Welcome back everyone. Today on the Joseph Carlson Show, we start off 2026 by looking at 10 companies that I believe are ten of the most well positioned stocks in the market in 2026. These companies are not your average companies. These are what I believe are the strongest compound machines, the ones with the widest Moat in the entire world. These companies are virtually indestructible. They don't even in many cases have competition and they're available for you to invest in.
And I believe that every investor should strongly consider having these companies in their portfolio. In many cases, they are the ones that drag the indices higher, that really push the markets forward. So we're really looking at these 10 companies. Many of them are not the Mac 7, by the way. They're different companies outside of the Mac 7, but
they're powerful nonetheless. And we'll be looking at all ten of them, going over the thesis, giving updates on them and why I own many of these companies in My Portfolio today. And before we jump into the 10 stocks, I first want to just take a look at the portfolio. As you know, many of the companies that I talk about, I'm not just talking. These aren't just words. I'm actually backing them by my actions. Many of them I invest into.
A lot of the thesis is that I share are ones that I hold for my own companies, and what we have here is just a massive day in the portfolio. If we look at what's happened just today, we can filter it by the one day, and this one's up 2.7% on the day. Massive return, $25,600 today. That's just in a single day. Now, why are these stocks up today? Well, there's a lot of various reasons. We'll be going over many of them
throughout the episode. But now we've reached an all time high with the passive income portfolio, $975,000 in total, 401,000 of that being gains. That's an all time high in the total portfolio value and an all time high in the gains. So massive start to the year. This is also a big day for the story fund. We're up to around $406,000 in total value, $149,000 in gains. If I look at the one day on this, this is up another 2% on the day, $7800. So massive day in both
portfolios. Now you may be wondering why are these stocks going up today, especially the ones in My Portfolio. And this is really how investing works. You get to decide which stocks to buy. You get to decide to hold them. You don't get to decide when they go up. But if you buy high quality compounding machines, they will eventually go up. That's what earnings growth does. That's what free cash flow per
share growth does. So what I see in My Portfolio is holding on to compounding machines and then certain catalysts come along that push these companies higher. Now as we jump into this, I want to highlight ten companies that I really believe everybody should consider having these in their portfolio. And I'll start off today with one of them, which is ASML. We're looking at ASML and it's up 5.66% today. It's up to 1229 dollars. Now, ASML is a company that I've covered for over a year.
In fact, I covered it right at the beginning of 2025 S just over a year and it's a company that's done incredibly well. When I look at this stock performance, we're up already this year like 6 to 10%. When we go back one year, we're up 60.5%. An incredible year by this company. This is one that I was pounding the table on below $700.00 per share. So if you're a follower of the channel, you'll know that. But I still believe that ASML has upside.
And the reason why is because this company is an undisputed monopoly. There is no second place when they're on the podium. There's no second and third, there's no silver and bronze. There's just ASML on that podium that is unique in the world of business with different companies. There's usually a duopoly or oligopoly, meaning that there's two companies or three sharing a monopoly with ASML, They're the only ones sharing this monopoly.
There's literally no one else. Now, ASML is up so much today for a couple different reasons and none of these reasons will be new to followers of this channel. One of them is that there is news here. We have Qualtrum brief which shows us recent events happening with each company. So that you're informed, Alethia Capital upgraded ASML from a cell. So they had this company at a cell, which was for sure an
incorrect rating on the stock. So they got that wrong, but they're changing their opinion and sentiment on it, which many analysts do. And they they upgraded from a cell to a buy and lifted its price target to a Street high $1500 per share from 7:50. So their price target on the stock went from 7:50 to 1500. They cited sharply higher earnings estimates for 2026 and 2027 or expanded capacity and strong EUV and DUV demand, especially from DRAM makers and
Chinese customers. The call highlights exceptions for continued tightness and pricing power in ASM. LS EUV franchise positions the stock as a top semiconductor equipment pick into 2026. That looks very good. So right there we have this analyst upgrade doubling their price target. Now the stock is up five, five percent, 6% today, another $65 and we're already about up 6 to 10% this year. And I believe that this bullish analyst rating was only part of the reason that the stock is up
6% today. Another big aspect of it is a video that was made this is by a YouTube called Veritasium. It's a great channel, highly recommend it. And Veritasium here has a video that's called The Ridiculous Engineering of the World's Most Important Machine. This entire video, the whole thing goes over it. It goes over ASML and basically just ASML.
