저자: DividendTalks진행자 · 외국인
요약 보기
결론: 진행자는 AI 관련 대형주 급락 이후 반등 가능성을 언급하지만, 현금흐름 기준으로 종목을 선별해야 한다는 입장이며 현재 가장 매력적인 후보는 아마존이다. 시장 상황: 엔비디아(-4% 이상), 아마존(-5%), 메타(-8%) 등 주요 AI 대형주가 하락했고 10개 기업의 시가총액 합계가 약 1조 달러 감소했다. 공포 구간(Extreme Fear) 진입이 언급됐다. Tom Lee 주장: 비관론이 확산되고 금리(10년물)가 5% 아래로 내려온 점을 근거로 하락 막바지라고 본다. 연준이 매파에서 비둘기로 전환할 가능성, 부채시장 경색과 전쟁 불확실성은 남은 리스크로 꼽았다. 수급: 골드만 프라임브로커리지 데이터에 따르면 숏 포지션이 롱을 압도하며 헤지펀드 3대 주식 전략이 코로나 이후 처음으로 1% 이상 합산 하락했다. 다만 수급 자체는 방향을 말해주지 않는다. 장비주: 램리서치는 실적 상회에도 약 12% 하락했다. ASML은 약 7% 하락했으며 분기 매출 약 117억 유로, 영업이익률 약 39%로 펀더멘털은 강하다고 평가했다. AI 투자 비용 우려: 메타의 자본지출은 매출 증가율보다 빠르게 늘고 있고 잉여현금흐름은 음수다. 아마존, 구글, 메타, 마이크로소프트, 오라클의 합산 잉여현금흐름도 음수로 전환됐다. CDS 프리미엄 상승이 관측됐다. 유가/금리: 유가 상승이 인플레이션 우려를 키우고 있으며, 젠슨 황은 AI 수요는 높지만 자본 조달이 병목이라고 설명했다. Nicholas Colas는 AI 자금조달 기대가 식으면서 실질금리가 하락했다고 해석했다. 밸류에이션 및 종목 평가: ASML은 할인 모델상 공정가치 근처(약 $1,500)로 3위, 마이크로소프트는 공정가치 약 $515로 2위(모델상 할인 여지 작음), 구글은 모델가 약 $310 대비 현재가 $323로 4위, 아마존은 모델가 약 $312 대비 현재가 $250으로 약 25% 상승여력을 제시하며 1위다. 아마존은 잉여현금흐름이 2026년 50억 달러에서 2030년 1,750억 달러로 회복된다는 가정이 핵심이며, 매출 성장률 가정이 10%면 $256으로 낮아진다. 출연자 전망: 진행자는 아마존 목표가를 약 $312로 제시하고, 실적 발표에서 현금 전환 증거를 확인하겠다고 했다. 현재 방향은 단기적으로 불확실하며 조건부 매수 관점이다.
다듬은 글
Today's heat map looks calmer, but the biggest players in AI are still showing mixed results. Tom Lee sees buying opportunities, and I'm checking four stocks today because only one of them shows significant growth in my cash flow models. Just look at where the biggest losses were yesterday . We see Nvidia, which fell by more than 4%.
We see Amazon, which is down 5%. Meta lost about eight percent. Yes , many defensive stocks ended the day in the red. Investors made a very specific choice. These 10 companies lost approximately a trillion dollars in combined market value. This measures the change in their stock valuations. Concentration here is what really matters.
Weakness in a few huge companies can overshadow the overall index. Now let's look at cash flow estimates. Google and Microsoft are still trading at substantial multiples. So, falling stock prices only create opportunities when the money these businesses generate justifies today's price. I think ASML is also worth adding to this discussion after falling almost 7%.
It supplies the equipment needed to produce advanced chips. We will compare its rating with Google, Microsoft, and Amazon, and then determine my top choice. And the mood, as we see, has returned to the zone of extreme fear. Tom Lee believes the sell-off may be approaching its final stages. Listen to his arguments, because we will test them with cash flow data.
