Massive Moats

“We believe we have identified the largest actionable total addressable market (“TAM”) in human history. We estimate that our quantifiable TAM is $28.5 trillion, consisting of $370 billion in Space from space-enabled solutions; $1.6 trillion in Connectivity across $870 billion in Starlink Broadband and $740 billion in Starlink Mobile as well as additional opportunities in enterprise and government; $26.5 trillion in AI across $2.4 trillion in AI infrastructure, $760 billion in consumer subscriptions, $600 billion in digital advertising, and $22.7 trillion in enterprise applications. For illustrative purposes of sizing our addressable market opportunity, we exclude China and Russia from our global estimates.” This will require a massive amount of CapEx in infrastructure.

“We believe that the key constraints in the continued growth of AI are physical chip manufacturing, data center infrastructure, and power generation; the future of AI will be determined by the control of the physical stack.” — S-1 Space Exploration Technologies Corp. $SPCX (2026)

3i Group's $III.L NAV per share increased by 19% Y/Y to 3,030p, up from 2,542p on March 31, 2025. This 19% Y/Y surge was primarily driven by the additional purchase of a 7.5% stake in Action and the company's expanding EBITDA. Currently, $III.L trades at a 28% discount to NAV.

Yes, I agree with that. Even though I simply view it as operating expenses and not as some excessive costs. Just as Apple has production costs, Netflix has costs related to creating content. Still, I think that when existing content is fully amortized, it doesn't lose its value entirely. Good movies and series will always retain a certain amount of value. Some fans return to a first season when a second one is released, while other content sits ready in Netflix library for members who might not watch it until a few years later. With the increasing investments Netflix is making, its library continues to grow. And so does the proportion of high-quality content that Netflix carries forward into the future to create new seasons or even an entire franchise around.

@massivemoats Just the point i am trying to make Netflix will always have to spend a lot on content Recently heard a good comparison with music We listen to the same songs for years and years Movies once we watched them we almost never rewatch them Not to say that I don’t like Netfix tho

Netflix $NFLX could become an Apple-like buyback machine over the next decade. I believe $NFLX is trading at an attractive valuation considering the vast runway of opportunities the company has over the coming decade. $NFLX currently has a 33%+ weighting in my portfolio. NFA

Netflix's major costs are indeed related to its investments in content, strengthening its moat with every original it releases. These are, however, capitalized on its balance sheet and flow through its P&L in the form of amortization. Therefore, almost all of its OCF is turning into FCF, which is available to its shareholders and is increasing at a rapid pace.

@massivemoats Netflix has massive content costs 40% of revenue just to stay relevant for the consumer That is completely different to Apple

@mrchamp1908 Still researching

@massivemoats What is your view on the latest results from action?

@guildercapital Yeah, 3i Group's deteriorating share price doesn’t make sense to me. Need to dive deeper into the numbers, but at first glance, the long-term catalysts still hold firm.

@massivemoats you’re one of the only other big holders of 3i group I know here. Thoughts?

3i group is a screaming buy here. Still insane room for expansion with action in it’s current whitespace. Payback period is under 1 year. 3i group should take on some debt of it it’s own here imo.

Investment Letter April 2026: open.substack.com/pub/massivemoa…

Although I made no transactions in April, the weightings within my portfolio still shifted slightly. Driven by strong price appreciation in $AMZN and $GOOGL shares, these positions have grown in weight, reducing the relative share of $NFLX and $III.L. Holdings as of April 30, 2026: - 3i Group $III.L: 36.20% - Netflix $NFLX: 33.68% - Amazon $AMZN: 24.78% - Alphabet $GOOGL: 5.33% - Cash 0.00% I am currently fully invested. This marks a new chapter in my journey as an investor, bringing with it a new set of biases and risks. I share some of my thoughts on this transition in the April investor letter. You can read the full letter via the link in the comments.

On April 29, 2026, Alphabet published its Q1 2026 results. In the article below, I share my interpretation of these figures and outline Alphabet's future potential. open.substack.com/pub/massivemoa…

Another company creating a massive consumer surplus is Spotify $SPOT. According to the company, I have listened to 9,136 songs since 2014 and spent 138,476 minutes listening to my favorite artist.

The Netflix Effect: about.netflix.com/en/news/the-ne…

Today, Netflix $NFLX demonstrates the massive consumer surplus it delivers. Over the last decade, $NFLX has invested more than $135B in films and series, contributed over $325B to the global economy and created more than 425,000 jobs on their productions alone.

@ajassy A lot of great developments recently, expanding Amazon’s moat even further. I am excited about the future of Amazon.

Amazon Supply Chain Services—our freight, distribution, fulfillment, and parcel shipping network—can now be used by any business. Was built over nearly three decades to move, store, and deliver products across land, air, and sea. All one network, so no need to piece together different providers at every stage. Same reliability and speed our customers rely on. P&G, 3M, Lands' End, and American Eagle already on board. Gonna help a lot of businesses move faster, save money, and simplify things. aboutamazon.com/news/retail/am…

@realroseceline Well said. Long-term returns are driven by how profitably capital can be allocated and the development of a company's moat.

