This portfolio update follows the completion of Q4 earnings results (for companies reporting their 31Dec or 31Jan quarters). NVDA was the last of my portfolio companies to release their Q4 results (25Feb). I intend to continue posting detailed portfolio updates on a quarterly basis, typically after the end of an earnings reporting cycle. For more frequent updates on the portfolio composition, I post regularly on X (formerly Twitter). The posts there can be seen by following @gauchorico. I have also been posting weekly changes to the portfolio’s allocations (which I no longer include in these quarterly updates) on X.
PRIOR PORTFOLIO UPDATES
PORTFOLIO PERFORMANCE
The GauchoRico Growth Stock Portfolio closed February 2026 at -19.1%, compared to +0.7% for the S&P 500 total return index. The start of 2026 has been moderately volatile with the portfolio reaching a YTD high of +7.8% on 13Jan and a YTD low of -25.1% on 5Feb. In particular, SaaS and AI stocks have seen large declines due to AI disruption fears on one hand and AI CapEx slowdown and AI crashing the economy fears on the other. In my opinion, these fears are overblown. Furthermore, I think that the risks are much more nuanced, which can lead to opportunities for discerning stock pickers to profit from the selloff by buying companies that will be unaffected or even beneficiaries of the very risks that are feared. I’ve taken advantage of the selloff in specific stocks to increase the portfolio’s leverage. The portfolio currently carries a margin balance with cash at -5.8% of the portfolio’s value. In addition, I’ve increased portfolio’s use of long-dated call options; these call options currently comprise 21.3% of the total portfolio’s value, which is the highest leverage in several years. More than half of the portfolio’s seven positions currently carry long-dated call options. This leverage amplifies both gains and losses, so currently the portfolio’s losses have been amplified.
| DATE | GauchoRico Portfolio (YTD) | S&P500 Total Return (YTD) |
|---|---|---|
| Jan26 | -9.2% | 1.5% |
| Feb26 | -19.1% | 0.7% |
Since 1/1/17 (9 years and 2 months), the cumulative return for the portfolio is +1099.5% with a CAGR of 31.2%. By comparison, the cumulative return of the S&P500 (total return including dividends) is 258.1% with a CAGR of 14.9%.
| Year | GauchoRico Return | GauchoRico Cumulative Return | S&P 500 (TR) Return | S&P 500 (TR) Cumulative Return |
|---|---|---|---|---|
| 2017 | +61.6% | +61.6% | +22.8% | +22.8% |
| 2018 | +55.9% | +152.0% | -5.2% | +16.5% |
| 2019 | +41.8% | +257.3% | +31.5% | +53.2% |
| 2020 | +245.6% | +1134.7% | +18.4% | +81.4% |
| 2021 | +27.7% | +1477.3% | +28.7% | +133.4% |
| 2022 | -71.4% | +350.5% | -18.1% | +91.1% |
| 2023 | +33.9% | +503.0% | +26.3% | +141.4% |
| 2024 | +82.7% | +1001.5% | +25.0% | +201.8% |
| 2025 | +37.7% | +1383.3% | +17.9% | +255.7% |
| 2026* | -19.1% | +1099.5% | +0.7% | +258.1% |
| * through 2/28/2026 |
OVERALL ASSET ALLOCATIONS
With the GauchoRico Growth Stock Portfolio’s YTD selloff, its share of total assets has dropped from 49.2% at the end of 2025 to 43.1% now.
Overall asset allocations are as follows:
Growth Stock Portfolio: 43.1%
Fixed-Income Portfolio: 30.7%
Crypto Portfolio: 2.1%
Other Assets: 24.1%
The following posts explain my reasons for no longer having virtually all of my assets in the Growth Stock Portfolio:
July 2022: When Should the Game Change?
July 2024: How I Changed My Money Game
May 2025: Safe Bucket and Investing for Fixed-Income: What Are the Risks?
ALLOCATIONS
| 2/28 | 1/31 | 12/31/25 | |
|---|---|---|---|
| NVDA | 23.3%* | 23.8%* | 20.2%* |
| APP | 20.6%* | 17.4%* | 24.8%* |
| AXON | 18.4%* | 12.3% | 13.1% |
| MELI | 15.3%* | 16.4% | 13.9%* |
| IREN | 10.2% | 12.7% | 8.3% |
| RDDT | 9.5% | 11.4% | 14.2% |
| ALAB | 8.6% | 9.5% | 8.3% |
| Cash | -5.8% | -3.2% | -2.7% |
The allocation details described below are as of February 28, 2026. Four of the seven positions (shown with an asterisk) in the portfolio are leveraged with long-term call options. APP: Of the 20.6% position, 10.7% is in shares and 9.9% is in Jun2027 $600, Jan2028 $390, Jan2028 $460, and Jan2028 $510 call options. AXON: Of the 18.4% position, 14.2% is in shares and 4.2% is in Jan2028 $440 call options. MELI: Of the 15.3% position, 14.3% is in shares and 1.0% is in Jan2028 $1720 call options. NVDA: Of the 23.3% position, 17.1% is in shares and 6.2% is in Dec 2027 $170, Dec 2027 $185, and Jan2028 $190 call options. The portfolio composition includes 84.7% shares, -5.8% cash, 21.3% long-dated call options, and -0.25% short-term short put options.
