FFM Fund Newsletter - Feb 2026

February 2026

Dear Friends, Dear Investors,

Following our annual letter, January proved particularly revealing. Earnings releases and investment announcements from major technology players confirmed a trend we are closely monitoring: the race for artificial intelligence is intensifying further, with spending levels becoming increasingly extreme.

The hyperscalers, Amazon, Meta Platforms, Microsoft and Alphabet, continue to announce massive capex budgets for 2026. Taken together, these investments now represent around 2% of US GDP, roughly twice the level seen at the peak of the late-1990s technology bubble. Each player appears determined to outspend the others to avoid falling behind in a race whose future profitability remains highly uncertain. The fact that Alphabet, despite its substantial cash generation, has turned to the bond market to finance this expansion clearly illustrates the regime shift: after years of strong cash flows with limited reinvestment, even the giants are now relying on external capital to sustain growth.

In markets, January was marked by sharp volatility within the technology sector. While companies tied to AI infrastructure generally held up well, new concerns emerged around software businesses, some of whose models could be partially disrupted by generative AI. In this context, Salesforce and SAP, two global leaders in enterprise software, fell by more than 15% over the month. Investors are clearly beginning to distinguish between potential AI winners… and early losers.

We do not believe all these concerns will automatically materialise. Large software platforms retain significant strengths. However, in an environment dominated by uncertainty, selling pressure and rapid technological change, we do not believe this is the right time to take aggressive positions in these segments.

True to our philosophy, we remain exposed to major structural trends while avoiding blindly following market euphoria. We continue to favour key infrastructure companies that are essential to the ecosystem, and remain cautious toward business models that could be weakened by this technological revolution.

While January did not mark a clear market reversal, it strengthened our conviction that we are moving into a phase of growing excesses, with the first casualties already emerging. More than ever, discipline, selectivity and a focus on companies generating stable profits will remain at the core of our investment decisions in the months ahead, naturally leading us to identify new opportunities offering the best quality-growth-valuation balance in the current environment.

Best regards,

Your CaridaB Group Team