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I think big Tech is currently 
cheap, and I want explain why? 

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That is the theme of today's 
video. 

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So we're going to be going over 
Amazon, Microsoft, Apple, Google

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and meta. 
I'll be doing a very quick 

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analysis on these companies. 
Just a couple minutes to explain

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with the math, why? 
I think these companies are 

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cheap because it's easy to say 
but I think it's good to have a 

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reminder with actual number and 
data and some really quick 

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analysis which explains why 
these companies are actually 

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trading at very discounted 
prices. 

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Based off their future risks and
future cash flows. 

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They'll produce. 
So we'll go through. 

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It will go through all five of 
the companies, I'll do a quick 

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rundown. 
You can let me know if you agree

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or disagree after after taking a
look. 

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Now, before we jump into, I want
to First go into my portfolio 

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and give a quick update on it. 
This is the story fun. 

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Just a disclaimer. 
I've warned people repeatedly 

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not to follow this portfolio 
because I consider it extremely 

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volatile. 
It's a higher risk portfolio and

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I've become completely aware 
that most Their tolerance for 

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volatility is very low, even 
though people say it's very high

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as soon as stock start trading 
down, people become very 

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bearish. 
On these companies, they change 

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their thesis on them. 
So this is a very volatile 

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portfolio. 
I have another portfolio, which 

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I have a much larger amount of 
money and called the passive 

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income portfolio, that one is a 
dividend growth. 

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One focused on high-quality 
Compounders, it has a different 

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investment thesis. 
I consider it less risky. 

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And so, keep that in mind, this 
is a smaller portion. 

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Portion of my invested money. 
I have another around 350,000 

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dollars in a different 
portfolio, but regardless I want

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to take a look at this. 
If we look at the Holdings here,

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I think this gives a pretty 
clean picture. 

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We're down 30.1% right now. 
Not optimal. 

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We've taken a hit the qqq's come
down and it's drag down 

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everything with it. 
You can name basically any 

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different tech company and 
they've all come down, but 

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surprisingly a lot of people 
think I've lost the most money 

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on Netflix, that is not the 
case. 

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Netflix is actually been not the
worst holding in this portfolio.

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The worst one is Amazon. 
That's where I've lost the most 

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money because not only has 
Amazon come down a ton and 

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price, but I also put a lot of 
money in it. 

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It's a dangerous combination. 
So I'm actually down, 42% on 

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Amazon. 
I'm only down 31% on Netflix 

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which is still a lot. 
But you see right there, Amazon 

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right now is my biggest, it's 
the biggest pain point in this 

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portfolio. 
Then We have Netflix. 

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I'm down ten thousand dollars 
which is 31 percent. 

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We have Google. 
I'm down 25%. 

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Microsoft, I'm down 16%. 
And Adobe Em Down. 19% 

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Salesforce, I'm down 31% Apple. 
I'm basically flat right now 

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especially with the dividends 
included. 

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So I do own a couple of these 
big tech companies that has to 

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be said in terms of disclosure 
we're discussing my thoughts on 

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them. 
But if we look at the overall 

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portfolio here, the performance 
has not been good. 

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If I compare it against the S&P 
500, Rid. 

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This is what it looks like. 
The S&P 500 performance is in 

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red. 
My performance of the story fund

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is in blue. 
You can see it trailing along 

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over the past year and we have 
not been able to close the gap. 

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That's what I'm trying to do. 
That's what I think will happen 

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over the next two to three 
years. 

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So we're about a year and a half
into this. 

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We have another couple of years 
to go until we get to the first 

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Landmark at the end of 20 25, 
we're going to be looking at the

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overall performance. 
So that's where it is right now.

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We're down around. 
Ninety-two percent below spy, 

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but things can change quickly. 
I still, I still have hopes that

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we can come and beat the S&P 
500. 

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If these companies, if there's 
stories and my thesis is 

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actually play out over time, but
it may take a little bit longer.

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Now, having said that, let's go 
ahead and jump in to my, my 

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thoughts here on why I think big
Tech is currently cheap and 

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we'll start off with Amazon. 
Amazon is my most troubling 

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stock right now. 
It's That I thought was cheap at

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roughly double the price that it
is now. 

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So, I really think that it's 
cheap right now, that's a bit of

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an understatement. 
If we pull up Amazon here, this 

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is using qualtrics insights. 
This is part of a tool that I've

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been developing as part of that 
Patron memberships. 

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If you want to try this out, you
can do so at no risk, you can 

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sign up for the patreon. 
You don't pay up front. 

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You get a free trial, period. 
So try it out. 

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See if you like it. 
But what this shows is the 

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fundamentals of what's going on 
with Amazon, On and this is a 

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bit deceiving, not qual term, 
but the actual data being showed

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her with Amazon. 
Because if you're not careful, 

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your analysis might lead you in 
the wrong direction. 

