2026 Outlook: The M&A Unwind, PE Exits & Private Credit

Hello and welcome back to the Market Maker podcast in what is actually one of our most highly anticipated episodes that we do. That's always because it's an outlook for the year ahead, a bit of a review of everything that's gone on in summary. But importantly, it's because we pull back the big guns for these big outlook episodes. And pleased to say I'm joined by Stephen Barnett. How are you?

Yeah, I'm very good. Thank you. And look, I don't think you've missed me because I was in preparation for this episode. I did listen to the last episode that you guys did where you talked about all things M&A and Piers. I didn't know he was such an investment banker. He was talking about IPO processes and then he got, I wouldn't say out of his depth, but then he got really into AI chips and things like that and GPUs versus TPUs versus Amazon's whatever, something or other. Yeah, I was very impressed.

And they say you can't teach an old dog new tricks.

Yeah. Well, look, you know, next time I need M&A advice, go to Piers.

Yeah. But look, I'm always excited for this one because it's a, you know, we're recording this on the 10th of December, 2025. So it's a good opportunity to look back in reflection of the year as a whole, to look about what we were thinking of at this time last year and how right or wrong were we in terms of putting our feet to the fire. And then yeah, in this conversation to cover a few different things, the kind of general theme of some of the just huge deals that we've seen certainly come alive. And then we had the momentary pause on the government shutdown, then it's reopened again from private equity to private credit being, it was kind of private equity bubble that shifted to the private credit kind of bubble a little bit. And then yeah, of course have a bit of a look of what's to come for the period ahead, and maybe also picking a little bit of our standout company person of the last year. So yeah, where do you want to begin by unpacking this?

Well, look, I want to begin again. I was driving in my car yesterday. I thought I need to prep for this episode. So I'm going to listen to our three-way predictions episode that we did this time last year, myself, Piers, and Ant. And there were, I think at the end we gave some pretty flash predictions on the S&P 500, Nvidia, and Bitcoin. And it's so like, you know, predictions, they're worth whatever they're worth, you know, the paper that they're written on. And I think through the course of the episode, there were some things that we were, you know, we were going around the edges of that ended up being proved very right. You know, we did a decent bit on AI and where that might lead in terms of its productivity gain and things like that. We also spoke a bit about tariffs, although we didn't know the extent to which they would become the headline that they became. But I'm just going to kind of give a bit of a summary of where we ended up just in terms of those three headlines. So the S&P 500, I don't know if you remember, and you were the raging bull.

Go, you know, just, that's me. I'm Robert De Niro.

You went 7,200. I think the S&P was at about 6,000 this time last year. You went 7,200, Raging Bull. Piers was a bit of a bear. He was a curmudgeon this time last year. I remember he went 6,300 and I, the markets expert, went 6,700. And as of today, 10th of December, we're at 6,840. So You know, if you ever need me for some market stuff.

Yeah. The margin of error there.

Well, it gets a lot worse. So Nvidia, bearing in mind it's currently at $185 a share. Piers, again, bit bearish, $130. I was a little bit more bullish, but not that much more bullish, $150 a share. And you were closest, $200 a share. Your bullishness was proven more right than our slight bearishness. So well done. One all.

And then Bitcoin.

Well, Bitcoin, I think we both put our finger in the air and just said, we don't have a clue. I think we all did actually. Me and you both went for $200K because, and I think my logic back then was, why not? It's a number. Could be $200K, could not be. Piers was a little bit more circumspect. He went 130 and obviously won because Bitcoin's struggled and is at 93K, which is I think slightly down year on year. So 1-1-1 in terms of our predictions over the last year. So there you go. That's nice and fair.

Yeah, it's cool. I was about to say, if it wasn't for my Nvidia call, you wouldn't have got your 6,800, but Yeah.

