December 19, 2025

In the Loop – December 19, 2025

“In The Loop” is designed to give you a short update reflecting major developments, earnings, and investment trends across some core Equity Income and Growth holdings. All clients should be aware that individual buy/sell recommendations will be conveyed directly to you on an individual basis. Have a great weekend.

The first news article I read Monday morning was titled, “Berkshire Hathaway’s Todd Combs, Investment Lieutenant to Warren Buffet and GEICO CEO, is leaving for JPMorgan”. I thought to myself, if you are leaving a dream job, this opportunity must be big. As I continued to read, Todd Combs left to become the head of the bank’s new Security and Resiliency Initiative, to find direct equity investments in the defense, aerospace, health care and energy industries. Combs will have $10 billion to deploy to start with for JPMorgan’s new initiative, which the bank said will ultimately commit $1.5 trillion to spur economic growth and “to make the world more secure.” We have been writing about this strategy for almost two months, calling it a “Pre-War” strategy, so it feels rewarding to have someone like Todd Combs leave Berkshire to focus on it for an institution like JPM.

Aside from our longer-term strategy, in the near-term, the markets have become sensitive to sharp rotations, elevated macroeconomic anxiety, and heightened scrutiny of growth and technology-oriented businesses. The issue is not execution—it is timing and sentiment. Despite solid underlying fundamentals and generally constructive results across many sectors, markets have recently sold off, signaling that expectations had moved ahead of what even strong outcomes could satisfy. Investors are increasingly focused on whether massive backlogs and long-dated contracts can be translated into near-term revenue without creating financial stress, higher borrowing costs, or negative sentiment loops. That reaction marks a shift: equities have become more sensitive to marginal disappointment and external noise. I am hopeful that this sentiment will begin to change as we enter 2026, but if it does not, we will be inclined to trim some of our winners. The most likely scenario is a widening out of the markets to include small and mid caps, as well as, international equities rather than just the Mag 7.

Individual Company Updates

Alphabet (GOOGL)

Alphabet enters year-end with improving operating momentum and added balance-sheet optionality. Recent channel checks and analyst commentary point to accelerating adoption of Google’s AI tools, with Gemini usage expanding alongside—not at the expense of—core Search engagement. This reinforces confidence that AI is acting as a growth enhancer rather than a disruptor to Alphabet’s core franchise, supporting durable low-to-mid-teens revenue growth expectations into 2026. Beyond operations, Alphabet also benefits from potential non-operating upside tied to its long-held private investments, which can bolster reported results and near-term sentiment. Taken together, improving AI traction and incremental balance-sheet flexibility strengthen Alphabet’s overall risk-reward profile.

IBM (IBM)

IBM continues to differentiate itself as an enterprise-first AI platform focused on trust, governance, and real-world deployment. Independent rankings have highlighted the transparency and accountability of IBM’s Granite models, reinforcing the company’s appeal to regulated and mission-critical customers. Product innovation remains tightly aligned with enterprise needs, emphasizing compliance, cost control, and integration rather than consumer-oriented experimentation. Strategic partnerships in data, software, and workforce enablement further underscore IBM’s long-term strategy: embedding AI deeply into core enterprise workflows, where switching costs are high and adoption tends to be durable.

Pfizer (PFE)

Pfizer has faced renewed pressure following cautious forward guidance, reflecting the ongoing normalization after Covid and the early stages of a multi-year patent-expiration cycle. While headline numbers appear soft, much of the drag is well understood and front-loaded, tied to declining Covid revenues and legacy products rolling off exclusivity. Beneath that, the core business shows relative stability, supported by aggressive cost discipline and restructuring progress. Management continues to position the pipeline for a rebound later in the decade, making the coming year look less like a fresh reset and more like a transition period where expectations have reset low enough to allow for upside if execution improves.

GE Vernova (GEV)

GE remains levered to structural growth in global electrification, grid modernization, and power reliability. Investor focus has centered on execution as demand for gas turbines, grid equipment, and services remains strong, but capacity expansion and margin normalization take time. Markets are increasingly sensitive to the pace at which backlog converts into cash flow, yet the long-term setup remains attractive as utilities and governments prioritize resilient power infrastructure to support AI, data centers, and energy security.

Bloom Energy (BE)

Bloom Energy sits at the intersection of distributed power, energy resilience, and decarbonization. Interest in on-site generation has been supported by data-center growth and concerns around grid stability, but near-term sentiment has been shaped by project timing, customer concentration, and financing considerations. As with much of the clean-energy complex, the debate is less about demand and more about execution, balance-sheet durability, and the cadence of cash-flow improvement as deployments scale.

We remain focused on navigating market trends and positioning portfolios for long-term growth and resilience.
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Formidable Asset Management (“Massey Romans Capital”) is an investment adviser registered under the Investment Advisers Act of 1940. The information presented in the material is general in nature and is not designed to address your investment objectives, financial situation or particular needs. Prior to making any investment decision, you should assess, or seek advice from a professional regarding whether any particular transaction is relevant or appropriate to your individual circumstances. Although taken from reliable sources, the Firm cannot guarantee the accuracy of the information received from third parties.

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