Are you ready to buy during this sale? Yes. I think we are close to the final stages of the sell-off, as the bearish play on tech stocks has become the consensus. In addition, bond yields, which have been so frightening to the markets, as you know, have decreased. So, there are two factors that used to be obstacles.
The Fed, which has been quite hawkish, is now potentially changing course to be dovish. And interest rates, which were approaching five when people feared 6%, are now back below 5%. I think the only thing left is that the debt markets are now somewhat closed, and of course, the uncertainty about the war.
His argument is that pessimism has become widespread, while bond yields have declined . This is a valid argument for a rebound. But this heat map from yesterday raises a more difficult question: Which businesses deserve our money if the sell-off continues? Now we have a snapshot of the situation from Goldman Prime Brokerage.
It helps explain the positioning argument. It describes a massive sell-off where short positions outweigh the buying of long positions. This is data from only one institutional sample, not a complete census of the actions of all investors. The hedge fund report shows how widespread this pressure has become.
Its main finding is that all three broad equity strategies fell more than 1% combined, which the report says has not happened since COVID. Note that the proportion of long positions also remains high. Aggressive short selling and significant existing long positions can coexist in the market. Positioning can reinforce the next movement without specifying its direction.
Here we have Lamb Research. It fell by almost 12%. This is despite the fact that they exceeded earnings expectations. If you want more details, we did an in-depth analysis yesterday. The forecast, in fact, failed to reassure investors. You see the names of equipment manufacturers, almost all of them are under a lot of pressure right now.
This concern extends to the long-term costs of AI infrastructure. And here is the monthly chart of the S&P 500. It changes history again. Microsoft, well, it's positive, despite yesterday's drop. Some semiconductor companies have suffered significantly more. So " buying on the dip" means completely different things depending on which dip we're talking about.
And I think Meta demonstrates something that investors are currently overestimating. The growth in capital expenditure is about 80% compared to the growth in revenue. This is about 26%. Both indicators are growing, but costs are growing much faster. This is where everything becomes tangible. Capital expenditures have caught up with operating cash generation.
The graph here, free cash flow, includes these financial payments, which actually helps explain the reported quarterly cash outflow. And this Bloomberg chart widens the circle of concern. The combined free cash flow for Amazon, Google, Meta, Microsoft, and Oracle has turned negative. This is an aggregate measure, so individual companies still have different positions on cash generation and financing, but the overall concern is clear.
For shareholders, the gap between cost growth and revenue growth ultimately needs explaining. The CNBC discussion clearly reflected this tension. Listen for uncertainty about when spending will start to yield a large enough financial return. The top three sectors today—that goes some way to defining how defensive this market has looked lately.
Meta's poor price dynamics, however, are quite telling. And the question is why? Because they're raising the midpoint of their spending range, you have n't really gained much in terms of 2027. Free cash flow is negative, and Wall Street doesn't expect a return on this until 2029. Cost growth is outpacing sales growth.
When will this reach equilibrium or decline? This is precisely the issue this chart raises. The business can continue to grow revenue while having less cash after investments. Therefore, our estimates should explain the recovery, in particular, how long shareholders will have to wait. And the credit market adds another level.
The lines here track the cost of default protection. Several of them have grown dramatically. Differences between borrowers matter. And the increase in the cost of protection does not mean that default is inevitable. When internal cash no longer covers investments, access to external capital becomes more important.
Jensen Huang's explanation focuses on this gap . Listen to him separate the demand for computing from the financing of growth. The demand for new cloud technologies is skyrocketing. Their capabilities are extraordinary. So, in the middle, there is not enough working capital to fuel this growth, to finance it.
And because there is such a high demand in many AI sectors, there is a shortage of capital. High demand and difficult financing can coexist, so these credit spreads deserve attention alongside revenue growth. The investment case depends in part on which companies will be able to finance their obligations on acceptable terms.
