On The Rock
Top Themes of the Week
Happy Sunday and greetings investors! Let's dive into some thoughts focusing on the Tech Titans.
Amazon (AMZN): Growth Engine
Internet and consumer investors remain bullish on Amazon. Questions about China and regulatory risks persist, but shouldn't derail the narrative. Here's what will drive the stock higher:
AWS Growth: Accelerating from +13% to +17% by the end of 2024
Retail Profitability: Amazon's increasing efficiency is well documented
Buyback Buzz: With the stock trading at a high free cash flow, buybacks are likely
Alphabet (GOOGL): Upside Potential
Google has an upcoming catalyst path (Google Cloud Next, earnings, DOJ remarks, Google I/O, and Apple WWDC), which could fuel momentum.
The HubSpot acquisition highlights that GOOGL might have underinvested in SaaS over the years, and this deal could rectify that, driving Cloud growth and advertisers.
Apple (AAPL): Value Play
Challenges like consumer spending, China, and regulation remain, but the valuation is becoming more palatable. Estimates also don't reflect a potential AI-driven iPhone supercycle (next year).
Meta (META): AI Could Fuel More Growth
The bull case for Meta is straightforward – with nearly 30% growth and generative AI upside.
Microsoft (MSFT): Bulletproof
Microsoft remains the best-in-class software on both the consumption and application sides, plus generative AI upside. Azure's ~30% growth (representing ~30% of revenue) underpins consistent growth.
Netflix (NFLX): Concerns Amidst Growth
Netflix's valuation is getting tougher to defend. Subscriber data remains strong as management pulls levers around password sharing.
Nvidia (NVDA): Core AI Play
Nvidia remains the heart and soul of the AI revolution, boasting visionary management, strong execution, and compelling value. Performance has been driven largely by earnings, growing confidence in AI use cases, and that the Total Cost of Ownership is a better metric than system cost.