It has a bit of history that's not directly related to the modern ASML, but what it really shows is the whole timeline of events to create this company, everything that needed to happen now. This video has 10,800,000 views, 10 million views, and it's a 54 minute video on ASML and the brilliant engineering behind it. And again, if you haven't seen this video, I highly recommend it.
I think it's a great video that really illustrates how incredible ASM LS technology is. Some of the comments on this video even highlight that after seeing what they've created, $400 million sounds cheap for it. It sounds inexpensive, like once you actually realize what they went through to make this technology, how nobody else can really replicate it, how even state funded governments with billions of dollars like China can't replicate what they've created, $400 million sounds cheap.
That's what this does is it explains it in a more full way than we've seen before. And once it gets 10 million views, some of these people are investors viewing this video. A portion of them are a portion of them are hedge funds and Wall Street that have never seen the technology and how incredible it is, how how wide mode it is. And so this is real due diligence on the company. It's real qualitative research
on what you're buying. So a big part of the reason that this stock is up so much today is not only this bullish analyst target, but also that video being released and going viral illustrating the incredible technology behind ASMLASML is still an incredible company. And although you can haggle behind the valuation and say that it's getting a little bit more expensive, I think that misses the force from the trees with these type of companies that have no second place.
They have no third place. There is no silver and bronze player in this category. I think this is a type of company that you want to own a piece of. You want to own some of it. Going into the next 10 years, we're going into a phase where there's going to be a lot of fab creation, lot of semiconductor activity, a lot of specialized chips being made. And I believe that ASML remains one of the top picks in this category. It's such a good pick to get exposure to this with no
competition. Now #2 We have another company that I've held in My Portfolio for some time. It's Amazon. And this is one that has been the laggard of the Mac 7. Amazon has hasn't kept up with the likes of Google. Google is a huge winner in My Portfolio. In 2025, it was the company that I primarily focused on. I made so much content about. I talked about chat, BT and Google and the dynamics of that
race. And I'm shifting over from Google Now to Amazon because I believe that there's a lot of upside in this stock. Amazon's a company that has just not gotten the bid that I believe it deserves. It is an incredibly powerful, multifaceted company that really has incredible numbers. Now, I've owned Amazon long before I've been following Mark Mahaney, but Mark Mahaney's someone that has been routinely bullish on this company and he recently reiterated his outperform rating on the stock.
Amazon today trades at $232.00. He believes that it's worth $100 more, so his price target is 335. Mark Mahaney has recently said, and this is the statement that he gave Amazon in the wake of our deep dive analysis into Rufus. Amazon's AI power shopping assistant is a full throttled agentic commerce that may not be quite ready for prime time, but it's coming very soon.
First, a McKenzie survey of 2000 respondents found that shopping advice was the second most common use of a Gen. AI agents like Gemini and ChatGPT. Second, Amazon has disclosed that more than 250 million customers used Rufus in 2025, generating an incremental $10 billion in GMV. And 3rd, Rufus was actually smart and personalized enough to remind me that my wife loves dark chocolate and to include it in a recent birthday gift package I was putting together for her.
He has all these, you know, he has a personal anecdote, which again is an anecdote, but he's also backing that with multiple points of broader data. So we have like survey data. We have data released directly from Amazon. Then we have an anecdote further reinforcing that .2 key points
of agentic acceleration. First, just like the arrival of the smartphones and the mobile Internet material expanded the Tam of the online retail, we also believe that agentic commerce can and will do so. Amazon disclosed in November that customers using Rufus during a shopping journey were 60% more likely to complete a purchase. That's a very powerful conversion boost. You looking at ROAI return on AI?
Here it is. And all of this is before full awareness of Rufus that has been reached and before the full rollout of agentic features like autobuy, predicting, bundling and surely others. Our analysis suggests that Rufus and Agentic Commerce could boost Amazon's retail GMV by as much as $56 billion. So that's powerful. Now it's actually aiding in conversion from completion of sales, which is one of the biggest metrics that you look at if you're running any online retail business.
