The Week Ahead Of Us 🔍 | Welcome back! Hope you all enjoyed the Super Bowl! | Unfortunately, I'm a little under the weather on my end, but alas, the Newsletter must go on. | On Friday, we got a bit of a rebound tech rally and some pushback around how good Claude is, with some calling out how Claude's legal API leverages software, as opposed to replacing it. However, my barometer for a broader software market recovery is by looking at Salesforce stock (only up 0.73% on Friday), so while there was uplift in names like Monday, Workday, and Hubspot, we didn't see a full reversal of the AI eating software trade. | I think negativity around what Claude can do today is missing the point though and Midnight Capital had a nice note on how we are still early days on AI eroding SaaS moats. With Alphabet and Amazon going balls to the wall on capex, I think in the future we will be talking more about compute scarcity and how there are "a few big winners in AI, and many big losers." | In other news, Japanese Prime Minister Sanae Takaichi, of the liberal democratic party, had a resounding election victory, setting up the Japanese stock market for a strong day due to their strategic government spending and tax reform agenda. | Let's get into it. | Here's a look at earnings this week. | Monday: Apollo Management, ON Semiconductor, Loews, Corebridge, ZoomInfo Technologies, Chegg, VisionWave, Becton Dickinson and Company, Arch Capital Group Tuesday: AstraZeneca, Coca-Cola, S&P Global, CVS Health, Marriott, Spotify, Robinhood, Ford Motor, Ferrari, Quest Diagnostics, Red Rock, Mattel, Hasbro, BP Wednesday: Cisco, McDonald's, T-Mobile, Shopify, Applovin, Hilton, Kraft Heinz, Tower Semiconductor Thursday: Applied Material, Airbnb, Expedia, Eversource, Rivian, Hyatt, TransUnion, Roku, Pinterest, DraftKings, Zebra Technologies, Wynn Resorts, Baxter, Birkenstock, Coinbase, Arista, Vertex Friday: Wendy's, Enbridge, Moderna, TC Energy, Cameco, Advance Auto Parts
| Here's a look at economic data this week (estimates are in quotations). | Monday: Consumer Inflation Expectations (3.4%) Tuesday: NFIB optimism index (99.5), Employment cost index (0.8%), Import price index (-0.1%), Import price index minus fuel, U.S. retail sales (0.5%), Retail sales minus autos (0.3%), Business inventories (0.2%) Wednesday: U.S. employment report (55,000), U.S. unemployment rate (4.4%), U.S. hourly wages (0.3%), Hourly wages year over year (3.7%), Monthly U.S. federal budget (-$50.0B) Thursday: Initial jobless claims (222,000), Existing home sales (4.15M) Friday: Consumer price index (0.3%), CPI year over year (2.5%), Core CPI (0.3%), Core CPI year over year (2.5%)
| | A new way to source your service providers | Together With Proladex | | Proladex is the trusted way for private equity firms to discover vetted service providers across deal origination, portfolio support, and back office operations. | We remove the friction around vendor selection by offering a curated, reference checked directory across key categories: | - Capital Markets & Advisory | - Executive Search & Recruiting | - Quality of Earnings & Diligence | - Consulting & Brokerage | PE investors can join the platform at no cost and instantly access credible partners for every stage of the investment lifecycle. | Service providers can explore an introductory trial by scheduling a call. | | | Earnings Corner 📈 📉 | $AMZN ( ▼ 5.56% ) Beat revenue coming in at $213.4B vs. $211.5B as AWS growth re-accelerated to about 24%, but missed EPS. Shares fell as much as 10% after amazon guided to $200B in 2026 Capex, well above expectations for $146B and guided 1Q operating income below consensus. Amazon's massive capex raise comes right after Google's raise from $119.5B to $175B to $185B, as hyperscalers are going all in on AI. | $KKR ( ▲ 4.06% ) and $ARES ( ▲ 7.05% ) both beat on revenue, but earnings diverged as AI-driven volatility continued to slow private market exits. KKR missed slightly on EPS reporting about $1.12 per share, as weaker realizations and carried interest timing weighed on results despite fee related earnings growing roughly 15% y/y. Ares met EPS expectations, supported by 30%+ y/y growth in fee paying AUM and resilient credit performance even as expenses rose. | $RBLX ( ▲ 9.66% ) reported Q4 bookings of $2.22B, up 63% y/y, alongside 144 million daily active users, reflecting stronger monetization and early traction with users over 18 following the global age verification rollout. Shares jumped about 20% after Roblox guided FY26 