Wow. Well, let's get on to M&A because this is another area where my prediction was right. So I really wanted to focus on this. One of my predictions last year in this episode that we did last year was that M&A deal value globally would top $4 trillion. Now, $4 trillion, it hasn't topped since 2021, which was a boom year in dealmaking. In 2024, it was about $3.2 trillion, $3.1 trillion of completed deals, which is relatively low from a historic perspective. So dealmaking has been up from an M&A perspective, and year to date, it's up at $4.23 trillion, right? Pretty big number. Not kind of standout blockbuster, let's all go and drink champagne, but certainly You know, up 34% year on year. So not an insignificant year in the M&A markets. And you'll see it from the headlines that you read about dealmakers being more confident and maybe hiring starting to tick up, especially at the more senior level. Big players in this, the winner from an M&A perspective in terms of banks, Goldman Sachs, the winner overall. From a private, from an IBD perspective, JPMorgan. So those are the two names that you would've expected to hear. And I've got a little chart in front of me that says who are the top banks across all different IBD products. And there are only two instances where JPMorgan isn't the top bank. So JPMorgan's the top bank for syndicated lending, for leveraged lending, corporate bond investment grade, corporate bond high yield. Equity capital markets follow-on and rights issues, equity capital markets overall. The only spaces where it was number 2 was in IPO issuances, which was Morgan Stanley with the largest market share, and mergers and acquisitions where Goldman Sachs got the largest market share. So you can see that the big beasts are continuing to rise to the top. And obviously, you know, over $4 trillion, it's been a good year for the guys that work 16, 17 hours a day, right?

Can I just ask a question? There's, on some of these league tables, I know they're composed in different ways, but just asking in terms of different names. So Goldman's, JP Morgan, they're kind of always jostling for positions on the podium, let's say. But some of the others, is there any like standout movers. I see Barclays features on a lot of these, and that's not someone I would normally expect to see. Probably I wouldn't necessarily go, oh, M&A Barclays, but I see them and I also see Centerview Partners. I think on volume and value of deals compared to previous years. Any word on those or any other movers that you think that are honourable mentions?

Honourable mentions. Yeah. So again, there's lots of different ways of cutting this data up. I'm going to start with the MergerMarket M&A top 10, and this is M&A. And the way that they rank their top 10 is in terms of the amount of deal volume that investment bank has worked on. So remember, in an M&A deal, you can have many different financial advisors working on the same deal, and that's why the top 3, Goldman Sachs has worked on $1.6 trillion worth of deal volume. JP Morgan's worked on $1.3 trillion worth of deal volume, and Morgan Stanley's worked on just over a trillion dollars of deal volume. You know, add them all together and you're getting already close to the $4 trillion. But just below that, you've got, as you said, you've got, well, you've got Barclays in 9th place, and Barclays have had a really, really good year. You can see it from their share price. Their strategy is starting to turn around. And they've been on some really, really good deals. Centerview in the top 7, and interestingly enough, they've been on $500 billion worth of deals, but their deal count is only 108, right? Evercore, which is one place above in the rankings, has been on $580 billion worth of deals, but their deal count is 211. So Centerview. You know, they've been on some pretty big deals. They've been going for the larger ticket items, which again, if you're a slightly smaller firm, what do you want to get on? You want to get on the big deals with the big fees. So that's many. Yeah.

Logic being there then that what you have a handful of really superstar MMD type people who have really solid, high quality relationships. Is that what is that? So the organizational structure is done in such a way where If it ain't big, we're not doing it, but they have the keys to unlock these big deal doors.

Totally correct. Yeah. So a lot of these more kind of corporate, so a lot more of these boutique names and, you know, elite boutiques and things like that. Their business model will be much more top-heavy, rainmakers, people that know everyone in that particular sector that they're working on. And they will not have the graduate intakes and the muscle, the kind of brute force of a Goldman Sachs or JP Morgan that can just get involved and basically say yes to everything as long as it makes some economic sense. So that's why you see the likes of Centerview. If they get on 4 or 5 mega deals in a year, they will be shooting up the table. And I mean, again, the Christmas party at Centerview is going to be epic this year. I'm absolutely sure of it.

Would it always be the case of, so those people we've just spoken about at the boutique, the senior people, would they have come through the journey and evolution of that boutique, or would they typically have come from a sell-side institution, built out their repertoire and network, and then taken those over with them?