PORTFOLIO CHANGES
While I no longer report detailed changes in my portfolio updates, I continue to post weekly portfolio allocation changes including buys, sells, and conversions between shares and LEAPS on my X account: see @gauchorico.
EARNINGS RESULTS
Since the last portfolio update, all portfolio companies reported their latest quarterly results. I’ll review them in the order they reported.
IREN (reported results on 5Feb)
IREN reported Q2 FY2026 results on 5Feb. While IREN is transitioning from a Bitcoin miner to operating as a neocloud, the Company still has Bitcoin mining operations. The financial results for the quarter reflect the significant decline in Bitcoin’s price. This is one reason for the stock price decline after earnings. IREN has a substantial amount of contracted power: 2.9GW prior to their earnings announcement and 4.5GW afterward, as IREN announced an additional 1.6GW of contracted power in Oklahoma. However, the earnings announcement was not accompanied by another large contract (like November’s announced MSFT deal) as some investors were expecting. The lack of an announced deal doesn’t concern me because IREN has what the hyperscalers and other datacenter operators desperately want and need: large-scale contracted power. In my view, it’s just a matter of time until we see one or more major agreements. IREN remains in an enviable position with 4.5GW of contracted power.
RDDT (reported results on 5Feb)
RDDT reported another very solid Q4 2025 on 5Feb. Revenue growth was 69.7% y/y and 9.1% above the top end of guidance. Other revenue, which is essentially licensing revenue, was up 8% y/y, so advertising revenue was up 75%. Daily average users and weekly average users were up 19.4% and 24.3% y/y, respectively. ARPU was up 42% y/y, with U.S. ARPU showing incredible y/y growth of 53.3%! Guidance for Q1 was for 54% growth at the top end, but guidance for Q3 and Q4 were 56.5% and 55.5% and the Company delivered 67.9% and 69.7%, respectively. If RDDT beats by a similar percentage in Q1, we’re looking at another strong high-70%s result, so essentially no growth deceleration. This sounds all good to me.
I reduced my RDDT position going into the Q4 earnings results, but I’ve already started adding back. My concern was that growth could begin to slow, but with the strong Q4 result and guidance suggesting no near-term slowdown, I’m more comfortable with a slightly larger allocation.
ALAB (reported results on 10Feb)
ALAB reported Q4 results on 10Feb and beat its 79.3% revenue growth guidance by delivering 91.8% y/y revenue growth. Revenue growth guidance for Q1 is 86.3%, higher growth than the Company issued for Q4. Therefore, it’s likely we will see revenue growth acceleration in Q1.
ALAB’s operating margin and FCF declined by 1.7% and 4.8%, respectively. It was notable that R&D expenses increased considerably in Q4 (and in Q3). CapEx spending on AI is creating significant opportunities for AI infrastructure companies like ALAB, so the Company needs to continue leaning into these opportunities by developing new products. Given my continued bullish view on AI’s continued strong growth and once-in-a-lifetime transformation, I’m happy to own fast-growing companies that stand to benefit from this mega-trend.
APP (reported results on 11Feb)
APP reported Q4 results on 11Feb. The financials continue to be outstanding. Revenue grew 65.9% y/y, adjusted EBITDA grew 82% and represented 84% of revenue, net income from continuing operations was 66% of revenue and grew 85%, and FCF margin was 79.0% and grew 88.3%. It’s very rare for any company to deliver numbers like these. In addition, APP is repurchasing shares, so there is no net dilution, and still has more than $3B remaining in its share repurchase program.
The question remains whether APP will be able to launch the general availability (GA) Axon product (not to be confused with AXON the other company in my portfolio) as my expectation is that this product will greatly drive adoption and growth. Management previously estimated GA for Axon in the first half of 2026, and they, once again reiterated this as on track for H1 2026 launch. Currently and for Q4, financial contribution from eCommernce and web-based customers was negotiable, and the Company doesn’t expect material contribution in 2026. On the earnings calls the analysts were rightfully focused on Axon’s upcoming GA launch and for clues as to its success to date. The response from management was consistently that the model doesn’t have enough data to become good yet and that this will take time. Management also wants to ensure that Axon is completely self-serve and will not suck resources to manage their customers’ implementation. I’m very optimistic about APP’s success in delivering Axon in 2026 and that the product will open up an enormous TAM for APP. However, even if Axon is late (after H1 2026), APP is growing the top line 70% while generating more than $3.5B/yr (and growing) in FCF.
