The Market Just Changed Overnight — 5 Stocks I’d Buy Right Now

Now, the market did not wake up to a normal pullback. Overnight, the political map has changed. AI stocks have sold off. The dollars weakened, gold's jumped, and then we're starting to see stocks reverse. And this kind of move, it creates two very different reactions. Some investors panic and sell everything. Others pretend nothing matters and buy every dip without looking at the numbers. Now, I don't think either approach makes sense. The opportunity is in separating the businesses getting stronger from the stocks where the price already assumes almost perfection. And in this episode today, I'm going to break down five stocks that are center of this reset. And a few of these, they've just reported their earnings. All five, in fact, they're moving for completely different reasons. One, well, it's nearly doubled its data center revenue. One is spending more on AI than almost anyone believed possible. And one has just delivered 20% bookings growth. While the stock trades near its yearly low, we've also got another one that's attracted Bill Aman after a 32% fall and one may be the cheapest high quality compounder in the entire group. And by the end of the episode, I'm going to rank all five from the stock I'd be most cautious with to the one I'd be most comfortable buying today. And the first thing we need to understand is what the market was actually pricing in. Democrats, they want control of both chambers of Congress. and investors they immediately focus on the prospect of tighter scrutiny for both technology as well as artificial intelligence. We had US futures fall, European markets open lower and semiconductor shares in Asia. They came under significant pressure. Now obviously it doesn't prove new regulation will crush AI. It shows how fast positioning can move when uncertainty arrives. At the same time, the dollar weakened, investors moved towards treasuries and gold pushed above $4,000. That is a classic signal that the market was also reconsidering growth, borrowing, and political gridlock. Now, the important part is what happened next. We started to see some stocks U-turn. The markets move from a one direction political reaction into a fight over which companies still deserve premium valuations. And today's heat map, it shows that reversal clearly. We've got Amazon, AMD, although barely. It was up significantly more just hours ago, and Netflix, they're all green. While Tesla, and parts of software remain under pressure. This is a rebound, but it's not a blind return to risk. Zoom out one week, and the damage is easier to see. AMD, that's down 17%, Google down 13, and several semiconductor names. They're still deeply red even after a slight bounce today. And 52- week high draw down. It makes the opportunity set even more uneven. AMD, that's down around 27% below its high. Amazon, that's down around 10%. And several AI leaders, they're down more than 30%. And this is where Tom Lee's view matters. He's not saying every AI stock is cheap. And he's not saying volatility disappears. His point is that uncertainty itself, that can become the clearing event. I >> think maybe 8,200 by the end of this year. you you yes you want to say that or you want to sort of say it or you want to say it this way or you think it's going to happen. Yeah, I think we're okay. >> I do think markets are going to exit the year strong, but they have been struggling, you know, like underneath the surface, it's been a real battle and I think everyone I speak to is nervous about one of many things, right? The war, AI spending, the debt markets, the Fed, inflation, midterms, and I think the markets held up really well in the face of all that. And as you know, markets climb a wall of worry. So, I think if we get some clearing of any of these things, then we can really see money come off the sidelines. That doesn't make this an automatic buy the dip moment. It means the sell-off has to be tested against earnings, cash flow, and valuation instead of treating as a single political trade. And look, the regulatory risk that is in fact real, especially for companies tied to data centers, digital advertising, and large consumer platforms. But divide incentives in Washington, they can also slow the most aggressive proposals. So today, I'm not building the case around a party winning or losing. I'm looking at whether the operating results are strong enough to absorb a lower multiple if investors demand more compensation for the risk. And that question matters even more this week because AMD, Booking, and Uber, they've now reported while Amazon and Netflix, we've also got some recent numbers of theirs to digest. The market's also debating whether the AI buildout is becoming a financing problem. Capex is rising, free cash flow