Almost always the latter. And you see this from a hiring perspective. The, the the typical route for a lifelong M&A banker is to start off at a bulge bracket, build a reputation, maybe move to an elite boutique, but become kind of very well known for the relationships you have and the deals you've done in that sector. And then you get headhunted to one of these boutiques or elite boutiques where the upside is much greater. Because again, when you're working for a Bank of America, you get, you know, your bonus is dependent on your performance, but it's also dependent on the performance of the entire firm. And some of your rainmaking gets distributed to cover some of the cracks in other parts of the business. Whereas if you are just working for a Centerview, you get to eat what you kill a lot more. It's a lot less bureaucracy. So do your training, put in the years in the big firms, and then you'll get poached. And then you might get your house in the Hamptons. You never know.

And so is there any specific big deals that stood out to you this year? I know there's been some really big numbers out there, but any particular transactions?

I mean, the big one for me that happened probably 3 or 4 months ago was the EA Sports or the EA acquisition by the Saudi Public Investment Fund. $55 billion. So it's one of the top 5 biggest deals of the year, but just from a cultural geopolitical, there's a lot of different angles which make this such an interesting deal. Again, it's, so it's the PIF, but it's also Silver Lake and Affinity Partners. So it's effectively a leveraged buyout. I think the notes here say it's the largest sponsor-led LBO on record. $55 billion. That is an absolute beast. And there were a lot of other big deals that we saw again in the technology space, but certainly in the materials and metals and mining space, in the healthcare space as well. And what I wanted to draw together just from looking at these big deals and looking at the total deal volume this year is I mentioned obviously the deal value this year being $4.2 trillion, up 34%. The deal volume, the number of deals that got completed, is actually down 7%. So it's 12,500 deals, lowest since 2021. So what does this tell me about the state of the market? It's that big, big deals are getting done and not, you know, maybe not as many small deals are getting done. This is probably a defensive strategy from large companies. Try again, a little bit of uncertainty with geopolitical risks and tariffs and things like this. But, you know, wanting to benefit from economies of scale, defensibility, and an antitrust environment that is maybe more conducive to big beasts partnering up with other big beasts. So really interesting dynamic. Fewer deals, but the size of the deals is just that much bigger.

Okay. Another thing you said to me pre the conversation was private equity. And as I said, it was kind of a big feature of some discussions you and I were having over a year ago about this kind of layering of the cake analogy. I always remember you were talking about, and we've had lots about continuation funds and so forth. In recent months. But you've kind of entitled it Indigestion when it comes to the private equity kind of community. So what are you referring to with that?

Yeah, so private equity again has had a, you know, has had a solid, if unspectacular year. There has been, in 2024, there were actually slight net outflows in terms of the amount of assets under management and amounts of new LP, limited partner subscriptions. There's been a net inflow of about, let's have a look, quite a significant amount, over $1 trillion of net inflow this year, which is not insignificant. So it's a little bit more confidence creeping back into the world of private equity after a couple of years in the doldrums. But yeah, I call it, I think 2025 is, it's a continuation of the theme. But I call it the private equity indigestion problem. Private equity now owns over 50,000 businesses, right? So absolutely massive industry, massive asset class. Their influence on every single sector at almost every single size from the mom and pop shops all the way through to the likes of EA. Silver Lake Partners getting involved with that, et cetera. You know, this, their fingers are in so many pies, their tentacles are all over the finance space. But as I said, they've got an indigestion problem. They invested this year, in the last 12 months, they've invested in nearly 6,000 new businesses. So bought 6,000 new businesses, but they've only sold 2,500. Right? So this is indigestion. You're eating more than you're getting rid of. And this is the long-lying problem in the private equity industry at the moment. As we discuss, as you mentioned, the continuation funds and continuation vehicles and things like that, private equity works in a low interest rate environment where valuations on entry are similar if not a little bit lower than valuations on exit. Multiples on entry and multiples on exit. And that is just not happening. I spoke this time last year about the valuation gap. You might have a lot of buyers and you might have a lot of sellers in the private equity market. A lot of buyers of companies, a lot of sellers of companies. But if the sellers want too much for their assets as a multiple of profits, then you're just not going to be able to sell the company, right? And this is the indigestion. There's just not enough activity still going on from an exit perspective to really give me confidence that private equity as a business model with the size of the industry, the size of the assets under management is a long-term robust exciting place to play.

