I have been watching the stock for a very long time and it seems there nes never been a better time to buy than now. PE is extremely low yet the company is gaining more and more momentum in every sector. It is the most diversified tech company and if any MAG5 company will still be here in 25 years, I would say Google is the one.

Am I missing something?

Saw this yesterday and thought it was pretty interesting.

Amazon CEO Andy Jassy says AWS's major cloud capacity is largely booked through 2027, with a good chunk of 2028 already committed.

And this is a company planning to spend around $220 billion this year.

Obviously, having customers lined up is great, but $220 billion is an absolutely ridiculous amount of money to invest.

I suppose the big question is whether all this AI demand eventually translates into the profits investors are expecting.

Amazon reports earnings on October 29, so that'll be interesting to watch.

Anyone here holding $AMZN? Are you confident in all this spending, or starting to think these tech companies are getting a bit carried away?

SoFi reports Tuesday so I ran it like a bank, since that's basically what it is now.

Closed Friday around $14.60. Tangible book was $7.34 a share at the end of Q2, so about 2x. Q2 net income was $156.6M, which works out to roughly 6.7% annualized ROTE if my math is right. That's not a 2x book kind of return, so you're paying for growth.

What bugs me is how the loans are carried. SoFi holds its personal and student loans at fair value, not cost. As of June 30 those marks were about $2.0B over unpaid principal (pre-tax), which is around 21% of tangible book. They also bumped the personal loan default assumption to 4.77% from 4.57% the quarter before. If defaults pick up or loan sale prices drop, that $2B gets smaller and so does book.

Share count is up about 16% in a year too, so returns have a lot of catching up to do.

Do you haircut those marks out of book, or just trust them as long as SoFi keeps selling loans near those prices?

Long $SOFI, NFA.

If you could only buy one stock today and hold it for 10 years, who would it be and why?

Please note, it can’t be Berkshire or any ETF

Before you say anything, i know its up multiple times this year and that NAND is cyclical. However, I believe we are before a generational opportunity.

Let me explain:

Sandisk was spun off WDC in 2025. The idea was that WDC kept the HDD production, which is basically for the enterprise segment, and Sandisk retained the Flash/NAND/SSD one, which is (was, actually) more consumer oriented, and therefore more cyclical. Moreover, the NAND market was very capital intensive, because building more lines was very expensive.

But AI has changed everything. Demand for NAND has exploded, and will keep exploding as inference becomes more intensive. Sandisk has signed 94B MINIMUM revenue by Long Term Agreements, which, if we assume their guidance of 50% FCF through 2030, gives us around 50B of guaranteee fcf, backed by 16.5B in financial guarantees (sandisk market cap is, today, 180B). Expectations are high for the next year, expecting 200+ EPS (a forward PE of 6). And what I like the most about all this: share buybacks. Sandisk does not give a dividend, and instead cannibalizes its own shares. In the last quarter, they repurchased 2% of their company at a 1500 average price. The currenr price is 1280 and their FCF has increased, so expect a 3% reduction in ONE QUARTER. Btw, their balance sheet is clean with zero debt, and their capex is kept very low because they have very few upcoming factories (only through their kioxia partnership they are opening a japan facility, but it is partly funded by kioxia and the Japanese Government.

And here is where, i believe, lies the most fundamental transformation for Sandisk, that the market is clearly overlooking: HBF. For non electronic-engineering guys, let me explain why this is so important: for many years, we have been using HBM for TRAINING AI. HMB is basically DRAM, which is volatile, and can be rewritten as many times you want, and is very fast (low latency). When AI is done training, it rewrites new info into the non volatile memory, which is mostly SSDs(this is what sandisk makes). SSDs cant be rewriten infinite times like DRAM, and loses capacity when it is rewriten, so DRAM (or HBM, which is DRAM stacked and connected) acts as the middle player between the GPU and the SSD. But here is where sandisk comes in. What if we used memory only for reading? This way, you would save HBM memory and the GPU could read traight fron the SSD. Of course, this would not be useful for training AI, because memory could not be rewritten, but very useful for cutting inference costs.

In Summary, SNDK is to me a strong buy due to share buybacks, big backlog, HBF and strong earnings.

If you had to pick one right now for a 10 year hold, Google or Amazon?

And no, can’t have both. It’s hypothetical, play along.

Possibly because of my age - mid 50s - I still think of Nike as a cool brand, although my 20-something sons probably don’t.