is being squeezed, and investors are becoming less willing to reward spending without visible returns. That is the thread connecting AMD and Amazon. Demand is still extraordinary, but the cash cost of meeting that demand, that's now too large to ignore. And we got Netflix and Booking. They're different. Their stories are about margin, buybacks, free cash flow, and whether slower near-term growth is already more than reflected in the price. It's why this is a stock picking market. The macro reset creates the opening. But the company numbers decide whether the opening is real. Now, let's start with AMD because the headline numbers, they were excellent. Revenue reached 13.4 billion, up 45% year-over-year. adjusted EPS that rose 74% to $29 and operating leverage that was clearly visible. Adjusted operating income grew 75% and adjusted operating margin expanded to 29% that was from 24% a year ago. Obviously, everyone knows with AMD the engine here, that's data center segment revenue hit a record 8.5 billion. That's up 97% year-over-year and 27% sequentially. And management have said the quarter was stronger than its expectations and that AI data center revenue grew more than 50% sequentially. That's not a small acceleration from a low base. And the biggest statement came in the 2027 outlook. AMD said it enters the year with the strongest product portfolio and customer momentum in its history, supporting growth far above its long-term model. Mandarin said they expect company revenue to grow more than 80% in 2027. Data center CPU revenue that's expected to roughly double while data center AI revenue that's expected to more than double. If that happens, AMD will be a much larger earnings business very quickly. It also means the market will judge every product launch, supply commitment, and customer deployment against an extremely high bar. And the fourth quarter guide supports the momentum. Revenue is expected to be roughly $17 billion which would be about 66% growth year-over-year and 27% sequentially. So the demand debate it's not the immediate problem. The question is how much of this acceleration is already reflected in the share price today. Now Wall Street they see around 34% upside over the next year. Their average price target comes to $648 where it trades today around 60 times. That's the 2026 earnings estimate around 30 times based on 2027 and close to 20 based on 2028. Now, obviously the multiples, they're falling quickly as we can see because analysts are expecting a major earnings ramp. But paying for that ramp today leaves less room for a product delay, margin miss, customer concentration issue, or slower AI spending. And the balance sheet detail here, this is the part I would not just gloss over. Inventory rose to 11.5 billion while quarterly free cash flow fell to roughly 554 million. The decline is not automatically a red flag. AMD they're building ahead of a huge product ramp and 9 month free cash flow still increased around 36% year-over-year. The other thing I'd like to say is that the company also remains in a net cash position with cash and short-term investments comfortably above total debt. Liquidity for AMD, that's not an issue. The potential issue here is conversion. If inventory and receivables keep absorbing cash while the stock is priced for rapid execution, investors, they could become less forgiving even if revenue continues to grow. Now, the stock is currently trading in the morning around $480, but the market I expect to be very volatile today. It could swing in either direction very comfortably. Now, my current DCF we can see comes to a value of $529, but it assumes free cash flow rises from around 7.6 billion to 42 billion by 2030. This is based on analyst expectations. Against today's price, we're talking around 10% upside terms of a margin of safety sitting around the 9%. My verdict for AMD is not to sell. The business momentum is too strong for that, but I wouldn't exactly chase at today's price. For a long-term investor though, a small starter position, it can make sense if you accept volatility. I become more interested by around $450 and much more interested around 425. AMD, it has one of the strongest growth profiles in the group today. It also has the thinnest valuation cushion, great company, excellent quarter, but at this price, it ranks as a watch or measured buy, not a conviction buy. Amazon's quarter was strong enough to confirm that the underlining machine is accelerating. Revenue reached $22 billion. That was up 12% year-over-year or 13% excluding currency. Operating income that climbed to $28 billion from 17.4, giving Amazon its highest operating margin on record. And this works out to be more than $300 million of profit every single day in just the latest quarter. The retail business is more efficient. Advertising