Is the antidote then lower rates? And we are expecting lower rates. So this is where it gets geographically quite interesting because we've kind of had Europe, you know, really quite dramatically reducing rates, but they're almost in like a holding pattern now. So the, the, depending on where you sit geographically, it's a little bit of difference where you are in the rate cycle. And actually we might see now the US cutting and Europe holding steady. So is that to unlock some bowel movement in the PE world? Is lower rates going to help or is it that, you know, I guess the general market consensus is we might only see another 2 rate cuts in 2026 after they deliver the December cut. So there's not many. Is that not enough? To really get you more confident then?

Yeah, I don't think it is enough and I don't know enough about the dynamics of where the breakeven point is on interest rates for some of these deals that are out of the money at the moment. But if it's one or two over the next 12 months, probably that doesn't move the needle from a valuation perspective. Obviously there's some potential green shoots in terms of the IPO market as a as an exit route for some of these companies. But let's just reiterate, private equity now owns over 50,000 businesses. So the volume of IPOs this year in the US has not been particularly, has not been anywhere near that number. So, you know, IPO might, an open IPO market might be a slight boost for private equity, but then again, the valuation has to be right. Again, when private equity is so all-pervasive relative to non-private equity-owned corporations, you know, what are the exit opportunities for private equity-backed companies? IPO, again, pretty weak market. An exit to a corporation, but more and more corporations are owned by private equity anyway. So the kind of exit environment to a strategic is maybe less conducive than it was. And then the third one is exit to another private equity sponsor. And then you start getting this kind of circularity, which gets everyone in the industry a little bit worried. You pass the parcel until the music stops and you know someone's going to take a hit. Obviously the other big trend in private equity this year, and we don't have time to go through everyone, but another big trend is the movement, the opening up of private equity to retail investors. Especially in the US, if you've got a little bit of money, you can now access some of these private equity funds, which, you know, it would've been fantastic to be able to do from the year 2000 to the year 2020, the private equity boom years. But is this a case of passing the parcel to the retail investor when things are looking structurally a lot less sound? So maybe we'll see that bear out a little bit more in 2026. I would expect that to be a theme over the next few years.

Okay. And the other thing I wanted to ask you while I have you is that in 2025, one thing that we have had is some notable high-profile defaults, namely First Brands, Tricolor, significant losses for lenders. All big names getting hit almost again, getting hit. It's kind of reminiscent of the saga we had with the, what was it called? The trading one that kind of just sunk Credit Suisse before. But is this a private credit, is this a structural shift, not a bubble, or is this, you know, is it a natural response to regulatory changes and real capital needs of private enterprises, or is this actually something that is more worrying than that? And is this, I think the word, wasn't it, that Jamie Dimon said was the something with the cockroaches. Yeah. If you see one, then there's probably more to come. I mean, yeah.

So this, so private credit, there's so much to unpack here just in terms of, I mean, I've called it Private Credit: The New Big Short, just because some of the terminology is very reminiscent of the terminology that we will remember from 2007 and 2008. As a headline, private credit is effectively shifting risk from banks that can no longer take the risk of lending to riskier credits on a highly leveraged basis and shifting that into institution funds and funds that are less heavily regulated, less systemically important. And that can be a little bit more nimble and a little bit more risk tolerant with regards to the way that they lend and who they lend to. And that's fine. You know, on the surface of it, that kind of makes sense, right? But there's a few little sticking points that would definitely be a cause for concern. Firstly, you know, the private credit industry, I think, is about, I think there's $3 trillion worth of loans issued by this very, very fast-growing private credit industry. And it's not as if these are totally separate to the mainstream banks that we believe are too big to fail and very systemically important, right? A lot within a private credit fund, you might get a bank lending to the limited partner that ends up investing in that private credit fund. You might get the bank lending actually at the general partner fund level, and you might get the bank coming in alongside the private credit fund within the individual investments, the individual lending to the portfolio companies. So the banks are not totally extracted or immune to the contagion of private credit. Now, the things that worry me in that context is that there's a lot of rubbish out there from a credit quality perspective in terms of the companies that are being lent to. I think let's just take a look at some of the information that I've got in front of me. So Goldman Sachs Asset Management estimates that about 15% of private credit borrowers, companies, are already not generating enough EBITDA to cover their interest payments. So that's 15% potential haircut, you know, 15% potential default, right? And Goldman's stress test shows that a 1.25 percentage point rate cut would only lift borrowers with a current coverage. So a coverage rate, profit divided by interest payments. It would only lift a few borrowers up above that one-time golden threshold. So basically a lot of these companies that have borrowed are underwater with their debt, right? Obviously this debt can get restructured. There can be interest rate payment holidays and all this kind of stuff, but this is really, really scary. A lot of these companies that have taken out this private credit debt probably won't be able to pay the money back.

