Please read the Unison Asset Management Social Media Disclaimer

Microsoft headlines have been focused on the company’s AI ambitions obfuscating its giant and rapidly growing cybersecurity business. Just last week Microsoft announced its new products, Microsoft Entra Internet Access and Microsoft Entra Private Access, are in the preview beta phase. These new products strengthen Microsoft’s cybersecurity portfolio specifically insecure service edge (SSE) which is currently being serviced by Microsoft Defender for cloud apps. SSE involves providing cloud tools that help workers securely access applications hosted in the cloud and on-premises. Microsoft Entra service offers an alternative to VPNs and helps security admins control employees’ connection to cloud apps. Current competitors in this space such as Zscaler, Cloudflare, and Palo Alto Networks saw their share prices fall as this news released. This is one of the largest remaining areas of cybersecurity Microsoft has yet to enter increasing the competitive pressure on smaller incumbents. Microsoft is in a strong position to take share in the space since they are the second largest cloud provider in the U.S. which gives them a structural advantage in supporting cloud apps built on Azure. This move continues the company’s strategy of leveraging its vast network of software users and tying in cybersecurity products that are purposely built around its software ecosystem. In the competitive world of cybersecurity Microsoft is creating a competitive moat that cannot be replicated by pure-play peers and should be a growth catalyst for the company in short and long-term.

Applied Materials has released its first major update to some of its semiconductor manufacturing equipment since 2010. The new system is called Vistara and serves as a central hub inside chip factories that feeds wafers into sealed vacuum chambers where metals and other materials are deposited or stripped away. This new update follows the U.S. and Europe plans to start manufacturing semiconductors domestically. Vistara aims to boost chip production while reducing energy costs during chip manufacturing. Energy is often one of the largest expenses for foundries and Applied Materials claims that Vistara reduces energy use by 10%. Aside from energy, Vistara is built to help with the production of more advanced chips allowing foundries to mix and match more types of vacuum chambers to avoid bottlenecks speeding up production. The new system has thousands of sensors that feed data into an AI system that helps foundries tweak the manufacturing process to reduce energy costs. Vistara is still in its early stages with the system shipped to one memory chip maker with others interested in the new system. Right now, Vistara’s main application will be in memory production since memory manufacturing is done in large batches so managing energy costs and production is critical in generating attractive economics. Over time this technology will likely be adopted in the production of advanced chips as foundries seek ways to reduce costs as the production of these new chips scales.

CVS and GoodRx are partnering up to deliver lower-priced prescriptions to millions of commercially insured customers as the debate around drug prices and the role of pharmacy benefit managers (PBM) heats up. This partnership will combine GoodRx’s tech platform and CVS’ pharmacy network to help deliver the lowest prescription price at the counter to millions of insured customers. Prior to this partnership, insured customers would pay the full co-pay for the drug they were prescribed even if an alternative generic option existed or there were available discounts that the customer was not aware of. Now insured customers will have all these discounts applied to their prescriptions so they always pay the lowest price at the counter. GoodRx will get paid a percentage or fixed fee for every prescription originating from its discounted pricing. In return, CVS’ PBM will likely be receiving a marketing fee from GoodRx for acting as a distribution partner. This partnership is likely a response to inquiries from the FTC on PBM business practices and multiple state lawsuits around insulin drug pricing. PBMs are often demonized as the driver for high drug prescriptions yet they remain an important distribution channel. PBMs benefit when there are alternative drug options as they can negotiate better prices when there is more competition vs one patent-protected drug option. These lower prices are then passed down to the end consumer as better prescription prices which makes the healthcare system more efficient.