These companies’ stocks hit record highs this week but could have a lot more to offer over the long term.
A number of companies’ stocks achieved new all-time highs on Friday, July 5, including tech behemoths Amazon (AMZN 0.03%), Apple (AAPL 0.38%), Microsoft, and Meta Platforms. As a result, the S&P 500 and Nasdaq Composite rose 1% and 2%, respectively, during a 24-hour period.
The rally followed news that unemployment had hit its highest level since 2021. Wall Street expects an uptick in unemployment to bring down interest rates, which often promotes growth in the stock market as companies benefit from lower borrowing costs. As a result, now could be an excellent time to expand your position in “Big Tech” before it’s too late.
Amazon and Apple are two attractive options, profiting from immense brand loyalty from their customers and the cash to expand into budding sectors like artificial intelligence (AI). Let’s examine these consumer-favorite companies and determine whether Amazon or Apple is the better stock to buy this month.
Amazon
Shares in Amazon have climbed 53% during the past 12 months, rallying due to several quarters of impressive earnings growth and expansion into some of tech’s fastest-growing industries. One of the most attractive aspects of its business is its diversification.
The company has come a long way since starting as an online book retailer 30 years ago. It’s vastly expanded its product range to become the biggest name in e-commerce and achieved lucrative positions in cloud computing, video streaming, digital advertising, and now, AI.
Amazon has growth catalysts across tech, potentially making it one of the most reliable long-term investments. For instance, an economic downturn in 2022 hit the company hard, causing steep profit declines in its retail segments.
However, Amazon remained profitable during the challenging year, thanks to its cloud platform, Amazon Web Services (AWS). Meanwhile, the company has since pulled off an impressive turnaround in its retail business, proving its ability to navigate market headwinds successfully.
In the 2024 first quarter, Amazon’s revenue rose 13% year over year to $143 billion. Its North American and international divisions posted revenue gains of 12% and 10%, respectively, with AWS sales spiking 17%. Also, Amazon’s operating income more than tripled, hitting over $15 billion.
Amazon is on a promising growth trajectory as sales continue to rise and it keeps investing in its business. This makes its stock a compelling option right now.
Apple
Apple’s stock hit a record high this week following a rally. Its share price has increased by 17% since its Worldwide Developer Conference (WWDC) on June 10.
Data by YCharts.
Declines in product sales and a delayed start in AI have concerned investors during the past year. This was reflected in a stock that has risen slower this year than many of its peers (as seen in the chart above). However, the WWDC gave a peek into Apple’s plan to boost product sales and carve out a lucrative role in AI over the long term.
At the June conference, Apple unveiled a new AI platform it calls Apple Intelligence, which will bring generative features across its product lineup. However, consumers must upgrade to the company’s newer devices to access Apple Intelligence.
iPhone users will need a 15 Pro or higher. Meanwhile, only Macs and iPads using Apple’s custom-developed Apple Silicon chips can run the new AI tools. The company hopes the new features will compel shoppers to upgrade their devices to access the coming features.
Apple revealed in its Q1 2024 earnings report it had more than 2 billion active devices worldwide. The company’s reach in the consumer market is vast, and its deep economic moat is driven by a walled garden of products and a reputation for quality. Apple generated $102 billion in free cash flow (what’s left of cash flow after capital expenditures), so I wouldn’t bet against the company flourishing over the long term.
Is Amazon or Apple the better buy?
Amazon and Apple have become worldwide household names. Both companies can seemingly do no wrong, succeeding in nearly every new market they enter. However, Amazon’s quick recovery after macroeconomic headwinds in 2022 and arguably more diverse business model make its stock potentially more reliable and worth considering over Apple.
Data by YCharts.
This chart shows that Amazon’s financial growth has dwarfed Apple’s during the past year. The retail giant is enjoying gains in all parts of its business. Meanwhile, many questions remain about whether Apple’s AI expansion will, in fact, boost earnings.
In addition to Amazon’s price-to-sales ratio of 3.5, compared to Apple’s 9.3, the e-commerce company’s stock is the better no-brainer buy this year.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.