Tom Lee: Now Is The Perfect Time To Be Greedy - 3 Tech Giants To Buy After The $1 Trillion Wipeout

I do think a lot of people are kind of hesitant hesitant to say, "I want to buy this dip at this moment." I think people are going to plan to buy the dip, Brian, but I this as strange as it sounds, I think people are marking their calendar until November 3rd. Today looks like someone's getting liquidated. I I don't know if it's an institution. I don't know if it's someone who's had a lot of these names and the these drops are causing for selling. Um but at the same time, uh the equal weight market is rising. So, I think there still is plenty of money sloshing around and reality is our institutional investors just just don't have conviction until after midterms. So, I think between now and November 3rd, uh it doesn't take a lot for stocks to get to fall a lot because I just don't know if there's as much dip buying conviction till after November 3rd. >> The perspective Tom Lee just shared directly targets the current wave of market panic. Capitulation has erased over $1 trillion in total market capitalization across benchmark indexes almost overnight headlined by single-day brutal declines. A search in cloud titan recently suffered its worst single-day drop on record plunging nearly 12.6% and wiping out roughly $490 billion in market value in a matter of hours while its mega cap peers slid between three and seven in tandem. The Cboe Volatility Index has spiked dramatically and CNN's Fear & Greed Index, alongside stock-specific sentiment indicators, have cratered deep into extreme fear territory dropping into the lower teens as short-term traders dump shares in sheer desperation. Skeptics are declaring that the AI bubble has finally burst pointing to massive escalating capital expenditure forecasts topping $700 billion combined annually across hyperscalers and temporary free cash flow contractions as proof of a fundamental breakdown. Fears of a grinding economic slowdown, persistent inflation, elevated interest rates, and global instability have pushed defensive traders into full retreat mode. The short-term tactical brain is terrified, desperately scanning the ticker tape for signs of a floor. But the long-term investor recognizes that widespread fear is currently blinding the market to undeniable operational strength. While Wall Street panics over quarter-to-quarter capex spikes, three of the world's most dominant digital powerhouses, controlling cloud infrastructure, global digital advertising, and enterprise artificial intelligence, have just been violently over punished. Despite double-digit pullbacks that have erased hundreds of billions from their valuations, their balance sheets remain cash-generating fortresses with widening economic moats. For investors who look past the immediate noise, this correction is setting up an extraordinary opportunity. Let's look at the numbers. First on the list is Meta Platforms, ticker symbol META. A tech powerhouse whose core advertising engine continues to perform at an extraordinary level. Despite a sharp 20 pullback from its recent highs above $700, Meta's underlying business drivers remain exceptionally strong. In its third quarter, revenue surged 26 year-over-year to $64.6 billion, beating analyst estimates, while total ad revenue reached $63.1 billion. >> [music] >> This growth wasn't just driven by an expanding user base across its family of apps, which now serves 3.64 billion daily active people. It was powered by a 10 increase in ad impressions and a 14 rise in average price per ad. Artificial intelligence is already directly supercharging Meta's monetization. Generative AI retrieval models are matching ads with users far more effectively, yielding higher conversion rates. Meta AI business assistant adopters saw nearly five more conversions at the same cost, prompting them to increase ad spending by 9%. Furthermore, AI improvements boosted Instagram Reels time spent by over 4% while Threads engagement jumped more than 20%. Wall Street's main anxiety stems from Meta's aggressive capital expenditures, which are guided between $135 billion and $145 billion for the year to fund data centers, GPUs, and custom infrastructure. While this heavy spending, combined with a $9.89 billion non-recurring legal settlement, squeezed third-quarter free cash flow to negative $2.12 billion, operating cash flow remained robust at $32.79 billion. To fund this infrastructure expansion without taking on expensive debt during high interest rates, Meta introduced a structured $95 billion equity financing plan. Beyond core ads, Meta is building powerful new monetization layers. Its standalone AI product, Muse, gained over 10 million users in North America in just 6 weeks with retention rates nearly double those of competing AI tools. Meta is establishing tiered subscriptions and partnering with retail giants like Walmart and Stripe on an open personal agent protocol to capture e-commerce transaction fees. With Meta trading around 20 times forward earnings, well below its historical averages, the current valuation offers an exceptionally