enhancing traffic and conversions, the company’s stock has declined by 32% year-to-date. This downturn is attributed to cautious guidance for Q2 and concerns over margin compression. Analysts remain optimistic, maintaining a “buy” rating due to Shopify's attractive risk-reward profile and the potential for a 37% upside. The company continues to see momentum in international markets, offline sales, and B2B segments, reinforcing its growth narrative.

Toast: I Was Wrong

Toast Inc. is currently facing significant challenges, as its revenue growth has slowed over the past two quarters, culminating in a disappointing first quarter where it fell short of expectations. This decline is attributed to a decrease in gross payment volume (GPV) per location, which poses a risk to its transaction-based revenue model. Despite these setbacks, subscription services have shown resilience, growing 28% year-over-year and contributing 46.5% to the company's gross profits. The adoption of Toast IQ is increasing, but it has yet to translate into revenue growth. Analysts remain cautious, with one rating the stock as a 'hold' due to its attractive risk-reward profile, although sentiment may remain muted until there are clear signs of revenue acceleration or stabilization in GPV per location. Currently, Toast's stock is trading at a forward price-to-earnings ratio of 17.26, with a potential upside of 46% based on average price targets. However, the analyst advises waiting for more definitive indicators of recovery before making investment decisions.

2 Undervalued Growth Stocks That I'm Aggressively Buying

A recent report highlights the growing trend of electric vehicle (EV) adoption across the United States, driven by increasing environmental concerns and government incentives. As of October 2023, sales of EVs have surged, with major automakers like Tesla, Ford, and General Motors leading the charge. This shift is particularly evident in urban areas, where consumers are more inclined to embrace sustainable transportation options. The report indicates that federal and state governments have implemented various tax credits and rebates to encourage EV purchases, making them more accessible to a broader audience. Additionally, advancements in battery technology and charging infrastructure have alleviated previous concerns regarding range and convenience, further boosting consumer confidence. Experts predict that the trend will continue to accelerate, with projections suggesting that EVs could make up a significant portion of new car sales by 2030. This shift not only reflects changing consumer preferences but also aligns with broader efforts to reduce carbon emissions and combat climate change. As the market evolves, automakers are investing heavily in research and development to enhance their EV offerings, ensuring they remain competitive in a rapidly changing landscape. The combination of consumer demand, supportive policies, and technological innovations is reshaping the automotive industry, signaling a pivotal moment in the transition to cleaner transportation solutions.

Pinterest Is Likely Dead Money (Q1 Preview)

A recent report highlights the ongoing challenges faced by the global economy as inflation rates continue to rise. Economists from various institutions have noted that the inflation surge, driven by supply chain disruptions and increased consumer demand, is affecting both developed and emerging markets. This trend has been particularly pronounced in the United States and Europe, where central banks are considering tightening monetary policies to combat rising prices. As of October 2023, the inflation rate in the U.S. has reached a 40-year high, prompting discussions among policymakers about potential interest rate hikes. In Europe, similar concerns have led the European Central Bank to signal possible adjustments in its approach to monetary policy. Analysts warn that if inflation persists, it could lead to slower economic growth and increased uncertainty in financial markets. The situation has sparked debates among economists regarding the best course of action to stabilize prices without stifling growth. Many are advocating for a balanced approach that considers both immediate inflationary pressures and long-term economic recovery. As governments and central banks navigate these complex dynamics, the global economy remains on alert for potential repercussions from ongoing inflationary trends.