And it continues on saying. And 2nd, just as Jenna AI has served to boost Google search revenue, so too we believe that Rufus can create more, not less, opportunities for Amazon Sponsored Products and Sponsored Brands ad revenue. The logic is straightforward. As agentic shopping helps guide and extract greater intent, it becomes more valuable to
marketers. We estimate that agentic commerce could boost Amazon's ad revenue by as much as 4 billion or 3% by 2028. We believe strongly that market fares over Agentic Commerce's impact on Amazon's ad revenue completely missed the point, adding up the agentic impact.
Admittedly, our estimates are speculative, but all in, we estimate that Agentic Commerce can boost Amazon's 2028 total revenue revenue by up to $31 billion or 3%, and it's 2028 total operating income by up to 6.8 billion or 4.6%. This thesis from Evercore ISI or Mark Mahaney, I believe, is a lot more powerful or deep of a thesis than it looks on the surface. They're not just saying that Gen. AI is going to help Amazon, but they're actually saying the exact opposite of what most
analysts are concerned about. Part of the reason that Amazon trades at a low valuation, part of the reason that it's just not done well compared to the rest of the Mac 7, is because investors are concerned about the potential impact of generative AI and agentic shopping on Amazon. Maybe it levels the playing field. Maybe it makes it so Amazon doesn't have as big of an advantage. Well, they're arguing the exact
opposite. They're not only saying will it not level the playing field, it's going to uniquely benefit Amazon. They're going to grow much faster than the rest of the industry as a result of generative AI and agentic shopping. Very few companies have the infrastructure to pull this off in the way that Amazon does with their AWS business to support and implement Gen. AI throughout all of their company and all of their products and with the tech talent to be able to build this out.
So Amazon is a company that could materially outperform expectations this year going into 2026. I feel very good about my position. Now as we continue moving on, we're again searching for the widest mode, best compounding machines on planet Earth. Companies that have such wide modes, they're virtually
indestructible. And the next two that we'll talk about, I'll group them together because they're very similar and they also happen to be two companies that are in My Portfolio. Remember that a lot of these companies that I believe are the best in the world are ones that I own. So again, I'm not just telling you about this. These are ones that I have real
money behind. These are S&P Global and Moody's, 2 of what are the most powerful duopolistic companies on planet Earth. Now, if we look at Moody's and S&B Global, they're both up huge today. S&B Global's up 4.46%. Moody's is up even more, another 6.2% today. That's part of the reason My Portfolio has really shot up today. When I look at my position in these companies, we can look in the financial category and we have S&P Global right here.
It's a $118,000 position with $37,000 in gains. That's not the only place that I hold this company. I also hold it in the Story Fund is a smaller position, 23,000 with $7000 in gains. So when you combine that together, I hold a lot of this company. It's one of my most significant bets because I believe, again, it's such a powerful stock. It is indestructible. Then we also have Moody's. I bought a lot of Moody's as well. This is a $62,000 position and
it's in the green over $15,000. When you look at S&P Global and Moody's, these aren't national businesses that only really work within the US. They are global businesses. They become the standard language protocol of how there's trust throughout all different nations and all different
businesses in issuing debt. Anytime a company issues debt and they want someone else to trust that they can repay that debt, they issuing, they get it rated by either S&P Global or by Moody's or in many cases by both. Because if they don't, if they say we don't want to pay S&P Global, we don't want to pay Moody's, we don't want to get our debt rated, they'll actually pay more as a response of that because other people won't trust their debt.
Other ETFs and institutions and banks will not buy their debt, causing the interest rate on that debt to go up or the fact that those companies issuing it have to pay more as a result. So S&B Global and Moody's are what's called a natural monopoly, meaning that the dynamics of the market create a monopoly. It's not something where they have to force their product upon other companies.
It's not like the Apple App Store where they capture customers and they force pricing With S&B Global and Moody's companies come to them, they, they get on their knees, they bow down and they say, please give us a good rating. We'll do anything for it. Let us be friends. We'll we'll meet with you. We'll have the CEO fly to your business. We'll do anything for a good rating because that saves us a fortune. S&P Global and Moody's sit at the very top of the food chain.
