Björn Bredehöft @2BSmart: "𝐏𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨 𝐑𝐞𝐛𝐚𝐥𝐚𝐧𝐜𝐢𝐧𝐠 𝟐𝟎𝟐𝟔 - 𝐏𝐚𝐫𝐭..."

Germany

𝐏𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨 𝐑𝐞𝐛𝐚𝐥𝐚𝐧𝐜𝐢𝐧𝐠 𝟐𝟎𝟐𝟔 - 𝐏𝐚𝐫𝐭 𝐈𝐈 Dear Investors, As promised, here is the more detailed Part II of our planned Portfolio Rebalancing 2026. As every January, I adjust the portfolio for the new year and the medium-term investment horizon. I strongly recommend reading the first part of the portfolio rebalancing to understand the general context of the adjustments. You can find the article here: www.etoro.com/posts/dc1db1c0-e4c1-11f0-8080-800022f2efe7 For anyone who simply doesn't have the time, here is a brief summary: In my opinion, AI data centers will remain the most important trend for the years leading up to 2030, but growth will slow significantly due to the already massive investment sums. At the same time, hyperscalers are shifting from acquiring to fully utilizing the acquired computing power. Which companies am I reducing in my portfolio and why? Since the AI winners from day one are already highly valued and the new reality is priced into the market, the risk-return profile in this sector is shifting. With a market capitalization of nearly $4 trillion, $NVDA (NVIDIA Corporation) simply won't be able to multiply its value as it did in the last three years. We anticipated this development and have held the company since early 2022, before the AI boom, but we will now reduce our position somewhat due to this changed risk-return assessment. However, Nvidia remains the company that could likely continue to benefit most from the ongoing trend, and accordingly, it will remain an important company in our portfolio. I will also be reducing our $AAPL (Apple) position. The company is in the midst of a transformation from a high-growth tech company to an established hardware manufacturer. While this is certainly normal at a specific size, it no longer reflects the growth I look for in a company. At the same time, I believe the valuation is too high given this transformation. Added to this are operational and legal challenges; Apple is increasingly being forced to open up its App Store ecosystem. This directly threatens the high-margin services division, which has been a guarantor of success. I will be removing $PYPL (PayPal Holdings) entirely from my portfolio for several reasons. In retrospect, I should have made this decision last year, but I still believed in a turnaround. There are several fundamental reasons for this, most notably the loss of its economic moat to competitors like Apple and Google Pay, the introduction of real-time payments in the EU, margin erosion, and the lack of growth in active users. I will also remove Ørsted (poor return and irrelevance to the portfolio) and Adobe (loss of economic moat and pricing power through generative AI). Who am I adding to my portfolio? As mentioned in the first article, I currently see the best risk-return potential in three key areas: innovative thermodynamic solutions for AI cooling, the energy gap and power grids as bottlenecks, and material dependency. Why? While technological leaps in semiconductors and AI applications have been enormous in recent years, outdated infrastructure is currently limiting utilization capacity. For example, modern high-performance air cooling can technically handle power densities up to 30 kW, but beyond that, it reaches its physical limits. Nvidia's new AI clusters, however, require cooling solutions for densities of up to 132 kW. Air cooling is no longer an economical option here. This is where liquid cooling comes into play, which gamers among you may already be familiar with from your own PCs. The expected CAGR for this sector is around 30% annually until 2030. At the same time, many, but not all, companies in this sector are still valued like boring industrial companies. Accordingly, I plan to add three companies from the liquid cooling, energy management, and energy networking sectors to our portfolio. Specifically, I have my eye on: $SU.PA (Schneider Electric SE), which has developed into a leading technology group for energy management in recent years and, with the acquisition of Motivair (liquid cooling systems), has closed the gap with the competition in terms of AI cooling. I'm also considering $VRT (Vertiv Holdings Co), the industry leader in AI reference architecture and cooling of Nvidia systems, as well as its direct competitor $NVT (nVent Electric plc), about which I have already written a separate article: etoro.tw/4pg1Jjf I currently see the best return opportunities in this sector, with valuations that are still moderate in some cases. However, I want to emphasize that none of these companies will initially be included in the portfolio with more than 5%. This is a strategic principle of mine to avoid taking on more risk than necessary and to give the companies time to establish themselves within the portfolio. Should the performance, as currently expected, be better than the portfolio average, the stake could then be further increased in the coming years. If you have any questions or suggestions, please let me know in the comments! Björn