The Tech Treatment
In this edition of the Smart Investor newsletter, we spotlight a leading architect of modern interventional medicine. But first, let’s review the latest Smart Portfolio developments.
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Portfolio News and Updates
❖ TSMC (TSM) saw its stock soar on the Taipei exchange to an all-time high, with the U.S. ADRs also clocking in large gains, after Goldman Sachs dramatically hiked Taiwan shares’ price target and raised its 2026 and 2027 earnings estimates by up to 15%, citing a “multi-year growth engine” in AI. This rally is adding to last week’s climb in TSMC’s shares, sparked by news that the world’s leading chip foundry has started mass production of the industry’s most advanced 2nm chips. Production is expected to begin at the company’s facilities in Taiwan, with planned manufacturing expanding to other locations – including the U.S. fabs – over the next year, as demand for the chips increases.
Earlier last week, TSMC was lifted by reports that Nvidia asked the Taiwanese giant to boost production of its H200 AI chips – the previous Hopper architecture 4nm chips, suitable for AI inference and training. Demand from China is surging, with 2 million orders for 2026 already registered – despite the fact that Beijing has not yet approved any H200 shipments, even though the U.S. government recently allowed exports of these chips to China. ByteDance, the TikTok owner, plans to spend about $14 billion on H200 GPUs this year.
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❖ According to media reports, Cisco Systems (CSCO) is in advanced talks to acquire cybersecurity startup Axonius for $2 billion. The Israeli-American firm develops an advanced platform for cyber asset management, creating a centralized inventory of devices, applications, cloud assets, and user accounts, enabling correlation and unified access management. However, these reports remain unconfirmed as of the time of writing.
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❖ IBM (IBM) stock rallied after RBC Capital raised its price target to $350 from $300, following Jeffries’ upgrade to “Buy” from “Hold” and a PT hike from $300 to $360. RBC said it expects 2026 to be the year when AI benefits become clearer for companies that are well prepared for enterprise AI adoption. Jeffries echoed the sentiment, adding that this year, like 2025, will see gradual AI monetization, with infrastructure and hardware providers continuing to lead over software in terms of stock performance, at least in the first half of the year.
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❖ Amazon (AMZN) entered its most ambitious investment cycle in 2025, pouring $125 billion into AI data centers, custom chips like Trainium3, and cloud division development. The heavy spending is already helping lift capacity constraints – the common hyperscaler growth barrier – with Wall Street projecting AWS growth to breach 30% this year.
With a $200 billion backlog of customers waiting for capacity, the cloud division remains the company’s primary profit engine. However, AMZN’s e-commerce business isn’t standing still – it is progressing fast thanks to fulfillment center automation and AI-powered software, which are helping increase efficiency and slash costs, boosting margins in the company’s retail segment.
As a result of these and other advancements, analysts are increasingly questioning the gap between Amazon’s business and stock performance. Evercore ISI named Amazon its “top large-cap Internet pick for 2026,” highlighting cloud growth and saying that AI has become a strong catalyst for the company’s earnings acceleration. Among other factors, analysts mention the company’s AI-powered shopping assistant Rufus, expecting it to meaningfully boost e-commerce sales. Meanwhile, JPMorgan analysts believe AMZN is strongly undervalued, providing a massive potential upside. Jeffries is also bullish: the firm has recently lifted its price target on Amazon, citing continued cloud leadership and rising AI infrastructure capabilities.
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❖ Wall Street is also turning increasingly bullish on Broadcom (AVGO), with its average price target signaling a potential upside of over 34%. The optimism is driven by robust demand for AI, data center, and networking chips, complemented by Broadcom’s highly profitable software segment that delivers steady, recurring cash flow.
JPMorgan analysts named Broadcom their top pick in the semiconductor sector, emphasizing acceleration in AI revenue. Cantor Fitzgerald, which gave AVGO a Street-high PT of $525, expects the firm’s AI-chip revenue to grow over 100% in 2026, with further growth projected in 2027. Goldman Sachs has recently added Broadcom to the firm’s U.S. Conviction List, also citing the AI chip strength. The firm believes that AVGO’s dominant position in enterprise networking silicon will drive market share gains in custom chips for major U.S. hyperscalers.
