App Economy Insights
Is this Google's NVIDIA moment?

Let's break it down:

📈 $100B+ revenue.
☁️ Cloud's $155B Backlog.
🤖 The Anthropic TPU Megadeal.
☢️ Going nuclear for the AI buildout.
🔎 Why Search revenue is accelerating.
https://t.co/1BjweFXIlY
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AkhenOsiris
Current 10 gm losing streak usurps anything else...what have you done for me lately...invest vs trade and you don't need to give a shit

MSFT is up 26% in the last 12 mos, 22.5% CAGR in the last 5 years, and 27.8% CAGR in the last 10 years. And the first question is "your stock has underperformed lately, what do you think is wrong?" - modest proposal
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Capital Employed
Best stock pitches letter dropping tomorrow.

This issue is an absolute mammoth with over 50 interesting ideas --->

https://t.co/JMLSGe878F
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Dimitry Nakhla | Babylon Capital®
RT @TheShortBear: $MELI is accelerating.

MercadoLibre CEO: "We are pleased to report another strong quarter..."

$MELI: -2% AH https://t.co/6QMlfcKBV3 - The Transcript
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Hidden Value Gems
Time to look at South African stocks!

"Johannesburg, South Africa’s biggest metropolis, markets itself as a “world class African city.” It’s home to some of the continent’s biggest companies and its largest stock exchange. But private firms have gradually taken over public services, from security to healthcare to mail delivery. Insurance companies fix potholes and sponsor fire brigades to reduce claims."

from @WSJ
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Dimitry Nakhla | Babylon Capital®
S&P Global $SPGI Q3 2025 Report 🗓️

✅ REV: $3.89B (+9% YoY)
✅ EPS: $4.73 (+22% YoY)

💵 Market Intelligence $1.24B (+6% YoY)
💵 Ratings $1.24B (+12% YoY)
💵 Commodity $556M (+6% YoY)
💵 Mobility $445M (+8% YoY)
💵 S&P DJ Indices $462M (+11% YoY) https://t.co/nLQcYLHf2e

14. S&P Global $SPGI (Thurs AM)

🗓️ REV Est: $3.82B (+7%)
🗓️ EPS Est: $4.41 (+13%)

💵 NTM P/E: 26x
💵 NTM FCF Yield: 4.17% https://t.co/MDt4osjmMx - Dimitry Nakhla | Babylon Capital®
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Dimitry Nakhla | Babylon Capital®
$GOOG was a $181 stock <4 months ago

“Efficient market” they say…

A quality valuation analysis on $GOOG 🧘🏽‍♂️

•NTM P/E Ratio: 19.32x
•10-Year Mean: 23.69x

•NTM FCF Yield: 3.79%
•10-Year Mean: 4.18%

As you can see, $GOOG appears to be trading below fair value

Going forward, investors can receive ~18% MORE in earnings per share & ~9% LESS in FCF per share 🧠***

Before we get into valuation, let’s take a look at why $GOOG is a great business

BALANCE SHEET✅
•Cash & Short-Term Inv: $95.33B
•Long-Term Debt: $10.89B

$GOOG has a strong balance sheet, an AA+ S&P Credit Rating & 467x FFO Interest Coverage

RETURN ON CAPITAL✅
•2020: 16.2%
•2021: 27.6%
•2022: 26.1%
•2023: 26.9%
•2024: 32.3%
•LTM: 31.9%

RETURN ON EQUITY✅
•2020: 19.0%
•2021: 32.1%
•2022: 23.6%
•2023: 27.4%
•2024: 32.9%
•LTM: 34.8%

$GOOG has strong return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2014: $66.00B
•2024: $350.02B
•CAGR: 18.16%

FREE CASH FLOW✅
•2014: $12.01B
•2024: $72.76B
•CAGR: 19.73%

NORMALIZED EPS✅
•2014: $1.28
•2024: $8.04
•CAGR: 20.17%

SHARE BUYBACKS✅
•2018 Shares Outstanding: 14.07B
•LTM Shares Outstanding: 12.39B

By reducing its shares outstanding ~12%, $GOOG increased its EPS by ~13.6% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 58.2%
•LTM Operating Margins: 33.2%
•LTM Net Income Margins: 30.9%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~18% MORE in EPS & ~9% LESS in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $GOOG has to grow earnings at a 9.66% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2028 EPS growth over the next few years to be more than the (9.66%) required growth rate:

2025E: $9.61 (19.5% YoY) *FY Dec
2026E: $10.21 (6.3% YoY)
2027E: $11.55 (13.1% YoY)
2028E: $13.57 (17.4% YoY)

$GOOG has an excellent track record of meeting analyst estimates ~2 years out, but let’s assume $GOOG ends 2028 with $13.57 in EPS & see its CAGR potential assuming different multiples

23x P/E: $312.11💵 … ~17.4% CAGR

22x P/E: $298.54💵 … ~15.9% CAGR

21x P/E: $284.97💵 … ~14.5% CAGR

20x P/E: $271.40💵 … ~12.8% CAGR

19x P/E: $257.83💵 … ~11.2% CAGR

As you can see, $GOOG appears to have attractive return potential IF we assume >20x earnings (a multiple below its 5-year & 10-year mean while assuming a lower 2028E)

At >22x, $GOOG has aggressive CAGR potential & it’s not unreasonable for the business to even trade for ~23x (given its growth rate, moat, balance sheet, & exemplary capital allocation)

Today at $181💵 $GOOG appears to be a strong consideration for investment

Between cloud ☁️ , AI 🤖 , quantum computing ⚛️, $GOOG has a strong growth runway ahead, with the potential for continued margin expansion serving as an additional tailwind

$GOOGL
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𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.

𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲. - Dimitry Nakhla | Babylon Capital® tweet