And oil is adding pressure at the same time . We have this headline linking higher prices to supply threats. More expensive energy complicates inflation forecasts and could increase costs for businesses already implementing large-scale investment programs. Then you also have this Brent chart , showing new growth.
For this episode, the important point is their combination. Concerns about technology costs are emerging simultaneously with the energy shock, rather than against the backdrop of a completely favorable economic situation . And investors also sought safety, helping to lower Treasury yields. Nicholas Colas offers a different interpretation of this bond movement.
Expectations for AI funding may be cooling. Listen to how he connects these two markets. Today is telling, I think, because today you have all this excitement about how much money AI companies can raise , and that takes the pressure off the real rates that were driving those nominal rates that we were watching so closely.
And seeing the 10-year low below 5 is a big, you know, big relief. This gives us reason for relief, while this title indicates its limitations. Lower yields may improve sentiment, but higher oil prices and funding uncertainties remain. A calmer morning should be interpreted very cautiously. Now, there is still good reason for growth here as well.
These are the projected earnings growth rates for the next 5 years, and they largely explain the investor enthusiasm we are seeing. But these valuations must eventually translate into real profits and cash that investors will receive. This graph also shows how expectations are changing. Early forecasts and latest expectations go in different directions.
When valuing a company, we must leave room for these expectations to change, especially with such investment demand. As you can see, the S&P heat map and earnings multiple make some large tech companies more attractive, but the definition of earnings matters. Investment returns, accounting adjustments, and forecast horizon— all of these can change the price we actually pay for operating results.
And cash flow offers us another test, and this picture looks less optimistic. The analyst in the following video explains why choosing individual businesses matters more now . Note the emphasis on monetization versus costs. When reading and analyzing hyperscalers vs. semiconductors, you realize that even these individual categories are now quite outdated.
In fact, within each of them, especially among hyperscalers, there is much greater differentiation. And it all comes down to the real dynamics of free cash flow. Which company at least does not worsen or even improves the dynamics of free cash flow, that is, receives more income from monetization than it spends on capital investments .
This is the structure with which I will approach income statements. We now have a calendar that shows how concentrated the reporting season is. So updates that clarify whether strong operating results are truly catching up with investments will be useful. Therefore, I will not consider every red square to be an equal opportunity .
We will need to link future business results to the valuation. And let's start with the company that supplies equipment for this entire development, namely ASML. Before we get too deep, let me just say this: I publish an article every week about undervalued stocks, as well as market events over the past few days.
You can click below, subscribe, and read all of these materials right away. So, ASML shares closed yesterday at around $1,500. As we said, they fell by almost 7%, and unlike the three hyperscalers that will be discussed below, the company has already reported for this quarter. So we can compare the drop in sales with the latest operating results.
Regarding their performance: since the beginning of the year they have grown by 46%, in the last 5 days alone they have fallen by 6%, and in the last month by almost 10%. But if you are a long-term shareholder, then you should be more than satisfied. Over the past 10 years, the growth is almost 1400%.
If we talk about their current position, it is the middle of the 52-week range, with historical highs reaching around $2,000. With a weak " buy" recommendation from Seeking Alpha and a strong one from Wall Street. And their quarterly revenue reached approximately 11.7 billion euros. Look at the last column here compared to previous quarters.
The reporting business is expanding rapidly, so the sharp drop in share price is worth investigating carefully. And if we look at their profitability indicators, we can see why investors rate this business so highly. The current operating margin is around 39%. Regarding return on capital, we see very strong indicators: total capital – 42%.
This is a supplier that makes significant profits from its sales. Maintenance and modernization provide another important source of income. In the last quarter, this figure reached about 3.3 billion euros. ASML can earn money by improving already installed machines, along with selling new equipment to customers.
Now we see, in fact, that the expected revenue growth is about 30%, and profits are growing even faster – by about 47%. Management also states that current supply plans will not fully meet demand in 2027 and 2028. So expectations remain high . And here we have a schedule of operational activities. He extends this optimism to the years to come.