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❖ Microsoft (MSFT) opened 2026 with an acquisition. The tech giant has bought Osmos, a Seattle-based startup focused on automating and simplifying complex data workflows using agentic AI to turn raw data into analytics- and AI-ready assets. Microsoft said that Osmos will be integrated into its Fabric unit – an AI-powered cloud analytics platform that integrates data movement, processing, warehousing, science, real-time analytics, and business intelligence into a single platform. This tuck-in deal aligns with Microsoft’s push to enhance autonomous data engineering capabilities in Fabric and bolsters its AI/data ecosystem.
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❖ Alphabet’s (GOOGL) Google DeepMind announced a partnership with Boston Dynamics, centered on robotics research that will use Google’s Gemini-based AI foundation models. The technology will be incorporated into Boston Dynamics’ next-generation humanoid robot, Atlas, combining a general-purpose AI “brain” with a capable humanoid “body” for complex, real-world tasks beyond traditional industrial robots. The robots will be produced by Hyundai Motor Group, the majority stakeholder in Boston Dynamics.
The collaboration comes less than a year after the Google AI research lab announced new AI models called Gemini Robotics, and Atlas will apparently serve as the first notable test case for the advanced tech. This partnership effectively establishes Google’s Gemini as a universal robotics operating system – the “Android for Robotics” – signaling a shift where AI’s next major growth cycle will be defined by its ability to move, perceive, and perform labor in the physical world.
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Portfolio Earnings and Dividend Calendar
❖ The U.S. financial giants will open the Q4 2025 earnings season within a few days. The first Smart Portfolio holdings to report are Bank of New York Mellon (BK) and JPMorgan Chase (JPM), scheduled for January 13, while Citigroup (C) will publish its results on January 14.
❖ The ex-dividend date for Oracle (ORCL) is January 9, while for EMCOR Group (EME) it is January 14.
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New Buy: Boston Scientific (BSX)
Boston Scientific Corporation is a global leader in medical devices, operating at the intersection of advanced engineering, clinical science, and procedural medicine. The company designs and manufactures technologies that enable physicians to diagnose, treat, and manage some of the most complex cardiovascular, neurological, and chronic conditions. Its portfolio spans implantable devices, minimally invasive tools, and digital-enabled platforms that are deeply embedded in hospital cath labs, electrophysiology suites, and interventional operating rooms. Boston Scientific is known for translating clinical insight into scalable technologies that improve procedural precision and expand treatment options for patients who were previously underserved. By combining sustained innovation, physician collaboration, and global manufacturing capabilities, the company functions as a core technology partner to modern healthcare systems rather than a commodity device supplier.
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Where Tech Cures
Boston Scientific’s story is one of repeated reinvention, shaped by an ability to absorb complexity, shed distractions, and refocus on higher-impact medicine. Founded in 1979 as a developer of minimally invasive medical devices, the company built its early reputation around technologies that reduced the need for open surgery – an orientation that aligned it closely with physicians and procedural workflows from the outset. As interventional medicine expanded through the 1980s and 1990s, BSX grew alongside it, broadening its footprint across cardiovascular and endoscopic procedures and establishing a durable global manufacturing and distribution platform.
A defining inflection point arrived in the mid-2000s with the acquisition of Guidant. The integration reshaped the company’s scale, clinical reach, and ambition – but also tested Boston Scientific’s operational discipline. The years that followed were marked by portfolio reassessment rather than expansion for its own sake. The company exited businesses where differentiation was difficult or regulatory risk outweighed strategic value, while concentrating investment in areas where innovation could meaningfully change standards of care. This period laid the groundwork for a more focused, strategy-driven organization.
Over the past decade – and especially during the last five years – that discipline has translated into a consistent pattern of targeted acquisitions designed to deepen leadership in structurally growing procedure categories. Rather than pursuing breadth, BSX systematically added technologies that expand addressable markets within cardiovascular, urology, neuromodulation, and endovascular care. Large, platform-level transactions such as Silk Road Medical strengthened its position in stroke prevention and carotid intervention, while the 2024 Axonics acquisition accelerated scale and share in sacral neuromodulation. Other deals extended this same logic into adjacent, high-growth therapies: chronic pain interventions, advanced electrophysiology access tools, laser-based urology systems, vascular atherectomy, renal denervation for hypertension, and next-generation neurostimulation. Collectively, these moves broadened Boston Scientific’s procedural relevance while reinforcing its presence in specialty labs where adoption curves are steep and switching costs are high.
