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Better Buy: Apple (AAPL) vs. Amazon (AMZN) Stock

Apple AAPL and Amazon AMZN are two of the richest companies in the world, and both have helped shape the modern economy. Both stocks would have also been some of the best investments ever, had investors bought AAPL or AMZN years ago, but it's not too late to get in on the action. So let's see which stock looks like the better buy at the moment.

Core Business Strength

Amazon is an e-commerce giant that saw its net product sales surge roughly 29% to hit $31.86 billion last quarter, which helped its overall Q2 revenues soar 39% to $52.9 billion. Amazon's cloud computing business skyrocketed 49% to reach $6.12 billion. AWS also experienced a 12% sequential gain, which helped it cement its place as the largest cloud provider.

Amazon reportedly grabbed 34% of the total cloud computing market during the second quarter, according to Synergy Research Group , which crushed Microsoft's MSFT 14%, IBM's IBM 8%, Google's GOOGL 6%, and Chinese e-commerce counterpart Alibaba's BABA 4%.

Meanwhile, Apple's most recent quarterly revenues climbed by 17% to reach $53.27 billion. The firm's adjusted earning skyrocketed 40%. Total iPhone revenue also surged by 20% to $29.91 billion. But, total iPhone unit sales climbed by only 0.7% to 41.30 million. The contrast between iPhone revenue growth and unit sales helped demonstrate how much the high-priced iPhone X has helped Apple.

New Growth Opportunities

Apple and CEO Tim Cook have known for a while that the company needed to diversify beyond its flagship smartphone that helped propel Apple into the trillion dollar titan it is today. The company's services business, which includes AppleCare, Apple Music, and Apple Pay, saw its quarterly revenues climb 31% reach $9.548 billion.

Apple Music has quickly become a Spotify SPOT competitor in the U.S. Plus, Apple's mobile payment service completed more total transactions than Square SQ and more mobile transactions than PayPal PYPL last quarter. Cook also said on Apple's Q3 earnings call that it is on track to double its 2016 services revenue by 2020, which would see the unit hit roughly $50 billion.

Plus, Apple's "other products" division surged 37% to reach $3.74 billion, making it Apple's fastest growing unit for the fifth quarter in a row. Apple's less talked about growth segment includes sales from AirPods, Apple TV, Apple Watch, Beats products, and HomePod. And let's not forget that Apple has plans to jump into the streaming TV world with a slew of its own original content within the next few years as it tries to take on Netflix NFLX , Hulu, and soon enough Disney DIS .

Not to be outdone, Amazon Prime, which boasts over 100 million subscribers worldwide, not only offers online shopping deals and special delivery offerings but also lets users watch a ton of TV and movie content. Amazon is spending billions to add to its slate of original content, which includes big-budget action series and indie movies with A-list stars-and maybe most importantly, it has started to jump into live streaming sports.

Amazon has also further expanded into the medical and pharmaceutical industry with its PillPack purchase. There have also been reports recently that suggest Amazon might start to roll out an insurance comparison website in the U.K. and get into both the gas station business and the travel discount industry, similar to Costco COST .

Outlook

Looking ahead, AMZN's third-quarter revenues are projected to climb by 30% to hit $56.91 billion, based on our current Zacks Consensus Estimate. Meanwhile, its full-year revenues are expected to reach $234.82 billion, which would represent a roughly 32% surge.

At the other end of the income statement, Amazon's adjusted quarterly earnings are projected to skyrocket over 517% to $3.21 per share. The firm's fiscal 2018 earnings are expected to soar over 279%.

Moving on, Apple's fiscal Q4 revenues are projected to climb by nearly 16% to hit $60.98 billion, while its full-year revenues are expected to jump by 15% to $263.68 billion. Meanwhile, Apple is expected to see its quarterly earnings surge by roughly 33% and its full-year EPS figure jump just under 27%.

Bottom Line

Amazon and Apple both clearly have their eyes on the future, while their core businesses continue to grow. The firms have both also received a ton of upward earnings estimate revision activity recently for both fiscal 2018 and 2019, with 100% agreement to the upside.

Amazon is currently a Zacks Rank #1 (Strong Buy) and sports "A" grades for both Growth and Momentum in our Style Scores system. Meanwhile, Apple is a Zack Rank #2 (Buy) that is trading at a lower forward earnings multiple than the S&P 500 average. Therefore, this fight seems too close to call, which means investors can hardly go wrong either way.

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International Business Machines Corporation (IBM): Free Stock Analysis Report

The Walt Disney Company (DIS): Free Stock Analysis Report

Netflix, Inc. (NFLX): Free Stock Analysis Report

Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Alibaba Group Holding Limited (BABA): Free Stock Analysis Report

Alphabet Inc. (GOOGL): Free Stock Analysis Report

Square, Inc. (SQ): Free Stock Analysis Report

PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report

Apple Inc. (AAPL): Free Stock Analysis Report

Microsoft Corporation (MSFT): Free Stock Analysis Report

Costco Wholesale Corporation (COST): Free Stock Analysis Report

Spotify Technology SA (SPOT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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