Record Foreign Investment in US Equities Masks Undervalued Cash Flow Plays

Foreign investors have poured a record US$942b into US equities over the past year, with many wondering if broad indices are getting too expensive. When global money chases headline benchmarks, quieter areas of the market can get overlooked. That's where cash-rich businesses priced below their estimated fair value come in.

Three such undervalued cash flow plays from our screen are Broadcom (AVGO), Alphabet (GOOGL), and Amazon.com (AMZN). Broadcom generates substantial free cash flow, expanding its custom silicon business and strengthening its position in networking. Its software assets further diversify earnings.

The key variable is how one emerging pressure shapes the balance between high-margin software cash flows and capital-intensive AI hardware demand. Alphabet's Google Cloud has become a money-maker with over 11% market share, driven by AI-first services like Vertex AI and Duet AI. However, the margin story only tells half of it.

Amazon.com is best known for its global online retail and Prime membership ecosystem, but its cash flow case leans heavily on Amazon Web Services (AWS). AWS supplies much of the durable, recurring cash that underpins the valuation work, even though the wider retail and advertising machine still brings in the bulk of sales.