Two Broadcom and AI Infrastructure stocks trade below their cash flow values.

With mixed inflation signals, bond markets sending different messages across regions, and cash still earning reasonable yields, investors are paying close attention to what truly drives long-term equity value, reliable cash generation, and what they’re paying for it. Cash flow-based undervalued stock screening focuses on companies with discounted cash flow estimates that exceed current stock prices, which may appeal to investors who prioritize cash over headlines. This article focuses on three stocks in our screener to show how this theme fits into a disciplined value-focused watchlist.

Broadcom (AVGO)

overview: Broadcom is a leading U.S. technology company that provides data centers, communications networks, wireless devices, and critical semiconductor chips and infrastructure software that help businesses move, store, and protect their data.

operation: Broadcom generates approximately US$47.8 billion in revenue from semiconductor solutions (including IP licenses) and approximately US$27.7 billion in revenue from infrastructure software.

Market capitalization: 1.74 ton dollar

Broadcom’s combination of a large semiconductor franchise and an infrastructure software portfolio tied to long-term demand for computing power and data movement could appeal to cash-flow-focused investors. AI is a key element, and collaborations such as OpenAI’s Jalapeño inference chip and Broadcom’s AI XPV platform will help support analyst revenue growth estimates and a reported return on equity of approximately 33.4%. At the same time, its high debt and recent insider sales pose risks, and its focus on AI investments could have both positive and negative impacts. For investors considering these trade-offs, some may believe that current pricing relative to at least one DCF estimate of fair value is an important part of the overall thesis.

Broadcom’s AI engine and reported 33.4% return on equity raise big questions about how much of the story is already priced in, and Broadcom’s DCF valuation analysis could reveal a twist that investors have missed.

Space exploration technology (SPCX)

overview: Space Exploration Technologies operates Starlink, a global satellite broadband network, operates a launch business that designs, manufactures and flies reusable rockets, and expands into AI using Grok’s large-scale language models, enterprise solutions, and support infrastructure.

operation: Space Exploration Technologies generates approximately US$12.2 billion from connectivity, US$3.8 billion from the space sector, and US$3.3 billion from AI services.

Market capitalization: 2.02 ton dollar

Space Exploration Technologies combines three powerful engines into one stock. Starlink as a profitable core business, a growing launch business, and a rapidly building AI platform that currently includes a large computing deal and the planned acquisition of Cursor. Sales are reported to be growing rapidly, and analysts expect profits to rise more than 60% annually and return to profitability within three years, but the stock remains below fair value in at least one DCF estimate. On the other hand, the company is currently loss-making, operates with high leverage, has short financing options, and has experienced significant insider selling, all of which trade at very high multiples, making it a very volatile stock.

Space Exploration Technologies combines Starlink’s cash generation, launch scale, and rapidly expanding artificial intelligence capabilities into one stock, but the real tension between its rich multiple and future earnings lies in Space Exploration Technologies’ analyst forecasts.

Palantir Technologies (PLTR)

overview: Palantir Technologies builds data and artificial intelligence platforms that help government agencies and commercial customers turn large, complex datasets into real-time decisions for applications ranging from counterterrorism and defense operations to insurance, construction, and marketing.

operation: Palantir generates approximately US$2.8 billion from government customers and approximately US$2.5 billion from private customers.

Market capitalization: $270.7 billion

Palantir Technologies operates at the intersection of high-growth AI software and mission-critical data infrastructure. Analysts estimate it currently expects annual earnings growth of about 32% and sales growth of about 31% annually, supported by a return on equity of 26.8% and net income of 43.7%. Recent developments include being named the cloud data layer for the U.S. Army’s Next Generation Command and Control program and signing multi-year contracts with USDA, Google Cloud, and Kirkland & Ellis, reflecting both government and enterprise demand. The company’s shares also face increased scrutiny over valuation multiples, insider sales and the potential for political or regulatory backlash, particularly over sensitive contracts such as the NHS contract. This situation highlights the importance of detailed valuation work and risk assessment for investors who are creating watchlists focused on long-term cash flow.

Palantir’s lucrative AI engine and government contracts have garnered attention, but the real story lies in how analysts see the company’s next phase of growth unfolding in Palantir Technologies Analyst Forecasts

The three stocks mentioned here are just a small part of this idea. The complete cash flow-based undervalued stock screener now flags an additional 699 companies with compelling cash flow stories similar to those already featured in this article, all grouped within the cash flow-based undervalued stock screener. With Simply Wall St, you can analyze these companies in more detail and identify those with specific catalysts, cash flow profiles, and valuation gaps that align with your highest beliefs, value-oriented approach.

Take control of your investment journey

If Palantir Technologies or one of these companies has caught your attention, register for free on Simply Wall St and add your company to your watchlist to monitor the stock price relative to fair value and track any new developments. Once migrated, manage your holdings with a portfolio command center that filters out the noise and delivers only the most important and actionable updates. Our community allows you to filter the best ideas from thousands of investor perspectives throughout your journey. Discover hidden catalysts and risks early to accelerate decision-making and stay ahead of the market.

Looking for alternatives before the crowd moves on?

Fresh stock ideas can quickly move from quiet to rapid, and initial momentum often evaporates once the crowd catches up. Scan these discreetly for now and consider them before they become too widely known.

• While things still look good, aim for a reliable source of income by checking out eight dividend fortresses focused on companies looking to combine strong cash generation with generous shareholder dividends.
• We identify early AI momentum by scanning 61 cash-burning, profitable AI stocks whose companies are already financing growth from real earnings rather than relying solely on capital markets.
• Before your interest expands, consider potential infrastructure opportunities by checking out these 35 grid technology and infrastructure stocks featuring companies related to grid upgrades, transmission capacity additions, and critical equipment needs.

This article by Simply Wall St is general in nature. We provide commentary using only unbiased methodologies, based on historical data and analyst forecasts, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.

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