Barron's : South Korea Has a Chip Conundrum—Huge Profits and a Serious Selloff

South Korea Has a Chip Conundrum—Huge Profits and a Serious Selloff

South Korea’s Kospi Index surged 165% over the past year, driven by semiconductor giants Samsung and SK Hynix.
Record profits led to significant employee bonuses, sparking internal union disputes and calls for a ‘national dividend’ from the government.
Despite a 150% year to date gain, Samsung shares dropped 16% last week amid foreign investor sales and leveraged local buying.

South Korea has had the world’s hottest stock market over the past year, with the Kospi Index surging 165% thanks to the country’s two semiconductor powerhouses, Samsung Electronics and SK Hynix.

That’s causing some problems—and could cause more if the past week’s tech stock downturn continues.

Samsung and SK Hynix, along with U.S.-based Micron Technology, dominate the global market for advanced memory chips. Hyperscalers rushing to build artificial-intelligence capacity are paying virtually any price for their products. Samsung’s operating profit soared more than sevenfold year over year in its latest earnings report.

“This is new territory,” says Gi-Wook Shin, director of Stanford University’s Korea Program. “It’s creating a lot of issues within Korea.”

The most immediate issue has been engineers pushing for their slice of the pie. Faced with a strike late last month, Samsung agreed to a profit-sharing deal that could see bonuses in the memory-chip division reach $400,000 this year, estimates James Lim, portfolio manager for Korea at Dalton Investments. SK Hynix quietly reached a similar settlement late last year.

Investors applaud the largess. “Losing talent in this field would be a death blow for any company,” says Jing Jie Yu, who covers the Korean giants for Morningstar. “The profit-sharing retains talent.”

Some members of President Lee Jae-myung’s left-leaning cabinet were less thrilled. His policy chief grumbled that part of the chip makers’ windfall should fund a “national dividend.” The labor minister called for “new rules for distribution through social dialogue.”

Lee himself poured cold water on these notions during a June 8 press conference. The state would already reap its share through established corporate taxes, he argued. Extraordinary measures would discourage international investment that Korea needs. “Lee is trying to walk a line between his leftist roots and a very pragmatic shift,” says Benjamin Engel, a Korean studies professor at Dankook University outside Seoul.

Samsung and SK Hynix’s mind-boggling earnings and bonuses have opened something of a Pandora’s box anyway. Disgruntled employees at less-privileged Samsung divisions are leaving their union and trying to form a new one, Stanford’s Shin says. Unions at other marquee firms like Hyundai Motor and internet conglomerate Kakao are demanding 30% of operating profit, Lim adds. Samsung shared 12%. On the other hand, Samsung shareholders are complaining that the employee bonus violated their rights.

These controversies might look like a mild kerfuffle if the chip makers’ shares keep falling back to earth. Foreign investors have in fact sold more than $40 billion worth of Korean stocks over the past half year as many funds reached their allocation limits, Lim says. Local retail savers have more than filled the gap, many of them novice equity holders increasingly buying through leveraged instruments. “A lot of ‘ant investors’ are borrowing money to get into the market,” Engel says. “It’s kind of scary.”

Samsung shares dropped 16% over the past week, paring their year-to-date gain to a mere 150%. SK Hynix is down 13%.

Memory chip prices will reassert their cyclical nature but not too soon, Morningstar’s Yu predicts. Major expansions from all the Big Three should start to come on-line in 2028 as current fixed-price agreements start to expire.

Market mood swings could deflate the share price balloon well before that, though. “You’re seeing tremendous volatility in Korean markets when sentiment weakens, which indicates leveraged investors getting a margin call,” Dalton’s Lim says.

Success can bring its own headaches

Barron's : AI Stocks Underestimate the Technology’s Potential, Says This Tech In

AI Stocks Underestimate the Technology’s Potential, Says This Tech Investor
Brian Barbetta, co-head of technology investing at Wellington Management, is betting on Nvidia, ASML, and Samsara.

Brian Barbetta, co-head of technology investing at Wellington Management, oversees a team managing $40 billion. The job routinely puts him in contact with the leaders of OpenAI, Anthropic, SpaceX, and other public and private companies leading the artificial-intelligence revolution. To call him bullish about the technology’s potential would be an understatement.