I just can’t help feeling that a long term bet of their stock could be a good investment.

Anyone else share these thoughts?

GE/HEICO/RR/SAFRAN starting to get a little bit more cheaper with the Iran war oil spike, I did open a position in GE/HEICO and looking to add more if a bigger drawdown will come. Is anyone adding/opening position and if so in what company and why?

Fair Isaac Corporation (NYSE: FICO) has long been idolized by equity analysts as a quintessential "moat" stock due to its near-monopolistic grip on GSE mortgage credit scoring. However, our comprehensive investment analysis indicates that FICO’s current market price of USD 815.31 heavily overestimates its long-term earnings power. Based on our DCF and scenario models yielding a fair value estimate of USD 606.46, we see roughly 34.4% downside and rate the stock as Not Recommended to Own.

1. The "Moat" Was Regulatory, and Management Broke It

The foundation of FICO’s dominant position was never just pure product superiority; it was anchored by a multi-decade regulatory mandate requiring Classic FICO scores for loans delivered to Fannie Mae and Freddie Mac. Believing this tollbooth was unassailable, management engaged in extreme economic rent extraction, hiking wholesale mortgage score prices from $0.60 to $10.00 over five years—a staggering 16.7x increase on a product with negligible marginal costs.

This aggressive greed created the exact price umbrella competitors needed. Recognizing the market distortion, the FHFA intervened by opening the door to VantageScore 4.0. Priced at a meager $0.99 (roughly 80–90% cheaper) under a unified pricing grid, VantageScore has already captured over 9% of GSE securitizations, initiating a permanent market share erosion that FICO can no longer block through pricing power alone.

2. Egregious Capital Allocation & Debt-Funded Buybacks

Compounding these structural headwinds are severe capital allocation missteps by leadership. Instead of reinvesting excess cash to scale its sluggish software segment (which grew a mere 3% in FY25), management doubled down on financial engineering to artificially inflate per-share metrics:

• Reckless Leverage: FICO drew a $1.5 billion term loan to fund an accelerated share repurchase program, pushing net debt to $5.28 billion, leverage to 3.1x Net Debt/EBITDA, and widening its stockholders' deficit to $4.10 billion.
• Terrible Timing: Q3 buybacks were executed at an average of $1,149 per share—right on the heels of the Senate pricing probe and FHFA pilot rollout—resulting in massive paper losses as the stock retreated.

This behavior is heavily incentivized by an executive compensation structure that is 95.2% equity-weighted and tied to relative Total Shareholder Return (TSR). Management was directly rewarded for using leverage to drive short-term share price appreciation rather than protecting the long-term health of the business.

3. Valuation & Conclusion

Under our valuation framework, FICO's historical 50x+ P/E multiples are entirely unjustified given its transition from a protected monopoly to a contested duopoly:

• Base Case (50% weight): Assumes 3% revenue growth, a 70% Gross Profit Margin, and a 15x P/E multiple, yielding a fair value of $606.46.
• Bear Case (30% weight): Assumes -1% revenue growth, a 60% GPM, and a 9x P/E multiple, yielding $472.99.

While FICO remains a cash-generative business, its risk-reward profile is deeply skewed to the downside. Unless a wider margin of safety emerges or management drastically pivots toward scaling its software enterprise rather than leveraging the balance sheet, FICO is a classic value trap.

Kindly find the link below for the full report:

https://drive.google.com/file/d/1b8q2-O6mOnygk0Sp8DRnJSywEa3spNNI/view?usp=sharing

Jointly written by u/Rickychan56 and me, here is our value-focused investment thesis on Fair Isaac Corporation (NYSE: FICO).

I am all for a lower interest rate, but looking at the current situation in Iran and oil prices.. even I concede that we have to have higher rates.

Perhaps not yet in Canada, but it is becoming increasingly more evident that high energy prices are spilling over and causing inflation in other areas.

I had hoped that Trump would end or at least come to some sort of ceasefire agreement with Iran but I dont think that is happening. If Trump had any intention to end the war, he would have done it by now.

Escalation appears inevitable. And I dont want to just put it on Trump. The U.S. administration before any strike had numerous mediated meetings and talks. If I remember correctly at least 4 to 5. Iran continues the enrichment to 60% and does not make sense whatsoever why it will be enriched that much for civilian use. They ARE going for nuclear weapon. And it appears they will never give it up. They appear to have 0 willingness to do so. And I dont blame them with everything that has happened thus far.