Other companies come begging to them. With S&P Global, they come begging for two reasons, to get a good rating with a low interest rate and to get included in the S&P 500, the most prestige index that exists. So this company has multiple aspects of it that really put it above most companies. And I believe these two companies are ones that should be looked at by every serious investor. They're almost layups.
They're like the easiest companies to invest in and make gains on. Now they're both up big today. So you may say I don't want to invest in them now, but I believe there's a lot more to come with these companies. One of the big reasons that they're up today is because of an upgrade from an analyst firm called Stifle. They upgraded Moody's from a hold to a buy.
The reason why is they basically said that when they're doing a lot of market analysis on the debt markets, there's been a lot of companies that haven't issued debt because they're waiting on the sidelines and in fact, stifle that gave them this bullish rating today said that they believe there's going to be a massive wave of debt issuance in 2026. Like we've hit this debt wall. Lots of companies are up and they're due to renew their debt. They have to take out new debt.
And again, whenever they do that, they have to pass through the toll booth of S&P Global and Moody's. So S&P Global and Moody's, a way that you can visualize this is they're the toll booth that sits on this bridge. Then you have cars on either side of it. Every time they pass, they pay S&P Global and Moody's their fee. There's a lot of cars that have been waiting on one side of the bridge for interest rates to come down. They're piling up.
There's like a huge traffic jam there. And this year, they believe that all those cars are going to start driving through and they're going to have to pay that toll. So right now is a good time to buy the stock, not because it's going up, but because of what's going to happen in the future. The other reason the S&P Global and Moody's are up big today is because of macro events.
And we have some macro events that recently happened. the US government flew in with Delta Force and they captured Nicolas Maduro. They extracted him from Venezuela and they're holding him on charges of drug crimes and other various crimes. Now, this is news that everybody has an opinion on. Some people like what happened. Some people don't like what happened.
Some people like certain aspects of it and don't like certain aspects of it. It's a thing that everyone has an opinion on. So regardless of your opinion on whether or not the US government should have done that or what should have happened, it did happen. And the reality is that investors are looking at Venezuela now as an economy that could be restructured and have a more normalized capitalistic structure. If that happens, they will issue more sovereign debt.
They'll do that almost immediately. And S&P Global Moody's don't just rate corporate debt, they rate sovereign debt as well. Any credible sovereign debt that's being issued will have to go through S&P Global, Moody's. If the Venezuelan government starts to issue billions of dollars worth of bonds and government debt, they're going to be rated by SME Global and Moody's. They'll make a lot of money that way. And you can see that there's market activity actually backing
this point already. Venezuelan bonds are already rallying based on the anticipation of a more normalized economy. There is a common thing amongst global economies, debt is a secular trend. Companies and governments and everyone else in between, they need debt to grow. That's one of the biggest aspects of growth ahead and these companies remain a bigger, more embedded, deeper Moat company every time debt issuance
grows throughout the world. Now as we look at the best companies in the world with the widest moats and most indestructible business models, there's another two that I have to highlight and they're two companies that you are familiar with Visa and MasterCard. These are both ones that every compounding investor should look at. Even though the market has already seen these companies and maybe it feels like you don't have any special edge.
These are two companies that will likely still outperform the broader index over the next 5 to 10 years because investors do miss the broader trends with Visa MasterCard. Visa MasterCard share duopoly across credit payments and digital transactions. They offer immense value through a multi sided network. With a normal network, each party offers value to each other. That's what we do on a phone call. You have two people on it. Each one offers value to the
other one. If one of you drops off, then that network has no value. With Visa and MasterCard, they offer a multi sided network that's deeply complex and it works with exponential value creation. This is why it's impossible to remake these companies. For example, every single customer, every new customer that signs up for Visa or MasterCard, they become exponentially more valuable to a merchant.
And every single new merchant that signs up for Visa, MasterCard becomes exponentially more valuable to all the customers. So you see this self reinforcing issue here. It becomes a chicken and the egg problem. All these customers, the billions of people using their network make it so that they're incredibly powerful customer base. And then you have all the merchants using it, which make it an incredibly powerful merchant base for the customers.