Barbetta co-manages the Vanguard U.S. Growth exchange-traded fund and the $2.7 billion Wellington Global Technology Opportunities strategy, geared to institutional investors. It has returned an average of 37% annually in the past three years, after fees. The analyst and investor sees some of the best investment opportunities in companies central to AI. The actively managed ETF holds heftier stakes than peers in companies such as Nvidia, Taiwan Semiconductor, and ASML Holding.

Barron’s spoke with Barbetta in May and via email on June 8 about the likely market impact of SpaceX’s pending initial public offering, companies wrongly deemed AI losers, and what might cause him to rethink his sunny stance. An edited version of the discussion follows.

Barron’s: Investors are growing more skeptical about the AI trade. What is most misunderstood about AI-focused companies?

Brian Barbetta: People expect the law of large numbers to catch up with companies whose revenue is growing by 15%-plus a year. But they fail to appreciate that companies innovating and creating new markets can grow faster for longer and in a more durable, repeatable manner than the market generally expects.

[Alphabet Google is growing almost as fast today as it was more than 10 years ago when I started covering it because the company continues to innovate, create new markets, and build new products. Revenue grew by more than 21% in the first quarter, compared with 12% in the year-ago quarte r. As the company brings AI to its users “to organize the world’s information and make it universally accessible and useful,” as Google’s mission states, we continue to expect strong growth.

In every other technology shift—mainframe, mobile, internet—you needed people and companies to adopt the technology. I needed to shop online, play a mobile game, watch Netflix, or use software at work to drive usage. The limit to growth was usage. Now, internet access is nearly ubiquitous globally, and this technology can use itself.

In the past, we ran into overcapacity issues because usage didn’t catch up with the buildout. With AI, usage is growing faster than capacity. Capex [capital expenditure] investments are generating strong returns, and the companies are supply-constrained relative to the revenue and profit-producing activity they could otherwise deliver.

Give me an example.

Uber Technologies CEO Dara Khosrowshahi recently said AI is central to product design and engagement. Three-quarters of rides are correctly predicted by Uber’s AI systems. Verizon Communications CEO Dan Schulman cited double-digit improvements in customer satisfaction scores and $200 million in energy cost savings from using AI [to optimize its infrastructure]. Companies that use AI are talking about tangible returns on investment.

It’s impossible to escape the buzz about SpaceX’s IPO. Anthropic and OpenAI have also filed with regulators to sell shares to the public. What impact will these so-called mega IPOs have on the broader stock market?

These companies are building entirely new industries, an area where the market has historically underestimated the durability of growth and the ultimate market opportunity. While some public companies that investors held as proxies for private companies could come under selling pressure, I don’t expect a material negative impact on other stocks, partly because the stocks that come public typically have a limited float.

We seek to initiate positions and add to them as IPO-ed stocks trade down, which typically happens when the lockup periods ease [allowing insiders to sell more shares]. More broadly, publicly held technology investments have done significantly better over any measurable time period than the vast majority of private funds focused on technology.

What did you learn from investing in private companies that informs your investments in public companies?

The prices of public securities reflect the known demand for existing AI services but underestimate the potential for what the AI labs are trying to build. Strength in AI stocks and the consistent positive revisions in earnings estimates have been driven by the success of AI thus far. If the private labs achieve just part of what they are aiming to build, we believe significant upside remains in many public stocks.

The other learning: Companies are building new products that will disrupt existing, publicly traded companies that we seek to avoid.

Investors are concerned that many software companies will be rendered obsolete by AI. What is your view?

Some software and service companies will see their role become somewhat marginalized—and in some cases eliminated. When Verizon says its customer service is getting so much better because of the use of AI, it’s reasonable to expect that software companies that help people in customer service could be under pressure. The same holds for consulting firms that offer outsourced coding.

Yet, some companies whose stocks are under pressure due to AI use are going to be beneficiaries of AI. Samsara sells hardware with software embedded. Its customers see a return on investment of more than 800% from its products, which help digitize physical infrastructure. For example, Samsara’s cameras used in delivery trucks can help determine when a driver is distracted or drowsy, and deliver real-time alerts. The company’s sensors detect fuel usage and aggressive braking, preventing accidents and fraudulent transactions.

