Analyzing Mega Cap Stocks: Meta, Microsoft, Apple, and Tesla

• 0:00:28 Meta:
  • Stock hitting fresh all-time highs of nearly $700 per share.
  • Q4 revenue: $48.4 billion (up 21% YoY).
  • Full-year 2024 revenue: $64.5 billion (up 22% YoY).
  • Q4 operating income: Up 43% YoY; operating margin at 48% (up 7% YoY).
  • Q4 EPS: $8 (up 50% YoY); full-year EPS up 60%.
  • Projected Q1 2025 revenue: $39.5-$41.8 billion (8-15% YoY growth).
  • Projected 2025 total expenses: $114-$119 billion, driven by infrastructure costs.
  • Projected 2025 capital expenditures: $60-$65 billion.
  • Q4 operating cash flow: $28 billion (record high, up 44% YoY).
  • Full-year operating cash flow: $91.3 billion (up 28% YoY).
  • Q4 capital expenditures: $14.4 billion (double last year).
  • Full-year capital expenditures: $37.3 billion.
  • No share repurchases in Q4 despite $13 billion in free cash flow.
  • Advertising revenue hit an all-time high, with growth in all regions.
  • Family of Apps segment performing well; Reality Labs segment still a drag on profitability.
  • Expenses as a percentage of revenue have been declining.
  • Currently trades at a price to operating cash flow of about 19.26.
  • The presenter believes Meta could be trading around fair value today.
• 0:10:24 Microsoft:
  • Stock trading around $415 per share, flat for about a year.
  • Q4 revenue: $69.6 billion (up 12% YoY).
  • Q4 operating income: $31.7 billion (up 177% YoY).
  • Q4 net income: $24.1 billion (up 10% YoY).
  • AI business annual revenue run rate: $13 billion (up 175% YoY).
  • Growth seen in all business segments.
  • Azure and other cloud services grew 31% YoY.
  • Search and news advertising grew 21% YoY.
  • Operating cash flow: $22.3 billion (up from $18.9 billion YoY).
  • Repurchased about $5 billion worth of stock.
  • Paid a dividend of about $6.2 billion.
  • Capital expenditures: $16 billion, leading to $6.5 billion in free cash flow.
  • Returned more capital to shareholders than free cash flow produced.
  • Revenue hitting all-time highs, but earnings growth is slower.
  • Operating cash flow hit an all-time high of $126 billion (trailing 12 months).
  • Free cash flow is declining due to increased capital expenditures.
  • Trades at a price to operating cash flow of about 25.
  • The presenter believes it is slightly above fair value.
• 0:16:29 Apple:
  • Stock saw a slight boost after earnings.
  • Q4 revenue growth: 4% YoY.
  • Products revenue grew 2-3% YoY; Services revenue grew 14% YoY.
  • Net income: $36.3 billion (up 7% YoY).
  • EPS grew 10% YoY due to a 3% decline in share count.
  • Operating cash flow: $30 billion (down 30% YoY).
  • Capital expenditures: $3 billion.
  • Free cash flow: $26 billion (down YoY).
  • Returned most of the free cash flow to shareholders via dividends and buybacks.
  • iPhone revenue flat since 2022; Mac revenue declining; iPad revenue down; Wearables down.
  • Services revenue is the only segment seeing significant growth.
  • Trades at 36 times free cash flow.
  • The presenter believes it is the most expensive stock of the group and overvalued.
• 0:22:29 Tesla:
  • Stock initially down 5% after earnings but recovered after the conference call.
  • Total automotive revenues declined 8% YoY.
  • Energy generation and storage revenue up 113% YoY.
  • Services and other revenue up 31% YoY.
  • Total revenues up 2% YoY.
  • Total gross profits down 6% YoY; gross margin declined to 16.3%.
  • Operating expenses increased 9% YoY.
  • Operating income declined 23% YoY.
  • Operating cash flow up 10% YoY; Capex up 21% YoY; Free cash flow down 2% YoY.
  • Producing fewer vehicles; deliveries up only 2%.
  • Market share flat or declining in key regions.
  • Energy and services segment performing well.
  • Vehicle deliveries flat for 15 months; profits not growing for 2 years.
  • Elon Musk claims Tesla could be worth more than the top five companies combined.
  • Musk predicts an "epic" 2026 and a "ridiculous" 2027 and 2028.
  • Musk believes Optimus robot could generate $10 trillion in revenue long-term.
  • Revenue and profits not growing substantially.
  • Trades at 375 times free cash flow and 14 times sales.
  • Trades at 84 times operating cash flow.
  • The presenter believes the stock is significantly overvalued.

Key Takeaways:

• Meta had the strongest earnings report and might be undervalued based on operating cash flow.
• Microsoft is slightly overvalued but shows consistent growth, especially in its AI and cloud segments.
• Apple is considered overvalued with slow growth and questionable capital allocation.
• Tesla's fundamentals are weak, but the stock price is driven by Elon Musk's optimistic projections, leading to significant overvaluation in the presenter's view.