Wouldn't a sell-side firm be incentivized to talk negatively about private credit?

Yeah, and maybe that's why Diamond's come out and said, look, more cockroaches are coming. This is a bit of a shambolic industry. And you know, there are other things, there are other elements of private credit that start to cause concern. Obviously the story around First Brands and Tricolor were the off-balance sheet financing. Off-balance sheet financing. Meaning that a private credit investor lender lends based on assets, a company's receivables book, for example, doesn't lend to the company as a whole. And that is called off-balance sheet financing. Something that we saw quite a lot in the 2007-2008 crisis, basically kind of shadow debt that can really topple a company when it all gets revealed. So that's something that, again, if I was the sell side, I'll be like, look at these guys, these guys are charlatans. And then the other thing that really reminds me of 2007, 2008 is there has been a kind of rebirth of what was then called rating shopping. So historically, if you wanted to issue a debt security, like a mortgage-backed security, you had to get it rated. In order for it to be able to trade on secondary markets. And back in 2007, 2008, it was S&P versus Moody's versus Fitch, and there was a lot of collusion, quote unquote alleged collusion and rating shopping. I'm going to go to one place to get the best rating and I will pay you for that rating, right? Pretty bad stuff. Fast forward to today and the S&P and Moody's and Fitch have slightly kind of taken a step back from private credit, private issuer ratings and private credit instrument ratings. And they've been replaced with the likes of Egan-Jones, Morningstar DBRS, Kroll Bond Ratings, HR Ratings. And when there is a competitive market for ratings, relatively opaque ratings, we go rating shopping, right? And you go and find the ratings agency that is going to be more conducive to giving that particular instrument, that particular credit, that particular loan, a better credit rating, which on the surface makes things look less risky, but they're just protecting or they're just kind of denying, evading the actual underlying risk of that particular credit. So there's just a few things here that make me feel a little bit uncomfortable. And private debt, you know, it's not like a hobbyist industry at the moment. It's quite big. So I mean, you know, that's something to keep an eye on.

Yeah, I was going to ask like, what's the magnitude of this problem? Because if people like JP Morgan, they like these big financial beasts, let's say, the traditional banks, if their exposure, they're not immune, but it's not massive, well then is it going to be that systemic to the system? Like The Big Short, for example, with the housing market. Or is it because like, how much of the known knowns do we know with the size of this? Because that was one of the things having lived a career through the subprime crisis was that I remember in 2007, 2008, you know, when everyone was making money hand over fist in the mortgage market, that Actually, from an analysis perspective, there was zero information publicly about size of the market, the types of products that were being issued. Like transparency was zero. Isn't it a bit different this time though? It's not quite to that degree.