The CEO is a tremendous technologist, and is increasing the pace of new-product development to bring more AI solutions into the installed hardware base. Samsara can grow revenue at a compounded annual growth rate of 20% through 2030, resulting in an earnings estimate well ahead of current expectations.

What other companies have been misclassified as AI losers?

Unity Software built the world’s leading game engine for mobile gaming and monetizes that through subscriptions and in-game advertising services. CEO Matt Bromberg, whom we have known for a long time from [his former role as chief operating officer at] Zynga, and a new chief financial officer, Jarrod Yahes, whom we knew from prior roles, have repositioned the company to benefit from everything happening with AI.

They are allowing developers to build new content based on existing digital assets, reducing the friction in bringing new games or features, and bringing AI into the part of the business that helps gaming companies with monetization. The company’s outlook for the core advertising business for the second quarter included a 50% gain in revenue year over year, excluding some discontinued parts of the business.

The market has said the explosion in creative tools is going to make Unity’s game engine less relevant. That misses the difference between using generative AI to play on your computer and building a mobile gaming business.

Broadcom’s earnings report sparked a recent selloff in AI-related stocks. Did anything in the report give you pause?

With AI infrastructure stocks up so much since the advent of generative AI, we have frequently seen marked selloffs around specific events as investors wonder if the “cycle is about to roll over.” We didn’t see Broadcom’s earnings as particularly indicative of any shift in the continued strength in AI infrastructure demand.

What is your most contrarian view about the AI cycle?

Shifts in algorithmic architecture can lead to a material shift in the hardware and semiconductors necessary to deliver great results and products. While we remain positive on continued growth in AI demand and are positioned accordingly, we recognize that a scientific breakthrough could cause a shift in the infrastructure necessary to deliver AI services.

What is an example of a possible breakthrough?

Today’s models are extremely compute-intensive, particularly as they process more data; handle larger amounts of text, code, images, or other information in a single request; and take on more complex reasoning tasks. That has created extraordinary demand for advanced semiconductors, networking, memory, power, and data-center capacity. Over time, researchers may find ways to make models more efficient, reduce the amount of computation required, or change model architectures in ways that bend the cost curve meaningfully lower.

What would cause you to reassess your bull stance on Nvidia?

Competition. Do we see others sufficiently meeting demand in a way that impacts Nvidia’s growth and profitability? We feel confident in the company’s position today, but the world changes quickly.

Also, we would reassess if we see demand for AI services taper off. Enterprise adoption of AI services is a critical leading indicator of continued demand for AI services. Public commentary and our real-time data continue to show incredible strength.

Is it time to start investing in the companies that are going to benefit from AI?

There is still such tremendous growth in the core that it appears to be the best part of the investment opportunity. ASML Holding is a critical supplier of the most advanced tools for semiconductor fabrication. It is effectively the only company that can make extreme ultraviolet, or EUV, lithography systems required for leading-edge chips today. The market continues to underestimate the size and duration of the AI investment cycle, and ASML will continue to benefit.

How do you think about the regulatory and geopolitical risk?

It’s top of mind. Given the power of some AI models, there’s a question of whether governments regulate how this technology is rolled out, if it hurts job creation, and how that is mitigated.

Different administrations will take different views on the degree to which technology needs to be protected. But demand for these companies’ services is so strong that the geopolitical [risk] concerning where chips sit may become less relevant over time. For example, many companies in China train their models via clouds in other countries, which isn’t something the U.S. has disallowed, so there is a way for China to get access to leading technology even with technology restrictions.

Several members of my team recently visited the fabs [fabrication plants] that Taiwan Semiconductor is building in Phoenix. The geographic diversification of the company’s footprint and [other steps taken] to alleviate geopolitical concerns should allow Taiwan Semi to reduce the discount in the stock. The company continues to show it is the manufacturing backbone of the AI era. In the latest quarter, revenue was roughly $36 billion, gross margin was above 66%, and management guided to continued strong growth.

What should policymakers be thinking about in terms of AI?