compelling setup as AI infrastructure efficiency scale and unlock long-term margin expansion. Moving to our second digital titan, we reveal Alphabet, ticker symbol GOOGL, which recently suffered the single worst daily drop in its corporate history. In a violent one-day sell-off, the search titan plummeted over 12.5% wiping out nearly $490 billion dollars market value almost overnight. Wall Street panicked after headline earnings missed expectations, but looking past the noise reveals a fundamental story that is vastly healthier than the price action suggests. The primary catalyst for the reported headline EPS miss was not an operational breakdown, but an unearned non-cash paper loss of 8.66 billion dollars on equity investments, primarily tied to a quarterly accounting write-down on space X. Operating fundamentals actually remained exceptionally strong. Total revenue surged 25 year-over-year to 127.58 billion dollars, while operating income jumped 30 to 40.58 billion dollars with an expansive 31.8% operating margin. While investors reacted nervously to search revenue growth moderating to 12 at 63.35 billion dollars, overall search query volume actually hit a five-year high. The temporary monetization gap stems from user queries rapidly transitioning into AI mode and AI overviews, where ad integration is in its earliest global deployment stages. As ad monetization scales across these AI search experiences, revenue per query is positioned to catch up quickly. The most compelling driver powering Alphabet's long-term thesis is Google Cloud, which delivered a blowout quarter. Cloud revenue doubled year-over-year, surging 103 to 30.71 billion dollars with operating income jumping to 11.12 billion dollars as margins expanded to 36.2%. Backing this growth is a staggering 561 billion dollars commercial backlog with over 55 expected to convert into recognized revenue over the next 24 months. Massive capital expenditures, guided between 195 billion dollars and 205 billion dollars for the year, have temporarily turned free cash flow negative at 9.07 billion dollars. However, this spending is directly building out TPU infrastructure and supporting massive AI adoption where Gemini model APIs process 32 billion tokens per minute. With core operations trading around an unprecedented 18 times forward core earnings and non-core equity stakes providing additional upside, this severe pullback creates an extraordinarily asymmetric entry point for long-term investors. Moving forward to our third market giant, we officially uncover Amazon, ticker symbol AMZN, which recently tumbled over seven following its third quarter earnings release. Wall Street's immediate reaction was driven by a modest headline miss with earnings coming in at $1.89 per share and revenue landing at $201.94 billion dollars and concerns over an aggressive $220 billion capital expenditure program that pushed trailing 12-month free cash flow into negative $42.4 billion dollar territory. However, this surface level drop masks an extraordinary operational expansion across its most profitable business lines. The primary catalyst powering Amazon's thesis is Amazon Web Services, AWS, which went into full re-acceleration mode. AWS revenue surged 39 year-over-year to $45.98 billion dollars, marking its fastest growth rate in nearly five years. While operating income soared 55 to $17.80 billion dollars with a stellar 38.7% operating margin. AWS now generates nearly 63 of Amazon's total operating income despite accounting for under a quarter of total revenue. CEO Andy Jassy highlighted that demand continues to outpace supply, projecting AWS revenue growth to exceed 40 annually through 2027 and 2028 backed by a massive $578 billion dollars contracted backlog with an average contract life of over 6.4 years. Crucially, Amazon's massive capital investments are directly generating high margin returns through its custom AI silicon, Trainium and Graviton, which have hit a $25 billion annual revenue run rate. Furthermore, its core retail operations delivered expanding margins with North American operating income nearly doubling to $8.70 billion while the timing shift of Prime Day artificially depressed third quarter retail growth figures. With Amazon trading at roughly 23.3 times forward earnings, an 80% discount relative to its historical valuation averages, the market is punishing necessary AI infrastructure spending while completely underestimating its future cash generation power. For long-term investors, this temporary free cash flow compression offers a rare chance to accumulate the world's undisputed cloud leader at a deep discount. In conclusion, while short-term market anxiety and quarter-to-quarter capital expenditure fears have triggered violent pullbacks across Meta Platforms, Alphabet, and Amazon, their underlying cash generation engines, expanding margins, and massive artificial intelligence backlogs remain overwhelmingly intact. For disciplined long-term investors looking past the noise, this panic-driven correction offers an extraordinary opportunity to acquire world-class monopolies at historical discounts.