remains attractive and AWS that's reacelerating. AWS revenue that grew 39% to $46 billion is fastest growth in nearly 5 years. That is 184 billion on an annualized run rate. And we can see AWS operating income that reached $17.8 billion up roughly 55%. Its margin was close to 39%. So this is not growth bought through collapsing profitability. And look, the backlog, it tells the same story. Demand commitments have accelerated as customers reserve capacity for AI training, interference, and traditional cloud workloads. And AWS, while it remains the largest of the major cloud platforms by annualized revenue, scale matters because Amazon can spread infrastructure, chips, power, and software investment across an enormous customer base. But as expected, this is the tension in just one image. Their operating profit, it keeps climbing while free cash flow has moved sharply negative because Amazon their spending at a historic level. Trailing 12 month free cash flow was negative $42.4 $4 billion driven mainly by the increase in property and equipment purchases for AI infrastructure and Amazon now expect around $220 billion of cash cable expenditure in 2026 and management they say spending should increase meaningfully again in 2027. Now look, this could be the right decision. If AWS can sustain growth above 40% while margins remain near current levels, today's capex, it creates a much larger future earnings base. But investors well shouldn't treat capex as free. The company has to convert these investments into durable cash returns, not simply point to the backlog and ask the market for patience. Now, the company is currently trading around $260 and is not obviously expensive on a headline forward earnings multiple. The problem is the reported earnings. They include volatile investment gains. Wall Street as well. They like the company. They see 30% upside. The average price target $327. The range 230 lowend 405 at the upper end. Where it's important to understand the 2026 earnings estimate is boosted by anthropic marks. So the apparent multiple can make the core business look cheaper than it really is. Operating income and normalized free cash flow. They're better anchors. Now a quick look at their growth profile which is outstanding. Forward revenue growth that's sitting at 14% while forward ebits are 25% forward ebit sitting 29%. All of these are looking very strong expected also to grow much faster than revenue. EPS coming in 24.5%. And it's good to see the balance sheet for Amazon can support the buildout. Net leverage is manageable and Amazon has financing access that smaller AI infrastructure players just do not have. Now, my DCF for Amazon comes to $312. That's the base case. But honestly, I wouldn't say this is incredibly conservative. It assumes based on analyst estimates that free cash flow rises from 5 billion in 2026 to 175 billion by 2030. And moving on from that period as a growth rate sitting around 15%. Now, this I would argue is more of a bullleaning base case. And on today's case, it implies 21% with a margin of safety sitting around 17%. My verdict is accumulate, not chase. Amazon is a long-term AI and cloud winner, but the free cash flow question is too important to hide behind the earnings multiple. I would be comfortable building gradually around the current levels and adding more aggressively below $250. The upside for Amazon is real, but the spending cycle keeps this below the cheapest names today. We then move on to Uber which has just reported. In fact, we can see morning session. It was up now it's down very volatile as most stocks are negative 1% trading around 65 $66. I mean year to date the company's down 18% over the last 12 months down 33 perhaps could open at a new 52- week low today where we get a near strong buy from Wall Street. Four out of five buy from Seik Alpha and the first reaction it looked ugly. Uber fell almost 4% after reporting $186 million of restructuring charges. Then they recovered most of that loss within 10 minutes. Now once you look past that headline, the quarter was strong. Gross bookings they reached $59.8 billion. Revenue was 14.8 billion. Trips grew 16% and active consumers grew 14%. They also finished the quarter with 215 million monthly active platform consumers and more than 4 billion trips. Trip per consumer that also rose 2%. So growth came from more users and higher frequency. We can also see gross bookings. They grew 20% both reported and constant currency. The result now it landed near the top of Uber's previous 58.3 to 60.3 billion guidance range where revenue increased 10% to 14.8. 