They haven’t fully appreciated the potential risks. I expect there will be more job creation than disruption, but groups have been left behind in the past and I’d want a working group to create programs for those under- or unemployed. From my conversations with world leaders, I don’t think their heads are in the right place right now.

The other is safety. These models can do things from a fraud and crime perspective that is fundamentally different from anything in the past. For example, they can be trained to impersonate someone. That is going to accelerate meaningfully. In my family, we have a password to be used to identify ourselves. We need to use the models to prevent others from using them for harm. In terms of defense, the U.S. is already leveraging [AI] to protect our assets around the world, but the threat vectors are increasing, and we need to increase awareness and spending.

Thanks, Brian.

Barron's : Nestlé Finds Its Sweet Spot. How the New CEO Is Turning the Food Gian

Nestlé Finds Its Sweet Spot. How the New CEO Is Turning the Food Giant Around.
Philipp Navratil aims to restart growth in the 160-year-old food giant by focusing on core brands like KitKat, Fancy Feast, and Nespresso.

  • Nestlé’s shares have plummeted 37% since early 2022, driven by weak sales, failed acquisitions, and three CEOs in 13 months by September 2025.
  • CEO Philipp Navratil is streamlining Nestlé’s portfolio to focus on core areas like coffee and petcare, planning 16,000 job cuts, and aiming for 3% to 4% organic growth.
  • Nestlé faces challenges including GLP-1 drugs, geopolitical risks, and investor calls to sell its $48 billion L’Oréal stake.

ROMONT, Switzerland—Willy Wonka would have marveled at one of the machines at a manufacturing plant here—a contraption that injects flavors into coffee capsules via a set of whirring tubes labeled “hazelnut,” “caramel,” and “blueberry cheesecake.”

This isn’t one of Roald Dahl’s fictional chocolate factories, although KitKat and Nesquik owner Nestlé runs plenty of those. The aroma tipping station can be found at a Nespresso plant located a 30-minute drive north from Nestlé’s head office in Vevey, where high-speed filling machines deliver more than 1,000 instant-coffee pods a minute. Even the lobby and elevators smell of roasted coffee, although workers say they stop noticing after a while.

Most Nestlé employees, no matter their department, tour one of the company’s 335 factories as part of their induction. Manufacturing is at the heart of everything the world’s largest food company is doing as it tries to revive its shares following a bruising spell. The Swiss-listed stock has plummeted 41% since early 2022, dragged down by weak sales, misguided acquisitions, and a revolving door at the top. The nadir came in September 2025, when the 160-year-old conglomerate hired its third CEO in just 13 months.

Nestlé is trying to end the slump by winning back market share and slimming down its sprawling business. CEO Philipp Navratil’s challenge is to revive sales, trim fat from a business that has strayed beyond its core brands, and bring stability after years of turmoil. Early signs suggest the turnaround plan is starting to work, with a fresh focus on the coffee pods, pet food, and the chocolate bars that Nestlé makes at factories like this one.

“Selling more portions, more cups, more servings every day…will solve most of our issues from the past,” Navratil tells Barron’s.

The KitKat Heist
In March, Nestlé showed that it’s adroit enough to bounce back from some bad luck. When thieves snatched 12 metric tons of KitKats in transit from Italy to Poland, the company capitalized with some free publicity for one of its most famous brands.

Rather than putting out a dry statement promising to cooperate with the authorities, five employees crafted a jokey response saying the robbers had taken KitKat’s “have a break” slogan a little too literally. Nestlé also launched an online stolen KitKat tracker, spinning the bad news into a viral marketing campaign that the company estimates notched $231 million worth of earned media in 10 days—a decent return for a truckload of chocolates worth an estimated $420,000.

“It was about learning to take a risk, be fast and be connected with consumers,” says Navratil. “Speed over perfection, courage over comfort….It’s a good example of the new Nestlé we are trying to build.”

It will take more than stolen KitKats and canny marketing to turn the company around. Shares slumped 43% from December 2021 to January 2025 in a brutal crash that wiped out about $177 billion in market capitalization. That isn’t supposed to happen to Nestlé: Unflashy yet reliable products such as Nescafé instant coffee and Fancy Feast cat food are expected to deliver steady gains and a solid dividend, rather than wild selloffs.

