Jun. 9 at 4:30 PM
$CLS -1.5SD move today
TD Cowen out w/ a report today suggesting that
$GOOGL FY27 consensus cap-ex ests are too low -
$230B vs TD's at
$295B
The report also expects
$GOOG ’s capex to stabilize at ~
$300B /year from FY28 thru FY31, w/ no indication of a slowdown. Google’s capacity is projected to more than double to ~18GW online by FY27 & increase to 39GW by FY31
CLS raed-thru suggests that there isn't a cap-ex cliff coming - which is consistant w/ mgmt’s commentary indicating extended visibility into FY28 & potentially FY29 - stable capex supports earnings sustainability
Note: Google is 40% of CLS total revs
TD see several drivers of future CLS earnings growth:
(1) increasing complexity in data center networking is shifting economics more favorably toward CLS as an ODM
(2) easing supply chain constraints &d a deflationary enviroin future years may enable higher volumes at similar spending levels
(3) potential new customer wins beyond GOOG
TD claims after the pullback (now -23.14% form the high),
$CLS.TSX looks more reasonable again
FY26 Fwd P/E: 33.3x on EPS growth rate of +70% yr/est & rev growth of 54.9% yr/est
FY26 Fwd P/E: 15.3x on EPS growth of +55% yr/est & Rev growth of +44% yr/est
FD: scale into 2x1 risk reversal - IV spiking - premiums are tasty