8 billion. Business model changes. Now they reduce reported growth by 8 percentage points which is why bookings are the cleaner read on the underlining demand. If we move to non-GAAP operating income, they rose 38% to 2.3 billion. The margin against gross bookings improved to 3.9% from 3.4% just a year ago. And non-GAAP earnings per share, they reached 88 cents, up 35% and the top of the prior guidance range. GAP earnings they do look weaker because last year's figure included unusually large investment gains where quarterly free cash flow that increased 14% to $2.5 billion trading free cash flow reached 10.4 4 billion, which is the clearest evidence that Uber's moved beyond growth at just any cost. And against a market value around $136 billion, that is close to 13 times trailing free cash flow before adjusting for net debt. For this growth rate, that's not really demanding. We've also got mobility bookings. They grew 17% to $29.5 billion. Segment operating income increased 27% and margin rose to 8% of bookings. Looking at delivery, that was even faster. Bookings grew 23% to 28.5 billion, while segment operating income rose 30% to just over 1 billion. And then we've got freight revenue that grew 34% but the segment still lost $33 million. It's improving yet it remains the weakest part of the group and it's not carrying the valuation thesis. It's also good to note for Uber their balance sheet it is manageable. Net debt to EBITDAR that's around 0.9 and is expected to fall towards 7 while net debt represents about a quarter of capital. Now, Wall Street, their expectations is this to hit around $1, 101 in the shorter term. That's around 50% upside lower range $70, which is still above today's price, although fairly trivial and upper end at 150. Where if we look at their growth here, well, the mix it is attractive. Forward revenue, we can see expected 15%, forward EBIT DAR, that's sitting 29%. and long-term earnings growth that's coming in 27.3. Now at roughly $6667, Uber trades around 21 times the 2026 earnings estimate and under 15 times based on 2027. That becomes cheap if the cash flow and earnings forecast remain intact. Now my DCF it assumes 8% free cash flow growth and 9% discount rate and 3% terminal growth. We get a value here of $115. Now that's around 72% upside from today's price as well as a margin of safety sitting at 42%. I mean if we were to increase the growth rate to the middle rate so we have been fairly conservative where we get a value of $132 pretty much a double from today's price. My verdict for Uber it is a buy. I would begin around today's price and aggressively below 60 while bookings and cash conversion remain intact. Now, the thesis it does break if booking's growth in free cash flow stalled or autonomous vehicles weakens Uber's platform economics. On today's evidence, I have to say Uber it ranks number one. Now, Netflix is the cleanest example of a strong business becoming interesting because the stock has fallen. Shares are down around 32% year to date. And when we look over the last year, they're down 42, pretty much trading around 52 week lows. We get a 4.1 bite respectable from Wall Street, weaker buy from Seik Alpha and as we saw in the last quarter, Bill Aman's Persing Square has now returned to the stock with a position worth roughly $692 million at the end of the third quarter. His thesis straightforward. Revenue can keep compounding. Advertising should scale. Content spending can grow more slowly than revenue. And most of the earnings that can turn into free cash flow and share buybacks. We've also got the latest quarter supporting the operating part of that thesis. Revenue reached 12.9 billion that was up 12% year-over-year while operating income grew 37% to 4.5 billion. Operating margin that also expanded to 34.6% from 28.2% and EPS that was up 49% to 87%. And the margin expansion for Netflix, that's the real story. Netflix is no longer just proving that streaming can grow. is proving the model can generate more profit from each dollar of revenue where fullear revenue is expected to reach around $51 billion up 13% with an operating margin around 31.5%. Free cash flow that was roughly $2.9 billion in the quarter and management still expect around $12 billion for the full year. Now it's great to see their share count is also falling quickly. It creates a second engine for earnings per share growth, providing management doesn't overpay for when the stock is expensive. In terms of Wall Street, their average price exit $85, 34% upside, higher end $126. More bears still expect it to fall down to $57. And the market is not pricing Bill Aman's full 20% earnings growth thesis. Consensus shows much slower growth in 2027 before an acceleration later. That creates room for upside if the margins keep surprising. And you can see forward price to earnings multiple that's around 17 times close to the bottom when we go all the way back to 2022 is a very different riskreward from the premium investors paid near the highs. Where