The nightmarish run started when the war in Ukraine forced Nestlé to make adjustments, as key raw materials like fuel and wheat became more expensive. The company responded by raising pricing 8.2% in 2022 and 7.5% in 2023. But by defending margins, it sacrificed market share to rivals such as Oreo and Cadbury owner Mondelez International and soft drinks maker Keurig Dr Pepper.

Shoppers weren’t in the mood to pay more for staples such as coffee, chocolate, and ice cream as inflation squeezed their wallets. The total volume of products Nestlé sold flatlined in 2022 and then slid in 2023.

That wasn’t the only problem. Nestlé tweaked its portfolio, but investors say some acquisitions were a distraction, backfiring as the company expanded into non-core areas.

Nestlé acquired a majority stake in Oakland, Calif.–based Blue Bottle Coffee for $425 million in 2017. Blue Bottle opened about 100 stores and expanded into China and South Korea, but Nestlé still lost money when it exited its position in April for $400 million, according to industry estimates.

It turned out that mass-producing instant coffee gave the company little insight into how to run an artisanal coffee shop. “As a business, it was outside our core competencies,” Navratil says.

The market also questioned the acquisitions of peanut-allergy biotech Aimmune Therapeutics and food-delivery service Freshly. Nestlé divested Aimmune’s signature drug Palforzia in September 2023, about three years after buying the company for $2.6 billion.

Nestlé bought Freshly for $950 million in October 2020. It shut down less than three years later. In May 2023, some Freshly investors alleged that Nestlé failed to pay up to $550 million in earn-outs tied to future growth, a lawsuit Nestlé says is “unjustified.”

The stock fell 31% from January 2022 to August 2024, when the board ousted CEO Mark Schneider, the star boss who had previously helped mastermind shares’ run to a record high.

Schneider was succeeded by Laurent Freixe, who joined Nestlé in 1986 and had been CEO of the company’s Latin America business since 2022. Sales volumes recovered, but Nestlé fired Freixe in September 2025 after the company said an internal investigation found he had an undisclosed romantic relationship with a subordinate. The CEO’s dismissal scuttled any hopes of a quick reset.

Freixe didn’t respond to questions from Barron’s about the company’s
strategy from January 2022 to September 2025. Schneider declined
to comment.

The misery didn’t end there. In January, Nestlé recalled some of its infant formula products after tests found they contained a toxin that can cause vomiting. The company says it is confident in its food safety protocols and acted quickly to fix the problem, which was tied to a quality issue in an ingredient from a supplier.

Nestlé has weathered controversies before, including a U.S. boycott in the late 1970s tied to marketing baby formula as an alternative to breast-feeding in developing countries. The boycott was dropped in 1984 when Nestlé agreed to refine its policy to fit with the World Health Organization’s recommendations.


Cooking Up a Comeback
Navratil and Chief Financial Officer Anna Manz spend a large chunk of their time working on their turnaround plan at Nestlé’s headquarters in Vevey, a small lakeside town where Charlie Chaplin spent the last 25 years of his life.

Manz’s office overlooks Lake Geneva, where a few employees take a lunchtime dip in the summer. After commuting by bus, the CFO often starts her day by tracking which brands and countries are leaders and laggards. The wonders of artificial intelligence mean that what would once have been a weekly bundle of regional managers’ reports is now available as real-time daily sales data.

“People eating and drinking us more is the first step to value share,” the CFO, who joined Nestlé from the London Stock Exchange in March 2024, tells Barron’s.

Just 22 miles away from the head office, the Swiss Alps overlook the Romont coffee plant. Over a shot of Nespresso, Manz lays out some of the things she learned last year, including that Nestlé needs to go all-in on fast-growing global trends like cold coffee and therapeutic pet diets.

The north star for Navratil’s new Nestlé is real internal growth, or what the company calls RIG. The metric measures how volume, rather than prices, is boosting revenue, to assess whether the company is winning market share.

“We want to grow faster than our competitors,” says Navratil, who knows firsthand just how important volumes are. The CEO has worked for Nestlé for about a quarter of a century, with stints in Honduras and Mexico and a spell running Nespresso, a brand sold in 81 countries.