At the same time, the company has been willing to divest or deprioritize assets that no longer fit its interventional core, ensuring capital and engineering talent remain concentrated on technologies with durable clinical and commercial momentum. Digital capabilities have been layered onto this strategy through mobile diagnostics, data analytics, and software-enabled platforms that extend Boston Scientific’s role beyond the device itself and into longitudinal patient management. This shift from product supplier to procedural ecosystem partner has become a unifying theme. Boston Scientific has embedded advanced data analytics, software, and AI-enabled tools into device development, clinical workflows, and physician training, strengthening its ecosystem approach rather than selling stand-alone products. Partnerships with leading hospitals, physicians, and research institutions have reinforced this model, helping accelerate adoption and refine next-generation platforms.
The result is a company shaped by a consistent strategy: focus where outcomes matter most, invest ahead of clinical curves, and tailor the portfolio to stay aligned with how medicine is practiced today. That approach is how BSX evolved from a broad medical-device manufacturer into a disciplined innovator with a clear strategic identity, and ultimately into one of the most influential architects of modern interventional care.
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Medicine-as-a-Platform
Boston Scientific operates at the center of modern interventional medicine – designing technologies that allow physicians to treat complex disease through precision rather than incision. Its business is built around catheter-based, minimally invasive procedures that shorten recovery times, improve outcomes, and lower system-wide costs. This positions BSX not just as a device manufacturer, but as a medtech leader – one whose competitive edge increasingly rests on the fusion of advanced hardware, software, data, and clinical evidence. That positioning places the company squarely in the faster-growing lanes of medical technology, where innovation, regulatory execution, and procedural efficiency matter more than scale alone.
The company organizes its operations into two primary segments. Cardiovascular accounts for roughly 66% of total revenue and represents the clear engine of above-market growth. This segment spans interventional cardiology, electrophysiology, and structural heart therapies – areas benefiting from the global shift toward catheter-based treatment of heart disease and stroke prevention. Within Cardiovascular, electrophysiology is the fastest-growing franchise, supported by a broad EP platform that combines energy delivery, mapping, imaging, and workflow integration. Products like FARAPULSE1 and WATCHMAN2 are not just incremental improvements, but the primary drivers of Cardiovascular outperformance, increasingly embedded in standard clinical workflows and expanding their role in guideline-supported care. Structural heart and rhythm management continue to benefit from aging populations, rising atrial fibrillation prevalence, and a sustained move away from open surgery toward minimally invasive intervention.
MedSurg represents the remaining ~34% of revenue, anchored by endoscopy, urology and pelvic health, and neuromodulation. Growth here is steadier but durable. Endoscopy remains one of the largest global procedure categories, supported by rising diagnostic and therapeutic volumes across gastrointestinal and pulmonary care. Urology and pelvic health contribute a stable procedural base, while neuromodulation adds a higher-growth layer through chronic pain and nerve-stimulation therapies. Recent acquisitions, including Axonics and Nalu Medical, have expanded Boston Scientific’s reach across both central and peripheral nerve stimulation, reinforcing its position in a market driven by chronic disease rather than elective cycles.
What differentiates Boston Scientific is not just where it competes, but how it scales technology. The company consistently targets narrow, high-impact niches where innovation can redefine standards of care, then builds depth through clinical data, physician training, and tightly integrated platforms. M&A plays a central role – not as financial engineering, but as a way to acquire differentiated technologies early and scale them globally. Over time, this approach has allowed newer franchises to replace maturing ones without disrupting overall growth.
Advanced technology acts as a force multiplier across the portfolio. AI, software, and data analytics are embedded directly into devices and procedural workflows, enhancing diagnostics, imaging guidance, and treatment precision – particularly in electrophysiology and interventional cardiology. Predictive heart-failure diagnostics, automated rhythm interpretation, and AI-assisted imaging help physicians intervene earlier and operate more efficiently. Regulation reinforces this advantage: the FDA’s evolving framework for AI-enabled devices – including lifecycle-based oversight and pre-approved algorithm update pathways – favors incumbent medtech firms with deep regulatory expertise, supporting BSX’s ability to commercialize AI-enhanced technologies at scale. Collaborations, including long-standing work with IBM in neuromodulation and chronic pain analytics, further extend this ecosystem approach without turning Boston Scientific into a pure software vendor.
