These Are Best Hyperscalers to Buy Now - Full Analysis

Daniel Pronk•Aug 14, 2026

Summary

Daniel provides a comprehensive analysis of the four major hyperscalers—Amazon, Meta, Microsoft, and Google—following their second-quarter results. Daniel's central thesis is that there is a clear correlation between capital expenditure (CAPEX) and cloud revenue acceleration. Daniel observes that Amazon and Google are spending aggressively, which is resulting in faster cloud growth, whereas Microsoft is being more conservative with its spending, leading to slower acceleration for Azure.

Daniel emphasizes that operating cash flow (OCF) is the best metric for valuing these companies during their massive CAPEX cycles. According to Daniel, the market is overly concerned about declining free cash flow margins, failing to recognize that the core operations are becoming more cash-efficient. Daniel concludes that Meta and Amazon are trading at significant discounts to their historical multiples, while Google is trading at a premium.

Amazon (AMZN): Daniel notes that Amazon possesses the most durable advertising business and is adding the most net dollar revenue to its cloud segment (AWS). Daniel points out that Amazon's operating margin is at an all-time high of 12.08%, and its price-to-operating cash flow of 13.7 is below its historical median of 14.6. Daniel calculates a fair value of $371 and predicts a potential 22.9% annual return over the next three years.

Meta (META): Daniel highlights Meta as having the fastest-growing advertising business and the highest operating cash flow margins at 57%. Despite the risk of being less diversified, Daniel argues that Meta's valuation at 8.6 times forward OCF is an unjustified discount compared to its historical median of 12.3. Daniel estimates a fair value of $827 and a future share price of approximately $1,100.

Microsoft (MSFT): Daniel views Microsoft as a highly diversified "tech ETF" but notes that its lower CAPEX growth is a trade-off for slower Azure acceleration. Daniel finds Microsoft to be fairly valued at 16.4 times OCF, which is below its historical average of 22.2. Daniel calculates a fair value of $578 with a projected 16% annual return.

Google (GOOGL): Daniel states that Google Cloud is seeing strong acceleration, but the stock is the most expensive in the group, trading at 17.6 times OCF versus its historical median of 14.7. Daniel suggests that even with optimistic growth expectations, Google may only produce an 11% annual return, leading to a fair value calculation of $354.

Mentioned Stocks

AMZN

Sentiment: BUYAction: BOUGHT

Reasoning: Daniel notes that Amazon has the most durable advertising business and AWS is adding the most net incremental revenue among cloud peers. Daniel highlights that Amazon's operating margin is at an all-time high of 12.08% and it is trading below its historical median P/OCF multiple. Daniel calculates a fair value of $371 and expects near 20% annual returns.

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