Of course, the columns below are just estimates, and they increase dramatically. The valuation question, however, is how much confidence we can have in this projected profit growth. ASML's balance sheet is also an advantage. Net debt to EBITDA is zero . ASML still has gross borrowings, but cash significantly changes the picture when assessing dependence on external financing.
Also pay attention to capital expenditures: approximately 4% of sales. ASML benefits from the purchase of equipment by its customers, having its own investment needs. This distinction is useful when we compare a company to hyperscalers. And the forward enterprise value-to- operating profit multiple has declined significantly from previous peaks.
This improves the initial assessment. It still depends on whether future operating profit approaches the expectations underlying the denominator. And if we look at the valuation data from Simply Safe Dividends, we see an average value of 32. Based on that, we see a significant discount. But before drawing conclusions, an important discrepancy should be acknowledged.
Namely: as we can see, Seeking Alpha estimates this indicator closer to 34. Therefore, different periods or definitions of returns may yield different results. So I want to give more weight to a detailed cash flow model than just an attractive multiplier. And if you look at the “blue tunnel” from Simply Safe Dividends, it actually indicates fair intrinsic value.
We see it below the lower limit for the first time in the last year. So, this is a potential signal of undervaluation. Look at the last 5 years. The last time we noticed this was around mid- 2025. My model assumes 50% annual cash flow growth over the next 10 years with a 9 % discount rate and 3% terminal growth.
These assumptions give an estimated value of around $1,500, and their share buyback program is also substantial— over €7 billion . This returns capital to shareholders. Transaction prices are listed in euros, so keep that in mind before comparing to US stocks. With a growth of about 10%, the model shows a decrease to $1,000.
At 20%, it increases to over 2100. The range we see demonstrates how much the result depends on sustainable growth even for a business of this quality. The growth in service revenue supports the investment case as the installed base of equipment creates ongoing opportunities. However, demand for upgrades and new systems ultimately depends on customer economics.
A strong competitive position does not eliminate this risk. Risks lie in these future figures . If customers postpone investments, the expected profit growth may be delayed. ASML's results confirm confidence in current demand. While the stock price reflects uncertainty about what will happen next. My base case is close to the current price, leaving little room for valuation margin.
In fact, today we see a premium of 4%. ASML ranks third for me today. An attractive business worth following . The next company poses a different challenge regarding earnings and cash. This is Google, which closed at around $324 yesterday. We see that it fell by a little more than 3%. The stock price itself obviously does not establish value.
We need to understand what advertising and cloud operations actually bring after investment. They have only risen 3-4% since the beginning of the year, but over the past 10 years have significantly outperformed the S&P, rising 690%. Trading near the middle, but moving towards the lower end of the 52-week range.
Strong buy recommendation from Wall Street, four out of five from Seeking Alpha with a buy rating . We have a growth screen that shows the business is still expanding across several metrics: revenue, operating profit, and operating cash flow. They are all important here. I want operational progress to remain visible while we examine cost pressures.
And the operating profit story is a significant part of the appeal. The latest bars we see remain significantly higher than the figures of the first years. Investors who buy Google get established profitable operations alongside new businesses competing for investment capital. YouTube also continues to strengthen its position in the American television viewing chart.
This supports broader advertising and subscription options. TV viewing time is measured, so keep this specific market definition in mind. Gemini also became more prominent in this web traffic comparison. This is a useful indication of engagement. Web traffic still leaves financial questions open. How much revenue does the usage generate and how much does it cost to maintain?
Google's operating cash flow has grown significantly, and analysts expect further expansion. Future columns indicate a much larger cash-generating business. However, operating cash flow is measured against the capital expansions needed to support this growth. But look, the cost projections are also huge.
We have an analyst scenario where Google's annual capital spending will grow to over $300 billion in 2027. These estimates show why operating cash flow alone is not enough. And, frankly , that's a crucial comparison. They report net income, while the latest quarterly free cash flow figure is negative.