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For example, right now, Amazon 
trades, a day, 44 forward, P/E 

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ratio roughly, there's some 
estimates that it's like out of 

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50, Ford. 
Something that's out of 40 Ford 

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PE ratio, but that's not cheap. 
If you're valuing this on an 

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earnings basis 44 PE that means 
that you're paying 40. 

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Four times next year's earnings 
and most companies right now are

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trading at around a 17. 
So Amazon is two to three times 

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more expensive on an earnings 
basis of next year than most 

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companies, which would lead you 
to believe that. 

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This company is very expensive 
and it's not cheap at all. 

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I don't think that paints a 
clear illustration of what's 

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going on. 
In fact, I think that part is 

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misleading, the way that I look 
at valuing Amazon and I think 

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this is a very straightforward 
way. 

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Is we just look at the history 
of the p'nay here. 

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If we look at its free cash 
flow, which we can see right 

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here, this orange chart is the 
free cash flow by year. 

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We can see that in 2014. 
Amazon started a generate free 

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cash flows. 
It that really took off in 2015 

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at like tripled, you have like 
six or seven billion dollars in 

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free cash flow there. 
And it started to grow in 2018 

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to 2020, Amazon over these three
years generated, 64 billion 

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dollars in free cash flow. 
So the story at that time was 

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Amazon, has this explosive 
growth and free cash flow? 

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The operating leverage AWS, all 
of it was playing together at 

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Harmony this. 
This nice Harmony of different 

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parts of the business. 
All generating cash flow and all

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the operating leverage was swung
in the right direction. 

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And if we look at this one year 
in particular, 2020, it was 

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twenty six billion dollars in 
free cash flow since then the 

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free cash flows have gone - the 
story. 

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Has changed the expenses, have 
gone up in Amazon continues to 

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lose money every quarter. 
So, looking back, how do we 

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value this company? 
Well, there's a couple things 

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I'd look at, and we can do this 
very quickly, swing over to 

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Amazon's latest earnings report.
This is just the most recent 

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one, you can find on the 
investor relations website. 

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And I look at two different 
things. 

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Here will be ignoring literally 
everything in the business, but 

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two different parts. 
Amazon's AWS everybody knows 

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about this. 
Amazon's web services and then 

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we have Runs advertising 
Services here. 

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So if we look at these two 
different line items, what this 

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chart shows is the quarter over 
quarter numbers of Revenue of 

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these two different line items. 
We have AWS right here. 

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Last quarter doing twenty point 
five billion dollars in Revenue 

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20.5, and it's growing like 20 
to 30% per quarter. 

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It'll probably slow down to the 
low 20s growth rate. 

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Last quarter was 28 percent, so 
it's not going to stay at 20 

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billion. 
Even with a Slowdown in the 

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economy, it's still going to 
grow because companies can cut 

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back on budget, but it's really 
tough to cut back on AWS. 

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That's something really 
difficult to do but regardless 

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we can assume that at least it 
will be twenty billion dollars 

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per quarter at a minimum for the
next four quarters. 

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Then we have the ads portion 
here Nine billion dollars nine 

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point five billion last quarter.
And this has been growing at a 

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very fast pace. 
Last quarter grew 30% Amazon has

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a killer ads business. 
I think it's the best one in the

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world. 
I think they have a better ad 

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business than Google. 
Because if you think about it, 

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you got meta and they have the 
social media ad business that 

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they rely on tracking, you 
around different apps, and 

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figuring out everything about 
you as a person and they have to

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infer what your likes are to 
present you with relevant ads. 

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You have Google that you have to
go to Google Search and type in 

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stuff. 
And then hopefully they put 

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products before the links that 
you're wanting to find. 

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Amazon is the most direct 
targeted ads in the entire 

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Market. 
You go to a website that has 

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stuff that you want to buy and 
you type in what you want to 

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buy. 
And they know from that search, 

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Corey exactly what you want to 
buy and they present you with 

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ads for those products. 
It's literally the most targeted

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ads in the business. 
So it's growing up, 30%. 

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I make a simple assumption that 
it's going to be 10 billion 

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dollars per quarter for the next
four quarters. 

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So, from these assumptions we 
can write right here. 

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The ads business will do 40 
billion in ad Revenue over the 

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next year. 
I think that's very very 

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reasonable. 
I think it's even conservative 

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and I think that AWS will do 80 
billion again very reasonable. 

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We're not assuming any growth at
all. 

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We're also not assuming that it 
will slow down and I guess with 

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the ads were assuming five 
hundred million dollars worth of

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growth. 
So a tiny bit of growth of the 

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ads but but not much and then 
with AWS were literally assuming

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no growth at all. 
When we combine that we get 120 

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billion dollars, right? 
So we have 120. 

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So we have hair some very simple
math and I think very reasonable

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math. 
We have 80 billion dollars 

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that's just the Assumption of 
AWS and what they're going to do

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in 2023 this year, then we have 
40 billion dollars of what I 

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think the ads will do this year 
2023. 