Yeah, I think we know a little bit more. I think that in terms of the size and again, it's hard to draw parallels. It certainly doesn't seem as systemic and as widespread as as what was happening in 2007, 2008. But there are 3 knock-on effects. Let's say, you know, I don't know, there is a recession, or let's say interest rates go up instead of down, or let's say something happens, which means that a lot of these companies end up underwater and a lot of these instruments ended up being called and a lot of companies go bankrupt. You got 3 consequences, right? Firstly, it's on the banks, the mainstream banks that have lent into these environments, as I discussed previously. Probably not as big, certainly not as big as 2007, 2008. Problematic, lots of write-downs, but maybe slightly insulated relative to what it was. The second is on the limited partners that have invested in these private credit funds. So they might end up getting burnt pretty heavily. And again, retail's starting to come into the mix here as well. And then thirdly, and probably more importantly from the person on the street, is that a lot of companies are going to go bust, right? And a lot of jobs are going to get lost if these private credit firms are offering slightly greedy, maybe slightly naive CEOs the luxury of lots of different debt instruments, you know, off balance sheet, on balance sheet at different levels with different payment-in-kind structures and things like that. They'll get quite excited. And then when the moon music stops, bankruptcy and thousands of jobs go from a lot of these companies. So I think that's probably the thing, you know, from a person-on-the-street perspective, that's the thing that I'd be most worried about. The other two, not so worried. All right.

Crystal ball time. So we talked about everything that's happened. What's your vision of the 12 months ahead?

Yeah, I mean, having listened to the podcast this time last year, we know nothing, right? And we've got Trump, which is such an interesting curveball, and we just don't know what's going to happen. I think from an IBD perspective, I would expect it to be a relatively similar year next year to this year. I think a lot of the sell-side firms are talking a good game and saying it's going to be a real bumper year. But I think there are headwinds and tailwinds, right? And they might end up, and I don't know which are going to take precedence. So the tailwinds potentially, you know, interest rate cuts, which is always well liked. Lots of private equity companies up for sale that probably need to get sold. Pretty typical story. IPO market looks like it could be slightly more conducive. Antitrust, maybe less than it was under Biden. So these are the tailwinds that make me think, hmm, could be a decent year. But then you've got the headwinds and we just don't know where these headwinds are going to go. I have a view that inflation might rear its, or kind of increased inflation might rear its ugly head again as a kind of 12-month knock-on from the tariffs. I don't think that we've seen maybe that work through all the way into the inflation data. Not yet, but maybe it never will. Who knows? Trump will obviously keep trying to prime the demand side pump, which is going to keep inflation buoyant, especially if interest rates go down. And then obviously you've got the geopolitical threat, you've got trade wars, you've got tariffs, you've got all of this stuff. That put a nice big check on the buoyancy of the M&A and the IBD markets. So yeah, I mean, we don't know anything, but I think it's probably safe to say that the headwinds don't massively outweigh the tailwinds and vice versa. So let's predict something similar to this year.

Yeah.

Yeah.

Hard to disagree with that. I think at the moment as it stands, the rate of decline of rates is not so meaningful, I would say, as to perhaps what we were thinking at one point in the year. So what, in terms of the midterms, there's obviously a long time to run until the end of the year. I think I'm right in the normal time of year that that happens. So does that mean that whilst Trump does have some more meaningful political influence in terms of the composition of Congress, does that give a green light for just continuation of mega mergers? And that will pretty much, you got, you want to get those big deals in, like you were saying before we talked a previous episode about the Netflix Paramount sort of story. Is it still, if you, if there's mega deals in the pipeline to get off the book, it's kind of now, next 10 months.

Yeah. And I think that you would be doing a pretty good job as an MD rainmaker at one of these banks by putting that pitch across, right? Maybe you've had 5 meetings with a large cap where you've been umming and ahhing and thinking about timing of a couple of deals. This might put a little bit of time pressure on, again, everything can and probably will change over the next 10 months, but I think it's probably a reasonable thing to warrant a conversation at the beginning of 2026 with some of these large caps that are thinking about maybe doing something.

Alright, to finish, your company of the year and your person of the year.