Three-month sales data published in April suggests the strategy is starting to pay off. RIG climbed 1.2% from a year ago, rising across all of Nestlé’s businesses except the troubled infant formula division. Shares jumped 5.9%, their best session since October 2025.

As he boosts RIG, Navratil has set about slimming down Nestlé. The longtime company insider has been acting more like an external hire brought in to shake things up, signaling to investors that he’ll ax billion-dollar businesses if that’s what it takes to change the company’s fortunes.

The new CEO has set out to streamline Nestlé’s portfolio around coffee, snacking, nutrition, and pet care, believing all four segments can deliver high-single-digit revenue growth. Nestlé is exploring selling well-known brands, including sparkling-water company San Pellegrino and the rest of its stake in ice cream maker Häagen-Dazs. Those businesses are lower-growth, harder to scale, and targeted at affluent consumers.

Nestlé isn’t the only consumer goods giant that’s spinning off large parts of its business. Rival Kellogg divided itself in two in 2023, and Unilever has spun off its ice cream business and remaining food assets in recent years. Kraft Heinz has toyed with the idea of a breakup, but suspended plans to split after pressure from major shareholder Berkshire Hathaway.

Adjusting the portfolio isn’t the only area where Navratil has been ruthless. The CEO has moved to cut costs by announcing plans to lay off staff. Nestlé said in October that it would slash 16,000 jobs, or about 6% of its total workforce; it expects its strategic changes to save about 3 billion Swiss francs ($3.8 billion) by 2027.

Still, while it trims the fat in some areas, Nestlé is still filling gaps elsewhere. The company said earlier this month that it agreed to fully acquire ready-to-drink meal maker yfood Labs after a three-year collaboration. It’s the company’s first acquisition under Navratil. Sales for yfood were about 150 million euros in 2025, representing double-digit growth from the year before.

The company is also going all-in on AI, with factory workers in the process of digitalizing paper records.

These early moves have reassured investors, with the stock up about 4% since Navratil replaced Freixe. But Nestlé must address three other challenges to lift its bruised shares.

First, Navratil and Manz need to get better at showing investors how they plan to address the challenge posed by GLP-1 weight-loss drugs, which have led to some consumers losing their appetite for snacks.

“We sell nutrition, not calories….People will still have the occasional piece of chocolate or pizza,” Navratil tells Barron’s. To some, that doesn’t inspire confidence that Nestlé has a grand plan to maintain strong sales of Hot Pockets and Toll House baking chocolate in the age of Ozempic.

The war in Iran is another worry. Economists expect a surge in inflation if shipping through the Strait of Hormuz remains disrupted, which would once again put Nestlé in a tough position of choosing between hiking prices and growing volumes.

Lastly, investors need more clarity about Nestlé’s intentions around its stake in cosmetics giant L’Oréal. It has held a position in the Garnier and Maybelline owner since 1974, when it bought in at the request of L’Oréal heiress Liliane Bettencourt to help stop the French government from nationalizing the company. It currently holds about 20% of all shares, a position valued at just under $47 billion. Nestlé bought the stake for just CHF300 million ($382 million) in 1974. It structured a sale in 2021 as a buyback, whereby L’Oréal purchased and then canceled shares, meaning Nestlé didn’t have to pay capital-gains tax on the transaction.

Asked why Nestlé is resistant to selling its L’Oréal shares, which are roughly flat over the past year, Manz tells Barron’s it has been “a very high-performing investment” for the company. “What will really drive our share price going forward is brilliant execution, and anything outside of that is a distraction, frankly,” she adds.

L’Oréal stock fetches about 28 times expected earnings for 2026, a premium to Nestlé. Investors say that if the company believes its turnaround plan has legs, it should sell the stake and buy its own shares or pay down some of its net debt pile, which stood at CHF51.4 billion at the end of 2025.

“There’s a wide valuation gap between the two companies, and Nestlé using that capital to buy back shares would be the right thing to do,” says Barron’s Roundtable panelist Christopher Rossbach, chief investment officer of the private investment partnership J. Stern, which holds a position worth $54 million in Nestlé. “Now would be the time to sell some of it, if not all of it.”