I’ve been thinking a lot about AI, chips, and all these other hot poplar industries and ai keep coming back to a pretty uncomfortable conclusion. Ten years from now, most of the companies people are excited about today will not work out as investments. Not because the technology isn’t great or the people arnt amazing, and not because demand won’t be massive. But because great technology and great returns are not the same thing. We’ve seen this before in then1990s, everyone knew the internet would change the world, and they were right. What they got wrong was who would actually make money and more importantly who would earn high returns on capital because the future economics were unclear. There’s a simple reason this keeps happening. The more important a technology is, the more capital flows into it, and the more capital flows into it, the harder it becomes to earn excess returns. Everyone builds, everyone expands, everyone competes, and the economics get spread thin over time. You end up with an incredible industry and very average investments. I think AI is setting up the same way. There will absolutely be winners, and the obvious place to look today is the hyperscalers like $AMZN, $MSFT, and $GOOG, perhaps $META, because they have distribution, cash flow, and the ability to invest at a scale others can’t. Even then nothing is guaranteed, but at least the logic holds. Where I struggle is when people assume every part wins at the same time. Chip designers, manufacturers, neo clouds, and AI applications are all raising capital and racing to grow. That sounds exciting on the surface, but it also means competition is increasing exactly where people expect the most profit. Usually capitalism doesn’t reward that evenly, again we’ve already seen this movie. If you break it down, each layer has its own challenge. Semiconductors require massive capital and constant reinvestment just to stay relevant. Cloud platforms may win, but pricing pressure and competition will naturally compress returns over time. AI applications have no moat, with low switching costs, and many of these “neo” infrastructure players are dependent on what looks promising today but the economics are difficult to foresee 3-5 years out. There’s a simple framework I keep coming back to. Value tends to concentrate in only a few places, the customer relationship, the lowest cost producer, or the bottleneck that acts like a toll bridge. Everything else ends up competing away its profits over time. The question is not who participates in AI, but who actually owns one of those positions. This is where most investors get tripped up. Investing isn’t about how big something becomes, it’s about what return that business earns on the capital it reinvests. You can grow quickly for years and still be a poor investment if all that growth requires constant spending just to keep up. At that point, you don’t have a compounding machine, you have a treadmill (this is a quote from my book). And treadmills are dangerous when expectations are high. Because the moment investors realize returns won’t match the story and more important the expected economics, the repricing isn’t gradual. It’s fast, and it’s brutal (ie $TTD), and it usually catches people off guard. That’s how you get 70% or 80% drawdowns in companies that still look like they’re “winning.” If you own five or six companies across the same AI value chain, you’re implicitly betting they all earn high returns. History suggests that’s unlikely. You might be right on the theme and still wrong on the outcome. That’s a tough lesson, but it’s a real one we all should think about. I could be wrong on who the winners are, but I’m very confident most won’t be. That’s not pessimism, it’s just my opinion that’s backed by pattern recognition. If it walks like a duck and quacks like a duck, it’s probably a duck. We’ve seen how this plays out when capital floods into something important and everyone tries to win at once. 🌹

Amazon $AMZN Y/Y Revenue Growth (TTM)

Growth is accelerating in all key segments of Amazon $AMZN

Alphabet $GOOGL top line: Acceleration in Search (+19.1% Y/Y), Subscriptions (+19.3% Y/Y), and Google Cloud (+63.4% Y/Y).

Netflix Q1 2026 Earnings Review: open.substack.com/pub/massivemoa…

Earlier this year, $NFLX announced that it would ramp up its content investments to roughly $20 billion in 2026 (Netflix, 2026). For FY2025, cash spent on new content was $17.1 billion (2024: $16.2 billion). These cash investments track slightly ahead of the amortization of this content (2025: $16.4 billion; 2024: $15.3 billion). For 2026, $NFLX expects its ratio of annual cash content spend to annual amortization expense to remain at ~1.1x. - FY2025: $17,097 million / $16,422 million = ~1.04 - FY2024: $16,224 million / $15,302 million = ~1.06 Comparing the $20 billion investment budget for 2026E against 2025’s $17.1 billion implies a year-over-year increase of +17%. This represents an acceleration of Y/Y growth, considering the increase in FY2025 relative to FY2024 was +5.4% Y/Y. Unlike other mega-cap companies currently heavily investing in infrastructure (e.g., hyperscalers like Amazon, Microsoft, and Alphabet), the bulk of $NFLX's investments are already baked into its operating cash flow (OCF). Because CapEx is relatively minimal (2025: $688 million), its OCF (less SBC) is essentially fully available to shareholders. In Q1 2026, $NFLX resumed its share buyback program, after it had been temporarily paused during the potential Warner Bros. acquisition. In Q1 2026, $NFLX bought back 13.5 million shares for $1.27 billion (= ~$94 per share). This leaves $6.8 billion remaining under the current buyback authorization. In FY2025, $NFLX repurchased $9.1 billion of its own stock under this program. In the attached visual, the development of $NFLX's annual FCF (adjusted for SBC) is shown (in red), alongside the annual cash investments it makes in new content (in black); because $NFLX creates value for its members, it also creates value for its shareholders. I view the resumption of the buyback program as a great capital allocation decision. With low CapEx and expanding operating margins, $NFLX will be able to direct an increasingly large pile of cash toward stock repurchases. At the current price level of $92, this creates additional value for shareholders, as I believe $NFLX's stock is currently trading below its fair value (see chapter 8 in the analysis that I published yesterday, link in comments).