It’s been a wild week for technology earnings, to say the least. With Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) moving in opposite directions following their latest round of quarterly earnings, investors may be wondering which Magnificent Seven firm is in the best shape as we look to close off the year. Indeed, the Magnificent Seven have stayed magnificent throughout the year. However, going into the new year and a potential “lost decade” for stocks, I believe that some of the Magnificent Seven names will stay magnificent while others will lose their luster.
In this tale of two tech titans, we’ll have a closer look at AAPL and AMZN to determine which looks like a timelier value bet for those looking to put new money to work in anticipation of a Santa rally. While only time will tell if Santa has a rally in store for investors this year, I do think the two AI tech titans look intriguing here after earnings.
Key Points About This Article
- AAPL and AMZN shares are moving in opposing directions after Thursday earnings.
- Both Magnificent Seven giants have strong AI plans. But Amazon’s looks more exciting at this juncture.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
Apple
Let’s start with the post-earnings laggard with Apple, which saw its stock get rocked by nearly 2% in the after-hours session of trade following a sluggish 1.8% down day on a scary Halloween Thursday for stock investors. The fourth quarter numbers weren’t terrible. Sales rose a modest 6%, while early iPhone 16 revenue came in slightly above estimates at $46.22 billion versus the $45.47 billion Wall Street sought.
In short, iPhone demand was relatively solid, but there were no signs of any sort of supercycle, at least in my opinion. And given how much the stock had run ahead of the number, there was bound to be disappointment if there were no real upside surprises on iPhone demand.
With Apple Intelligence debuting earlier in the week, we may just see iPhone demand pick up ahead of the holiday season. Of course, we’ve only been dealt a limited number of Apple Intelligence features thus far. And the “main attraction” (ChatGPT integration and a much smarter Siri) has yet to arrive.
Once the best of Apple Intelligence lands, it will be interesting to see how device demand reacts. Either way, I think AAPL stock is a great value on post-earnings weakness at around $220 per share. The quarter wasn’t awful. In my opinion, investors are just getting impatient, and that could cause them to miss the real “spark” that could power a device supercycle in the new year.
At around 31 times forward price-to-earnings (P/E), AAPL isn’t cheap. But does it deserve to be this cheap, given its deliberate and personalized approach to AI? I don’t think so.
Amazon
Amazon stole the show on Halloween evening as it reported an outstanding third quarter that caused a 6% surge in the after-hours session. The e-commerce, cloud, and AI behemoth didn’t just beat on earnings; it also reported strong growth in the cloud. Additionally, it seems to be flooring it on AI infrastructure, something that may just help it pull ahead in the AI race.
Indeed, many investors may discount Amazon’s AI abilities, especially compared to its savvy rivals in the Magnificent Seven. However, going into 2025, I do think the company is setting itself up for success as it looks to monetize new AI offerings while moving ahead with its AI buildout. With the cloud firing on all cylinders and more momentum behind the generative AI services business, it should come as no surprise why the stock is up so much following its strong number.
At just over 32 times forward P/E, AMZN seems way too cheap for its own good. While far from a deep-value play, I do see Amazon as a strong growth company poised for another leg higher. Despite the explosive two-year rally, AMZN shares are within 5% of their peak last seen in 2021.
At this juncture, I’m inclined to view Amazon as a better buy than Apple after earnings. Sure, AMZN stock is pricier today than it was before its big quarterly reveal. However, it’s pricier for a reason. And as it shows off its AI strength in the new year, I do think the stock could make a run for $200 per share.
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