The growth in investment valuation helps reported profits. Therefore, the profit figure requires careful interpretation along with cash generation. And you can see this difference on this screen as well. The net margin is unusually high, while the operating margin is actually much, much lower here. To evaluate the core business, I focus more on operating indicators.
The good thing is that balance provides flexibility . Net debt is zero, reflecting the importance of their cash reserves. This helps finance investments, although the costs must still ultimately provide an attractive return. Comparing forecast earnings challenged the idea that every technology stock is historically cheap.
We see that they are trading at around 24 earnings versus the average of 22. So Google's valuation depends somewhat on which earnings metric we are using. Notice how differently the profit and free cash flow growth metrics behave. The reported earnings growth looks impressive, but here we see that free cash flow has declined by about 51% year-over-year .
For this assessment, it is more useful to ask: how much sustainable cash is left after infrastructure spending? And Waymo offers another possible source of future value. The report outlines plans for 20,000 robo-taxis by the end of 2027. I see this as an expansion plan that needs to be implemented, not as a guaranteed future profit.
And a comparison of the cloud order portfolio shows why investors remain optimistic about future revenues. Note that these are analyst calculations that take into account liabilities and expected revenue recognition. A large order book provides transparency, while final margins and cash conversion are what matter.
And the projected cash generation can become very powerful. But we must compare it with a consistent investment forecast. Taking the strongest cash forecast from one source and lower costs from another is an exaggeration of potential value . My model, based on the latest analyst forecasts, predicts free cash flow growth from $30 billion in 2026 to $180 billion by 2030 .
This is a significant assumption of recovery before a further phase of 15% annual growth. Now, the higher-cost scenario creates a more complex outcome. Investment estimates would absorb the operating cash forecast we just reviewed. Under this alternative, the recovery of cash should occur later than we saw in my baseline scenario.
Using my recovery path along with a 9% discount rate and 3% terminal growth, we get a value of around $310. The assessment obviously depends on whether a basic recovery in cash flows actually occurs. And the recent cash flow shortfall makes these assumptions worth checking. I want to see how operating cash generation catches up with investments .
High accounting profit alone does not confirm that the recovery is ongoing. Changing the assumption for the latest increase gives a value of approximately $260 to $367. Even the lowest scenario preserves the path to early recovery. Therefore, it does not take into account every possible disappointment regarding costs.
So, at today's current price, $323, the valuation gives a small margin—just a 4% premium. Thus, Google ranks fourth at these prices. A strong operating business supports this thesis, but the valuation already requires a significant cash recovery. Microsoft closed yesterday around $521 after falling just over 2%.
It holds up better than many competitors . The important question is whether this resilience is backed up by financial performance. I mean, it's up about 8% since the beginning of the year. Over the past 10 years, the results have been very strong, outperforming the S&P by 770%. The stock is also trading near historic highs of $554.
Strong rating from Wall Street, weak from Seeking Alpha. Their annual revenue has grown above $330 billion. We see that progress shows significant growth over time, with a CAGR of 15%. So, Microsoft enters the investment cycle with a broad revenue base and an established customer network. If you look at the growth metrics, they show a steady increase in revenue and operating cash flow.
These figures confirm the investment attractiveness. They also give us a benchmark for assessing the rate of growth in infrastructure spending. I mean, their operating margin is almost 47%. The level of profitability provides Microsoft with significant financial opportunities. This also sets a high bar for assessing the profitability of additional investment costs .
Quarterly revenue and normalized profit have been increasing for some time. The growth has not been entirely uniform, but the direction is clear. I want the next earnings report to show that the underlying operating momentum is maintained, and we see analysts expecting EPS of $ 19-$20 in fiscal 2027 and almost $24 next year.
These estimates assume further progress. The price will become more attractive if Microsoft can achieve this without significantly worsening its cash position. We see the stock trading at a forward earnings multiple of 26–27, below the five-year average of around 30. This is a more favorable historical comparison than what we've seen at Google, but we still need future cash generation to justify the price.
