Episode summary
Dylan Jovine | Amazon Hasn’t Been This Cheap Since the 2008 Financial Crisis
Summary
The host argues that several mega-cap tech stocks look unusually cheap after a selloff, especially Amazon and Nvidia. He says Amazon has not traded this cheaply since the 2008 financial crisis and notes that it is now at a discount to Walmart even though Amazon’s top-line growth is expected to be about 12-13% versus Walmart’s 5%. He also highlights Nvidia at 19.9 forward earnings, calling that its lowest forward P/E in seven years, while Apple trades around 28 times forward earnings and Microsoft and Meta are near 20 times.
The core case is that Wall Street is fixated on the scale of AI spending and the lack of a clear near-term return on investment. The host says firms are spending $100-200 billion a year on AI, but he thinks the market is overly focused on quarterly results rather than longer-term business value. In his view, the selloff creates a favorable setup because either the companies earn strong returns on that spending and stocks rise, or they curb spending and profits improve anyway.
He frames the moment as a long-term buying opportunity rather than a warning sign. Looking out five to ten years, he expects these dominant businesses to remain strong and potentially deliver attractive returns, and he says investors should be ready to buy during the drawdown.
Key takeaways
- The host says Amazon is cheaper than it has been since the 2008 financial crisis and is trading below Walmart despite faster expected growth.
- He says Nvidia’s forward P/E is 19.9, its lowest in seven years, while Apple, Microsoft and Meta trade at similar or higher multiples.
- The host argues Wall Street is overreacting to $100-200 billion of annual AI spending because the market is judging the companies on quarterly optics.
- He says the downside in the stocks is limited by a two-part outcome: either AI spending produces returns, or the companies cut spending and earnings improve.
- The host recommends a longer-term, five-to-ten-year view and says this is the kind of selloff where investors should get ready to buy.
Notable quotes
“Amazon has not been this cheap since the 2008 financial crisis, the Great Recession”
“And it also is trading at a discount to Walmart for the very first time in its history”
“Nvidia is trading, and this is shocking to me, at its lowest forward PE in 7 years. 19.9”
“What a gift down markets are. I love down markets because you get to buy really good things at really good prices”
How the episode opens
Good morning. This is Don Giovanni with Behind the Markets. Happy Wednesday.
Today's Wednesday, April 1st. April Fools' Day. Happy April Fools' Day.
And you know, I have something for you that is going to sound like it's an April Fools' joke. Amazon has not been this cheap since the 2008 financial crisis, the Great Recession. And it also is trading at a discount to Walmart for the very first time in its history.
And this is despite the fact that Amazon's top-line growth is expected to be around 12-13%, where Walmart's top-line growth is expected to be around 5%. Unbelievable. Or consider Nvidia.
Nvidia is trading, and this is shocking to me, at its lowest forward PE in 7 years. 19.9. It has not been this cheap on a valuation basis in 7 years, since before the AI boom.
Consider Apple, by contrast, is trading at 28 times the forward earnings. Or consider Microsoft, like Nvidia, it's selling for about 20 times forward earnings, same with Meta. It is unbelievable.
What a gift down markets are. I love down markets because you get to buy really good things at really good prices. It's really unbelievable.
So, why are these stocks down? Basically, Wall Street is not happy with the spending. They don't think the AI spending is sustainable.
Look, one of two things, which is great. I'll tell you something, it's tricky. I understand where Wall Street's coming from.
These firms are spending 100-200 billion dollars a year on AI spending, and Wall Street is saying, "We don't see a clear path to ROI for that kind of spending. So, we can't control you. We're just going to sell your stocks and run away.
We're going to opt out, so to speak. So, look, I view these as great discounts because let's play the tape here.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai capex
- valuation compression
- market selloff
- amazon vs walmart valuation
- forward multiples
Companies and tickers mentioned
- AMZN
- WMT
- NVDA
- AAPL
- MSFT
- META
- Amazon
- Walmart
- Nvidia
- Apple
- Microsoft
- Meta
Watch the episode
Watch “Dylan Jovine | Amazon Hasn’t Been This Cheap Since the 2008 Financial Crisis” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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