GDS February Letter: Long Zoetis; AI Capital Spending cycle Explained Max Who Will Win

GDS Investments' commentary for the month of February 2026.

“The big money is not in the buying and selling, but in the waiting” - Charlie Munger, Value Investor and former Vice Chairman of Berkshire Hathaway

What a year it has already been. Between nonstop headlines, political controversies, and market volatility, it feels like we’ve already packed a year's worth of developments into little more than a month.

In times like this, our first instinct is not to react, but to slow things down.

Volatility does not invalidate a disciplined investment process. Rather, a volatile environment is where discipline matters most. The temptation in a headline-driven market is to treat each new development as some kind of decisive turning point, a trigger to rethink investment strategy. But a great deal of the “news” that moves markets in the short term has very little bearing on the long-term economics of durable businesses.

So rather than respond to every new development, we try to step back and ask two questions:

1. What is actually changing beneath the surface, in ways that are likely to persist?
2. What feels urgent, but will probably be forgotten a few quarters from now?

One window into that distinction came last month from the 56th World Economic Forum in Davos, Switzerland.

Davos and the consequences of being an “unreliable partner”

For much of its first year, the Trump Administration itself has been a driver behind no small amount of political and economic upheaval, and it’s clear at least some of what’s changing will persist.

The Trump Administration has been playing with fire in its relationships with the market and international allies alike. When relationships are stable and based on mutual respect, participants tend to assume continuity; but when they are not, self-preservation becomes the dominant impulse.

That shift was on full display at Davos, particularly in the contrast between how different leaders articulated their vision for the global economy and what they implied about the future of cooperation. In his comments at the event, Canadian Prime Minister Mark Carney highlighted a growing concern about the reliability of international partnerships with the U.S. In his words:

“For decades, countries like Canada prospered under what we called the rules-based international order. We joined its institutions, we praised its principles, we benefited from its predictability. And because of that, we could pursue values-based foreign policies under its protection.