From the perspective of the "blue tunnel", we also receive a signal of undervaluation. Although a few months ago this indicator signaled serious undervaluation. However, it has been a long time since we have seen him within reason. You will have to wait until the end of 2025. Here we see that profits were increasing while the forward rate was decreasing.
Such a combination can improve the investor's initial position. However, the projected profits have yet to arrive, and infrastructure bills are affecting what we ultimately get. We have this older forecast illustrating the expected decline in cash flow before recovery. The report for fiscal year 2026 has already been released, so the estimate is a bit outdated.
However, other forecasts point to pressure until 2028 before a stronger rebound. We also have a scaling plan that helps explain this pressure. We want analysts' forecasts to show a sharp increase in computing power by 2030. Creating and equipping such infrastructure requires significant costs before all associated revenue and monetary profit is generated.
And Microsoft's projected costs also increase significantly in this comparison. These numbers are analyst estimates, not management promises, but they show why future cash flow depends on both demand and investment discipline. So, the optimistic answer is that these companies have historically earned returns higher than their cost of financing.
The graph supports this argument at the group level. The next question is whether the new investments will be able to maintain sufficiently attractive margins. Now, you also see that their net debt to EBITDA ratio remains close to zero. This provides scope for investment management during periods of cash flow pressure.
Balance helps, while the income generated from these investments remains decisive. Now let's focus on the projected recovery near the end of the chart. The optimistic scenario assumes that today's spending will create much greater cash generation in the future. If the recovery takes longer, investors will wait longer for the same expected benefit.
My model assumes significant short-term free cash flow of $50, then $30 before recovering to $95. This is an assumption about timing, and it significantly affects the outcome of the assessment. And the profit forecasts here indicate operational progress during this period, so cash flow is considered separately when summing up the results.
Higher returns can support confidence, while the timing of the investment determines how much cash remains. So, according to the model, free cash flow reaches $165 in fiscal year 2030. After that, there is a 15% growth. Therefore, the assessment includes a significant recovery before the start of the next growth phase.
This recovery needs an economic foundation. I want the additional computing power to generate revenue that comfortably exceeds its cost. Historical success reinforces confidence, but each new wave of investment still has to prove its feasibility. Given a 9% required return, my average estimate is $515.
The lower and higher levels of further growth give approximately $ 411 to $643. Given today's price, we see that Microsoft is most likely trading at fair value. I like Microsoft's operating quality, but the model doesn't offer much of a discount. This distinction is important before we call it a bargain buy today.
So, Microsoft comes in second with me : a strong business with a smarter multiple, and the next results will be an important cash flow check. The latter company offers greater potential for the model along with the assumption of a larger recovery. Yesterday, Amazon closed at around $250 after falling nearly 5%.
This business combines retail, advertising, and cloud computing. This combination gives us several potential profit drivers along with a very substantial investment program. Performance has increased by 89% since the beginning of the year, and by 545% over the past 10 years. Trading around the middle of the 52-week range.
All-time high of $287, double “strong buy” from Wall Street Quant and respectable “buy” from Seeking Alpha. I think these are the strongest ratings of all that we've looked at today. And this screen shows steady growth in revenue and operating profit. Cash flow figures look less encouraging. This gap is key to understanding the possibilities.
Operational progress is notable, while the ultimate monetary benefit remains a matter of debate. Revenue estimates are approaching $830 billion by 2026, then heading towards a trillion. Of course, these are just projections, but on this scale, even a modest change in profitability can have a significant impact on revenues.
And AMZN delivers roughly $55 billion in operating profit for the year, more than half of the total. This makes the results of the cloud division critically important. Strong retail sales alone will not answer the key questions of this assessment. Advertising is another important factor. Revenue for the year reaches approximately $76 billion, growing by 24%.
This creates a strong business for Amazon in addition to retail and cloud services, which will help support long-term profitability growth. And the operating margin graph here shows how much the business has improved over time. The last quarter was around 14%, and maintaining higher profitability on such a large revenue base would significantly strengthen the investment case.
