Recent market weakness has created a buying opportunity in select high-quality technology stocks. Consider the group of Amazon (AMZN), Microsoft (MSFT), and Meta (META), which now trades at a valuation similar to the broader S&P 500 despite having superior growth. Another opportunity exists in S&P Global (SPGI), which has sold off due to potentially overblown fears about disruption from AI. SPGI now trades at a 21 forward P/E, notably cheaper than prices where a prominent investor was recently adding to their position. This theme of AI disruption fears has also pushed quality software companies like Intuit (INTU) to trade below their long-term valuation averages.

The "Best Buys" of the MAG7 (AMZN, MSFT, META)

• The speaker argues that while the Magnificent 7 (MAG7) as a group may seem expensive, certain companies within it are attractive buying opportunities after the recent sell-off.
• By removing Tesla (TSLA), Apple (AAPL), and NVIDIA (NVDA) due to higher valuations, the remaining companies look much more reasonably priced.
• The group of Amazon (AMZN), Microsoft (MSFT), and Meta (META) trades at a combined forward P/E ratio of 24.
• This is nearly the same valuation as the S&P 500, which has an estimated forward P/E of 22.
• The speaker's argument is that these three companies are substantially better than the "average" S&P 500 company, with faster growth in earnings and cash flow, and therefore should not be trading at a similar valuation.

Takeaways

• The recent market downturn has created a potential buying opportunity in some of the highest-quality big tech companies.
• Investors could consider looking at Amazon, Microsoft, and Meta as they are being priced similarly to the broader market, despite their superior growth and market positions.
• The high valuations of other MAG7 stocks like Tesla are skewing the perception of the group as a whole.

S&P Global (SPGI)

• The stock has been "crushed" in recent months due to fears that AI will disrupt its data business by making data freely available.
• The speaker counters this by noting much of SPGI's data is proprietary and not accessible to AI. The company's breadth of data across private markets and physical assets gives it immense pricing power.
• Valuation: The stock is trading at a 21 forward P/E ratio.
• Bear Case Analysis: The speaker presents a scenario where even if the company's entire Market Intelligence business went to zero, SPGI would still trade at a 27 forward P/E, which would be cheaper than its long-term average. This suggests a significant amount of negative sentiment is already priced in.
• Superinvestor Activity: Prominent investor Chris Hohn was adding to his SPGI position in Q4 2025 at prices around $480 to $540. The stock is now trading substantially cheaper than when he was buying.

Takeaways

• The bearish sentiment around S&P Global due to AI fears may be overblown, creating a potential value opportunity.
• The stock appears cheap relative to its historical valuation and even in a "worst-case" scenario where a major business segment is disrupted.
• The fact that a respected investor like Chris Hohn was buying at higher prices provides a bullish signal.

Microsoft (MSFT)

• The stock has been selling off along with other big tech companies.
• It is highlighted as one of the three "best buys" from the MAG7, alongside Amazon and Meta.
• Superinvestor Activity: Chris Hohn was buying Microsoft in Q4 2025 at prices higher than its current level. The transcript states he was buying around $480 to $540, and the stock is now "a full cheaper".

Takeaways

• Like other high-quality tech names, Microsoft is experiencing a sell-off that may present a buying opportunity.
• It is considered one of the more attractively valued members of the MAG7.
• An influential investor saw value in the stock at even higher prices, suggesting it may be undervalued at current levels.

Meta (META)

• The stock continues to trade down despite reporting "blockbuster earnings."
• The company is projected to grow revenue by 25%+ in 2026.
• Valuation: Meta trades near a 20 forward P/E ratio, which the speaker notes is "half the price of a Walmart."
• It is highlighted as one of the three "best buys" from the MAG7.

Takeaways

• There appears to be a disconnect between Meta's strong financial performance and its recent stock price decline.
• At a forward P/E of 20, the stock may be undervalued for a company with such a high growth rate.

Duolingo (DUOL)

• The stock has been "eviscerated" and is down dramatically after Goldman Sachs rated it a "sell" and called it an "AI loser."
• The Bear Case (from Jeremy Lefebvre):
  • Duolingo is a "niche product" that users try for a short time and then abandon.
  • It does not have the same customer loyalty as a company like Netflix; users are not likely to stay subscribed for 5-20 years.
• The Bull Case (from the speaker):
  • Not Niche: The market for learning English alone is 1.5 billion people. The company is also expanding into massive markets like Chess (600 million players), Math, and Music.
  • Strong Growth & Retention: The company has never lost subscribers and has grown paying subscribers by 945% since 2020. The number of users with a streak of over one year has doubled from 5 million to 10 million recently.
  • Analyst Call Context: The speaker points out that Goldman Sachs has a history of issuing "sell" ratings at the bottom, citing their sell call on Netflix in June 2022, just 5-10% from its absolute low, after which Netflix stock rose 320%.

Takeaways

• Duolingo is a "battleground" stock with strong opinions on both sides.
• The bearish view centers on its perceived niche appeal and low long-term user retention.
• The bullish view argues the market is massive (not niche) and that the company's actual user data shows strong, accelerating growth and long-term engagement, contrary to the bearish narrative.
• Investors should be skeptical of analyst "sell" ratings that come after a stock has already fallen significantly.

Investment Theme: Software & AI Disruption

• A major market narrative is that AI will destroy software companies by making user interfaces and business logic obsolete. This fear is causing a broad sell-off in the sector.
• Counter-Argument: The speaker argues these fears are impractical and unfounded.
  • A simple text box will not replace complex, learned user interfaces (UIs) for professional workflows like video editing or financial modeling, where speed and shortcuts are critical.
  • Companies will not trust AI, which is known to "hallucinate" and be unpredictable, to run their core business logic where precision and reliability are essential.
• Companies like Intuit (INTU) are mentioned as being caught in this sell-off, now trading "below its 10-year valuation on every single valuation metric."

Takeaways

• The current panic selling in software stocks, driven by AI fears, may be an overreaction.
• This has created potential buying opportunities in fundamentally sound software companies that are now trading at multi-year low valuations.
• Investors should critically evaluate the "AI will replace everything" narrative and consider whether it applies in a practical, real-world business context.

Netflix (NFLX)

• Strategic M&A Move: Netflix has granted Warner Bros. a seven-day waiver to engage with Paramount for a "best and final offer."
• The speaker interprets this not as weakness, but as a confident, strategic move by Netflix to "call their bluff."
• This forces Paramount to either present a superior offer or step aside, potentially ending the drama and allowing Netflix's deal with Warner Bros. to proceed. Netflix retains the option to counter any offer.
• Historical Analyst Rating: Used as a prime example of a flawed analyst call. Goldman Sachs rated Netflix a "sell" on June 10, 2022, near the stock's absolute bottom. The stock has since outperformed the market dramatically.

Takeaways

• Netflix management appears to be making shrewd strategic decisions to strengthen its position in the media landscape.
• The history of analyst ratings on Netflix serves as a cautionary tale about following sell-side ratings, especially after a stock has already experienced a major decline.