bookings well above Street, offsetting margin pressure from higher investment and safety initiatives. | $RDDT ( ▼ 7.43% ) reported Q4 revenue of $726M up 70% y/y and beat EPS as ad revenue surged 75% y/y, driven by performance advertising and early AI driven efficiency gains. Shares gave up early gains after Reddit guided 1Q revenue above Street and announced a $1B buyback. | $AFRM ( ▼ 4.02% ) Affirm beat on the top and bottom line with revenue up 30% y/y, while GMV rose 36% y/y on higher transactions, repeat usage, and rapid growth in the Affirm Card, which is emerging as a key growth engine. | For deeper, stock market research upgrade to the WSR Investing Club | | | Today's Headlines 🍿 | Goldman's Anthropic team up: Goldman has turned to Anthropic to automate accounting and compliance roles, with agents expected to launch "soon." The bank has been developing agentic systems based on Anthropic's Claude model, which will initially be used for high-volume "process-intensive" back office work before Goldman evaluates other areas in the firm that could benefit from AI automation. Norway's sovereign wealth fund had a similar breakdown, having utilized Claude to analyze earnings calls, monitor news flow, and improve voting efficiency. The fund estimates that last year Claude improved productivity by 20% for its portfolio managers and risk functions.
The WSJ's AI vs Software view: Software has had a rough go as of late, and for good reason: New AI models, like the Claude Opus 4.6, allow companies to "vibe code" their own tools and eliminate the need for a third-party software vendor. The new models will likely be quick to displace software in certain areas, such as project management and document review, but adoption elsewhere might be slower. Industry expertise isn't easily replicated by AI, and certain fields like healthcare, security, and legal are too high-risk to be replaced by vibe-coding. Private Credit Managers played down their software exposure late last week, with Ares sharing that its <9% of its $400B total private credit AUM, while Blue Owl shared their software loans are 8% of AUM and at around a 30% LTV, and KKR shared 7% of its assets are in Software. Thoma Bravo is out with an anti-Co-op move, inserting a clause in the credit agreement of their portfolio company, Majesco, that is meant to create an alert around cooperation group formation. Lenders must alert Thoma Bravo within 3 business days of any attempts to coordinate with other lenders. Those who fail to notify, will forfeit voting rights on amendments or covenant waivers. Law firm Jones Day has sued Centre Lane Partners, a MM PE firm, accusing them of failing to pay more than $9.6mm in legal fees across dozens of its portfolio companies. Jones Day claims Centre Lane suddenly stopped paying invoices in 2024. Hims and Hers $HIMS ( ▼ 1.96% ) had to scrap plans to sell a lower-cost GLP-1 diet pill after the FDA cracked down on the drug that was not approved by the FDA and hadn't undergone clinical trials. Gen Z is the first generation to be less intelligent than its predecessor, the Millennials. A neuroscientist's study revealed that easy access to technology and the internet has cognitively stunted Gen Z, despite the group spending more time than ever in school. Grant Thornton vs KPMG: KPMG pressured its auditor Grant Thornton for a 14% fee cut, arguing that AI automation has made the work faster and cheaper. Many are now wondering if KPMG should do the same. Trump backs Nexstar's $6.2B bid for Tegna, which would add Tegna's 64 stations to Nexstar's 200, covering about 80% of the country. NatWest is nearing a $3.7B takeover of wealth management group Evelyn Partners, beating out Barclays in a hotly contested auction. 9fin is in talks to raise as much as $150mm in new financing at a $1B Valuation, roughly 20x ARR. The credit intelligence provider previously raised $50mm in a Series B at a ~$479mm valuation. Block is laying off 10% of its staff in an efficiency push for the financial services provider owned by Jack Dorsey. Liftoff Mobile postponed its IPO: The Blackstone-backed company was looking to raise $762mm but delayed its offering after tech stocks spiraled. BUT 7 IPOs priced last week, including eye care firm SpyGlass Pharma which saw its shares soar 65% in its trading debut to give the company a market value of $842mm. This also includes Jennifer Garner's Once Upon a Farm, which raised $198mm and saw shares rise 17% in its trading debut, giving the company a market value of $847mm.