Operating cash flow that significantly exceeds $160 billion per year. The main challenge arises after the investment. A large cash inflow can still leave limited free cash flow for shareholders. Now about profitability ratios—here too, we need to be careful. We see that GAAP forward earnings are actually at 19-20 times.
While the non-GAAP figure is closer to 30. Mixing these numbers would create a misleading comparison with the other stocks we evaluated today. And the projected decline in profits next year also needs context. Investment gains overstated the current reported income base. A comparison with such an elevated base can create the impression of a decline, even if the core business continues to grow.
The combination of earnings and valuation shows why a single multiple can be misleading. Both the forecast period and the definition of profit affect the result. I just made the assumptions about operating profit and cash flow as clear as possible. We also have a net debt ratio that remains moderate .
Amazon has financing options, but that's no substitute for an attractive return on investment. Shareholders still need to know how much cash the expanded infrastructure can ultimately generate. And the forecasted operating profit line indicates a significant increase in profitability against the backdrop of high revenue.
This is the business foundation for a bullish forecast. We need to convert these profits into real money after deducting the investment required to obtain them. And the very low free cash flow margin shows why investors remain alarmed. Profitability improved, but investments absorbed most of the generated capital.
The valuation becomes attractive only if this ratio improves significantly over time . Here is the assumption underlying my model. Free cash flow will grow from $5 billion in 2026 to $175 billion by 2030. This is a 35x increase, and it deserves serious analysis. Again, taken from analysts' forecasts .
Advertising helps explain one possible source of this recovery. Further growth here adds revenue outside of traditional retail. However, this schedule alone cannot ensure the full recovery of cash flow projected for Amazon's entire business . And after the initial recovery, the model assumes 15% annual growth and a 9% discount rate.
To simply call it a 15% growth model is obviously to downplay the complexity of the early years. So, that gives an estimate of $312. Relative to today's price, this is about 25% upside potential , with a safety margin of about 20%. If we consider a lower growth scenario, at 10%, the value would be $256.
Obviously, this maintains the same initial recovery, only reducing the subsequent growth rate. Therefore, it provides a limited view of delayed or weaker initial recovery. Ultimately, Amazon's balance sheet gives them room to manage investments, but financing choices still matter . Additional borrowings or liabilities may change what is left to shareholders.
I would evaluate them alongside operating results and cash flow forecast. And the reverse calculation shows a further growth rate of about 9.2%. This may seem straightforward until we remember that early cash flow recovery is already factored in. The full cash flow path deserves more attention than the headline.
In the next results, I want to see AWS sustain strong growth and profitability. The graph explains why. A business that provides more than half of operating income has an excessive impact on the recovery that shareholders expect. Amazon ranks first as my strongest conditional opportunity. The estimated growth potential is impressive, but cash recovery needs to justify it.
This is the conclusion I approach earnings reports with, rather than considering the valuation to be warranted. So, the short summary: Google is in fourth place, the operating business remains attractive, but my model offers little insurance, despite assuming a significant cash recovery. Clearer evidence of cash conversion may change the assessment when the next results come in .
In third place we put ASML. Recent results demonstrate high demand, which serves as a useful steady stream of income. My baseline valuation remains close to the stock price, so I'm waiting for a better entry point or stronger cash flow projections. Microsoft is in second place. I like the quality of the operating activities and the ability to finance investments, but my model is close to fair value.
It becomes more attractive when the price falls or the prospects for stable cash flows improve. Amazon takes the top spot because the model offers the most obvious growth potential. The crucial assumption is the recovery of cash flows, which I will return to after the earnings report. So subscribe to updates and write in the comments which assumption you would question the most.
The sale gives us better prices on shares of important companies. My choice still depends on how much these companies can generate after the investment. I will keep this criterion at the center of my ratings as the situation changes. If you enjoyed today's episode, give it a like, hit subscribe and the bell to get notified of new episodes, and don't forget to follow the pinned comment to subscribe and read it all at once. And most importantly, have a nice day. See you in the next issue.
Comments 0