The broader industry backdrop remains supportive. Minimally invasive cardiovascular procedures are growing faster than the overall medtech market, underpinned by aging demographics, rising chronic disease prevalence, and global healthcare systems prioritizing efficiency and outcomes. Longer term, Boston Scientific is also exploring platform extensions – such as expanding pulsed field ablation into adjacent indications – that add asymmetric optionality without reliance on near-term execution. Combined with strong exposure to structurally growing end markets and a technology-led operating model, Boston Scientific enters the next phase as a medtech leader – growing not by volume alone, but by shaping how medicine is practiced.
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1 – FARAPULSE – Boston Scientific’s pulsed field ablation platform for treating atrial fibrillation using non-thermal energy.
2 – WATCHMAN – a left atrial appendage closure device designed to reduce stroke risk in atrial fibrillation patients without long-term anticoagulation.
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Compound Interest, M.D.
Boston Scientific’s third quarter of 2025 marked another chapter in a now-familiar pattern – strong growth, disciplined execution, and results that continue to run ahead of expectations.
Revenue reached $5.1 billion, up just over 20% year-over-year on a reported basis and 15.3% organically,3 comfortably exceeding management’s prior guidance range and extending a streak of revenue beats that now stretches back more than two years. The outperformance was not narrow or episodic. It reflected sustained momentum across the company’s largest and fastest-growing franchises.
Segment trends reinforced the quality of the results. Cardiovascular revenue expanded 22.4% year-over-year (19.4% organically), driven by continued adoption of WATCHMAN and accelerating uptake of FARAPULSE within electrophysiology. Electrophysiology, in particular, remained the fastest-growing franchise within Cardiovascular, with growth far outpacing the broader medtech market as hospitals expanded capacity and physician familiarity increased. MedSurg posted more modest growth of 16.4% (7.6% organically), reflecting a more mature end-market profile, while still benefiting from steady demand in Endoscopy and Neuromodulation.
Regional dynamics were supportive overall: the U.S. and Asia-Pacific delivered strong double-digit growth, while EMEA was roughly flat on a reported basis, due primarily to the deliberate exit of the ACURATE valve4 and temporary ERP-related disruptions5 – both well-telegraphed and non-structural headwinds.
Profitability scaled alongside growth. Adjusted operating margin expanded to approximately 28%, about 80 basis points higher than the previous year, as mix continued to shift toward higher-value interventional procedures and scale efficiencies flowed through manufacturing and SG&A. Adjusted EPS came in at $0.75, up more than 19% year-over-year and meaningfully ahead of consensus expectations. Notably, this quarter extended BSX’s record of beating adjusted EPS estimates every quarter since early 2023, with double-digit year-over-year EPS growth in each period – a consistency that is rare even among similarly high-quality medtech peers.
Cash generation remained a quiet strength. Free cash flow for the quarter exceeded $1 billion, reflecting strong operating leverage and disciplined working-capital management. This cash flow underpins Boston Scientific’s ability to invest aggressively in R&D and tuck-in acquisitions while keeping leverage around 2x EBITDA – a level that preserves strategic flexibility rather than constraining it.
Street expectations for the fourth quarter of 2025 cluster around roughly $5.3 billion in revenue and adjusted EPS in the high-$0.70 range – assumptions that already factor in some normalization after an exceptionally strong year, but still imply confidence in sustained procedural demand and mix strength. Against that backdrop, management’s updated outlook underscored confidence rather than caution. Full-year 2025 organic revenue growth guidance was raised to approximately 15.5%, with adjusted EPS now expected in the $3.02-3.04 range, implying roughly 20-21% year-over-year growth. Fourth-quarter guidance calls for continued double-digit organic growth, positioning reported results modestly ahead of current consensus assumptions.
Looking beyond 2025, consensus expectations point to some moderation from 2025’s elevated pace, with growth remaining above market averages – supported by EP expansion, structural heart adoption, and incremental contributions from recent acquisitions. In that context, Boston Scientific’s financial profile entering 2026 is about strength and durability – a business that has demonstrated its ability to compound revenue, expand margins, and convert earnings into cash across cycles, not just quarters.