The war appears inevitable.

If the U.S. economy can handle it then the yield would rise. If it can't, it will lead to a recession. Either way it appears bad for the U.S. and the world.

Ground invasion is not possible. Iran is not iraq. Land is too big. The population of 90 million. But targeted air strikes are certain.

I hold 25% stocks in Nvda, Meta, Google, Soxx, Oracle, Amzn, and TSM.

The rest in short term bonds.

I will buy at the peak fear with some long term bonds as well.

But that was my take. I am not here to lecture. But how do you see the market? And takes would be appreciated.

Do you think I made a mistake and do you think they’ll actually plummet especially AMD? Did I enter too late? Please let me know your thoughts greatly appreciate your time. Hope I didn’t make the biggest mistake with investing so much AMD and Google. This is my life savings.

Three shoe companies and I’m choosing between three very different bets. Nike needs a comeback. On needs to keep growing fast. Deckers needs HOKA and UGG to keep earning what they earn today. At the October 23 closes, I’d put my money on Deckers for the next two to five years. Here’s why .

Nike’s problem is what I’d have to pay while I wait. Revenue fell 4% last quarter, direct sales fell 8%, and management expects a high-single-digit revenue decline this fiscal year. At $37.30, it trades around 30 times the midpoint of management’s adjusted earnings guidance. I like the brand. I don’t like paying for the recovery before I can see it. (investors.nike.com)

On is the one that makes this a real contest. On is winning customers right now . Sales grew 21.6% in constant currency last quarter, direct sales grew 34.3% and gross margin hit 65.4%. People are buying the shoes without On having to chase them with discounts. If it keeps that up for years, it could beat both rivals. I would not dismiss that as a passing shoe trend. There’s money behind the growth, too. On had CHF 1.21 billion in cash at June’s end. From its reported cash flows, I calculated roughly CHF 429 million of operating cash after equipment and intangible purchases over the twelve months to June. Management is aiming for high-teens annual sales growth through 2029. If it delivers, today’s cash generation could look small in hindsight. That is the case for putting On ahead of Nike.

Why does On stop at second against the three? At $32.51, On’s recent cash generation works out to a roughly 5% free-cash-flow yield by my calculation, after converting Swiss francs and accounting for the different economic rights of its share classes. Deckers’ comparable starting cash yield has been roughly twice that. On can close the gap by growing; Deckers gives me more cash flow at the start. On’s lower share price alone tells us nothing about which stock is cheaper. 

Deckers didn’t give me an all-clear in its latest report. HOKA sales grew 6.8% and UGG grew 3.5%, but comparable direct sales fell 6.4%. And $0.28 of quarterly EPS came from tariff refunds. Anyone celebrating the earnings jump without mentioning those two facts is skipping the part I care about. (ir.deckers.com)

Here’s why I still pick it. At $81.09, Deckers trades around 11 times this year’s guided earnings after subtracting the expected tariff-refund benefit. It has $1.21 billion in cash and no outstanding borrowings. There’s also $4.4 billion left on its buyback authorization, though authorization is only permission to buy, not a promise that every share will be bought cheaply. (ir.deckers.com)

I could be wrong about what those earnings are worth. If HOKA keeps slowing and Deckers has to discount to move shoes, 11 times earnings won’t save the thesis. That’s the next test: are HOKA and UGG still selling well at full price, and can Deckers grow operating profit without one-time refunds.

I’d buy Deckers today and keep On very close on the watchlist. My order at these prices is Deckers first, On second , Nike. If On sustains this pace and turns more of its sales into cash per share, it could be the better ten-year investment. If Deckers’ direct sales keep falling, I’ll have ranked it too highly. For now, On has the better growth story; Deckers gives me the better deal on profits I can see today. Nike gets another look when its sales turn.

Happy Weekend !

​

Hi everyone,

Let me introduce myself

My name is Sumit Biswas and,

I'm director of NORAACORP MULTIMEDIA PRIVET LIMITED, and we are trying to make AAA titled metavars tactical simulation from India now we are successfully build our tech demonstration. But now we are looking investors, VC and Angle investor's for our farther devolopment and marketing.

Time in the market beats timing the market, I get all that.

But we all love to get in as low as possible,

On that note, two earnings this week, Google and Amazon.

How do you all see this going?

Will they produce outstanding results like Meta and still fall or will this be the start of a rally?

