Core 20

Alphabet runs three compounding engines at once: Google Search with ~90% query share, YouTube as the second largest search engine on the planet, and Google Cloud growing revenue north of 25% year over year. AI is a tailwind here, not a threat, as Gemini integration deepens advertiser tools and Cloud wins land on AI workloads that competitors are chasing. We hold this as the portfolio's core technology compounder, a business that prints cash, buys back stock, and keeps opening new revenue lines.

Apple's services segment, now running at over $100B in annual revenue, is the real story here: high-margin, recurring, and growing faster than hardware. The iPhone installed base of over 2 billion active devices is a moat that compounds quietly every year, locking users into an ecosystem that spans payments, subscriptions, and now financial products. We hold this as a quality compounder that anchors the portfolio with durable free cash flow and a buyback machine that steadily lifts per-share value.

Microsoft owns three compounding engines at once: the dominant enterprise software franchise, the fastest-growing hyperscale cloud in Azure, and now the most credible AI monetization story in tech through Copilot and its OpenAI partnership. Azure is the clearest place where AI spend is landing right now, and Microsoft is capturing that without sacrificing margins. We hold it as the portfolio's core technology anchor, a business that grows through cycles and keeps widening the gap on competitors.

Broadcom is a semiconductor and infrastructure software giant with two durable engines: custom AI accelerators (XPUs) being built for hyperscalers like Google and Meta, and a recurring software business anchored by the VMware acquisition. The AI silicon opportunity alone is enormous, with Broadcom guiding to a serviceable addressable market in the hundreds of billions as hyperscalers design away from Nvidia for certain workloads. We hold it as the portfolio's core tech compounder, a business that prints cash, raises its dividend, and has multiple ways to win as AI infrastructure spending accelerates.

NVIDIA owns the picks and shovels of the AI buildout, with its H100 and Blackwell GPUs sitting at the center of every major hyperscaler and enterprise AI infrastructure spend. Data center revenue has compounded at triple digits over the last two years and the CUDA software moat makes switching costs real, not theoretical. We hold it as the highest-conviction growth anchor in the portfolio, the name most likely to keep surprising on revenue as AI capex stays elevated.

Lilly owns two of the most commercially powerful drugs in the world right now: tirzepatide for diabetes and obesity, and a growing Alzheimer's franchise with donanemab. The GLP-1 wave is still early, and Lilly is better positioned than almost anyone to capture the long-term demand as manufacturing scales and international markets open. We hold it as the core healthcare compounder, a high-conviction name that pulls the portfolio's growth rate up.

Meta owns the largest social attention network on earth, with Facebook, Instagram, WhatsApp, and Threads giving advertisers reach no single platform can match. The AI-driven ad ranking improvements are compounding: revenue per user keeps climbing while the cost to serve ads keeps falling, which is a margin flywheel that is still early. We hold it as a core growth anchor where the business quality gives us confidence to stay through volatility.

Bank of America is one of the most rate-sensitive of the big four US banks, meaning its net interest income expands meaningfully as rates stay elevated and loan demand recovers. The consumer banking franchise is massive, the balance sheet is clean, and management has been disciplined on expenses in a way that lets earnings leverage flow through. We hold it as a steady financial sector anchor that participates in a soft-landing scenario without carrying the idiosyncratic risk of smaller regional names.

Chevron is one of the strongest balance sheets in big oil, with a debt-to-equity ratio that gives it room to buy back stock and sustain its dividend even when crude prices drop. The Hess acquisition adds long-duration Guyana barrels to a portfolio already anchored by Permian growth, deepening the production runway well into the next decade. We hold it as the energy sleeve of the portfolio: steady cash returns plus levered upside if oil stays elevated.

Amazon runs three distinct compounding engines: the dominant e-commerce marketplace, the world's largest cloud platform in AWS, and a fast-growing advertising business that is already generating serious operating income. AWS alone is worth more than the whole company traded for just a few years ago, and its operating margins are expanding as AI workloads drive higher-value consumption. We hold AMZN as a core growth anchor because it gives us durable exposure to cloud infrastructure, consumer spending, and digital advertising in a single position.