Well, yes, I want to get this from you as well. So let's, and I want to get a prediction from you, just one prediction. So my company of the year, 2025, you can't look too far away from Google. So Google has had an absolutely killer year. I love this company partly because I've been invested in it for a very long time and it makes me very happy. But because I mean, again, its share price up 75%, it is continuing to outperform across so many different domains. Whether it's YouTube, Search, Gemini, it's got the hardware, the software, the cloud, it's got everything. I would fully expect it, it's the third largest company in the world at the moment by market capitalization. I would firmly expect it to be the largest by this time next year. And I saw the most wonderful graphic the other day, which I'm sure you've seen, which is this kind of extremely complex circular investment and revenue relationship between all of these different Nvidias and OpenAIs and Oracles and things like that. And then on the right-hand side, you've just got one big circle with Google and you're like, keep it simple. Just invest in Google. Like why would you try and figure out whether CoreWeave's a buy or not when you've just got Google on the right-hand side? So that's my company of the year. What about yourself?

Do you know what? I, when you said company of the year, even before you saying Google, I too have always been a Google fanboy. I mean, if you go back to the episodes we had, I think maybe 2 or 3 years ago, I don't know if it was all 3 of us on the show or it was just me and Piers, but we were like picking out of the big tech. So Amazon, Microsoft, Alphabet, who would you pick? And I think Piers might have gone Microsoft and then I went Alphabet at the time. And the reason why I love it is that I think the story that that company's been on has been phenomenal this year. Because I remember when it was early in the year, and we had that kind of like panic moment where it was like ChatGPT was just, I mean, ChatGPT is another breakout story of 2025, but they had such a great start to the year. There was perplexity and it was all that talk about that eroding ad fees and Google were really getting hammered at the time. And it was two sides. There was this whole, the future of their search business, which is their You know, that's their absolute rock within their playbook, at least right now, and always has been. And then there was the whole DOJ situation about the forced breakups that was about selling Chrome and Android. So they were getting hit on those two plus brain drain. If you remember how excited everyone was about AI at the beginning of the year, it was like, why would you want to work at Alphabet? Was kind of the feeling or the vibes you were getting. And like, as a long-term fanboy of Alphabet, I'm like, look, you're, you're, I think you're a bit naive to see the magic, you know, this shiny pebble on the beach and go running for it. It's like, look, you're on dry land here with Google and massive firepower. So you had that really quite fearful first part of the year. Then the turnaround came. And this is the thing that why, you know, when we talk about predictions for next, for, you know, I still am. I do not buy this kind of like anti-big tech and bubble sort of scenario. It's like big tech is so dominant and it was literally in my kind of expectation is always the same. It's like, it's the Death Star, it's these Empire Strikes Back and lo and behold, the second phase of the year, I think Google, it was Q3, they had their first ever $100 billion quarter. Up 16%. And this is something that me and Piers always talk about, is the revenue increases that big tech see. It's just, I know obviously the ability to continue at that rapid pace, but we seem to always be saying this and they always are delivering at these like startup level of growth that we see. Then you had the cloud acceleration. So that middle part of the year, the AWS, Azure stabilized, Google Cloud revenue was up 34% year on year. And that too falls into the latter part when personally, I think Google went full beast mode, which was Gemini drop, code red alert, OpenAI scenario. You've had this kind of agentic shift, which is like, right, let's, like you rightly said, let's just have this entire suite of what is Alphabet's offering. Which is this whole contained enterprise where I just think that it's such a no-brainer. So yeah, I just think they've had such a great story of a year where I think people were very much big doubters of Alphabet at the beginning of the year, and here we are. So even for big tech, when you think that you might have it all figured out with these companies, they continue to surprise.

And it's a great lesson in not just in kind of biding your time from a strategic perspective, from an investment perspective, not just going for the first mover, OpenAI, ChatGPT, but just like waiting until everything settles down a little bit, just waiting until everything plays out. Google might not be the first to the scene to create that initial momentum, but you never count them out, right? And as this thing washes through the cycle, It feels like Google have, as you said, gone beast mode and have just almost kind of stood down their competitors and gone, all right, here we go. You know, the big boys are in town now. So yeah, company of the year. What about person of the year?

