TS2 TECH • DAILY MODEL PORTFOLIO
Stocks to Buy Today
AI demand continues to drive strong revenue growth, but markets open Monday just below record highs as both oil prices and Treasury yields remain elevated. Today’s focus is on companies with solid cash flow, clear cloud demand, and disciplined valuations.
Constructive • Selective
Monday pre-open setup
Cash market closed • Futures active
Read-through: S&P 500 futures rose 0.1%, with Nasdaq futures up 0.3%. The likelihood of a Fed rate hike in September slipped to 30% after disappointing retail sales data. While this supports higher growth valuations, Brent crude hovering near $89 signals ongoing inflation concerns.
Upcoming catalysts: On Tuesday, investors will watch for housing starts, building permits, industrial production data, and earnings from Home Depot. Wednesday features the release of FOMC minutes, along with results from Target and Analog Devices.
Five model picks
Weights total 100%
Alphabet
Alphabet (NASDAQ:GOOGL)
92/100 ★★★★★
Alphabet’s relatively low forward multiple is paired with rapid cloud growth and a substantial contracted backlog. Profits from search continue to fund expansion efforts, though significant capital expenditures have recently pushed quarterly free cash flow into negative territory.
The average 12-month price target is $428.04, suggesting an upside of 23.75%.
Revenue totaled $119.8 billion, with cloud revenue up 82% to $24.8 billion. The cloud unit reported an operating margin of 35.6%.
Cloud backlog climbed to $514 billion, with management anticipating a little more than half will be recognized in revenue over the next 24 months.
Set limits within the range and avoid buying into an opening gap above $350.
Monitor backlog recognition, search growth, and the point at which capital spending starts translating into free cash flow.
Capital spending in the second quarter reached $44.9 billion, while free cash flow was negative $5.9 billion. If backlog conversion slows or ad pricing weakens, the costs of the current investment cycle will become more apparent.
Amazon
Amazon (NASDAQ:AMZN)
AWS posted its strongest growth in over four years, driving the bulk of Amazon’s operating profit. While the stock’s forward multiple looks fair for this level of expansion, the portfolio is holding back cash as the $220 billion capital spending plan has pushed free cash flow into negative territory.
The average 12-month price target is $326.07, representing a potential 24.15% upside.
Second-quarter sales totaled $200.6 billion, with operating income up 43% to $27.5 billion. AWS reported sales of $42.2 billion.
For the third quarter, the company expects sales between $197 billion and $202 billion, with projected operating income ranging from $22.5 billion to $26.5 billion.
Begin trading within the band, keeping at least half your position available in case of a market pullback.
Keep an eye on AWS growth holding above 30% and any impact from added capacity on free cash flow.
Free cash flow over the past 12 months fell to negative $7.6 billion as spending on property and equipment increased sharply. The company’s third-quarter outlook also suggests slower overall revenue growth.
NVIDIA
Nvidia (NASDAQ:NVDA)
NVIDIA continues to post the highest confirmed growth in the group, with its forward earnings multiple close to Microsoft’s. The model limits NVIDIA’s weighting below Alphabet’s, given the upcoming earnings report and a wide range of analyst estimates.
The average 12-month price target is $302.83, representing a potential upside of 34.50%.
Revenue reached $81.6 billion, with Data Center revenue up 92% to $75.2 billion. Non-GAAP earnings per share stood at $1.87.
For the second quarter of fiscal 2027, revenue is projected at $91.0 billion, give or take 2%, with a non-GAAP gross margin of 75.0%.
Start with a modest initial position and avoid increasing it if the stock quickly rises above $230.
Second-quarter fiscal 2027 results and the 2:00 p.m. PT conference call will put the $91 billion revenue forecast to the test.
The average target masks a broad spectrum of forecasts, and the company’s guidance factors in no China Data Center compute revenue. A gross margin miss could overshadow headline growth.
Microsoft
Microsoft (NASDAQ:MSFT)
Azure’s growth has picked up pace, and Microsoft’s contracted commercial backlog offers exceptional revenue visibility. The position remains smaller than the top three, as shares have rebounded significantly since earnings and the date of the next report is still unconfirmed.
The average 12-month price target stands at $569.56, suggesting a potential upside of 14.97%.
Revenue totaled $90.0 billion, with operating income at $40.6 billion. Azure and other cloud services rose 43%.
