In multi-segment mega-caps where one business unit dominates the analytical narrative (e.g., AWS for AMZN, Cloud for GOOGL), the market systematically prices the headline segment at or near the full market cap and implicitly assigns zero value to other materially profitable standalone segments. A rapid SOTP sanity check — valuing each segment at a reasonable peer multiple and summing — reveals when this mispricing is occurring. The "free segments" condition is a structural signal: you are acquiring proven, profitable businesses at zero marginal cost within the market price. The check is fast and often more clarifying than a DCF.
For any multi-segment mega-cap, run a three-step SOTP screen: (1) value the dominant/headline segment at a consensus-appropriate peer multiple; (2) if that single segment alone approaches 70%+ of market cap, the remaining segments are implicitly mispriced — check whether they would each be profitable standalone businesses; (3) if yes, this is structural undervaluation, not a value trap. The signal is strongest when the dominant segment is accelerating (sustaining the SOTP case) AND the secondary segments are themselves growing. If the dominant segment is decelerating, the "free segments" condition may be a mirage — the market may be correctly discounting the headline segment, not irrationally underpricing the rest.