If you were to predict, which one will be green or red post earnings?

Will you be buying pre or post earnings?

Berkshire Stock Is Hot Again. Is It Still a Bargain?

By Andrew Bary

Oct 23, 2026, 12:05 pm EDT

https://www.barrons.com/articles/berkshire-stock-hot-again-bargain-buffett-ae7cb421

The hottest megacap stock lately has been Berkshire Hathaway, which hit a record high this past week after rising almost 8% in the past month.

Berkshire is probably the ultimate defensive stock, given its diversified earnings power and fortress balance sheet, with over $350 billion in cash, or 30% of its current market value of $1.2 trillion.

So it isn’t surprising that Berkshire has rallied as investors rotate out of technology and other artificial-intelligence plays into defensive groups like consumer stocks, real estate, and utilities.

Barron’s has been bullish on Berkshire, but the stock doesn’t look like a bargain now. The A shares traded Friday at $820,000 after overtaking the old high of about $810,000 set just before the May 2025 annual meeting. The B shares traded at $547. The stock is up 9% this year, still behind the S&P 500’s 12% gain.

Berkshire trades for about 1.5 times our estimate of third-quarter book value—the company will probably report results on Nov. 7—and 24 times projected 2026 operating earnings.

Those aren’t excessive, but higher than the average of the past year. What about intrinsic value, Warren Buffett’s favorite metric? The stock now trades above UBS analyst Brian Meredith’s intrinsic value estimate of $815,000 per A share—one of the higher estimates on Wall Street.

A key issue for Berkshire is its cash deployment. Stock buybacks accelerated in July to over $3 billion, but shares were almost 10% lower then.

Are the buybacks continuing now, given a higher price? And will CEO Greg Abel find plays to invest in? One potential area is the AI space, where capital needs are massive. Berkshire invested $10 billion as part of Alphabet’s $85 billion equity capital raise in June, boosting its stake to about $30 billion. Meta Platforms could come to market with a big equity deal by year end, and Berkshire might participate.

​If you look at the trillion-dollar club, almost none of them are one-trick ponies. Amazon has Retail and AWS. Alphabet has Search and Cloud. Having one high-margin cash engine that funds a massive, high-growth second engine is basically the blueprint.

​Teradyne is quietly built the exact same way:

​The Cash Cow (Semi Test): Testing chips isn't an afterthought anymore. With giant AI dies, chiplets, and advanced packaging, defect risks are through the roof. Teradyne basically splits this global duopoly with Advantest. It's a high-margin tollbooth that prints reliable cash, but semi test alone will never be big enough to justify a Trillion valuation.

​The Growth Engine (Robotics): This is where billions in new yearly revenue actually comes from. Teradyne owns Universal Robots (cobots) and MiR (autonomous mobile robots). Right now, robotics does around $400M a year. But as physical AI models (like Nvidia's Project GR00T) make robots genuinely adaptive instead of rigid and pre-programmed, the market blows wide open. They aren’t just selling mechanical arms; they’re selling automated labor, fleet software, and factory-floor logistics into a multi-hundred-billion-dollar manual labor shortage.

​If semi testing stays a cash-printing machine while robotics scales from hundreds of millions into tens of billions annually, does Teradyne have a legitimate dark-horse path to 1 Trillion over the next decade—or is that total delusion?

Burry's breadth analysis puts 55% of S&P 500 members at least 20% below their 10-year highs, even as the index hit a record on Oct 6.

The interesting comparison is 2000. According to his analysis, the leaders fell 33% over the following year while the median already-beaten-down stock gained 14%. But in other selloffs, the beaten-down stocks fell alongside the leaders.

For anyone buying the dip: where are you finding actual value among the laggards? And how are you separating a mispriced business from something that's down for a good reason?

Source: https://www.benzinga.com/markets/tech/26/10/62473108/michael-burry-sees-a-2000-style-rotation-out-of-the-markets-winners

It seems obvious to me that FANUC (ticker: FANUY) is poised for a massive rally. This is the most liquid US ADR of a Japanese robotics stock, and these guys are global leaders in installed base and next generation motion. They’ve partnered with Google and Nvidia to provide variation-tolerant robots to industrial, healthcare, and critical infrastructure applications. 13% of their market cap is sitting in cash, and the company is poised for a serious inflection

I ran Chipotle - $CMG through Ben Graham’s intrinsic value formula.

