Amazon (AMZN 0.87%) and Apple (AAPL 2.15%) are two of the biggest names in commerce, with one dominating online shopping and the other having a similar command of consumer electronics. Their success has earned them spots in the world's top-five most valuable companies by market capitalization, yet they're still potentially lucrative growth stocks.
In 2023, shares in Amazon and Apple have climbed 63% and 45%, respectively, thanks to easing inflation and excitement over certain tech markets like artificial intelligence (AI). However, it's not too late to profit from the long-term potential of these companies, with both active in multiple high-growth industries.
Let's assess whether Amazon to Apple stock is currently the better buy now.
Amazon: Winning in e-commerce
Amazon holds a 38% market share in online retail in the U.S., with its dominance demonstrated by the fact that Walmart's second-largest share is only 6%. While Amazon's authority in the sector has seen it soar to record heights, it also left its business vulnerable amid 2022's economic downturn. The company's retail segments reported a combined $10.6 billion in operating losses for the fiscal year as inflation hikes caused reductions in consumer spending.
However, Amazon has come back strong in 2023. Restructuring moves and a gradually improving economy have allowed for a revival in its retail business. In the second quarter, Amazon's North American segment reported operating income of more than $3 billion. That figure is a significant improvement from the $637 million in losses the segment suffered in the year-ago period.
NASDAQ: AMZN
Key Data Points
About 80% of Amazon's total revenue regularly comes from its e-commerce business, making the recovery a massive selling point for its stock. Alongside an expanding role in AI with its cloud platform, Amazon Web Services, the company appears on a growth path that could be worth an investment.
Apple: A solid long-term outlook
Apple hasn't had it as easy as Amazon this year. Its stock has made solid gains since Jan. 1, but macroeconomic headwinds have caught up with its business, leading to revenue declines in several product segments. In the third quarter of 2023, the company's revenue fell for the third consecutive quarter, tumbling 1% year over year.
The bright spot of Apple's earnings this year has been its booming services segment. The digital business delivered an 8% rise in revenue thanks to higher sales from subscription services and the App Store. Services are particularly lucrative for Apple, with profit margins often hovering around 70% compared to products' 35%. Services have strengthened the company's business for the long term, diversifying its revenue and allowing it to lean less on product sales during uncertain times.
NASDAQ: AAPL
Key Data Points
Despite Apple's recent challenges in products, it remains a leader in consumer tech. The company has leading market shares in smartphones, smartwatches, headphones, and tablets. Its dominance in the industry bodes well for when the market inevitably recovers and economic hurdles subside, and consumers can spend more freely. As a result, it's crucial to keep a long-term mindset with Apple shares.
Apple's stock has risen 232% in the last five years. It will take time for its business to bounce back fully. However, it remains an attractive long-term hold.
Is Amazon or Apple the better buy?
As two of the biggest names in tech and consumer goods, it's hard to go wrong with Amazon's or Apple's stock. However, Amazon appears to be the better buy right now, with more room for growth over the next year. The retail giant's business is on a promising trajectory as it recovers what it lost in 2022 and becomes a major player in AI.
Additionally, despite a recent rally, Amazon's stock remains down 26% from a record high it hit in July 2021 during the pandemic. The dip suggests the company's shares have plenty of room for growth. Meanwhile, Apple shares achieved an all-time high of $196 per share in July 2023 and have only slipped about 3% since then.
As a result, Amazon is currently the better buy. However, it's still wise to keep Apple on your radar for a potential future investment.