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3 – Organic net sales growth excludes the impact of foreign currency fluctuations and net sales attributable to certain acquisitions and divestitures for which there are less than a full period of comparable net sales.
4 – ACURATE valve refers to BSX’s self-expanding transcatheter aortic valve, which the company discontinued after failing to meet competitive clinical endpoints versus leading alternatives. The decision reflects portfolio discipline rather than demand weakness.
5 – ERP-related disruptions stem from the rollout of a new enterprise resource planning system in Europe, which temporarily affected order processing and created backorders in 2025; management expects normalization as systems stabilize.
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Instrumental Multiple
Boston Scientific’s market setup is best understood through a peer set that reflects the different strategic paths within large-cap medtech rather than a single uniform business model. Medtronic anchors the group as the closest broad-based comparator, sharing deep exposure to cardiovascular, electrophysiology, and hospital-driven procedural demand. Abbott Laboratories adds a scale and diversification lens, illustrating how the market prices a wider healthcare platform with significant device exposure. Stryker provides the premium execution benchmark – an acquisition-led, innovation-driven medtech compounder historically known for consistent growth and margin discipline. Edwards Lifesciences rounds out the group as a focused cardiovascular specialist, offering a sharper view into how investors value cardiology-centric innovation and structural heart growth. Together, these companies frame the landscape in which Boston Scientific’s growth, margins, and stock performance are evaluated.
Stock performance within that group has diverged sharply over the past year, with the differences stemming from a familiar mix of valuation normalization and shifting expectations in the medtech sector. In simple terms, the laggards of 2023-2024 (Medtronic and Edwards) became the leaders of 2025 after their valuations compressed and new products launched. Meanwhile, Abbott saw its stock surge early last year on several positive developments, before settling into a consolidation phase as it faced headwinds like softer diagnostics demand. Stryker posted a modest decline, driven by concerns related to its aggressive acquisition cadence, strengthening competition, and more mixed recent earnings delivery.
BSX has registered a small gain of about 5% over the past year, despite expanding market share and steady earnings outperformance, as these outcomes were largely anticipated and reflected in its premium valuation. The stock entered 2025 as one of the best-performing large-cap medtech names of the prior cycle, with expectations already elevated. The long, steady climb continued through the first three quarters of last year, before giving way to a classic post-peak correction driven by valuation sensitivity and concerns about moderating growth rates. Although the company issued a strong long-term outlook, the market viewed those targets as consistent with, rather than additive to, existing expectations. This coincided with broader investor fatigue around elevated multiples in the latter part of 2025, producing a roughly 10% pullback without any deterioration in underlying fundamentals. However, Wall Street remains bullish long-term, viewing the pullback as an attractive entry point and projecting a potential upside of over 30% in the next 12 months.
Indeed, as a result of recent stock decline, Boston Scientific’s valuation is now much less stretched than it was just several months ago. The stock trades at or slightly above peer-group averages on trailing and forward non-GAAP P/E, Price/Sales, EV/Sales, and EV/EBITDA multiples – and below Edwards Lifesciences across each metric. At the same time, BSX remains the undisputed growth leader within the group, with revenue growth roughly double that of the next closest peer, EBITDA growth clearly ahead of the cohort, and adjusted EPS growth expected to outpace all major competitors. This combination yields a forward PEG ratio of approximately 1.79x – the lowest in the peer group, representing a roughly 20% discount to the company’s own historical average and broadly in line with the median for the generally much more conservatively valued Healthcare sector.
Boston Scientific does not pay a dividend, instead prioritizing the reinvestment of free cash flow into internal R&D, capital expenditures, and tuck-in or mid-sized acquisitions that extend its portfolio in structurally higher-growth categories. Its capital-allocation framework emphasizes reinvesting growing cash flows at attractive returns on capital, reinforcing the stock’s positioning as a compounding growth story rather than a yield vehicle. While BSX does repurchase shares opportunistically, buybacks are used primarily as a defensive mechanism to offset dilution from employee stock-based compensation and performance-based equity programs. Notably, although historical authorizations have included programs of up to $1 billion, the company deliberately paused buybacks in the second half of 2025 to preserve dry powder for its M&A pipeline, reinforcing the growth‑over‑yield stance.
