1 October we become SureStone CapitalSame team, same ABN. Our website and email addresses move to surestone.com.au.
Preparing video
Key points:
Nvidia (NASDAQ: NVDA) delivers strong returns but faces sustainability risks as competition intensifies Microsoft (NASDAQ: MSFT) and Apple (NASDAQ: AAPL) show margin strengths, but valuations and growth constraints prompt caution Alphabet (NASDAQ: GOOGL) seen as undervalued with future upside; Meta ($META) praised for spending discipline Amazon (NASDAQ: AMZN) and Tesla (NASDAQ: TSLA) viewed less favourably due to lower business returns and rising competition
John Birkhold from TWC Invest highlights the dominance of global mega-cap stocks, notably those based in the US, attributing their outperformance to strong profitability and capital deployment. Birkhold points to Nvidia ($NVDA) as a standout, emphasising the company's extraordinary growth and margin expansion in recent years, now boasting $200 billion in revenue. However, he raises caution over inflated market expectations, suggesting current returns may be unsustainable given the likelihood of rising competition, with companies like Alibaba (NYSE:BABA) potentially emerging as challengers in the AI chip space.
Birkhold identifies Microsoft ($MSFT) as another major player, benefitting from improved asset efficiency after transitioning to a subscription model. Yet, as Microsoft increasingly invests in Nvidia-type chips, there are early signs of declining asset returns, prompting TWC Invest to trim its position due to valuation concerns. Apple ($AAPL), meanwhile, is described as highly profitable but facing growth challenges, particularly in integrating AI due to energy constraints; Birkhold maintains an underweight position in this stock.
Alphabet ($GOOGL) is viewed favourably for its stable growth and capacity to remove costs, while Meta ($META) is seen as agile in adapting spending for ROI. Amazon ($AMZN), despite strength in AWS, is considered less attractive due to lower returns in core businesses. Birkhold warns against Tesla ($TSLA), citing increasing competition and declining profitability.