Yeah, person of the year. I got to go Jensen Huang. And the reason why is I was thinking, I think I was listening to a Novak Djokovic podcast recently. He seems to be doing a lot. It feels like the end of his career because he started to appear on lots of podcasts talking about his life's journey. But it got me thinking about how someone like Djokovic, but more so Federer back in the day, how it's always the toughest when you're at the top. And I think he just continues to just be this such like godfather status where, you know, he is literally, you know, carrying the stock market higher. But also you look at some of these recent meetings he's had in the last few months of the year. He has sat around the table with the Prime Minister of India, with the US President. He is a key component of brokering this trade deal with China. He sat there with Macron, like he's basically a head of state at this point. He is up there as one of the increasingly most influential people of the world. I mean, he is selling, he is selling literally the oil of the 21st century. I mean, it's so And he's become a bit of a cultural icon, leather jacket. He brings up the chip as a shield when he comes on. I gotta love this guy's energy. I mean, but my point being is that I think it's always hardest when you're on top, but I think he's just done such a phenomenal job at handling that expectation. And every earning season comes around and every time we question, is it going to, is this the moment? And he just has continued to deliver. So I don't know what 2026 holds for him and Nvidia, but for 2025, I don't think you can go further than Jensen Huang.

Yeah. Yeah. Get, well, Christmas present for Ant, a leather jacket and a shield.

Well, if you want to buy me a Blackwell shield, I'll gladly take one off your hands.

Yeah, yeah, absolutely. Go into the office with it every day. All right, so wrapping this up, my person of the year, very, very different from yours, but I thought I'd put this in as a bit of a curveball. I'm going to go Michael Burry. He of the big shorts. I thought you were going to say cheer up for Christmas.

Come on.

I mean, you know, so, you know, done some interesting moves in terms of shorting Palantir and Nvidia, but the reason why I'm putting him as my person of the year is he wound up his fund, right? And then decided to do a, to do a Substack and his Substack within 3 days, there were 21,000 paid subscribers paying $379 a year. So just like that, he has built an $8 million business. Just off that. How insane is that? And anyone, you know, well, actually it makes me think that you should probably get a Substack and, you know, I'm not sure we're at Michael Burry levels, but you know, anyone that can command 21,000 pages of—

I just need to do 80 grand and I'll be happy.

Well, exactly, exactly. 8 million annualized from a guy that basically got famous from a film and a book and sometimes comes up with some interesting suggestions. So again, as the way the media landscape's working and the fact that, you know, you don't need to run a fund to make money. If you've got a name, if you've got content that people are willing to buy, $8 million within 3 days off the bat. Not bad, eh?

Prediction then, I would say, I'll give you one. Michael Burry reopens a fund in 2026. Yes. How about that?

Yeah, I think you're probably right. I think you're probably right. My prediction, something's going to happen at OpenAI. Like either it will get acquired fully by Microsoft or Nvidia or Sam Altman will get fired. Something's going to happen there. Like the volatility, like Sam Altman is a man that looks like he's on the verge of, you know, serious burnout. So, you know, something's going to happen. Code black, as I think you guys mentioned in the last episode.

And you know who's going to come in and hoover that up? When trouble comes?

The Musk man.

Elon. Elon.

Correct. Always waiting. Again, it's never the first mover. It's always the guy that's waiting in the wings that you've got to be worried about. Great stuff.

Well, look, hopefully everyone enjoyed that. This is obviously going out ahead of Christmas. So I guess a couple of thank yous. Thank you to Steven. What an amazing year. You've, you know, brought your first child into the world and What a wonderful time for you and your partner. So congratulations to Steven and thank you for coming back on the show. But to the community, I mean, we've had some statistics come out from the Spotify Wrapped and it's been pretty insane in terms of the continued growth of the show. So thank you so much for everyone who continues to tune in. Lots of the private messages that we get always in terms of the thank yous for, you know, interview prep and just, you know, making finance a little bit more interesting and less dull than perhaps targeted to, you know, just generally finance professionals. Because, you know, part of the mission that Steven and I have always carried is to make these sorts of subjects as accessible to everyone as possible. So thank you so much. Have a wonderful time with your friends and families over the Christmas period and the new year ahead. But to finish, Steven, maybe—

Oh no, I was just going to say one more shout out to the new researcher, Saad. I got his materials today. Phwoar! That's some impressive stuff. Well done and thank you.

All right. Take care, everyone, and all the best.