Group 1 - The article discusses the impact of tariffs on various sectors, highlighting the ongoing trade wars and their implications for market dynamics [1][2] - It emphasizes the role of securities in navigating the challenges posed by tariffs, suggesting that investors should be aware of sector-specific vulnerabilities [1] - The piece also touches on the broader economic context, indicating that tariffs could lead to increased costs for consumers and businesses alike, potentially affecting overall market performance [1][2] Group 2 - The author, Ernest Hoffman, has extensive experience in market reporting, which adds credibility to the analysis presented in the article [3] - The article aims to inform readers about the current state of the market in relation to tariffs, without making specific investment recommendations [4]

Core Viewpoint - SAP SE is recognized as one of the best Strong Buy stocks in the tech sector, despite ongoing challenges in the software industry [1]. Group 1: Analyst Ratings and Price Targets - Piper Sandler maintained an Overweight rating on SAP with a price target of €220, highlighting ongoing pessimism in the software sector due to seat compression and AI-generated code concerns [2]. - Barclays lowered its price target on SAP from $348 to $283 while maintaining an Overweight rating, noting that the market's reaction to Q4 results was overly severe [3]. Group 2: Financial Performance and Projections - SAP reported strong operating profit and free cash flow for FY25, exceeding expectations, with an anticipated effective tax rate of 32% and free cash flow of about €8 billion [4]. - The management emphasized that the solid performance in SaaS and PaaS development supports confidence in SAP's long-term strategy and value generation [4]. Group 3: Company Overview - SAP SE is a German multinational software corporation that develops enterprise software for business operations and customer relations, including ERP, analytics, cloud, and AI solutions [5].

Core Viewpoint - Saputo Inc. has entered into a definitive agreement to sell an 80% interest in its Dairy Division (Argentina) to Gloria Foods, valuing the business at approximately $855 million, with expected net proceeds of about $543 million after tax [1][2][3] Financial Summary - The Dairy Division (Argentina) generated approximately $1.2 billion in revenues over the last four quarters, accounting for about 7% of Saputo's consolidated revenues [2] Strategic Implications - The divestiture is part of the company's strategy to refine its global footprint for long-term growth, enhancing financial flexibility and allowing for targeted reinvestment in higher growth opportunities [3] - The company will maintain a 20% ownership interest in the Dairy Division (Argentina) and continue to manufacture select items on behalf of Saputo [1][2] Operational Details - The transaction includes two manufacturing facilities and local brands such as La Paulina, Ricrem, and Molfino [2] - The closing of the transaction is expected in the first quarter of fiscal 2027, pending customary closing conditions and regulatory approvals [1]

Group 1 - The software stock downturn of 2026 may be indicative of a larger trend, similar to the impact of the internet on the newspaper industry in the early 2000s [1][2] - Historical examples show that share price stability in industries facing disruption requires stable earnings outlooks, as seen with newspapers which experienced a 95% decline in share prices from 2002 to 2009 [2] - The decline in newspaper stocks ended when earnings estimates bottomed, and the uncertainty surrounding AI's impact on software companies suggests that near-term earnings will be critical indicators of business resilience [3] Group 2 - Major software companies like Salesforce, Workday, and SAP are perceived to have their terminal values threatened by advancements in AI [4] - The recent debut of AI developer Anthropic and its automation capabilities has contributed to a significant decline in shares of various software companies, with no clear positive catalysts emerging to attract investors [8] - Software stocks are underperforming the Nasdaq Composite by the largest margin this century, with notable declines including 27% for Oracle and Salesforce, and a 41% drop for Figma [9] Group 3 - The software sector typically outperforms the S&P once it finds a bottom, but the extent of the current downturn remains uncertain, with no immediate solutions to shift investor sentiment [10]