No other company can start this chicken and egg problem. They'd rather just use the networks that already exist. The attempts to bypass them also are not going to have as big of an impact on Visa MasterCard as many investors believe. For example. Visa's network is already so massive at this point it it is at a point where it's literally unbreakable. We look at it and they have 3.4 billion debit cards. They have 1.5 billion credit
cards. And this continues to grow year after year with MasterCard, they don't have nearly as big of a network as Visa, but they do have a large network, 3.32 billion Mastercards. MasterCard has a higher percentage of these being credit cards. And you can also see the organic growth over long periods of time. As time goes on, more Mastercards get issued because again, all these merchants become very valuable to the customers. All these customers become very valuable to the merchants.
Now, when choosing to invest between Visa or MasterCard, this is where you can kind of choose your own path, so to to speak. For example, with the Visa, there are different things to consider. Visa is a company that's more concentrated on the network itself. The Visa rails, they're going for just broad scale. They want to be everywhere with every transaction. So they're focusing entirely on growing their network, solidifying their network. They're not as big into the
other services. And although Visa does have a value added service segment on this chart, we can see it right here, which is the other category. It's a very small category of the overall services that Visa provides. If you're going for share scale, broad size, and a company that's reliant mostly on its native rails, then you would invest in Visa. MasterCard has a different approach.
MasterCard long ago realized that they could never scale their network bigger than Visas. Visa has just simply one at that game. So instead of trying to focus solely on their rails and their network, they actually became a bit more agnostic to their network in general. They leaned into what's called a value add service business where they focus on transactions, whether or not those transactions happen on their network or off their network.
MasterCard believes fully that they don't know what rail will succeed over the long period, but they do know that every single transaction is centered around trust, is centered around fraud prevention, is centered around knowing your customer. And these are tools that they've developed where they can help any type of transaction, whether it happens on the MasterCard rail or whether happens on a governmental rail. The product that MasterCard really sells is trust, trust in
transactions. And that's something that is widely applicable to any transaction throughout the
world. So MasterCard is more of a pick if you're less focused on the rails itself, if you're less focused on the share volume of transactions and you're more focused on a company that's trying to sell trust and become agnostic and becoming multi rail, meaning that MasterCard is working with companies that do government payments, that do stable coins, that do everything and they have a much bigger
value added service business. For me personally, I like Mastercard's approach a little bit more. I think both are great and both are super wide mode, but I've put my eggs in the MasterCard basket. I have $192,000 position here. It's my biggest position by far. It's only $43,000 in the green so far, but I see further steady growth ahead for MasterCard. I recently did a deep dive into MasterCard as an exclusive video as part of the Qualtrum membership. It's around an hour long.
It's called the thesis, the hidden bowl case of MasterCard, where I go through far more in depth about what Mastercard's transition in their business actually is and how we can look at it as investors. The feedback on these exclusive videos where I can dive in a bit deeper has so far been very positive. Some people in the community have said that they're halfway through the video and it's already in their top ten favorite videos of all time.
So if you want to see more on this, if you want to see videos that don't quite fit well within the YouTube category publicly, then you can join the private community through qualtrum.com and you get access to a lot more content. Now next on the list of the most powerful monopolistic companies in the world, we have GE Aerospace, which is one that we've talked about a little bit. This is an investment that I believe Chris Hohn has popularized. Chris Hohn is a very disciplined value investor.
He only invests in what he considers are strong companies. Now, his list of strong companies mirrors many of the ones that we've talked about today, many of the ones that are like the rails, the networks that you do payments on, many companies that have moats that are indestructible.
But GE is a company that many high quality investors didn't fully realize how good the quality of this company actually is until Chris Hohn again popularized it, had it in the portfolio, and of course the staggeringly good performance helped out with getting attention. We have GE as a company that's up 476% over the last five years. In just the past year, it's up 89%. That grabs attention. What is going on with this company? And this is where we break down a lot of misconceptions about
these companies. For example, if you're looking at GE, you may just remember it as GE, the company that makes the washing machines and the refrigerators, and they might make some like plain parts as well. And why would you want to invest in a company that's creating washing machines and refrigerators? Those are the worst companies to invest in. But GE shifted from that business plan. They spun off everything else, and they created GE Aerospace.
But even after the company restructured into only the assets that build aerospace parts, GE Aerospace, it's still a company that's widely misunderstood by analysts and investors. Many analysts look at GE, and they say, yeah, it's a company that builds aerospace parts. And the bull case for it is that travel's recovering. There's going to be more planes in the sky. That completely misses the point. The thesis on GE is not that travel's recovering.