we've also got advertising that remains both the opportunity and the risk. Netflix expects ad revenue around $2.7 billion this year. That's below the previous $3 billion target because product roll out in their view that's just been slower. Now, I'd also not use this chart here to claim that Netflix has overtaken YouTube is comparing Netflix's total revenue with YouTube advertising revenue. So, useful for scale, but it's not a like forlike competitive conclusion. The important question is whether advertising, engagement, and pricing can support low double-digit revenue growth without weakening retention. So far, management say churn has improved year-over-year. And the stock, well, it can continue to be volatile because engagement data, hit timing, and ad execution will move expectations. But the earnings base, it's much stronger than what it was during the 2022 collapse. My DCF, it starts with $12 billion of free cash flow and it assumes 10% growth. We can see 9% discount rate. Now it gives a value as we can see here on the middle case of $75 indicating 17% upside margin of safety 14%. Unlike AMD, the current price is already near a defensible margin of safety. My verdict is buy gradually around $63 and buy more aggressively below 60. Aman's involvement is not the reason to own it, but it does reinforce the valuation case. The thesis, well, it breaks if advertising stays weak. engagement erodess and margins stop expanding at the same time. Until then, Netflix, it offers a better balance of quality, cash flow, and valuation than the market mood suggests. We then move on to Booking Holdings, which is the stock I think the market is trading most harshly. Shares, they're down 27% year to date. Is also trading around 15 times on a forward valuation where Wall Street gave it a near strong buy rating. Seek Alpha respectful buy. In fact, Wall Street, they see near 50% upside in the short term, $230 price target. And you've got consensus. They expect earnings growth around 15% this year, followed by 18% in 2027. Now, the Moswood does fall very quickly with expectations of 11 on 2028 numbers. And the reported quarter, it does look messy at first. Gap revenue, we can see here, it fell 1% to $8.9 billion. Net income well that also fell around 1% but adjusted revenue that grew 9% to $9.8 billion. Adjusted EBITRA likewise that grew 9% to 4.6 billion. The operating demand was solid. Room nights grew 7% to $345 million. That's an acceleration from 5% in just the previous quarter. Gross bookings they also increased 10% to 54.5 billion or roughly 11% at constant currency. average daily rates. They also contributed positively. Now, the 1% gap revenue decline was not a clean signal of weak demand. It included a $900 million revenue reduction connected with an FTC matter involving Price Line. Now, booking also accured a $100 million loss for that matter. No final settlement has been agreed and litigation or additional penalties remain possible. So, this is a genuine risk. It's why it show both GAAP and adjusted figures. Ignoring the charge highs the risk, but using the GAP revenue decline as proof that the core travel business shrinking, that's honestly misleading. And quarterly free cash flow that fell 22% to $1.1 billion, largely because of a $3.6 billion seasonal unwind in deferred merchant bookings. Trading to our monthly cash flow, that still grew 11% to $9.2 billion. The longer window, that's more useful measure here for a seasonal travel platform like booking. And the company also returned $2.4 billion of capital in the quarter, including $2.1 billion of buybacks and roughly 300 million of dividends. Now, we can see the diluted share count that's fallen 7% year-over-year and is down roughly 36% since 2018. That is a powerful boost to per share value when the stock is repurchased cheaply. And the near-term problem for booking its guidance for the fourth quarter booking expects room night growth of only 1 to 3% and reported gross bookings growth of 2 to 4%. Adjusted revenue that's expected to grow 0 to2% as reported while adjusted EBIT are roughly flat. Constant currency growth it is better but the slowdown it is real. Now we can see here on the right hand side management are pointing to softer international travel disruptions linked to the Middle East higher airfares and localized unrest in parts of Europe. Domestic travel though that's held up better where for the full year booking still expects high singledigit growth in gross bookings adjusted revenue and adjusted EBIT DAR with adjusted earnings per share up in the low to mid- teens. The longerterm ambition is at least 8% growth in gross bookings and adjusted revenue and around 15% growth in adjusted earnings per share. Now the valuation is already compressed well below the 5-year average. The forward multiples