Robinhood (HOOD 3.27%), the online brokerage that popularized commission-free trades, is often associated with meme stocks and riskier investments. Yet according to Robinhood, the ten most owned stocks across its platform are Amazon (AMZN 1.52%), Apple, Alphabet (GOOGL 1.66%)(GOOGL 1.66%), Tesla, Nvidia, Palantir, Meta Platforms, Microsoft, Netflix, and Ford Motor Company.
All of those stocks, with the exception of Palantir, can be considered blue chip stocks. Therefore, the average Robinhood investor still seems focused on higher-growth tech plays -- but they're not all chasing volatile meme stocks like Gamestop.
Image source: Getty Images.
Out of those ten stocks, two stocks have secured more buy ratings from Wall Street analysts than all the others: Alphabet and Amazon, which are tied at 58 buy ratings as of this writing. Let's see why these two stocks stand above the rest -- and if they're worth buying right now.
Alphabet is becoming an AI play
Alphabet's Google already owns the world's top search engine, mobile operating system (Android), web browser (Chrome), webmail platform (Gmail), and streaming video service (YouTube). It also operates one of the world's leading cloud infrastructure platforms and cloud-based productivity suites, and its Gemini generative AI platform is growing rapidly.
NASDAQ: GOOGL
Key Data Points
Google's massive ecosystem makes it one of the most balanced ways to profit from the secular expansion of the digital advertising, cloud infrastructure, and AI markets. Its platform is a gold mine of data for targeted ads and generative AI services, and it can easily bundle its services to fend off smaller competitors in those markets. Antitrust regulators have consistently targeted it, but it has weathered numerous such probes and lawsuits over the past decade.
Google still generates most of its revenue from targeted ads, but it's been diversifying its business with subscription-based services (such as Google One and YouTube Premium). Its Google Cloud platform is also growing rapidly as more companies upgrade their cloud infrastructure to handle the latest generative AI applications.
From 2025 to 2028, analysts expect Alphabet's revenue and EPS to grow at CAGRs of 15% and 12%, respectively. It's still reasonably valued at 26 times this year's earnings, and it has plenty of room to grow as the cloud and AI markets expand.
Amazon's core businesses will keep growing
Amazon is already the world's largest e-commerce and cloud infrastructure company. It generates most of its revenue from its retail business, but most of its profits actually come from Amazon Web Services (AWS), the world's largest cloud infrastructure platform.
NASDAQ: AMZN
Key Data Points
AWS' profits enable Amazon's retail business to expand through lower-margin, loss-leading strategies. That's why it can continuously attract more Prime members through its exclusive discounts, free shipping, streaming services, and other perks. It's already locked in more than 240 million Prime members worldwide, which gives it a wide moat against other retailers.
Amazon's e-commerce business will continue to grow as it upgrades its logistics networks, accelerates its shipping capabilities, and expands into new regions. Its cloud infrastructure business will also benefit from the AI market's breakneck growth. To capitalize on that trend, it's rolling out more AI development tools, purpose-built AI services, and machine learning services. It's also expanding its higher-margin advertising business into a secondary profit engine.
From 2025 to 2028, analysts expect Amazon's revenue and EPS to grow at CAGRs of 12% and 18%, respectively. It also doesn't seem pricey at 26 times this year's earnings, and it could have plenty of upside potential as its e-commerce and cloud businesses evolve and expand.
Should you buy Alphabet and Amazon right now?
I believe Alphabet and Amazon are both evergreen stocks that deserve Wall Street's bullish ratings. It's encouraging to see Robinhood's investors stick with these two stocks rather than more speculative ones, and they're still both worth buying in this choppy market.
