Brian Nowak Previews Megacap Internet Earnings for GOOGL, META & AMZN | Episode 318

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Brian Nowak Previews Megacap Internet Earnings for GOOGL, META & AMZN | Episode 318

IdeaMValuation Methodology and Risks

Amazon.com Inc (AMZN.O)

Our $330 PT is based on applying a ~25X P/E multiple to an average of our $13 of '27/'28 EPS

(roll to mid-year), which implies ~29X '27 EPS and ~22X '28 EPS.

Risks to Upside

n Faster than expected AWS rev growth and stable margin expansion

n Faster than expected Retail rev growth, stable to expanding 1P Merch Margins

n Greater than expected shipping and fulfillment leverage

Risks to Downside

n Investments step up and continue for longer than expected

n Merch margins worse than expected

n AWS revenue decelerates and /or margins decline

Alphabet Inc. (GOOGL.O)

Our $415 PT is based on applying a ~23X P/E multiple to the average of our $16/$19 EPS in

'27/'28, and implies paying ~1.4X PEG, a ~25% premium to GOOGL's peer median.

n New products generate higher than expected top line contribution.

n Capital returns through greater share buybacks.

n Hiring and/or spend per headcount is lower than expected.

n High exposure to SMB and travel could pressure ad revenue in a recession

n Improved disclosure around the Google and Other Alphabet segments may not

decrease the overall investment activity of the business.

Meta Platforms Inc (META.O)

Our price target is determined using a discounted cash flow/long-term EBITDA multiple. It

implies a ~23x '27 P/E Multiple. Our DCF uses an ~8% WACC and a ~3% terminal growth rate

n Faster than expected Reels monetization & higher engagement growth

n Increased benefit from AI investment

n Revenue driven by subscriptions and/or click-to-message ads

n Further efficiency improvements drive outsized FCF growth

n Macro pressures/weaker consumer spend

n Regulation impacts ability to target ads