While my optimism about APP’s and Axon’s future is steadfast, other investors have been selling the stock on fears of disruption and competition. The stock is down sharply in 2026 YTD. I didn’t want to commit many more investing dollars to APP so I’ve resorted to leveraging my position by selling shares and buying long-dated call options. While this adds risk, my expectation is that APP’s and Axon’s success will become obvious well before my call options expire in Jun2027 and Jan2028.
AXON (reported results on 24Feb)
AXON reported a stellar Q4 result on 24Feb, and, rightfully so, the stock price shot up 16% in after-hours trading. Even after the rise, the shares were still 42% below the 52-week high. AXON has been a consistent compounder for several years, maintaining a >30% revenue growth rate for multiple years. Fourth-quarter revenue growth accelerated to 38.5% y/y, exceeding management’s expectations. Called-out drivers for growth in the quarter were premium software adoption, Taser 10, Axon Body 4, and counter-drone equipment. International revenue, a current and expected future growth driver, grew 54.4% compared to 35.2% growth for U.S. revenue. Future contracted bookings showed exceptional strength, increasing by $3B during Q4! With future growth drivers and indicators firmly intact, AXON’s growth going forward should remain strong and could even accelerate further. Management provides only annual guidance, and, for 2026, the top end of revenue growth guidance is for 30%; last year, management initially guided for 27.1% growth and delivered 33.4%. Non-GAAP operating expenses grew by 31.4%, lower than the 38.5% top-line growth; slower expenses growth than revenue growth is always welcome. Non-GAAP operating margin was 19.9% and FCF margin was 19.7%. Overall, the quarter was exceptional and the future remains bright.
Perhaps, AXON has been classified as a SaaS company, and its shares may have sold off in part for that reason. Fears of SaaS business disruption by AI have been publicized and widely circulated. Is AXON a SaaS company? Yes, 43% of AXON’s revenue is derived from software and services, but AXON will be more of an AI beneficiary than a company subject to disruption. AXON is the market leader in its target markets, and that’s not going to change. AXON’s relationships with its customers are not easily replicated or displaced, even with years of trying. If anything, AXON’s costs will come down due to AI. Furthermore, AXON will be able to shorten product development cycles and introduce many new offerings directly from new AI capabilities. I don’t see any disruption risk at all, and AXON’s future growth drivers — international growth, new AI product offerings, enterprise adoption — all remain fully intact. I remain pleased to maintain AXON as a high-allocation position in the portfolio.
MELI (reported results on 24Feb)
MELI reported Q4 2025 results on 24Feb. Revenue growth accelerated meaningfully for the second quarter in a row, up 45% y/y compared with 39% in Q3 and 24% in Q2. Most other KPIs also showed very solid metrics. For the second quarter in a row, however, the Company’s net margin was weaker than in prior recent quarters: 6.4% in Q4 and 5.7% in Q3. In the four quarters preceding that stretch, net income margin ranged between 7.5% and 10.5%. MELI continues to invest in its business, with management stating that they are choosing to “invest upfront in business areas with the greatest long-term growth opportunities”.
As I’ve stated previously, as long as MELI continues to deliver strong growth and maintains clear dominance in Latin America’s eCommerce and FinTech markets, I intend to remain invested and avoid over analyzing the quarterly results. Immediately after earnings, MELI’s stock price traded about where it was after the April 2025 Liberation Day stock market selloff and about 30% below its 52-week high. I took the opportunity to sell my high cost-basis shares to buy Jan2028 $1720 call options.
NVDA (reported results on 25Feb)
NVDA reported Q4 FY2026 results on 25Feb. A few things remained the same. First, market fears surrounding AI’s future slowdown persist. Second, NVDA’s revenue growth accelerated, and guidance for Q1 2027 suggests further acceleration (77% at the guidance mid-point and 81% at the guidance top-end). NVDA delivered another exceptional quarter, with revenue growth of 73% y/y and 19.5% sequentially. Data center revenue grew even faster: 75% y/y and 21.7% sequentially. With Blackwell now in full production, gross margin has returned to approximately 75% and is projected to remain at that level. Free cash flow margin for the quarter was 51.2%. These results were achieved with zero revenue from H200 GPU sales into China; NVDA doesn’t know if or when H200 sales into China will be permitted, and therefore its guidance includes zero data center revenue for China.
