Undervalued Stocks: NVIDIA, Broadcom, and Alphabet Amidst Treasury Yield Surge
The recent surge in U.S. Treasury yields to a 25-year high has raised concerns among investors, making stocks that rely on distant profits less attractive. However, this shift can leave cash-rich businesses undervalued, creating opportunities for patient value hunters. Three such companies highlighted by Simply Wall St are NVIDIA (NVDA), Broadcom (AVGO), and Alphabet (GOOGL).
NVIDIA is a leader in AI data centers, gaming PCs, and automotive systems, with its Compute & Networking division generating US$275.4b in revenue. The company's AI-focused infrastructure provides recurring returns from data center clients, but any crack in its competitive moat could undermine its pricing power and profitability.
Broadcom ties into this cash-flow screen through its mix of semiconductor hardware and infrastructure software, with VMware, mainframe tools, and cybersecurity subscriptions feeding recurring income. The company generates substantial free cash flow and is expanding its custom silicon business, but a quiet pressure on its software cash flows could shape the future path of margins and growth.
Alphabet runs Google Search, YouTube, Android, and subscription products, while also operating Google Cloud's AI infrastructure and Vertex AI platform. The company's ad empire already throws off large amounts of cash, while Google Cloud's AI subscriptions and usage-based services offer a second, more clearly recurring layer. A quiet shift in how customers commit to the cloud backlog could ultimately shape long-term cash returns.