Core Insights - N4XT Experiences has announced a multi-season partnership with SAP to enhance the digital and experiential infrastructure for New York Fashion Week and its NYFW Collections, focusing on integrating technology and AI to provide value to designers [1][3][4] Company Overview - N4XT Experiences operates large-scale fashion intellectual property, including NYFW Collections and LA Fashion Week, acting as a connector among designers, venues, and the broader fashion industry [2] - The company emphasizes a designer-first approach, providing necessary venues, infrastructure, and operational support to allow designers to focus on their craft [2] Partnership Details - SAP will serve as the official technology and co-innovation partner for N4XT, collaborating to implement technology that enhances engagement among designers, editors, buyers, and attendees during fashion week [3][5] - The partnership aims to build sustainable infrastructure and solutions for the fashion industry, focusing on removing operational barriers while leveraging SAP's advanced technology [4][5] Digital Platform Development - N4XT and SAP are developing a digital platform called .FW to connect designers, partners, and audiences, supporting designer discovery, audience engagement, and commerce over time [7] - Planned features include curated access to designers, tools for Fashion Week navigation, and connections between physical retail and digital experiences [8] Retail Innovation Lab - N4XT will launch the Retail Innovation Lab in collaboration with Public School, showcasing SAP's AI-enabled technology solutions for retail [10] - The lab will support the relaunch of Public School and introduce a new approach to retail during New York Fashion Week, accessible to the public for a limited time [11][12]

Core Insights - Saputo Inc. reported strong financial results for Q3 of fiscal 2026, highlighting momentum across its global platform, driven by strong commercial execution and operational efficiencies [2][3] Financial Highlights - Revenues for Q3 2026 were $4.888 billion, a decrease of $106 million or 2.1% compared to Q3 2025, primarily due to lower US dairy commodity market pricing [5] - Adjusted EBITDA increased by 18.0% to $492 million, with an adjusted EBITDA margin of 10.1%, up from 8.4% [5][3] - Net earnings reached $220 million, a significant increase from a loss of $518 million in the same quarter last year, with earnings per share (EPS) of $0.54 (basic) and $0.53 (diluted) [11] Sector Performance Canada Sector - Revenues increased by 4.2% to $1.416 billion in Q3 2026, supported by higher sales volumes in retail, foodservice, and industrial segments [24][25] - Adjusted EBITDA rose by 8.0% to $189 million, with an adjusted EBITDA margin of 13.3% [27] USA Sector - Revenues decreased by 7.1% to $2.142 billion in Q3 2026, impacted by lower US dairy commodity market pricing [32] - Adjusted EBITDA increased by 15.6% to $185 million, with an adjusted EBITDA margin of 8.6% [36] International and Europe Sectors - International Sector revenues were $994 million, down 2.5%, while Europe Sector revenues increased by 8.0% to $336 million [46][61] - Adjusted EBITDA for the International Sector rose by 60.8% to $82 million, and for the Europe Sector, it increased by 16.1% to $36 million [53][66] Strategic Initiatives - The company is focused on optimizing its product mix and enhancing operational efficiencies through capital investments and network consolidation [3][38] - Strategic investments in advertising and promotional activities are aimed at supporting commercial growth and brand strength [5][41] Outlook - The company anticipates continued organic sales growth, particularly in the USA Sector, supported by sustained growth in key retail categories and ongoing innovation [77] - Expectations for the Canada Sector remain strong, with operational efficiencies and disciplined cost reduction efforts expected to drive performance [77]

Core Insights - Saputo Inc. reported strong financial results for Q3 of fiscal 2026, highlighting robust cash generation and margin expansion driven by operational efficiencies and strong demand for high-protein dairy products [2][3]. Financial Performance - Revenues for Q3 2026 were $4.888 billion, a decrease of $106 million or 2.1% compared to Q3 2025, primarily due to lower US dairy commodity market pricing [3][9]. - Adjusted EBITDA increased by 18.0% to $492 million, with an adjusted EBITDA margin of 10.1%, up from 8.4% [3][9]. - Net earnings reached $220 million, a significant increase from a loss of $518 million in the same quarter last year, with earnings per share (EPS) of $0.54 (basic) and $0.53 (diluted) [9][3]. Sector Performance Canada Sector - Revenues for Q3 2026 were $1.416 billion, up $57 million or 4.2% from Q3 2025, driven by higher sales volumes in retail, foodservice, and industrial segments [22][23]. - Adjusted EBITDA for Q3 2026 was $189 million, an increase of 8.0% from $175 million in Q3 2025, with an adjusted EBITDA margin of 13.3% [26][27]. USA Sector - Revenues for Q3 2026 totaled $2.142 billion, down $163 million or 7.1% compared to Q3 2025, impacted by lower US dairy commodity market pricing [32][33]. - Adjusted EBITDA increased by 15.6% to $185 million, with an adjusted EBITDA margin of 8.6%, up from 6.9% [36][37]. International and Europe Sectors - International Sector revenues for Q3 2026 were $994 million, down 2.5% from $1.019 billion in Q3 2025, while adjusted EBITDA rose by 60.8% to $82 million [47][53]. - Europe Sector revenues increased by 8.0% to $336 million, with adjusted EBITDA up 16.1% to $36 million [63][68]. Strategic Initiatives - The company is focused on optimizing its product mix and enhancing operational efficiencies through strategic investments in automation and cost-effective production capabilities [3][38]. - Continued investments in advertising and promotional activities are expected to support commercial growth across all sectors [3][41]. Future Outlook - The company anticipates organic sales growth, particularly in the USA Sector, supported by sustained growth in key retail categories and ongoing innovation [80]. - The International Sector is expected to benefit from improved economic conditions in Argentina and cost reductions in Australia, while the Europe Sector is projected to deliver improved performance through margin recovery and disciplined pricing [80].