Commercial remaining performance obligations climbed 84% to $678 billion.
Set your limit order below Friday’s closing price, and don’t buy the first tranche if the stock opens above $505.
Keep an eye on Azure’s growth, cloud capacity, and how quickly Microsoft’s $678 billion backlog is converted into revenue.
Microsoft faces significant future lease obligations and AI infrastructure commitments. If Copilot adoption slows or capacity exceeds demand, returns on invested capital could come under pressure.
Meta Platforms
Meta Platforms (NASDAQ:META)
Meta’s advertising business continues to expand rapidly, and its forward multiple remains lower than those of other major AI investors. However, this factor is weighted least in the model, as operating profit and free cash flow declined amid higher data-center, legal, and restructuring expenses.
The average 12-month price target is $785.32, suggesting a potential upside of 33.14%.
Revenue reached $60.8 billion. Ad impressions climbed 14%, while the average price per ad rose 12%.
The company expects third-quarter revenue between $61 billion and $64 billion, factoring in a projected 1% negative impact from currency fluctuations.
Consider buying in the lower half of the range if the Nasdaq opens on a weak note.
Monitor if revenue growth balances out expenses from AI infrastructure, legal matters, and restructuring.
Second-quarter costs surged 55%, while operating income declined 8%. Free cash flow slipped to $784 million. A further increase in spending could mean earnings continue to lag behind revenue growth.
Forecast and valuation comparison
| Ticker | Price | Forecast | Fwd P/E | Avg target | Upside | Entry |
|---|---|---|---|---|---|---|
| GOOGL | $345.90 | Cloud demand strong | 16.68× | $428.04 | 23.75% | $339–$346 |
| AMZN | $262.65 | Q3 sales $197–202B | 20.70× | $326.07 | 24.15% | $257–$263 |
| NVDA | $225.16 | Q2 rev. $91B ±2% | 25.17× | $302.83 | 34.50% | $220–$225 |
| MSFT | $495.40 | Backlog +84% | 25.15× | $569.56 | 14.97% | $486–$496 |
| META | $589.85 | Q3 rev. $61–64B | 18.61× | $785.32 | 33.14% | $575–$590 |
Prices are as of the close on Friday, Aug. 14. Forward multiples and analyst targets were updated between Aug. 16 and 17, though some estimate services may update at other times. Targets represent analysts’ opinions and carry uncertainty; they are not fair value estimates and may not account for all post-earnings changes.
100% allocated
How the model ranks today’s list
- 35%Results and estimate revisions
- 25%Cash flow and balance sheet
- 20%Valuation against forecast
- 15%Entry quality after the move
- 5%Near-term event risk
Let the cash session set the price
As of 03:35 ET, U.S. cash markets were closed and futures showed only slight gains. After 09:45 ET, use limit orders: allocate 30% of each planned position within its entry range, add another 30% only if the Nasdaq maintains its opening range, and reserve 40% until after Wednesday’s FOMC minutes. Cancel orders for the day if both Brent crude climbs above $90 and the 10-year Treasury yield tops 4.75%.
Good reports, weaker entries today
- AMDWait for reset
Second-quarter revenue totaled $11.5 billion, with non-GAAP earnings per share at $1.66. Shares surged 6.52% on Friday to close at $514.39. The results were solid, though the current valuation appears extended.
- CSCOWatch margins
Fourth-quarter revenue climbed 18% to $17.3 billion, with non-GAAP earnings per share up 23% to $1.22. Shares slipped after management projected first-quarter gross margins of 65% to 66%, raising value questions as margin uncertainty persists.
- AMATDo not chase
Revenue for fiscal Q3 climbed 25% to a record $9.12 billion, while non-GAAP EPS hit $3.50. Friday’s 5.12% share price drop signals elevated expectations; investors may want to wait for stabilization before considering new positions.
7.6/10
Growth-heavy
All five holdings are partly tied to AI spending, so simply diversifying by ticker doesn’t eliminate factor risk. However, Alphabet, Amazon, and Meta’s lower forward multiples help offset the concentration.
Oil, rates and record-index risk
Brent rose 6% last week and held close to $89 on Monday. Another push toward $100 could boost inflation expectations and bond yields, putting pressure on technology valuations while the S&P 500 hovers near record highs. Disappointing retail figures suggest that easing rate expectations may be due to weaker demand rather than straightforward disinflation.