Johnson Controls is the dominant player in commercial building automation, HVAC, and fire and security systems, with a sticky installed base that generates recurring service revenue. The company has been simplifying its portfolio by shedding non-core segments, and the tailwind from data center cooling demand and energy efficiency retrofits gives the core business a multi-year growth runway. We hold it as a steady industrial compounder with exposure to the AI infrastructure buildout through the cooling and controls angle.

American Express runs a closed-loop network where it owns both the card and the merchant relationship, giving it pricing power and spending data that Visa and Mastercard simply do not have. Millennial and Gen Z cardholders are now the fastest-growing cohort on the platform, and premium fee revenue keeps growing even when consumer credit gets choppy. We hold it as a quality compounder that earns through the cycle and keeps compounding earnings per share through buybacks and fee growth.

Coca-Cola's brand moat and global distribution network generate predictable cash flows across every economic cycle, making it one of the most reliable earners in the portfolio. Pricing power has been the real story lately, with the company consistently passing through cost inflation without losing volume at scale. We hold it as a stabilizer that keeps the portfolio grounded when growth names sell off.

TSM manufactures the most advanced chips on earth, running the foundries that Apple, Nvidia, AMD, and virtually every other fabless giant depend on to bring their designs to life. There is no real alternative at the leading edge: TSMC's 3nm and 2nm nodes are years ahead of any competitor, which makes switching costs effectively permanent for customers who need peak performance. We hold it as the foundational semiconductor position, a quality compounder that captures the economics of AI, mobile, and HPC without needing to pick which chip designer wins.

Moody's runs a two-sided franchise where the ratings business prints cash through every credit cycle and the analytics segment compounds at a faster clip as financial institutions lean harder on risk data. The oligopoly structure in credit ratings is one of the most durable competitive moats in finance, full stop. We hold it as a core compounder that adds quality earnings and pricing power to the portfolio without needing a specific catalyst to work.

ASML is the only company on earth that makes extreme ultraviolet lithography machines, the tools every leading chipmaker needs to print the most advanced semiconductors. That monopoly position means pricing power, a multi-year backlog, and earnings that compound as the chip industry's long-term capex cycle keeps running. We hold it as a core quality anchor that gives the portfolio durable exposure to AI-driven semiconductor demand without the volatility of individual chip designers.

OXY is a low-cost Permian operator with a massive chemical and carbon management business that most pure-play oil names cannot match. Buffett has been buying steadily, which tells you something about the quality of the asset base and the balance sheet trajectory post-Anadarko integration. We hold it as a cyclical lever that pays us to wait while oil prices stay above OXY's breakeven.

Philip Morris is executing a genuine business transformation, with smoke-free products like IQOS and ZYN now driving the majority of revenue growth and expanding margins faster than the legacy cigarette base declines. The ZYN nicotine pouch category in the US is still in early innings and gives PM a rare volume growth story inside a defensive consumer staples wrapper. We hold it as a yield-paying compounder that cushions the portfolio during risk-off periods while the smoke-free pivot quietly re-rates the multiple.

Kraft Heinz owns some of the most durable brand names in packaged food, from Heinz ketchup to Kraft mac and cheese, giving it pricing power that holds up even when consumers are stretched. The stock has been beaten down for years on margin concerns and a failed strategy pivot, but management has stabilized the cost structure and is quietly rebuilding organic growth through brand investment and emerging market expansion. We hold it here as a cheap, dividend-paying ballast position that cushions the portfolio during risk-off stretches.

Chubb is the world's largest publicly traded property and casualty insurer, with a disciplined underwriting culture that consistently outperforms peers on combined ratios through hard and soft markets alike. The company compounds book value steadily by combining pricing power in commercial lines with a growing high-net-worth personal lines franchise and international exposure that peers cannot match. We hold it as a durable, all-weather position that cushions the portfolio when riskier bets go through rough patches.