Category: personal_noteS

MSFT, Alphabet, Meta, Amazon all expected further increase in capex

What you are seeing in 3q25 capex spending…

What you are hearing from mgmt.

MSFT – “now expects capital investment growth in fiscal 2026 to exceed that in fiscal 2025”.

Alphabet – “expect significant increase in 2026 capex” / 2025 capex to be in a range of $91 billion to $93 billion” vs $85 bn guided in 2q25.

Meta – “capital expenditures would be notably larger in 2026 than 2025”. / 2025 capex to be $70-$72 billion vs $66-72 billion guided in 2q25.

Amazon – “we expect our full-year cash CapEx to be ~$125 billion in 2025, and we expect that amount to increase in 2026” vs ~$118bn guided in 2q25

 

 

Robots should be capex?

Technically, capex should be more one-off than recurring.

Phone used to be a “capex” item. You won’t buy a phone every other year, before the iPhone era. Apple’s P/E multiple expanded when it transformed the category into a more “recurring business”.

In the early stage of AI training, people spend whatever is needed on chips capex. This is due to the increased performance of AI GPUs and thus the efficiency of training. However, after this growth era, I think this is still more of a “capex” item thus the growth should normalize later. Inference is another thing though.

Robots should be capex ultimately. However, in the initial adoption stage, which hasn’t arrived yet, we should see a growth that makes people forget this is a capex category. Then there will be a period of doubt, like when Buffett purchased Apple. And hopefully, the leading robot company by then can transform robot into a “recurring” category like Apple did for smartphone.

 

Why $1 of bitcoin is worth $2 in stock market

Matt Levine explained why $1 of bitcoin is worth $2 in stock market.

Read the article here:

A Bitcoin in the hands of a crypto treasury company is really worth more than a Bitcoin in your hands, because the treasury company can do stuff (investor education! lending! leverage! staking! tokenization! stuff!) with the Bitcoin that you could not easily do. Therefore the premium is justified for business reasons.

There are vast pools of institutional capital that (1) want to own Bitcoin but (2) can’t own Bitcoin directly, or through futures or exchange-traded funds or other more normal (and lower-premium) mechanisms. Therefore the premium is justified for market-segmentation reasons: Crypto treasury companies are getting paid a durable premium for bringing crypto to institutional investors in investable form.

Retail investors are lazy and/or confused and buy hyped crypto treasury stocks without understanding the enormous premium they are paying for crypto exposure. Therefore the premium is justified for meme reasons.

 

Japan history (3) – Where does power come from?

3/ Government of Meiji Japan

In early 1868, Emperor Meiji declared power to be restored to the Imperial House and the end of shogunal system.

Fighting was needed before and after the declaration.

New administrative system – in 1871, Domain (Han) system was abolished and domains were converted into prefectures, headed by a bureaucratic appointee from the central government. Power is centralized.

New military –

  • In late 1873 and 1874, the samurai were given the option to convert their stipends into government bonds.
  • Nationwide conscription established in 1873

Land tax reform established a uniformly set tax rate at 3% on land bonds, which recognizes private land ownership. A cash-based system replaced payment with crops. In January 1877, the government lowered the tax rate from 3% to 2.5% in an effort to regain support for the land tax.

In 1889, the Constitution was adopted, with recognition of the Emperor. Technically, the power is still from the Emperor.

Things are moving fast… within China’s financial system

Last year, Huarong, now China CITIC Financial Asset Management (2799.HK), bought into Bank of China H-share, becoming a over 3% shareholder. And it took one non-executive board seat of Bank of China right after.

Great Wall AMC, became a over 3% sharehoder of Minsheng Bank and got 1 non-executive board seat.

Xinda, via purchasing convertible bonds, became a over 3% sharehoder of Shanghai Pudong Development Bank.

These shouldn’t be taken lightly, as banks are heavily regulated in China. So there were political decisions made.

Japan history (2) – Where does power come from?

2/ Shogunate

Year 1192

Power established by an organized army (most powerful army, by killing opponents), and the recognition from Japan’s Emperor.

Kamakura Shogunate 镰仓幕府 (first Shogunate)

Minamoto no Yoritomo 源頼朝, born into the Minamoto clan, a prominent samurai family.

Defeated the Taira clan in 1185.

Emperor’s real power had decreased already; in 1192, Yoritomo became Sei-i Tai Shōgun, which have power over other feudal lords while the Emperor becomes figurehead.

Shogunate needs to be financially power to organize the most powerful army.

Imperial court came back into power after some time, but then replaced by Ashikaga shogunate 足利幕府, or Muromachi shogunate 室町幕府 (2nd shogunate)

Japan history (1) – Where does power come from?

1/ Taika Reform

Year 645

Power established by killing opponents (Isshi incident).

Emperor Kōtoku 孝徳天皇

Then the reform divided Japan into 66 “provinces”, the head of which may come from head of powerful families / clans.

Basically, before the reform, each powerful family may behave like its own king, but now the whole Japan only has 1 super / centralized Emperor.

Land is nationalized and taxed.

Emperor will over time focus more on religious work, thus getting power as decedents of God.

So $IBB generated negative return over the past 5 years…

And it probably should be down.

Top weighted companies within $IBB are Gilead, Vertex, Amgen and Regeneron.

Gilead 1q 2022 revenue was $6,590 million and 1q 2025 revenue was $6,667 million – no growth for 3 years.

Vertex 1q 2022 revenue was $2,097.5 million and 1q 2025 revenue was $2,770.2 million (but 1q 2024 revenue was $2,690.6, so revenue growth slowed significantly). Additionally, Vertex shows no growth in non-gaap operating income.

Amgen is better – 1q 2022 revenue was $6,238 million and  1q 2025 revenue was $8,149 million. But growth is smaller in operating income vs 3 years ago – non-gaap operating income grew to $3,599 million in 1q 2025 vs $3,140 million in 1q 2022, or ~15% growth in 3 years.

Regeneron 1q 2022 revenue was $2,965 million and  1q 2025 revenue was $3,029 million – no growth vs. 3 years ago and 1q25 vs 1q24 declined 4%.

Gilead and Vertex stock performance is not bad actually.

In the past 3 years, Gilead stock is up 75% and Vertex stock is up 50%.

However, the index is pressured – only those companies with promising new “story” to tell are up meaningfully. Existing business lines are not sexy as shown above. 

No rising tide that could lift all boats post covid – only dangerous ones like rising interest rate.

What I don’t understand about robotaxi…

For the same destination, Baidu’s Apollo robotaxi in Shenzhen will charge RMB 125 (before coupon) vs RMB 40 on Didi express (affordable tier, before coupon) and RMB 50 for regular taxi.

Didi charges 125 before coupon
Didi Express charges 40 before coupon
Regular taxi charges 50

What’s also interesting is that Baidu’s robotaxi estimates that it will take 79 minutes!

Meanwhile Didi estimates it’s about 31 minutes, which is in-line with other map apps’ estimates.

Baidu robotaxi charges more than 2x the taxi price and takes more than 2x the time…

Well done.

Attaching the breakdown of Baidu robotaxi fare (before coupon)