r/valueinvesting
Are MSFT, META and NVDA undervalued right now? Forward PE, PEG ratio and analyst upside look interesting
Asks if MSFT, META, NVDA are undervalued given low PE, PEG, and high analyst upside, or if earnings estimates are overly optimistic.
- Forward PE and PEG ratios for these mega-cap tech stocks appear attractive and not crazy.
- Strong fundamentals like AI exposure, cloud/ad growth, and high margins support valuations.
- Analyst price targets indicate significant upside potential ranging from 44% to 46%.
- Forward PE and PEG ratios might be misleading if future earnings estimates are too optimistic.
- The market might be pricing in more risk than usual for these large-cap tech stocks.
I’ve been looking at large-cap tech / AI stocks again, mainly Microsoft (MSFT), Meta (META) and Nvidia (NVDA), and I’m trying to figure out if these are actually undervalued at current levels or if the market is pricing in more risk than usual.
From what I’m seeing:
MSFT: forward PE around 21, PEG around 1.3, analyst upside around 44%
META: forward PE around 17, PEG around 0.8, analyst upside around 46%
NVDA: forward PE around 21, PEG around 0.5, analyst upside around 45%
Obviously analyst price targets are not guaranteed, and PEG depends a lot on future growth assumptions. But for mega-cap tech stocks with strong AI exposure, cloud/ad growth, and high margins, these numbers don’t look crazy to me.
Curious what others think. Are MSFT, META and NVDA still undervalued growth stocks here, or are the forward PE / PEG ratios misleading because earnings estimates are too optimistic?
Which one looks like the best buy right now: Microsoft, Meta or Nvidia?
Do you understand Financials, Profit Margin & Balance sheets?
A killer quarter. And forward, its based on estimates, sure but a sub 1 PEG is hard enough to find, much less .5!
Which is why people don't do it; it takes serious effort. I do long term value investing, but I also do growth investing, so quite different from you, with very specific risk management where I like risk/reward, but again, the reason most people who try it fail is because they don't put in the work. This, I believe, is why so many people fail to beat the market; they have some kind of vague fundamental thesis, but it takes years to test it, typically, or at least 6-12 months, and if they don't do a lot of the hard work, then across a lifetime... you don't really learn so much from attempts made so infrequently.
They also have objectively better numbers. Lower past and forward PE, higher revenue growth, higher eps growth, less capital expenditures, and a .5 PEG. 🤷🏼♂️
The fact that we're on a value investing sub and people don't understand the difference between EPS/Cash flow growth vs. multiple growth/contraction absolutely blows my mind.
So what, just because AMZN was massively overvalued 5 years ago and has since absolutely crushed growth of intrinsic value this means it isn't a good buy? Look at 10 years, so you get a realistic picture before the massive overpricing due to people thinking covid = people at home + stimulus checks = $$ for amazon.
Like, forget about AMZN, the market could care less about past numbers, it discounts future cash flows back to today.
( I am a long time bag holder )
Meta is being sold off for the following reasons:
- their nos of new users fell. I get a sense that the company is moving away from this towards ARPU or what they call APPU. If you check out FB recently, you will find that their AI generated stuff is very target and actually good. I find myself spending quite a bit of time there.
- there is a sense that META can’t really do anything else. Their glasses is moving in start-stop spurts. Their AI is getting better but is helping to generate content their only goal ? If you try meta AI, you will find that it is actually quite good in certain things besides generating images. But nobody talks about it at all.
- Some say, Mark is willing to cut losses (reality labs) if the strategy changes, and that is a good point. But I think they need to start having more success in their initiative and not be perceived as long in the tooth.
If you are into META, you could track the following metrics on their progress, the chart and text was generated by Lucy Diamonds, so it is AI slop:
https://www.reddit.com/u/raytoei/s/rEGtss3dhz
Btw, I did my valuation and even on a multi-year capex spending ( I can’t remember maybe up to 5 years at various amounts) , the valuation is still not expensive.
DM me if you want a copy of my valuation
These companies are capital intensive, so they will naturally have a lower PE. You can make a strong argument that companies like META and AMZN are actually very fairly valued and have further to fall.
Bullish MSFT, somewhat bullish NVDA still. META… I don’t know… might work out. But I’m not so sure. BUllish short term (1-2years) though.
checking checking
Down -50%
Yes what?
I bet on a company’s TAM and execution. NVDA > META >> MSFT.
I don’t think MSFT is undervalued. Rising tide lifts all boats but I can say MSFT executes.
What did he say da?
All the metrics you’re looking at are juiced because the depreciation from their capex really hasn’t begun to hit yet
La frase más peligrosa en bolsa, esta vez es diferente
Man this sub shocks me everytime