As we wrap up 2025, we want to say a heartfelt thank you to all of you for reading, sharing, and supporting our work. In just 7 months,
Our Rebound Portfolio and buy recommendations have both outperformed the S&P 500.
Rebound Capital is now in the top 100 Substack Bestsellers List.
Legendary investor Michael Burry is a paid subscriber to Rebound Capital.
We published 75 reports this year, which were read by more than half a million investors! Here’s what we got right, where we missed the mark, and the predictions that only time will tell.
What we got right:
Our conviction in the “picks and shovels” of the Artificial Intelligence revolution was our strongest driver this year. We caught these when they were in a significant drawdown, with the market effectively counting them out.
1. ASML Holding
Our thesis was simple: the world’s most advanced chips cannot exist without Extreme Ultraviolet (EUV) lithography. Regardless of who wins the chip war — Nvidia, AMD, or Intel — they all require ASML. The market eventually acknowledged that ASML is a monopoly with no close second, confirming our view that ASML dominates the entire AI supply chain.
2. Google
Earlier this year, the narrative was that ChatGPT would kill Search. We took the contrarian view, arguing that Google owning the entire stack (from proprietary chips (TPUs) to the data required for training, to their distribution) is a moat that doesn’t come around easily.
In our deep dive three months ago, we calculated Google's fair value to be approximately $300. The stock hit this position around November and has stabilized at around $315 (31% return compared to 5% of the S&P 500).
3. AMD
While Nvidia was and still is the king, hyperscalers (Microsoft, Meta, Oracle) were desperate for a viable alternative to reduce costs and dependency. Our thesis for investing in AMD was that the market was underestimating the effectiveness of their MI350 series chips.
The prediction proved correct with OpenAI announcing a deal to deploy 6 gigawatts of AMD GPUs. We exited our position immediately after the agreement, as the stock price surged and crossed our fair value model.
To put it simply, the valuation has run away from the business fundamentals. This is a classic scenario in which a strong catalyst caused an undervalued stock to become overvalued overnight.
4. Healthcare Basket
In the spirit of Christmas, we are making our Healthcare Basket picks public.
We put together a healthcare basket in August, as healthcare’s valuation discount to the S&P 500 was nearly at its widest in 30 years, with most companies trading at half the S&P 500's P/E.
When we invested, healthcare had seen 12 consecutive months of net outflows! Our thesis was that the worst was over for healthcare and the industry was starting to turn around. We assembled a portfolio of 5 stocks we believed had the highest potential.
Exactly 4 months later, the healthcare basket outperformed the S&P 500 by 3x, with only one stock underperforming the market.
What we got wrong:
Investing is a humbling game. While our fundamental analysis was sound, the psychological behavior of the market and the “gravity” of high valuations cost us.
1. The Trade Desk
There is no beating around the bush for this one. The stock has lost 44% since our buy recommendation in June. Following our call, the stock rose 30% in two months after being added to the S&P 500 (ideally, we should have sold it then). The next earnings decimated the stock price, with the company dropping 40% in two days following its earnings (due to conservative guidance).
We learned that when a stock is priced for perfection (high multiples), even good earnings aren’t always enough; they need to be flawless. We are now erring on the side of caution with high P/E stocks (as you might have noticed with FICO, Axon, and TPL).
2. Airbnb
This one’s slightly more nuanced. Here’s how we ended our Airbnb deep dive:
Purely based on our valuation metrics, we should give Airbnb a buy rating. If you are a long-term investor with a 5+ year horizon, there is very little to go wrong with investing in the company (a great business with a moat & a decent valuation).
But at Rebound Capital, we focus on turnaround situations with clear catalysts and a two to three-year investment horizon. At a 28% base-case upside and with most of the experiences and take rate expansion loaded beyond 2027, Airbnb doesn’t clear the bar for our investment.
Even though the company might be a buy for long-term, quality-focused investors, it’s a pass for us as we don’t see any strong catalysts to re-rate the stock in the short term.
But the stock is up 20% over the last month with no significant catalysts. Our view is that the entire industry is starting to get re-rated (Booking is also up 11% last month), as economic data show travel remains the top priority for discretionary spending. A few other high-profile analysts also re-rated the stock, giving it much-needed momentum.
What time will tell:
Our investment horizon is usually two to three years.
One of the biggest questions facing the market right now is: Will AI replace SaaS or strengthen it? The same question affects two of our biggest conviction picks, Constellation Software ($CSU) and Adobe ($ADBE).
The bear case is obvious: AI will write code (threatening CSU’s VMS moats), and AI will generate images (threatening Adobe’s creative suite).
We believe this fear is overstated. We view AI as a feature, not a replacement. However, the jury is still out. We are currently betting that these incumbents will integrate AI to become more efficient and sticky, rather than being displaced by it.
The following 2-3 years will be critical for these companies. If our stance is correct, both of our picks are well-positioned to grow significantly. If our stance is incorrect and AI does start replacing SaaS, then the legacy (and financial) status of these companies should still prevent outright crashes and give us time to exit.
Either way, we’ll be watching and monitoring the situation closely. What do you think?
As you can probably tell, we spent hundreds of hours researching to bring you the best ideas and outperform the market. Consider upgrading the subscription to get all our deep dives and access to our Rebound Portfolio!
That’s it for now. This will be our last report for the year. See you next week with our top rebound picks for 2026. Appreciate all the love and support!