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And again, this isn't 
extrapolating out, some gigantic

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growth in the company. 
This is literally assuming no 

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growth. 
I'm just taking last quarter's. 

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Numbers, timesing them by 4 and 
they've been growing at 20 plus 

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percent per year on both of 
them. 

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So this is I think under 
shooting it. 

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If we do that, we get 120 
billion dollars. 

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Now, I'm going to assume the 
margins of both of these are 

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30%, 30% operating margins on 
both of them. 

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The reason why is I think it's 
safe to assume that With AWS, it

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has gone below. 30 percent to 
twenty six percent on some 

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quarters. 
But the average over the past 

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two years has been 30% and many 
quarters that goes above 30%. 

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So, does it depends on how much 
capex, they do. 

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How many Investments they do? 
But most of the time AWS average

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is around, 30%, operating 
margins. 

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So I'll soon 30% operating 
margins on AWS for the ads 

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business. 
I'm also assuming 30% operating 

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margins. 
This case for the ads, they 

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don't release this Amazon. 
Doesn't talk about their 

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operating margins for their ad 
services, but I think it's safe 

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to assume it's 30% because meta 
which is an advertising company 

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has around 30 percent, operating
margins and Meadow is working 

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with very untargeted ads. 
They have to try to track you 

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and infer, lot of data. 
Amazon literally has the search 

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box. 
They have even more targeted ads

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than meta, so I don't see how 
they could have lower. 

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Our operating margins than meta 
when they have more targeted 

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ads. 
So I think again, that's a safe 

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assumption to make thirty 
percent of 120 is 36 billion 

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dollars. 
That's it. 36 billion from just 

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these two things. 
No, other part of the company, 

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I'm not looking at the other 
services. 

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They have third-party sellers 
Services which they make a lot 

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of money from it has high 
margins. 

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I'm not looking at the prime 
business, not looking at the 200

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00:11:45,600 --> 00:11:47,600
million members and the Prime 
subscription In. 

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I'm not factoring any of that 
in. 

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This is literally just AWS and 
the advertising Revenue. 

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We get 36 billion dollars on a 
very safe. 

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Conservative assumption. 
Now, going back to this, we look

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00:12:00,300 --> 00:12:04,000
at this right here and if they 
posted 36 billion dollars in 

229
00:12:04,000 --> 00:12:08,100
cash flows from this, it would 
be right around here based on 

230
00:12:08,100 --> 00:12:10,100
this chart, that's where it 
would be. 

231
00:12:10,800 --> 00:12:14,200
So if you see that picture and 
all of a sudden, Amazon is 

232
00:12:14,200 --> 00:12:17,600
posting a chart that looks like 
this, you know, that that It's a

233
00:12:17,600 --> 00:12:21,800
very good picture that shows 
growing free cash flows. 

234
00:12:22,200 --> 00:12:24,700
The problem with Amazon right 
now is they're not doing that 

235
00:12:24,700 --> 00:12:26,800
because they're spending so much
money on these other stuff. 

236
00:12:27,300 --> 00:12:30,400
So if we assume that they can 
just get their expenses under 

237
00:12:30,400 --> 00:12:33,900
control with the retail 
business, which I think they can

238
00:12:34,300 --> 00:12:37,800
and that will net out to just a 
0 and it will literally make no 

239
00:12:37,800 --> 00:12:40,100
money. 
We can assume no income. 

240
00:12:40,100 --> 00:12:42,800
No, operating income from the 
retail business, they could 

241
00:12:42,800 --> 00:12:46,000
still post 36 billion dollars in
cash flows. 

242
00:12:46,100 --> 00:12:51,000
Now if we do the math on this, 
And we divide the 36 billion by 

243
00:12:51,000 --> 00:12:54,700
the market cap to get the free 
cash flow assumption based on 

244
00:12:54,700 --> 00:12:58,100
that amount of free cash flow 
that is a free cash flow yield 

245
00:12:58,100 --> 00:13:03,300
of 4.1%. 
So, Amazon would all of a sudden

246
00:13:03,300 --> 00:13:07,800
go from having a minus 3 percent
free cash flow yield to a 4.1 

247
00:13:08,000 --> 00:13:09,800
which is really good. 
That's, like, in the consumer 

248
00:13:09,800 --> 00:13:13,900
staple category. 
And again, this is assuming just

249
00:13:13,900 --> 00:13:16,800
the ads business just the AWS 
business in everything else 

250
00:13:16,800 --> 00:13:20,200
being Net neutral not losing 
money or not making money. 

251
00:13:20,500 --> 00:13:24,000
I still believe the other parts 
of Amazon can be profitable. 

252
00:13:24,100 --> 00:13:27,600
I think retail can make a profit
2020, retail made a profit, 

253
00:13:27,600 --> 00:13:31,400
2019, retail made a profit. 
It does make profit from time to

254
00:13:31,400 --> 00:13:34,300
time, but it's often swung into 
the - because they're doing 

255
00:13:34,300 --> 00:13:37,700
major Investments. 
So, if we just neutralized it, 

256
00:13:37,700 --> 00:13:41,600
it'd be four point one percent, 
but if the other stuff, any of 

257
00:13:41,600 --> 00:13:45,000
the other stuff at all, starts 
to make any money and that free 

258
00:13:45,000 --> 00:13:47,200
cash flow, yield would even go 
up further. 

