The Motley Fool on $SE (Oct 29, 2026)
Sea Limited is liked as a business with accelerating revenue growth (47% in the first quarter, 48% in the second), true net income approaching one billion in the first half of 2026, 22 times forward earnings and around 10 times free cash flow, and insulation from AI capex since it owns no data centers and uses AI internally instead of selling it. Gaming is a harder business and agentic shopping could weaken Shopee's link to end users; the speaker owns no shares yet.
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Okay, I want to talk about your first stock. It is Sea Limited . Yes, Sea Limited. This is a $ 50 billion company from Singapore. It has three branches. First, they have Shopee, which is their e-commerce business .
They own SeaMoney, which is a financial services business. Then they have Garena, which is a video game business.
This is a very large company, yet its revenue growth is accelerating . So, growth of 47% in the first quarter, and growth of 48% in the second quarter. If you look at the expected growth.
The administration only anticipates growth in e-commerce volume, but it expects volume growth of about 25% for the entire year. This is very similar to the first half of the year.
This is still a remarkable growth rate. It does not take into account the company’s other two branches, which are growing a little faster .
The stock is trading at just 22 times forward earnings. So, a company with tremendous growth, extremely profitable, with net income approaching one billion in the first half of 2026, not adjusted earnings.
This is true net income. And a reasonable assessment here.
So, Sea Limited is a company I liked as a business initially. I think it's a great mix of growth, profit and valuation, but I also think, as we'll talk about shortly, that it's insulated from the impact of artificial intelligence.
Yes, I like the rating; it's really convincing. I always have difficulty with these companies whose products I can't really interact with. But, you know, I think the markets you're talking about are very attractive.
I have shown a revenue growth rate earlier; it is an exceptional revenue growth rate. As you know, they seem to have built a good reputation.
Gaming activity is one of the things I wonder about. This kind of applies to all those gaming companies . I think this has become a much more difficult activity . However, the stock is currently trading at around 10 times its free cash flow , which is a very compelling valuation .
What is the story of artificial intelligence for them, or the lack of a story?
Well, it's interesting that you brought up the topic of free cash flow , because that's one of the things I wanted to point out. This is not a company that invests its capital expenditures in building AI infrastructure.
It does not have data centers. She is not trying to participate in this game at all. In fact, it doesn't even have logistics warehouses. They rent them from other companies. Therefore, this is considered a low-capital asset business in this respect.
And when it comes to free cash flow, yes, it is very strong because it does not invest much in capital expenditures.
Or, if you think about it , she's simply using artificial intelligence to improve her own business. She does not use it to sell artificial intelligence to her clients. Therefore, artificial intelligence is not a product for sale.
Rather, it is what you use internally to make things better.
So, one of the things you have available is the fact that it is growing its advertising business. We have previously mentioned in other videos that artificial intelligence can improve digital advertising because it can use available inventory better and more efficiently.
To ensure it reaches the right people. This could lead to higher prices. Therefore, it uses artificial intelligence in its operations, but it does not sell it. This is one of the positive points here.
Therefore, Sea Limited is on my watch list. I don't own any shares in it yet.
Yes, in my previous thought about C Limited, yes, it is somewhat risk-free when it comes to spending on AI infrastructure, but with regard to AI itself, it is exposed to some risks.
In particular, shopping through agents in the Shoppe business is huge, and if agents are the ones interacting with the platform, they are looking for the lowest price. This is in the company's best interest, but it also separates Shop, or rather, C Limited, from the end user, and this could cause complications for its financial arm and advertising business.
Therefore, it is not entirely immune to the risks of artificial intelligence.