Jarc Predicts 'Violent' Upside Repricing for Amazon, Google, Microsoft

Rihard Jarc, an analyst known for predicting Nvidia's rise in 2010, believes that the recent surge in Amazon, Google, and Microsoft stocks is only the beginning of a 'violent' upside repricing. The three tech giants have seen significant gains over the past week: Microsoft (NASDAQ:MSFT) has climbed 26.5%, Amazon (NASDAQ:AMZN) 20.4%, and Alphabet (NASDAQ:GOOGL) 12.5%. Jarc argues that these companies are burning through free cash flow as capital expenditures have more than doubled, creating a primary downside risk.

Despite this risk, the analyst believes that the trade's multiples do not look stretched enough to kill it. Alphabet trades at roughly 17 times earnings while growing revenue 24% year over year, with Google Cloud accelerating 82% and operating margin expanding to 35.6%. Microsoft carries a P/E near 26, supported by 17.75% revenue growth, 46.78% operating margins, and a $678 billion RPO backlog that grew 84% year over year.

The forward setup is unusually visible, with major milestones reached in cloud business and AI adoption. Microsoft's Azure crossed $100 billion in annual revenue, and Alphabet's Cloud backlog reached $514 billion. Amazon's AI and custom-chips businesses each eclipsed a $25 billion annualized run rate. However, the real risk lies in capex outrunning cash flow, with Alphabet's free cash flow turning negative $5.9 billion in Q2.