259
00:13:47,400 --> 00:13:50,400
Saving Amazon is going to cut 
down on their employee count I 

260
00:13:50,400 --> 00:13:53,400
think they over hired. 
I think that's what's causing a 

261
00:13:53,400 --> 00:13:56,500
lot of their - free cash flow 
and that is a problem, that's 

262
00:13:56,500 --> 00:13:59,000
not too difficult to fix. 
I think Amazon can get this 

263
00:13:59,000 --> 00:14:03,400
under control. 
So overall I think expenses are 

264
00:14:03,400 --> 00:14:06,100
going to be getting cut. 
I think employee expenses 

265
00:14:06,100 --> 00:14:08,600
getting cut, I think Warehouse 
expenses getting cut. 

266
00:14:08,800 --> 00:14:13,000
I think that the operating 
income of AWS and and the ads 

267
00:14:13,000 --> 00:14:16,000
business is growing, I think the
company right now is cheap. 

268
00:14:16,000 --> 00:14:19,300
And when we get out to the The 
second half of this capex 

269
00:14:19,300 --> 00:14:22,300
investment cycle, I think we're 
going to see pretty explosive 

270
00:14:22,500 --> 00:14:24,900
free cash, flow growth. 
So that's my assumption right 

271
00:14:24,900 --> 00:14:26,800
now. 
Amazon is cheap in my opinion. 

272
00:14:26,900 --> 00:14:30,500
Next up, we have apple which 
admittedly I own this company 

273
00:14:30,500 --> 00:14:33,400
and both my portfolios, the 
story fund, and the passive 

274
00:14:33,400 --> 00:14:36,200
income portfolio and I'm an 
apple Fanboy. 

275
00:14:36,200 --> 00:14:38,700
I like the products, I like what
they do. 

276
00:14:38,700 --> 00:14:41,700
I think they make good stuff. 
But more than that I think the 

277
00:14:41,700 --> 00:14:44,000
stock is a good stock. 
I think it's actually a cheap 

278
00:14:44,000 --> 00:14:46,500
stock currently. 
The reason that I say that and I

279
00:14:46,500 --> 00:14:49,400
know that this Is more debatable
because a lot of people think 

280
00:14:49,400 --> 00:14:52,300
that Apple's expensive and it 
just won't come down in price. 

281
00:14:52,300 --> 00:14:55,500
And they don't understand while 
why Apple deserves this premium 

282
00:14:55,700 --> 00:15:00,300
of a 23 forward P/E ratio, 110 
years ago, it traded at like a 

283
00:15:00,308 --> 00:15:03,500
17. 
So, shouldn't it go back to a 17

284
00:15:03,500 --> 00:15:07,000
where it rightfully belongs. 
That's what the Bears say, what 

285
00:15:07,000 --> 00:15:09,600
the Bears. 
Get wrong in this situation. 

286
00:15:09,800 --> 00:15:13,100
Is that Apple? 
Today is not the same company. 

287
00:15:13,100 --> 00:15:16,300
It was 10 years ago. 
So you're saying a different 

288
00:15:16,300 --> 00:15:20,300
company, the Apple today should 
trade the same as it was a 

289
00:15:20,300 --> 00:15:22,600
different company. 
Apple, 10 years ago, what has 

290
00:15:22,600 --> 00:15:25,300
changed over that time? 
Apple has moved to become a 

291
00:15:25,300 --> 00:15:28,100
service oriented subscription 
oriented business. 

292
00:15:28,300 --> 00:15:32,300
That gets a ton of money from 
high-margin digital income, 

293
00:15:32,600 --> 00:15:37,300
before it was a, a, I think a 
shallow mode or it rather a 

294
00:15:37,300 --> 00:15:41,400
narrow moat company that just 
sold, a couple items and it had 

295
00:15:41,400 --> 00:15:43,300
no digital subscriptions to 
speak of. 

296
00:15:43,600 --> 00:15:45,100
That's an entirely different 
company. 

297
00:15:45,300 --> 00:15:49,400
If apple is just still selling, 
Phones and it had no huge app 

298
00:15:49,400 --> 00:15:51,500
ecosystem with 30 million 
developers on it. 

299
00:15:51,700 --> 00:15:54,600
If it had no insurance has it 
they're getting all this money 

300
00:15:54,600 --> 00:15:58,100
from selling phone insurances. 
If it had no network of products

301
00:15:58,100 --> 00:16:02,200
of all their MacBooks and there 
are pods in their apple watches,

302
00:16:02,200 --> 00:16:05,200
and everything that they sell 
combined together, all working 

303
00:16:05,200 --> 00:16:09,000
and cohesion with imessage, and 
all these these Digital Services

304
00:16:09,000 --> 00:16:11,200
that form this beautiful 
ecosystem. 