In effect, the market has already done the work of normalizing valuation rather than reassessing the business. What remains is a company still growing faster than its peers, still gaining share in the most attractive medtech categories, and now priced closer to the group rather than meaningfully ahead of it. With execution already proven and visibility intact, Boston Scientific no longer needs multiple expansion to outperform – it only needs time.
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Investing Takeaway
Boston Scientific represents a modern medtech compounder built around procedural leadership, technological depth, and disciplined portfolio expansion. The company has positioned itself at the center of minimally invasive medicine, where durable clinical demand, aging demographics, and technology intensity converge. Its strategy blends internally developed platforms with targeted acquisitions that extend reach in high-growth therapeutic areas, while steadily embedding software, data, and AI into device ecosystems. This approach reinforces physician adoption, raises switching costs, and supports consistent execution across cycles. Capital allocation remains growth-oriented, prioritizing reinvestment over near-term yield and reinforcing long-term competitive advantage. Taken together, Boston Scientific offers investors exposure to structurally attractive end markets through a business that has proven its ability to scale innovation into outcomes. For those seeking sustained growth anchored in medical technology rather than short-term catalysts, the investment case is clear and durable.
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New Sell: Modine Manufacturing (MOD)
We are stepping away from Modine Manufacturing at this stage, not because the business has stumbled, but because the risk profile around its primary growth narrative has changed in a way that reduces forward visibility.
Operationally, Modine continues to execute well. The company has delivered strong growth in Climate Solutions, accelerated data center capacity expansion, and raised its full-year outlook. Management has been proactive, scaling U.S. and international manufacturing, integrating acquisitions, and positioning the platform for long-term participation in AI-driven infrastructure build-outs. From a business-quality standpoint, little has gone wrong. In fact, much of the original investment thesis has played out as expected.
The issue is not execution – it is the narrative authority and who controls it.
Modine’s recent valuation and stock performance became tightly linked to a single structural assumption: that AI workloads would continue driving higher rack density, rising thermal intensity, and sustained demand for chiller-based data center cooling. That assumption was challenged directly at CES 2026. Nvidia’s unveiling of the Rubin platform, with its emphasis on architectural efficiency, GPU consolidation, and warmer-water operation, introduced a credible alternative path in which AI growth does not translate linearly into cooling demand. When Nvidia’s CEO explicitly questions the future reliance on traditional chillers, the market listens.
This matters disproportionately for Modine. Climate Solutions now accounts for roughly 60% of revenue, with data center cooling representing the marginal growth driver and a meaningful share of forward expectations. While near-term orders and fiscal 2026 guidance remain intact, confidence around fiscal 2027-2028 has weakened, precisely where Modine’s valuation premium was anchored. Even if absolute AI demand continues to rise, uncertainty around cooling intensity per workload creates asymmetric downside risk for a company so directly exposed.
Some analysts view the selloff as an overreaction, and Modine may ultimately prove resilient. The company is investing in liquid and hybrid cooling, and long-term opportunities remain real and significant. But in AI infrastructure, Nvidia sets the roadmap. Until Rubin’s implications are better understood or Modine’s pivot is clearly validated, the stock is likely to trade on caution rather than conviction.
This is a risk-management decision, not a judgment on quality. Modine remains a strong operator with credible long-term optionality. We are exiting to avoid riding a narrative-driven down leg, preserve flexibility, and wait for either clarity or mispricing. If the company’s transition gains traction and the stock establishes a durable base, we are prepared to revisit the position. For now, discipline takes precedence over loyalty to a thesis that has entered a more uncertain phase.
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Smart Investor’s Winners Club
The 30% Winners Club represents stocks from the Smart Investor Portfolio that have risen at least 30% since their purchase dates.
The Club’s ranks have shrunk by one last week, as CSCO slid slightly below the threshold. Now, the Winners are back to 19 stocks: GE, AVGO, ANET, TSM, HWM, APH, EME, IBKR, ORCL, PH, GOOGL, VRT, MTZ, RTX, BK, MS, IBM, CRWD, and JPM.
The first contender for the Club’s entry is now CSCO with a 28.55% gain since purchase, closely followed by LDOS with 27.07%. Will one of them reach the 30% threshold, or will another stock outrun them to the finish line?
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