What If Mega-Cap Tech Stocks Are Actually Cheap?
What if mega-cap US tech stocks are actually cheap?
The hell you say!
No, seriously. Think about it. All you have to do is assume sell-side growth forecasts are accurate. What could possibly go wrong?
I'm sorry for the generic sarcasm. It's a sarcasm kind of day. I set the tone early with "Expensive Observations," kept it going with "Until Something Breaks" and now I have to see it all the way through.
The accepted narrative says America's mega-cap growth champions (predominately tech shares
I continue to marvel at street and Seeking Alpha revenue growth estimates for Nvidia. To meet those goals, TSMC has to be able to produce more chips for NVDA. Sadly, that will prove difficult in the near-term. Unless they reallocate capacity from other major clients such as AMD, QCOM and their largest customer Apple. How likely is that?
AAPL at least are sitting on a huge pile of cash (which guarantees returns through Treasuries) and is clearly the winner (not just in profits but soon volume) of smart phones when literally people need a smartphone more than they need a car (and possibly housing).
Yes they have to lie in the bed they made with China (both manufacturing and sales), yes they face antitrust (which historically and factually has been toothless), and yes they may be “too expensive”, but to borrow your phrase about Dedollarization: compared to what?
“Emerging Markets” is clearly going through a pull back as even the most ardent globalist/capitalist (finally) recognizes the real risk reward of Russia/China etc… and that money searching yield might be less pleased with Europe’s inflation/economic outlook (and land war)… so where do you park those dollars in the US?
Nail in the coffin: if you’re looking for upside you bet on AI, and one easy bet (compared to trying to pick a winner from the huge cambrian explosion of AI startups) is that the current tech oligopolies will crush/acquire/entangle and for sure financially profit from the AI trend. Make no mistake: these robber barons are not asleept at the wheel when it comes to technical (and economic) domination.
Microsoft (defacto owns OpenAI) has a great excuse to raise prices on everything, ditto Google, AWS frickin makes the AMZN profits (plus ads!) with [AI!] compute (which MS and GOOG also sell)…. and FB got back into social media (ignore crypto and meta, we got AI stickers!)
Warren Buffet (not a techy) of all people has a huge percent in Apple, so if I were smarter I’d sell when he sells. (Not your financial advisor, lawyer, not medical advice, no affiliate links were harmed, yada yada).
I interaction with many more XOM products than tech crap……but I do see your point.
I learned once that PEG can “justify” any valuation. That was in 1999 . . .
It is useful to use a less malleable valuation method, DCF, seeing what assumptions you have to make to arrive at the current valuation. Doing this for the Seven Galacticos is thought-provoking.