around 14 versus average close to 20 while the yield sits above the recent norm. We can also look at leverage that seems to be manageable. Net debtar coming at 34 leaving plenty of room to continue buybacks while absorbing a softer quarter. Now my DCF starts per analyst expectations 9.3 billion where we have a 5% growth rate as the middle case again 9% discount rate 3% terminal growth it gives us a value today of $231 against the share price 47% upside 32% margin of safety but what I say is when we take a look it doesn't assume here the model's not telling us we need heroic growth the base case is only 5% and the reverse DCF it implies the market today is pricing slightly negative long-term free cash flow growth and a 15% discount to fair value. That's around $197 and 20% discount on $185. The current price sits well below both. The risk is that weak international demand lasts longer. The FTC cost expands or AI changes how travelers discover hotels faster than booking adapts. Those are serious, but they are visible risks. My verdict is buy. The next quarter may look soft, but the cash generation, share count reduction, and valuation, they give booking the strongest cushion in the group at around $157, I'd be comfortable starting a meaningful position and adding if the market sells the stock further on short-term travel weakness. And look, if we put all the five stocks together and I'm ranking them purely on business quality, growth, durability, cash conversion, valuation, and how much can go wrong before the current price becomes expensive, I'd have AMD in fifth place. It's got the strongest near-term growth, but also a fairly small margin of safety with the greatest dependence on almost flawless execution. I would own a starter position, not chase a full allocation. Better entry would be below $450 with a stronger buy zone around $425. Amazon that ranks fourth. The AWS acceleration is exceptional and the long-term opportunity may be the largest, but the kavic cycle makes fair value more assumption sensitive. I would accumulate around current levels and get more aggressive below $250. I wouldn't call it cheap until normalized free cash flow becomes clearer. Netflix that ranks third. The stock has reset. The operating margin expanding, free cash flow strong, and buybacks are reducing the share count. Around $63, I would buy gradually. Below 60, the risk war becomes much, much more attractive, provided advertising and engagement do not both weaken. Booking Holdings ranks second. It has weak immediate guidance, but also a very large valuation discount, a $9 billion free cash flow engine, and a rapidly shrinking share count. The combination, it gives me more ways to win. Travel demand can normalize, buybacks can compound per share value, and the stock does not need a heroic multiple to generate an attractive return. Now, I'd still build the position in stages because the fourth quarter it may be soft, but I would use weakness under $160 rather than wait for every risk to disappear. The bigger lesson from the overnight reset is that a falling market does not make every stock cheap and a strong quarter does not make every stock a buy. AMD and Amazon approving AI demand remains powerful, but they also show why valuation and cash conversion matter more as the investment bill rises. Netflix and booking show the other side of the market. When cash flow is strong, shares are being retired and expectations full, volatility can create a genuine margin of safety. Uber it takes number one. 20% bookings growth, 31% adjusted EBITR growth, and more than $10 billion of training free cash flow. They're difficult to ignore near 13 times cash flow. So my final order is Uber first, booking second, Netflix third, Amazon fourth, and AMD fifth is on a quality ranking is my risk world ranking at today's price. If the market keeps reversing, I would not abandon the buy prices. The discipline is deciding what each business is worth before the next headline changes the mood again. And as we can see, the market is very volatile. AMD that was up 78% now we can see pretty much flat. And as the day progresses, I only anticipate volatility getting more and more. But let me know your own view. Which of these five would you buy first? Whether Uber, in your opinion, deserves the number one spot after this quarter. And if you enjoy today's episode, smash that like button, hit the subscribe and bell button so you're aware of the next update. The market, it changed overnight, but the numbers still decide which opportunities are real. And we also release one weekly article where we cover severely undervalued stocks as well as what's going in the market. You can click below, sign up, read all of these straight away. More importantly though, have a great day. I'll see you all on the next one.