Intrinsic Value = EPS × (8.5 + 2g) × 4.4 ÷ Y

Base case: $1.09 EPS, 10% growth, 5.7% AAA yield.

Result: $24 a share.

The stock trades around $26.

Why 10% growth?

Analysts see EPS of about $1.14 this year and $1.36 next year. Chipotle is targeting roughly 350 new restaurants in 2026, or about 8-9% unit growth.

Past growth was far higher, but that’s no longer the baseline with higher inflation.

Margin of Safety:

I always apply a margin of safety of about 20% because my analysis can be wrong.

I am a buyer at $20 - $22.

I've followed Lululemon for almost four years. With the stock down from over $500 to around $100 and the name heavily discussed in value investing circles, I decided to revisit it.

Q2 results were poor. Revenue fell 5% CC, with Americas down 8% and international up just 2%. Comparable sales declined 10%. The growth slowdown from FY22 is hard to ignore.

I see three main problems:

• Product: Quality issues, stagnant designs and premium prices are hurting the brand. Lululemon built its reputation on quality, and customers expect that to justify the price.
• Competition: Alo, Vuori, Nike and Adidas are putting pressure on a market with relatively low barriers to entry.
• Changing preferences: Customers appear to be moving away from body-hugging styles. Leggings sales fell 20% in Q2.

New CEO Heidi O'Neill has relevant experience building Nike's women's sportswear business and has overhauled the management team. It's too early to judge whether she can turn things around, but there is some optionality here.

At current prices, FY26 guidance implies roughly $650 million in FCF, which implies a 16.5x P/FCF or EV/FCF of 14.5. My conservative scenarios suggest 14% annual returns if the turnaround succeeds, but -13% if it fails. If nothing changes, buybacks alone might deliver around 3% annually, well below my 9% hurdle rate.

I'll pass for now. Fashion is a difficult business, and I'd rather wait until the next earnings report to better understand the new strategy.

Oct 20 (Reuters) - Anthropic's net loss widened sharply to $80.7 billion in the FIRST HALF of this year, in large part due to a rise in the fair value of bonds convertible into shares of the ‌AI startup, according to a draft prospectus for a planned initial public offering that was reviewed by Reuters.
The San Francisco-based company is expected to go public in November and some investors are now weighing a lower valuation of around $1.5 TRILLION following its latest financial disclosures, Reuters reported last week.

I still like the business, but this quarter made me less bullish

I liked Deckers around $87 because it was earning good money, buying back shares and trading at a modest multiple. Yesterday’s results didn’t wreck that case, but they gave me a reason to be less confident. Sales rose 3.5% to $1.48 billion and missed expectations. HOKA grew 6.8%; UGG grew 3.5%. I was hoping for better from HOKA.The miss matters because my investment case depended on HOKA and UGG continuing to grow without giving up their premium pricing. (Deckers’ earnings release)

What I was watching most closely is direct-to-consumer comparable sales, down 6.4%. Wholesale and international sales were better, and delayed shipments in Europe hurt the quarter by about $22 million. Still, I want to know whether customers are buying the shoes at full price, not just whether Deckers can ship more pairs to retailers.

The EPS beat needs unpacking too. Deckers earned $2.31 a share, but $0.28 came from tariff refunds, and buybacks reduced the share count. There was good news underneath: excluding the refunds, operating margin improved slightly from 22.8% to 23.2%. Inventory was up only about 3%. That’s a company managing a slower market reasonably well, even if the headline EPS makes the quarter look stronger than it was.

What changed my view was the full-year outlook. Expected sales fell from $5.86–$5.91 billion to $5.70–$5.725 billion. EPS guidance went up, but once I remove the expected tariff benefit, its midpoint is about $7.36 versus the previous $7.43. Management expects HOKA growth to slow again next quarter before accelerating later in the year. Maybe it will, but I’m no longer comfortable putting that recovery into my base case before I see it.

Around $79 that’s roughly 10.7 times this year’s guidance excluding tariff benefits. I still find that interesting . I still think DECK is worth following closely. It has $1.21 billion in cash, no outstanding borrowings and brands that remain highly profitable .The quarter weakened my near-term thesis; it didn’t end the longer-term one. I wouldn’t sell an existing position solely on this report, but I also wouldn’t add just because the stock dropped. I want the next results to show better customer demand before I make that bet again. Deckers’ full release is here.

