Q3 profit and Q1 2027 sales guidance are real, but the $154 stock still needs more than $110 billion of FY27 sales at a high multiple. I keep $115.
Key points
- $14.6 billion Q3 revenue and $2.8 billion operating profit, the first clearly profitable quarter.
- $33, 37 billion is first-quarter 2027 sales guidance; Q4 capex is now $35, 40 billion.
- $51 billion net cash at September 30 after nine-month capex of $48 billion.
The call
The $154 stock capitalizes a $35 billion first quarter as if it were a $140 billion year and still applies about 14 times that figure. At 13.2 billion shares the equity is $2.03 trillion. Net of $51 billion cash, enterprise value needs roughly $110 billion of FY27 sales at 18 times.
I instead model $105 billion of FY27 sales: Connectivity $32 billion, Super Intelligence $68 billion, Space $5 billion. Cloud contracts stay cancellable after a short ramp, and capex near $35 billion a quarter keeps free cash thin. Fourteen times sales, $40 billion remaining net cash, and 13.6 billion shares produce $115.
Revenue by quarter ($ billions)Company releases through Oct 20 2026; FY27E is my estimate
Valuation
| Item | Figure |
|---|
| FY27E revenue | $105 billion |
| EV / sales | 14 times |
| Enterprise value | $1,470 billion |
| Net cash | $40 billion |
| Shares | 13.6 billion |
| 12-month target | $115 |
Fourteen times sales is still generous for a mix whose largest line can be cancelled on 90 days’ notice and that spends more cash than it earns. If FY27 sales hit $140 billion the stock is closer to fair; if they stall near $80 billion the equity is nearer $80. Asymmetry still favors the downside.
From $154 price to $115 targetMy FY27 sales, multiple and share count
Risks
- Starship cadence and V3 launches could lift Connectivity well past $32 billion.
- Cloud customers could keep ramping instead of terminating, pushing SI past $68 billion.
- A Tesla combination or a lower rate path could hold a 20-times sales multiple.
What would change my mind
A reported quarter of more than $25 billion revenue with positive free cash flow and non-cancellable cloud terms.