305
00:16:11,500 --> 00:16:14,200
If that wasn't the case, I do 
think that Apple should trade at

306
00:16:14,200 --> 00:16:16,500
a 17 but that's not the case 
anymore. 

307
00:16:16,800 --> 00:16:19,200
Apple. 
Has grown it, Seekers ecosystem.

308
00:16:19,400 --> 00:16:22,800
The ecosystem is the moat, the 
digital subscriptions, and 

309
00:16:22,800 --> 00:16:25,700
things that tie all the products
together is the mode. 

310
00:16:26,000 --> 00:16:30,500
So I look at them as growing a 
substantial moat, a moat means 

311
00:16:30,500 --> 00:16:33,500
that the PE Ratio should be 
higher than a company that 

312
00:16:33,500 --> 00:16:36,900
doesn't have a moat apples. 
Moat has improved. 

313
00:16:37,000 --> 00:16:39,300
I think the valuation should go 
up as a result. 

314
00:16:39,700 --> 00:16:43,500
And in my opinion I still think 
that this is low considering how

315
00:16:43,500 --> 00:16:47,100
economically powerful this 
company is for example that 

316
00:16:47,400 --> 00:16:51,000
Casual yield of apple right now 
is a five point four, five 

317
00:16:51,000 --> 00:16:53,700
percent, that's already very 
good. 

318
00:16:54,400 --> 00:16:58,000
And this is with what I still 
consider to be significant 

319
00:16:58,000 --> 00:17:01,100
reinvestment apples always doing
reinvestments into different 

320
00:17:01,100 --> 00:17:03,900
products. 
I did a recent report on my main

321
00:17:03,900 --> 00:17:07,300
Channel about the new Apple 
mixed reality headset. 

322
00:17:07,300 --> 00:17:09,000
It's going to cost like three 
thousand dollars. 

323
00:17:09,000 --> 00:17:12,700
It has all these sensors in it 
it's this premium device that 

324
00:17:12,700 --> 00:17:14,400
they'll work into their 
ecosystem. 

325
00:17:14,599 --> 00:17:17,800
They're going to make it work 
with their Apple TV + and Live 

326
00:17:17,800 --> 00:17:20,000
sports and different 
applications for it. 

327
00:17:20,300 --> 00:17:22,400
So Apple has this massive 
ecosystem. 

328
00:17:22,599 --> 00:17:26,400
It has a 5.4 percent free cash 
flow yield which I think is is 

329
00:17:26,400 --> 00:17:31,000
very high and we look at it. 
The company is also very good at

330
00:17:31,000 --> 00:17:33,700
generating cash flows without 
diluting the shareholder. 

331
00:17:34,100 --> 00:17:36,400
Look at this quarter by quarter,
not a lot of companies can pull 

332
00:17:36,400 --> 00:17:39,900
this off last quarter. 
It was twenty billion dollars 

333
00:17:40,200 --> 00:17:45,700
quarter before that 20.7 quarter
before that 25.6 quarter before 

334
00:17:45,700 --> 00:17:48,300
that forty four billion. 
That's Our iPhone cycle. 

335
00:17:48,400 --> 00:17:51,200
So every once in a while to have
this massive free cash flow 

336
00:17:51,200 --> 00:17:54,600
quarter and then it's followed 
up by pretty good ones, not bad.

337
00:17:54,600 --> 00:17:57,600
20 billion that's in the range 
of Microsoft right there, even 

338
00:17:57,600 --> 00:18:00,200
above Microsoft and there's no 
big dips. 

339
00:18:00,500 --> 00:18:03,300
It's becoming more more smooth 
out because they have the 

340
00:18:03,300 --> 00:18:06,100
services. 
So I think the story for Apple 

341
00:18:06,100 --> 00:18:09,100
right now is investors are 
scared about the economy. 

342
00:18:09,100 --> 00:18:13,200
Slowing down and Apple getting 
its earnings revised lower. 

343
00:18:13,800 --> 00:18:15,600
But I think that they're 
forgetting that this company is 

344
00:18:15,600 --> 00:18:18,000
moving more to digital. 
I think they're going to raise 

345
00:18:18,000 --> 00:18:20,700
prices on all their 
subscriptions and that will 

346
00:18:20,700 --> 00:18:23,500
generate meaningful amounts of 
free cash flow. 

347
00:18:24,200 --> 00:18:27,400
And another thing with this 
company, a lot of companies 

348
00:18:27,400 --> 00:18:30,000
can't do anything. 
If the stock price goes down, 

349
00:18:30,000 --> 00:18:32,800
they simply don't have the cash 
flows to act defensively. 

350
00:18:33,200 --> 00:18:37,000
Apple can act defensively 
meaning that if the stock price 

351
00:18:37,100 --> 00:18:40,800
plummets, let's say it goes down
30%. 