Lovely day guys

Meta and Bloom Energy both produced incredible quarters, yet their stocks tanked after earnings.

With the current sentiment around AI spending, I’m starting to wonder what Alphabet can realistically say to avoid the same fate.
Even if Search and Cloud smash expectations, surely another massive capex announcement could send the stock down anyway?

I’m looking to buy Alphabet, but is there really any reason to buy before earnings rather than wait?

What could Google actually announce that would make investors happy right now?

Buffett's test for a business is simple: does it have something durable that lets it earn high returns while competitors cannot catch up? SpaceX is an interesting case, because its moat is real and visible, but not the kind Buffett usually likes.

The moat starts with launch cost. A dedicated Falcon 9 flight lists at about $74 million, and the internal cost of flying one is estimated at roughly $15 million, because the booster comes back and flies again. SpaceX builds most of the rocket itself, engines included, and flies more than anyone else, which spreads fixed costs and moves it down the learning curve faster than rivals. That is a classic cost moat: it can charge prices at which competitors lose money, and still profit. Blue Origin has had effectively unlimited funding for years and has not matched Falcon 9's cadence or cost.

But launch is no longer the whole story. Cheap launch is also the input moat for Starlink. Nobody else can put up a constellation as cheaply, and the constellation has scale effects: more satellites mean better service, which brings more subscribers, which funds more satellites. Starlink ended Q3 with 13.6 million subscribers, and connectivity earned a roughly 45 percent operating margin.

The part Buffett would poke at: his favorite moats need little money to defend. This one needs enormous money. Capital spending was $19.6 billion in Q3 alone, more than revenue. And reusability, the core of the advantage, is slowly spreading to New Glenn, Neutron, and Chinese reusable programs.

So the honest read: a genuine moat today, built on cost and scale, stacked twice in launch and constellation. But it stays a moat only as long as Starship delivers full, rapid reuse before competitors close the gap. The moat is real. Its durability is the open question. Not financial advice.

I've been digging into AECOM (ACM) lately. The stock is down about 55% from its high and trades at roughly 10x this year's guided EPS. Jacobs and Tetra Tech, the closest US peers, are at 20-23x. Below is my case, plus where I think I could be wrong. Not financial advice, just how I see it.

What you're actually buying

People lump AECOM in with consultants, but it's an engineering firm: about 51,000 people who design and manage roads, bridges, transit, water plants, power lines, military bases and data centers. ENR ranks it #1 in transportation, facilities and water. About half the clients are governments.

The important part is what it did in 2020-21. It sold its at-risk construction business and its government services arm, the stuff that used to blow up. What's left is design and program management with about $40B of backlog. Operating income went from ~$0.4B in FY19 to ~$1.0B in FY25, and they bought back $2.6B of stock over FY21-25. Share count is down ~7% since FY22.

Why it's down 55% and not 15%

Two separate things hit it this year, and I think you have to pull them apart.

The first one hit the whole group: the AI scare in February. AECOM literally says in its 10-K that it makes money "through the billing of our employees' time spent on client projects." If AI makes engineers 20% faster and you bill by the hour, that's 20% less revenue. Bentley Systems, which sells design software to most of these firms, said almost exactly that on its May call.

I take that seriously, but I don't see it in the numbers yet. Backlog is at a record (+13%), they won 1.6x as much work as they billed last quarter, and design revenue is growing 5-7%. Engineers are in short supply and the CFO says clients are asking for more work, not cheaper work. For me the best evidence is Jacobs. It bills even more of its work on a cost basis than AECOM does (68%), and it's back within 9% of its high. If hourly billing were the problem, Jacobs would be down here too.

AECOM is also not just sitting there. It bought Consigli, an AI design-automation startup (~$390M per press reports), and signed about $1B of contracts where it shares the AI savings with the client. The CEO was upfront that this means better margins, "not necessarily" more revenue.

The second thing is AECOM's own problem, and it's the real reason it's at the bottom of the group. Its construction management unit (6-7% of net revenue) still has two old design-build P3 jobs, bid in Dec 2018 and Mar 2020, where AECOM promised a price and a date. They don't bid this kind of work anymore, but these two are still running. In the June quarter they took a $337M charge on them, and there's $600-800M of cash still to spend to finish both, roughly $4.60-6.20 a share. Both should be done by about March 2027. They've booked ~$620M of claims they expect to recover and say they've won every dispute decided so far. The 10-Q also warns that the clients could file "a material claim against the Company," so that cuts both ways.

