François Rochon 5.0 5 ideas

Alphabet's products (search, YouTube) are free to users, creating an unshakable moat, and it is investing ~$180B in capex (2026) defensively to protect its core business from AI disruption. The company generates sufficient cash to fund AI investments without debt, and its Gemini AI has countered competitive threats; the advertising model remains highly profitable. LONG due to durable competitive advantages, defensive AI investment strategy, and ability to maintain dominance in a changing landscape. AI could erode search margins more than expected, or massive capex could yield low returns.

Meta has successfully used AI to improve ad targeting, driving ~20% revenue growth at scale, and its platforms (Facebook, Instagram) are free, creating a powerful network-effect moat. AI investments have been offensive, enhancing ad effectiveness and helping overcome Apple's privacy changes; capex is funded internally and has shown clear ROI. LONG because of superior execution in monetizing AI, sustained growth, and a resilient business model. Regulatory pressures, or AI advancements by competitors could reduce its edge.

CarMax's moat and margins have eroded due to competition from Carvana (online) and AutoNation (using used cars as a loss leader for service). The omni-channel strategy increased costs without capturing the high-margin service business, and structural competition makes a return to former profitability unlikely. AVOID because the business model is no longer as strong, and the investment thesis of a durable competitive advantage is broken. A dramatic industry shift or successful restructuring could improve prospects, but this is not the base case.

Fiserv's CEO departed for politics, results disappointed, and net debt was near the investor's threshold of 5x net income, reducing margin of safety. Management change introduced uncertainty, and potential earnings decline could push leverage above prudent levels, despite a cheap valuation (~7-8x earnings). AVOID due to heightened risk from leadership transition and leverage, even if the business may recover. New management could stabilize earnings and reduce debt, making the stock a bargain.

LVMH's luxury brands (Louis Vuitton, Tiffany, Sephora) remain powerful, and current earnings weakness is cyclical, not structural. Earnings could grow 60-70% over five years (~11% annual growth plus ~2% dividend), driven by brand strength and long-term demand growth in China as wealth rises. LONG because the brand moats are intact, the valuation is reasonable after a downturn, and the company is well-positioned for cyclical recovery. Prolonged luxury downturn, especially in China, or secular decline in spirits consumption.