Core Insights - The podcast discusses international investing, highlighting that international stocks outperformed US stocks in the previous year and exploring whether this trend can continue and where the current opportunities lie [3][10]. Economic Environment - The macroeconomic situation in Europe has been improving, with positive news on inflation, growth, and interest rates, yet uncertainty is rising due to various market disruptions [4][6]. - January was noted as a particularly volatile month, with significant events impacting market sentiment [6]. Market Valuations - European markets performed well in 2025, but current valuations are around fair value estimates, indicating that while equities are not expensive, they are not undervalued either [8][9]. - There are still opportunities in specific sectors and styles despite the overall market being fairly valued [12]. Country-Level Opportunities - Germany and the UK are highlighted as relatively attractive markets, trading a few percent under fair value estimates, while the Netherlands and Denmark are noted for having the cheapest valuations in Europe [14][15]. Small Cap Stocks - Small cap stocks in Europe are still seen as more attractive compared to large caps, with a larger gap between their valuations and the general market [19]. Sector Opportunities - **Consumer Defensive Stocks**: This sector is expected to benefit from lower inflation and interest rates, leading to increased consumer spending [21][23]. Companies are investing more in branding to regain consumer interest [25]. - **Technology**: European tech stocks are currently undervalued, particularly in the software segment, which has lagged behind hardware stocks [30]. There is potential for a correction in share prices as investor sentiment improves [30]. - **Healthcare**: The sector is seen as defensive with strong cash flows and dividends, but has faced negative sentiment due to various uncertainties. GSK is highlighted for its diversified exposure across the pharma sector, providing stability [32][50]. Stock Picks - **SAP**: Identified as a strong pick due to its growth potential and significant upside despite recent share price declines [36][40]. - **Diageo**: Recommended for its global diversification and potential recovery as inflation decreases and consumer spending increases [41][44]. - **GSK**: Chosen for its strong performance relative to peers and diversified product pipeline, which offers stability in a volatile market [48][51].

Group 1: Market Overview - The narrative of "Software-mageddon" is gaining traction among global investors, with debates on whether to initiate bullish calls on recently battered software stocks [1] - Large institutional investors are beginning to enter the market to buy the dip in software stocks that have experienced significant declines, with some supporting optimistic views on AI-focused software giants [1][3] - The S&P 500 Software and Services Index has dropped approximately 25% since its recent peak at the end of October, while the overall S&P 500 index has remained relatively stable [3][4] Group 2: Impact of AI Tools - The launch of Anthropic's AI programming tool, Claude Cowork, has intensified fears of AI agents disrupting the SaaS software industry, leading to a collective sell-off in software stocks [2] - The S&P 500 Software and Services Index experienced its worst performance since May 2002, with a significant market cap loss exceeding $800 billion [4] Group 3: Investor Reactions and Divergence - Institutional investors are showing mixed reactions, with some cautiously buying while others remain hesitant, indicating a divide in sentiment regarding the software sector [8] - Some portfolio managers are starting to see long-term value in certain software stocks, while others are waiting for stronger catalysts, such as robust AI-related revenue reports, before making aggressive purchases [8][9] Group 4: Future Outlook and AI Integration - The market is reassessing the value chain in the software industry, with AI potentially redistributing profits rather than completely replacing existing software infrastructure [11][12] - The current sell-off is seen as a response to the question of how much profit pools will be redistributed among SaaS vendors due to AI advancements, with a focus on real deployment and revenue growth from AI-related products [12][13]

Core Viewpoint - The recent sell-off in software stocks, driven by concerns over generative artificial intelligence impacting profits, may have been excessive, with SAP identified as one of the most unfairly punished companies [1] Company Summary - SAP is highlighted as a company that has been disproportionately affected by the market's reaction to generative AI concerns [1]