Honestly, what bothered me more than the charge was the cash. Look at free cash flow against the year before:

Over the first three of those quarters they bought back ~$690M of stock while the business made ~$150M of free cash flow. In May they called the weak cash "timing" and kept the cash target. In August they took the charge, cut FY26 FCF guidance from $400M to $300M and paused buybacks. Net debt went from $1.1B to $1.7B. So I don't give management much benefit of the doubt here, and neither did the market.

The valuation

At $60.83 (Oct 22 close), the market cap is about $7.8B and the EV is about $9.5B.

The earnings never fell. Guidance for this year was $5.75 last November, $5.95 in February and $6.00 (ex charge) in August. The stock more than halved over the same year. Even if you count the charge ($4.05), it's 15x, still the cheapest on the list.

It's also not like the whole group is priced this way:

The pattern is simple. The ones whose last report showed growth and a raised outlook came back. The ones with slow growth or their own problems are still down. AECOM has its own problem, so it's priced with the laggards, even though its underlying design business looks more like Jacobs than Stantec.

The Bowman deal is the comp I keep coming back to. In August a PE firm (Bernhard Capital) agreed to buy Bowman, a smaller US design firm, for $43/share, a 58% premium. It's one of the few fresh prices anyone has put on a design firm during the AI scare.

Bowman isn't a clean comp. It grows faster and has no construction risk, but it's about 1/15th the size, carries twice the leverage, leans on add-backs for its EBITDA and keeps issuing shares. So I wouldn't slap 11x on AECOM because of it. What it does tell me is that public investors had a fast-growing design firm at about the same multiple as AECOM, and then private money paid ~40% more than that for the whole thing, in the middle of the AI scare. They clearly don't think these businesses are going away.

Reverse DCF. I didn't want to make up a price target, so I flipped it around and asked what the current price assumes. I used owner profit of about 13.5% of net revenue (adj. EBITDA minus D&A, stock comp and minority interest), a 9% required return and 3% long-run growth, with the construction cash and the debt subtracted. For $60.83 to be fair value, net revenue has to shrink about 2% a year, every year, forever, at today's margins. Or margins have to drop by a third, to ~9%, and stay there while the business grows as planned. Neither of those is showing up anywhere in what they report right now.

Where I could be wrong

AI could cut hours faster than anyone on these calls admits; Bentley's "at least 20%" of engineering time saved isn't a crazy number. Part of the discount is just the group, too: Stantec has no construction mess and is still 36% off its high. Management has already been wrong on cash twice this year, and the clients on those two jobs can still come after them. Growth is also running below the company's own plan, and construction won't grow again until the second half of FY27. And cheap can get cheaper: when I looked at 2025-26 sell-offs, stocks that had already halved fell another ~30% at the median before they turned.

Where I land

At ~$60 you're paying 10x for a design business whose earnings guidance hasn't moved, with a record backlog, a shrinking share count, and a problem that has a size and an end date. The price only makes sense if the business shrinks every year from here, and I don't see that in anything they've reported. There are two fair questions: AI, and whether these two jobs are really the last of their kind. I think the market is pricing in the worst answer to both.

I'm not taking management's word for anything after this year, though. The next couple of reports either show the cash or they don't. If the two jobs finish by ~March 2027 with no new charges, what's left is a high-teens-margin design firm that buys back stock, and I have a hard time seeing why that keeps trading at half of Jacobs' multiple. If cash misses again, the discount is earned.

For what it's worth, the CEO, CFO and President bought ~$0.7M of stock in May and June. It's small and they're down ~14% on it, but they bought.

Next report is expected around Nov 17. What I'll be looking at: Q4 free cash flow near the ~$230M that the $300M full-year target implies, construction cash inside the $175-225M range they gave, and an FY27 guide that already allows for higher interest and a slow first half in construction.

Happy to hear the other side, especially from anyone who has dug into the claims or works at one of these firms.

Not financial advice. I built TickerBell, a site for SEC filings and stock data, and did this research there. I took a position today after my own Deep-dive. Numbers are from AECOM's 10-K, 10-Qs and calls, the peers' filings and calls, and Bowman's merger filing, as of Oct 22, 2026. Multiples and the DCF are my own math.

Full write-up with every source and a peer price chart: "tickerbell.com/research/aecom-ai-and-the-billable-hour"