Incomes need to rise $50k for median-priced homes to be as affordable as they were in 2019, when mortgage payments took up 21% of household income.
| | M&A Transactions💭 | Stellus Capital Management (NYS: SCM), a closed-end, non-diversified management investment company, has reached a definitive agreement to be acquired for $882.134M by P10 (NYS: PX). EV/Net Income was 28.9x and EV/Revenue was 9.28x. Goldman Sachs advised on the sale. | SiTime (NAS: SITM) has reached a definitive agreement to acquire The Timing Business Division in Tokyo, Japan, of Renesas Electronics (TKS: 6723) for $3.0B. | MCJ Group (TKS: 6670), engaged in PC manufacturing, has entered into a definitive agreement to be acquired for JPY 200.0M by Bain Capital and its management. EV/EBITDA was 9.14x and EV/Revenue was 0.89x. | Legend, operator of an online media and technology company, has reached a definitive agreement to be acquired for $1.2B by Genius Sports (NYS: GENI). The Raine Group advised on the sale. | Garden, developer of patent creation platform, was acquired for $150.0M by SIM. | The Battery Project of Enervest was acquired by Octopus Australia for AUD 2.4B. | Distributed Power Solutions, provider of distributed power services, has reached a definitive agreement to be acquired for $675.0M by Kodiak Gas Services (NYS: KGS). Morgan Stanley advised on the sale. | Swiss Grand Hotel, operator of a hotel and convention complex, was acquired for KRW 320.8B by an undisclosed investor. | Private Placement Transactions💭 | Kojo, developer of a cloud-based construction management software, raised $270.0M of Series E venture funding led by CapitalG at a pre-money valuation of $730.0M. | Goodfire, developer of an interpretability tooling system, raised $150.0M of Series B venture funding led by B Capital Group at a pre-money valuation of $1.1B. | Fundamental, operator of a data technology company, raised $255.0M of Series A venture funding led by Oak HC/FC at a pre-money valuation of $945.0M. | Angitia Biopharmaceuticals, developer of a global clinical-stage biotechnology company, raised $130.0M of Series D venture funding led by Frazier Healthcare Partners and Venrock. | | Odds of the Day 🍒 | Polymarket traders are pricing in a 66% chance of Anthropic going public this year. | | | Noteworthy Chart 🧭 | On my LinkedIn, I laid out how Private Credit is exposed to the Software industry: | | | Meme Cleanser 😆 | | Until next time! | | Join our Referral Program and Gain WSR Investing Club Access ☕️ | Enjoyed the newsletter? Send it to a friend 🤝 | | Share The Wall Street Rollup | Refer 6 new readers to the Wall Street Rollup to gain 3 months of free WSR Investing Club Access. Refer 15 new readers for 8 months of access! | You currently have 0 referrals, only 6 away from receiving 3 Months of Wall Street Rollup Investing Club Access. | | | Or copy and paste this link to others: https://www.thewallstreetrollup.com/subscribe?ref=DwqDXt8SIM | |
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