The thesis for this company is that it is a monopoly royalty on global GDP masquerading as a factory. People are missing the forest from the trees with GE. In essence, it possesses the Holy Grail of investing, a company that has monopolistic dominance over its aftermarket sales. It has regulated products that have to be required to be purchased by manufacturer like GE, and it possesses such high barriers to entry that literally no other company has entered into its space in the past 50
years. This is part of the reason that Chris Hoehn looks for this type of company. It is an obvious outcome. GE is essentially embedded by the government when it creates a plane engine or a turbo engine, which again are so difficult to create. No company has even entered into this category for the past 50 years. So GE is making these or putting them on planes. When they put them on planes, there's service, there's parts that need to be replaced. Can the plane go to any different company?
Can they say even though we bought the engine from GE, we're going to get the part from this manufacturer? This one they can't. The government will not allow it. You have to get the approved parts purely from GE, the manufacturer of the engine. So they have an aftermarket monopoly on everything they sell, very similar to the dynamics that you see with ASML. They sell the big EUV machine. They have an aftermarket
monopoly on that machine. They're the only one that can service it. As they install more plane engines, their install base increases, that high margin service revenue increases. They have essentially infinite pricing power on the aftermarket sales. So GE is an obvious winner. It has predictability, it has incredibly high barriers to entry. It has a Moat that's defined by physics, not just by network effects or by different government mandates.
It's very difficult to even enter into this category. Then you back that by management that's very much investor aligned. They're trying to bump this stock up as well. They're using it to create enormous gains for the shareholder. It is a perfect storm. Again, it's the Holy Grail of an investment. It's almost everything that you could look for. I've become very interested in this company and have continued to research it more and more.
Many of my best investments are from learning about investors like Chris Hohn, what they see in the company and then doing deeper dive research on these investments so that I can build conviction in them as well. When I look at GEI believe it does possess very similar moats, very similar investment thesis to the likes of ASML. For me, this is 1 to strongly consider going into 2026. Now we've already gone through 7 and we have three more companies that I believe again are the
best in the world. And this next one I become very interested in as I've learned more about the semiconductor industry and I've been picking and choosing and seeing which companies I believe are the best within that industry. One of them sticks out as an increasingly powerful, dominant and critically important company to the global economy. That company is TSM. Now, it may seem obvious, you know, everybody knows about TSM. They know it's a great company.
But a lot of things, again, even with these companies, are still not obvious to most investors because it wasn't obvious to me at first sight. I've always viewed TSM as a great company. They make chips, but it's one of those hardware companies that's cyclical, that you can't really rely on. It goes through booms and busts. And I believe that that thesis, my previous view of the company, is essentially dead. It's just wrong. TSM is no longer a cyclical hardware company.
That's an outdated view of this stock. When we look at the stock, though, it's still being priced that way. It's being priced today at a 22 to 26 Ford PE. Why is TSM being priced at such a low earnings multiple? If it's such an important company, we'll get investors view it as a cyclical semiconductor company, one that you can't really rely on for solid earnings performance on an ongoing basis. Now, if that view is wrong, what is the correct view of TSM?
It is turned into a global utility monopoly on compute, meaning everything that we do with compute, every computer, every smartphone, every smart car, every refrigerator with a chip in it, every TV that comes with chips in it, every single thing that we're doing with compute has to pass through TSM. And this is again, a structural advantage that TSM has developed over the past decade that other companies don't have. It's a structural advantage with physics.
This is what I'm starting to believe is one of the biggest moats in the market. We have moats of network effects, which are companies like Facebook and Google and Visa, MasterCard. Those are great network effect companies. We have companies with mandated monopolies. We have ones like S&P Global and Moody's, but then we also have companies that I believe have a physics monopoly. These are the ones like ASML, the ones like GE and now we have TSM.