352
00:18:41,100 --> 00:18:43,800
All right. 
And that case, what Tim Cook is 

353
00:18:43,800 --> 00:18:46,500
going to be doing is a lot of 
BuyBacks the free cash flow. 

354
00:18:46,500 --> 00:18:50,100
Yielded be like 7%. 
They could buy back a chunk of 

355
00:18:50,100 --> 00:18:54,200
the company every single year 
bringing that stock price back 

356
00:18:54,200 --> 00:18:56,300
up, they have the cash flows to 
do it. 

357
00:18:56,500 --> 00:19:00,200
So I see this is also a bit of a
defensive bed in my opinion. 

358
00:19:00,200 --> 00:19:03,300
I think the companies cheap in 
the low 20s, doesn't mean it 

359
00:19:03,300 --> 00:19:06,100
can't go lower but I think apple
right now II just think it's 

360
00:19:06,100 --> 00:19:08,600
good value. 
Now, next up, we have Microsoft,

361
00:19:08,600 --> 00:19:11,000
which is another company I think
is cheap by own. 

362
00:19:11,000 --> 00:19:14,700
This one in the story fund and 
my dividend portfolio, looking 

363
00:19:14,700 --> 00:19:18,700
at this one, the big problem. 
With Microsoft is the forward 

364
00:19:18,700 --> 00:19:21,200
P/E ratio, that's what 
everybody's looking at in 

365
00:19:21,200 --> 00:19:25,100
today's market, which I think is
good, but we have to look at a 

366
00:19:25,100 --> 00:19:28,500
couple things here on quadrant 
says the forward P/E ratios 

367
00:19:28,500 --> 00:19:31,400
based. 
It's a 27 and keep in mind, this

368
00:19:31,400 --> 00:19:35,000
is based on analyst estimates of
next year's earnings. 

369
00:19:35,200 --> 00:19:37,200
And this is where we have some 
disagreements. 

370
00:19:37,500 --> 00:19:41,300
I think this is very low. 
It's assuming an eight dollar 

371
00:19:41,300 --> 00:19:43,700
earnings per share, next year. 
When we look at a lot of 

372
00:19:43,700 --> 00:19:46,600
different assumptions, we have 
this right here, which is a 

373
00:19:46,600 --> 00:19:49,700
table of Print analysis, 
assuming nine dollars. 

374
00:19:49,700 --> 00:19:53,000
And fifty four cents next year. 
My assumption is that Microsoft 

375
00:19:53,000 --> 00:19:55,000
can earn around ten dollars next
year. 

376
00:19:55,400 --> 00:19:59,500
If Microsoft earned ten dollars 
next year, which again, I think 

377
00:19:59,500 --> 00:20:02,000
they can. 
It's no guarantee worst case 

378
00:20:02,000 --> 00:20:03,500
scenario. 
They earn eight and it's really 

379
00:20:03,500 --> 00:20:08,400
a 27 Ford PE ratio. 
But if they earned eight dollars

380
00:20:08,400 --> 00:20:12,200
or sorry ten dollars next year, 
instead of eight the Ford PE 

381
00:20:12,200 --> 00:20:16,400
would be 22 right now. 
You'd be buying Microsoft at a 

382
00:20:16,400 --> 00:20:19,600
20 to Ford PE. 
If we look at that historically 

383
00:20:20,200 --> 00:20:24,000
that means that Microsoft right 
now today is the cheapest it's 

384
00:20:24,000 --> 00:20:28,700
been since 2019 for just a 
couple trading days there and 

385
00:20:28,700 --> 00:20:32,100
then all the way back to 2017. 
That's the last time you'd be 

386
00:20:32,100 --> 00:20:36,400
able to buy Microsoft at today's
price and people are saying that

387
00:20:36,400 --> 00:20:39,400
Microsoft is so expensive. 
Now it's such an expensive 

388
00:20:39,400 --> 00:20:42,600
company, look at the high. 
Multiple Microsoft was just 

389
00:20:42,600 --> 00:20:46,300
trading at a 35 Ford PE for over
a year. 

390
00:20:46,700 --> 00:20:49,500
That's where the Company trades 
during bull markets with how 

391
00:20:49,500 --> 00:20:52,300
powerful it is. 
It has a credit rating better 

392
00:20:52,300 --> 00:20:55,600
than the US government. 
It's a diversified monopolistic 

393
00:20:55,600 --> 00:20:59,500
business that has its hands in 
every part of corporate America.

394
00:20:59,800 --> 00:21:02,600
I don't see this company going 
away for another hundred years, 

395
00:21:03,300 --> 00:21:06,300
so even if the earnings come in 
a little bit lower next year, 

396
00:21:06,500 --> 00:21:10,000
worst case scenario, you're 
getting it at a 27 Ford PE 

397
00:21:10,000 --> 00:21:14,200
ratio, which I still think is 
inexpensive for Microsoft, but 

398
00:21:14,200 --> 00:21:17,000
best-case scenario. 
You get out of 3:40 p.m. 