A Sweet Spot
If Nestlé clears those hurdles, there is plenty for investors to like. Shares are trading at about 18 times forward earnings, a sizable discount to the 23-times valuation they’ve had on average over the past five years. That is cheap for a company expected by analysts to increase its underlying trading operating profit by 21% from last year to 2030.

Wall Street is forecasting annual free cash flow will rise to CHF12.9 billion from CHF9.2 billion by then. That bodes well for a dividend that has risen every year since 1996. Nestlé paid out CHF3.10 a share last year for a yield of 3.94%.

There’s a broader buy case, too. Shares in consumer goods makers have been depressed ever since the pandemic, but they could rally as investors seek to shield their portfolios from a potential AI bubble by loading up on stocks that can deliver reliable returns, year after year.

There are signs that a rotation away from highflying tech stocks may be coming, with the Nasdaq Composite slumping 4% on June 5 as investors slammed the brakes on the AI trade.

Brian Kersmanc, a portfolio manager at GQG who oversees a $1.8 billion stake in Nestlé, thinks the consumer staples industry is in a “digestion phase,” where shoppers are still adjusting to the price hikes that came about during and immediately after the pandemic. He expects Nestlé’s revenue growth to reaccelerate as it optimizes its portfolio around areas like coffee and pet care. “A lot of these types of businesses will catch a bid as people rotate out of tech and try to find something else that can deliver high-single digit or low-double digit returns,” he tells Barron’s.

Nestlé’s suite of reliable and steady products can help it ease investors’ AI jitters and serve as a hedge against volatile tech stocks. What matters above all is achieving consistent growth. The company is targeting organic growth of 3% to 4% this year, which some on Wall Street see as a tough ask.

“We need to come back to this consistent delivery,” Navratil tells Barron’s. “All of this has started and is under way, but we’re far from done.”

If he’s right, the innovative handling of the KitKat heist won’t be the only sign that the turnaround plan is working. Just like the missing 413,793 chocolate bars, Nestlé stock will be a steal.