And I believe that the physics monopoly along with their network effects on top of it create an incredibly powerful Moat. And it's a Moat and a toll booth on a product or service that's becoming more consistent and less cyclical, which is demand for compute. Demand for compute has become not a thing that we want at certain points or another. It's a thing the world needs all the time. The truth is with TSM is that they have so-called competitors with Intel and Samsung that are
in the same category. And you might hear that they're making these high end chips as well, but you can consider them as more of a theoretical competitor than an actual competitor to TSM right now. They cannot create the same fabs, they can't create the same chips. They don't have the science, they don't have the technology, they don't have the manufacturing capability. TSM is in a league of its own. So when TSM creates the highest end chips, they have unmitigated pricing power.
They don't have the downward pricing power pressure of these competitors because these competitors can't create the same chips. So TSM in the most important segment of its business is a monopoly, not a duopoly, not an oligopoly. They are a full on monopoly. They're also critically important to global GDP. And this is a point that I want to stress because again, when we look at TSM, you'll notice that for such a critical company, it trades at this PE ratio between a 22 to 26, right?
We can say it's around a 24. That is on a really low end. We have companies all over the place that have higher P ES than this. Why does TSM trade at such a discount based on how critically important and how fast and how profitable the company is? Why is this stock not $500 per
share? Well, there's one big factor of why TSM is not $500 per share, and that is because of the risk of a Chinese invasion on Taiwan. This is geopolitical risk, and investors are always cautious and nervous about geopolitical risk. There are reports that China is posturing around this. They're kind of flexing their muscles. They're making moves that make it seem like they want to invade Taiwan. And so the risk is something that every investor has to
concern themselves with. In fact, when we look at why Warren Buffett bought TSM and then sold out of it, he didn't outright name China. But without directly naming China, he basically said he was worried about a Chinese invasion. So that is a risk that exists with investing in TSM, but I believe that it's worth the risk. I believe that, first of all, TSM is becoming more globally diversified. They're opening up in more locations.
They're geologically diversifying away from just Taiwan. But another thing that I believe is that Taiwan is critically important to the US. It's critically important to all of Europe. And I believe that China knows that. When we look at what China's basing its decisions on, they want to see the reaction of what would happen if they made certain decisions and if it's really worth it. And China would know that the US would be heavily involved.
In fact, it would probably lead to a direct confrontation.
If they decided to invade Taiwan, that would be something that the US would get directly involved in, and Europe likely as well because if China controlled direct manufacturing of the heist and chips, that's obviously a big problem for the rest of the West. So when I look at this, I think there is a risk, There's always a risk of geopolitical concerns with investing in a company that has its base, its headquarters so close to China. But I also believe the risk is
worth it in this case. For me, this is a company that's being priced downwards at $325 per share when it should more appropriately trade at around $500 per share based on its quality and the fact that it's a monopoly. Now moving down the list, we have two more. One of them is called Synopsis. And like many of the companies that we've discussed, I've looked at these companies as the best in the world. These aren't your average
companies. I told you they they weren't going to be your average companies when we first started this video. And as you can see, if we've followed along, these are not your average companies. These are literally the best in the world. And I believe that synopsis is no different. It very much belongs to be in this category.
In the discussion, as I was looking through the whole semiconductor supply chain, all the different companies, there's thousands, 10s of thousands involved in this process. There are a handful that play critical roles that without them, everything else would break, and Synopsis is certainly one of them. Now, if you haven't heard of this company before, because I haven't talked about it on my channel up until now, Synopsis plays a more critical role in
software than any other aspect. For example, whatever company you're talking about, at the very bottom of the the chain you have companies like Google, Amazon, NVIDIA, AMD. All these companies design chips, right? So they make their own designs and then they send them over to
TSM to create. Well, before TSM can actually create these chips, the chips actually have to be drawn and they have to be. They have to have the software to actually make it so that you can take those designs and put it into a manufacturing process. The software to do that is Synopsis. It's their company supplying all the software. Now Synopsis over the past 10 years has done a lot of deal making.
They've done a lot of acquisitions to make it so that they're not just like a supplier of the software or playing a part of it. Now. They're like the entire operating software of the entire chip design process. Now, providing the software to make these chips and design them for the manufacturing process is obviously complex. I mean, it sounds complex, but it's about 1000 times more complex than you could possibly
conceive. And the complexity is where the pricing power comes in. Remember that the companies that really have the biggest moats, the ones that really have dominant leads when it comes to physics and software, are complexity. The reason that FML has such a masterful Moat, the reason that it's one-of-a-kind, is because it's so complex with physics that nobody else can make it. The same thing for GE making these plane engines.