399
00:21:17,200 --> 00:21:20,200
Ee because next year they earn 
ten dollars in earnings per 

400
00:21:20,200 --> 00:21:22,000
share. 
And again I don't think that 

401
00:21:22,000 --> 00:21:24,700
that's out of the question. 
I think there's a decent chance 

402
00:21:24,700 --> 00:21:27,100
they can earn nine and a half 
ten dollars. 

403
00:21:27,100 --> 00:21:30,900
So, looking at this company, the
fundamentals are there it has 

404
00:21:30,900 --> 00:21:33,600
everything we've reviewed this 
company, many times, I think the

405
00:21:33,600 --> 00:21:35,900
free cash flow growth will 
probably slow down a little bit,

406
00:21:35,900 --> 00:21:38,500
but I still think this company 
will generate significant free 

407
00:21:38,500 --> 00:21:41,800
cash flow and if they're able to
close that Activision, Blizzard 

408
00:21:41,800 --> 00:21:44,800
deal, I think they'll be another
positive thing for Microsoft. 

409
00:21:45,100 --> 00:21:48,200
So right now, I think the 
worst-case For Microsoft is 

410
00:21:48,200 --> 00:21:50,800
pretty good, and I think the 
best case scenario is really 

411
00:21:50,800 --> 00:21:52,600
good. 
I just don't see too much 

412
00:21:52,600 --> 00:21:56,100
downside with today's price. 
And then finally, we have Google

413
00:21:56,100 --> 00:21:57,500
and meta. 
And I'm going to group these two

414
00:21:57,500 --> 00:21:59,700
together because they're both ad
companies. 

415
00:21:59,700 --> 00:22:03,200
And I think the thesis on both 
of these of why they're cheap is

416
00:22:03,200 --> 00:22:05,600
very similar. 
Let's take a look at Google 

417
00:22:05,600 --> 00:22:11,600
here. 17.8 forward, P/E ratio. 
Do I need a say too much more 

418
00:22:12,100 --> 00:22:16,900
5.5 free cash flow yield. 
Now it is true, the downside of 

419
00:22:16,900 --> 00:22:20,200
goo Google is, it's been 
highlighted by some activist 

420
00:22:20,200 --> 00:22:23,300
investors and channels like mine
that they spend a lot of money 

421
00:22:23,300 --> 00:22:26,900
on paying employees and when you
net that out of the free cash 

422
00:22:26,900 --> 00:22:29,900
flow, it makes it free casual 
yield a little bit lower around 

423
00:22:29,900 --> 00:22:33,200
three percent. 
So it's not quite as cheap as it

424
00:22:33,200 --> 00:22:36,300
first appears. 
But even netting out, the stock 

425
00:22:36,300 --> 00:22:39,700
based compensation, the company 
still getting really cheap. 

426
00:22:39,700 --> 00:22:42,100
I don't think Google should be 
trading at a 17 forward P/E 

427
00:22:42,100 --> 00:22:45,800
ratio, given the moat durability
and predictability of this 

428
00:22:45,800 --> 00:22:49,200
business. 
Keep in This company grew its 

429
00:22:49,200 --> 00:22:55,400
Revenue, a ton 40%, then another
20 percent over a two-year basis

430
00:22:55,700 --> 00:22:59,600
and it's barely giving up 
anything that is a very sticky 

431
00:22:59,600 --> 00:23:02,500
business when you grow revenues 
that fast and then you give up 

432
00:23:02,500 --> 00:23:05,700
basically nothing. 
And I think the ad, pocalypse is

433
00:23:05,700 --> 00:23:08,700
a little bit overstated, there's
lots of advertisers that want to

434
00:23:08,700 --> 00:23:11,800
advertise on multiple platforms.
I think, even though Amazon's 

435
00:23:11,800 --> 00:23:14,800
growing and Netflix is getting 
into ads, I think that Google's 

436
00:23:14,800 --> 00:23:18,100
ad business will continue to 
grow as the Higher Market grows,

437
00:23:18,100 --> 00:23:21,000
it's kind of like retail. 
There's just lots of growing 

438
00:23:21,000 --> 00:23:24,400
Market space in that area and I 
say, many similar things about 

439
00:23:24,400 --> 00:23:29,300
meta the companies even cheaper 
on paper. 15 for PE ratio is 

440
00:23:29,300 --> 00:23:31,900
very cheap. 
I would say the commodity 

441
00:23:31,900 --> 00:23:36,100
multiple right now is around a 
12 forward P/E ratio, meaning, 

442
00:23:36,100 --> 00:23:38,500
that that's the price at which, 
a company trades. 

443
00:23:38,500 --> 00:23:40,600
That if you think, it's not 
creating any value. 

444
00:23:41,100 --> 00:23:43,600
So metas, just above that 
commodity multiple. 

445
00:23:43,700 --> 00:23:45,900
It's below the rest of the S&P 
500. 