>>> Barron’s Weekend Summary

Cover Story:
-Nestlé's Nespresso plant features innovative machines that infuse flavors into coffee capsules, producing over 1,000 pods per minute. As part of employee induction, all Nestlé staff tour one of the company's 335 factories. Recently, Nestlé has faced significant challenges, including a 41% drop in stock since 2022 due to poor sales and leadership instability, culminating in the hiring of a third CEO in 13 months. CEO Philipp Navratil aims to restructure the company, focusing on core products like coffee pods, pet food, and chocolate bars to regain market share. A recent incident involving the theft of 12 metric tons of KitKats highlighted Nestlé's resilience in leveraging unexpected situations for brand promotion.
CEO Interview:
Ryan Cohen, co-founder of Chewy and CEO of GameStop, plans to take his company's rejected offer to buy eBay directly to its shareholders, emphasizing that the offer is credible and beneficial for shareholders. Following a profitable quarter, GameStop has transitioned from a meme-driven retailer to a strong competitor in the collectibles market, particularly trading cards, which overlaps with eBay's business. Cohen views GameStop's physical stores as complementary to eBay's online presence and claims that he wants to acquire eBay for long-term growth, criticizing its management. In a recent interview, Cohen detailed GameStop's strong performance in collectibles and refurbished tech, asserting that his expertise in e-commerce aligns well with eBay's operations.
Tech Trader:
-Oracle's recent earnings report, part of the broader tech earnings season, underscores investor concerns about the software industry's future in the age of artificial intelligence (AI). Following the report, Oracle's shares dropped 8.5%, reflecting ongoing skepticism. The software sector has faced negativity since last fall, with fears that customers might develop custom software using AI and that AI agents could disrupt traditional user-based pricing models. Despite some previous recovery, software ETFs, including Oracle, showed weakness, struggling to meet Wall Street's modest expectations as overall sales rose only 2%. Investors now favor AI leaders in data and cybersecurity, highlighting the need for software companies to adapt or risk obsolescence. Notably, Adobe's announcement of its CFO's departure to Marvell Technology—a company focused on AI data center chips—further emphasizes this shift in focus toward infrastructure over traditional software.
The Trader:
-Artificial intelligence stocks have seen significant gains this year, leading to volatility in the market, particularly for tech stocks. The Nasdaq Composite fell 2% recently, reflecting investor concerns about high valuations in light of persistent inflation and geopolitical issues. As a result, investors are reevaluating their expectations for future earnings, especially with interest rates potentially remaining elevated. Quanta Services, benefiting from the AI boom, has seen its shares increase approximately 50% since last fall, driven by rising energy needs from AI developments and a robust $48.5 B backlog. Major tech firms are expected to invest heavily in AI, further heightening electricity demand and supporting Quanta's growth prospects.
-The SpaceX IPO, the largest in history, recently began trading but had little immediate impact on the stock market, with key indices like the S&P 500 rising 0.7% during the week. Its significance may extend beyond the event, potentially signifying investor sentiment towards riskier assets and influencing the tech sector, which has been the backbone of the bull market driven by artificial intelligence. Upcoming IPOs from companies like Anthropic and OpenAI will also be crucial for gauging the market's appetite for innovation. SpaceX's entry into the Nasdaq-100 could further affect tech stocks, which constitute a significant portion of the S&P 500. Therefore, dismissing SpaceX’s IPO could overlook its broader implications for market trends.
Features:
-Baron Capital, a major holder of SpaceX stock, recently increased the estimated value of this stake just ahead of the anticipated IPO pricing on Thursday. The $17 B Baron Partners fund and the $3.7 B Baron Asset fund saw gains of nearly 7% and 8% respectively on that day, with significant portions of their assets (30% and 23% respectively) invested in SpaceX. The firms increased their SpaceX stock value in line with the upcoming IPO price of $135, reflecting a more than 25% rise from the March 31 valuation of $105 per share. Despite these gains, both funds underperformed against the S&P 500, which has risen approximately 9% this year. Founder Ron Baron highlighted a substantial investment of $2 B in SpaceX since 2017, resulting in profits of $12 to $13 B.
-Investors often repeat past behaviors, and a promising opportunity is emerging with Honeywell International's impending split in 2026, likened to General Electric's breakup in 2024, which generated significant returns. Honeywell plans to form two companies focused on aerospace and automation, both expected to have higher valuations than the current Honeywell stock, potentially reaching $290 per share, a 40% increase from $205.88. Jim Osman describes this separation as a 'clarity trade' rather than a distressed breakup. The split will take effect on June 29, with Honeywell Aerospace trading as HONA. Investors might consider buying now to benefit from owning two stocks, mirroring GE's experience where its aerospace division significantly outperformed expectations. Honeywell's aerospace segment is a key asset, producing critical aircraft components and widely utilized power systems.
European Trader:
-Nuvalent's stock surged 39% to $122.90 after GSK announced its plans to acquire the cancer-drug developer for $10.6 B, offering $124 per share, a 40% premium. GSK's American depositary receipts remained flat at $50.65. This acquisition marks GSK's largest in eight years, aiming to enhance its cancer drug pipeline after previously swapping its oncology business for Novartis' vaccines division in 2014. The deal may concern GSK shareholders.
Emerging Markets:
-Amazon is establishing a satellite ground station in Kenya, marking its entry into the competition against SpaceX’s Starlink. Starlink, which has over 10,000 satellites and more than 10 M subscribers, generated $3.3 B in revenue in Q1 2026. While Amazon currently has around 330 satellites in orbit, it relies on partners like SpaceX and Blue Origin for launches. Despite setbacks at Blue Origin, Amazon aims to progress in the space broadband market, although competing with SpaceX remains challenging. Recent stock movements reflected the broader market's fluctuations.
Commodities:
-The ongoing Iran war is impacting global supply chains, particularly in critical commodities like oil, helium, lithium, and ammonia. As a result, the chip sector is experiencing a sell-off, affecting stock market indices. In the wake of these disruptions, a new wave of green technology start-ups is emerging, striving to provide alternative sources for these vital commodities. This shift reflects investors' increasing interest in sustainable solutions amid geopolitical tensions.
Streetwise:
-No update