All NVDA’s needle-moving growth is coming from the data center segment, and it is expected to remain so for the foreseeable future. NVDA has clear visibility into supply and demand into calendar 2027, and the Company expects sequential total revenue growth at least through the remainder of fiscal 2027 (the next four quarters). Vera Rubin samples have shipped, and full production is anticipated for the back half of calendar 2026. If we model $80B in total revenue for Q1 and then 15% sequential revenue growth for Q2-Q4 FY2027, NVDA would grow revenue by 85% in FY2027! Even 10% sequential growth after Q1 would yield 72% revenue growth for FY2027.
It sure seems like a minimum of 70% total revenue growth is in the bag for the coming year. What happens after that? I think that’s been the question for the past several years. What happens 2+ years out? Almost all (or maybe all) past booms have had busts. The penalty for being aggressive and wrong is high for Wall Street analysts. Like analysts, most investors fear pain more than they rejoice great gains. I think that looking to the past and succumbing to human psychology, prevent large swaths of investors from investing aggressively in NVDA today; for them, missing a fat pitch causes no harm to the portfolio. On one hand, sticking to “this time is different” for NVDA can yield wonderful returns if the future plays out as I expect; on the other hand, over-allocating and over-leveraging could result in portfolio pain.
NVDA’s sales growth will eventually slow. It’s not going to happen next quarter, and NVDA has information about its supply chain and their customers’ demand that suggests it’s not going to slow this year. That’s the bet on being an NVDA investor: higher growth for longer than the market expects. This bet has worked out for almost three years. How much longer until the growth slows and how steep will that decline be?
Jensen makes the case based on first principles. Compute equals tokens (intelligence), and tokens equal revenue for data centers. Data center operators, therefore, must care about two things: 1) the number of tokens produced, and 2) the cost to produce a token. Of course, this also assumes that the revenue received per token is greater than the all-in cost to produce one. Colette Kress (CFO) on the earnings call: “Every data center is power constrained.” Thus, it must follow that in order to maximize revenue, data centers must install the most power-efficient (tokens per watt) GPUs, which are always going to be NVDA’s latest and greatest GPUs. Of course, not all data centers are configured to run the latest Grace Blackwell (and Vera Rubin, once they’re available) systems, so there’s residual demand for Hopper and even Ampere GPUs. The expectation is that virtually all new data centers that have access to NVDA’s best GPUs will configure their data centers around them. The logic is sound: so long as there is unsatiated demand for intelligence (tokens), there will be plenty of demand for more compute (GPUs). Jensen recently stated that he thinks it will take another 7-8 years for the world’s demand for compute to reach some sort of equilibrium.
Seven years is 28 more quarters away, so Jensen is saying he thinks NVDA sales growth will continue for that period. NVDA grew total sales by 126% in 2023, 114% in 2024, and 65% in 2025. If year 1 growth of the next seven is between 70% and 85%, how will growth look in years 2-7?
Clearly, no one can know the answer. However, NVDA’s valuation suggests that the market isn’t expecting growth to persist for the next seven years. NVDA’s trailing 12-month P/E is 37, and if earnings grow 70% this year, the forward P/E is below 22. If earnings grow 85%, the forward P/E is only 20. This seems like a no-brainer investment assuming, of course, there’s no geopolitical catastrophe harming NVDA’s supply chain (e.g. Taiwan).
FINAL THOUGHTS
Currently, there is much fear, uncertainty, and doubt surrounding AI, so-called “excessive CapEx” spending, disruption, and competition. Most of the positions in the GauchoRico portfolio have been swept up in this FUD, yet nearly all available information and evidence point to substantial opportunities for companies like NVDA, ALAB, RDDT, APP, IREN, and AXON. I see far more opportunity than reasons for concern. To me, it seems so clear that AI is a once-in-a-lifetime technology that will drive extraordinary technological advances, massive productivity improvements, and vast economic benefits to specific companies. I believe my investments are among those that will benefit greatly. For these reasons, I’ve decided to take advantage of the recent stock price declines by adding leverage through both margin and call options; I haven’t been this aggressive in several years. The call options expire between 18-24 months from now, which I believe is ample time for the portfolio’s quarterly results to prove that the FUD is unwarranted and that the market may ultimately be proven wrong. Now is the time to be patient.
The opinions, thoughts, analyses, stock selections, portfolio allocations, and other content is freely shared by GauchoRico. This information should not be taken as recommendations or advice. GauchoRico does not make recommendations and does not offer financial advice. Each person/investor is responsible for making and owning their own decisions, financial and otherwise.