There's only one or two companies that can actually do it. No other entrance for the next 50 years. This company creates software that's so highly complex, so deeply embedded, it's taken so much time to get to where they are that nobody else wants to do this. Essentially no one else is willing to even compete with them because they just throw up their hands and they say that we don't have a chance.
The Synopsis software, this essential software of taking these designs from Apple and NVIDIA, creating digital blueprints that can work within the physical reality of the manufacturing process is entirely unique to Synopsis and it's essential. And when they create these digital blueprints, they also IP them. So it becomes part of their their IP that they can kind of create royalties out of overtime as well.
So they own an immense amount of blueprints and digital IP that they're still making money on of many chips that are being sold all throughout the world and created. So this is a business that is incredibly lucrative, has incredibly good fundamentals, has very little competition ever coming for in the future because it's so complex. They've recently done an acquisition that further entrenches their monopolistic position and we see very fast
growth from them in the future. In fact, when we look at the revenue growth, it's a very fast growing company, 15% plus. You can see that over the next 10 years it's likely to grow further. One of the things that aids this company in the future is complexity. As the chip manufacturing process in the physics of it become exponentially more complex, not linearly, but exponentially more complex going down to nanometers.
Atoms are the limit now, and Synopsis has to create software that that works around these limitations. So the software being created is exponentially more complex than it has ever been before. The chance of them being replaced or circumvented is incredibly difficult.
So when you're buying this company, you are buying a certified monopolistic compounder, one that you can buy into overtime, hold it for 10 years, watch the valuation go up and down a little bit, and watch the ebbs and flows of the company. But you know you're going to have a company that's going to be around very strong in 10 years and it will certainly be much bigger in 10 years.
Now finally we get to the end stock here, one that I saved for the last, which is a personal holding of mine. Everyone will will know this. It's Netflix and I included on this list because I believe it's a company when you're looking at 2026 that's traded down a bit, it's given you some room to buy into it. So we have right here that the stock went up to around 129. Now it's down to around $90.00
per share. Many investors say I'm going to wait around for a dip on a high quality company and I believe this is an opportunity. Now when we look at Netflix, the bull case here, like everybody knows Netflix is a big company and they're the leader in streaming. But when I look at Netflix and the bull case of it, it's remained largely the same for the past three years. The bull case really hasn't changed that much.
A couple years ago, I came to the strong conclusion that Netflix has reached escape velocity with its subscriber scale. The subscriber scale is just simply unmatched. They won the game. They are not only the leader leader in subscribers, but this gives them a unit economic advantage that no one else can possibly compete with. Just consider the actual economics of the situation. With Netflix having over 300
million subscribers. We can compare that to the likes of a Paramount Plus. Let's just do A4 instance here. If each of these companies spent $1 billion on content, how much would that cost them to amortize that content spend across their subscriber base? For Netflix, every $1 billion they spend, they would spend $3.31 per sub. So as a Netflix subscriber, you're paying $3.31 for a billion dollars worth of content.
If you're a Paramount Plus subscriber, you're paying $12.64 for $1 billion worth of content because Paramount Plus doesn't have as many subscribers to amortize and spread their content costs across. So this gives the Netflix customer a vastly better value proposition. It gives Netflix unmatched unit economics which they can exploit to continue with their escape velocity.
The unique dynamic with Netflix is the bigger the company gets, the more inevitable it gets that it will continue to get bigger. That is the flywheel in motion. Most companies when they get bigger, it becomes a guessing game of whether or not they can continue to grow again in this. Case, as they get bigger, it's more likely that they'll continue to grow.
The price for content goes down, the value proposition goes up and makes other streamers services, by contrast, more expensive in relation to Netflix. So I hold a huge stake in this company already, but I continue to be excited about it in 2026. And I've actually recently bought more Netflix over just the past couple of months. These 10 companies are phenomenally strong. They're worth considering for any investor. I hope you enjoyed the little insight on these.
If you want to see more content, exclusive episodes, deeper dives into these companies, as well as get access to qualtrim.com, which is software specifically created for long term, fundamentally driven value investors, make sure to join our community here at qualtrim.com. That's all for this one. See you in the next one.