446
00:23:46,000 --> 00:23:50,300
The company trades at a Casual 
yield of 7.6 and the core 

447
00:23:50,300 --> 00:23:53,700
business of meta is very strong,
the advertising business. 

448
00:23:54,200 --> 00:23:56,600
I don't personally like this 
company as much from a 

449
00:23:56,608 --> 00:23:59,100
qualitative perspective. 
There's other bets that I like 

450
00:23:59,100 --> 00:24:02,300
more but you have to admit that 
meta has a very strong Core 

451
00:24:02,300 --> 00:24:05,300
Business. 
The free cash flow plummeted 

452
00:24:05,400 --> 00:24:09,600
over the past year and that 
coincided with a lot of capex 

453
00:24:09,600 --> 00:24:12,300
growth. 
And that also coincided with 

454
00:24:12,300 --> 00:24:15,500
Mark Zuckerberg, talking about 
the metaverse non-stop, which 

455
00:24:15,500 --> 00:24:18,600
spooked investors. 
So There's this this large 

456
00:24:18,600 --> 00:24:21,100
amounts of different things 
happening at the same time 

457
00:24:21,400 --> 00:24:24,300
causing meta, stock price to go 
down and investors to lose 

458
00:24:24,300 --> 00:24:26,800
confidence in the company. 
But I think we're going to see 

459
00:24:26,800 --> 00:24:29,600
some of that heal over time. 
Some of the get better. 

460
00:24:29,900 --> 00:24:34,100
I think the capex spend which 
Zuckerberg said is mostly for 

461
00:24:34,100 --> 00:24:37,800
the core businesses, not for the
metaverse, I think this is going

462
00:24:37,800 --> 00:24:39,600
to level off and stop 
increasing. 

463
00:24:40,300 --> 00:24:43,000
I think the free cash flows will
also start to go up because 

464
00:24:43,000 --> 00:24:46,100
again, the capex spend is going 
to be going down and I think 

465
00:24:46,100 --> 00:24:50,100
that Mark Zuckerberg The message
that investors do want him to 

466
00:24:50,100 --> 00:24:52,600
focus on the core businesses, 
not just the metaverse. 

467
00:24:52,900 --> 00:24:55,200
So he wrote letter, he cut 
costs. 

468
00:24:55,200 --> 00:24:57,200
He actually laid off some 
employees and I think he's 

469
00:24:57,200 --> 00:24:59,200
taking the company in a good 
direction right now. 

470
00:24:59,500 --> 00:25:01,600
And again, you don't have to 
argue this one too much from a 

471
00:25:01,600 --> 00:25:05,200
free cash flow perspective. 
From a PE perspective, it's very

472
00:25:05,200 --> 00:25:06,800
cheap. 
It already has priced in a lot 

473
00:25:06,800 --> 00:25:10,300
of negativity and I think it has
some room to surprise to the 

474
00:25:10,300 --> 00:25:13,600
upside so I consider meta and 
Google cheap as well. 

475
00:25:13,600 --> 00:25:16,600
So that's over all my quick. 
Take on these ones and keep in 

476
00:25:16,600 --> 00:25:19,000
mind. 
That cheap does not mean the 

477
00:25:19,000 --> 00:25:22,200
companies won't get cheaper. 
When the pendulum swings from 

478
00:25:22,200 --> 00:25:26,500
one end to the other often times
it goes a little too far stocks.

479
00:25:26,500 --> 00:25:29,300
Don't go down right to their 
fair value and then stop. 

480
00:25:29,300 --> 00:25:33,100
They go down, far below it. 
And Peter Lynch said that the 

481
00:25:33,100 --> 00:25:35,800
hard part about investing is not
buying good companies, that's 

482
00:25:35,800 --> 00:25:38,000
the easy part. 
The hard part is hanging on to 

483
00:25:38,008 --> 00:25:39,400
him, not getting scared out of 
them. 

484
00:25:39,400 --> 00:25:42,600
So I think it's good even though
most people right now, I assume 

485
00:25:42,600 --> 00:25:44,900
think that big Tech is mostly 
cheap. 

486
00:25:44,900 --> 00:25:47,300
I think it's good to get a 
reminder and just look At the 

487
00:25:47,300 --> 00:25:50,600
numbers, even by the Numbers. 
These are pretty cheap companies

488
00:25:50,600 --> 00:25:53,300
and they still have incredibly 
good core businesses. 

489
00:25:53,600 --> 00:25:57,000
Incredibly economically powerful
companies with strong Market 

490
00:25:57,000 --> 00:25:59,900
positions, unlikely to be 
disrupted, I think they have a 

491
00:25:59,900 --> 00:26:02,800
long Runway of growth and 
they're trading at valuations 

492
00:26:02,800 --> 00:26:05,500
they haven't for years. 
So my opinion I think they're 

493
00:26:05,500 --> 00:26:06,800
cheap. 
Let me know what you think.