Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL) are red-hot tech titans that reported earnings last week. Both FAANG firms beat estimates, but Amazon’s beat was more impressive. Post-earnings, shares of AMZN rocketed more than 8%, while Apple stock fell by 4.8%. The question for investors is whether it’s better to take a bite out of Apple on its near-correction or to buy Amazon, which may have more profound quarterly beats up its sleeves.
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At this juncture, I am bullish on both companies post-earnings, but I like AAPL more than AMZN after last week’s market action! Therefore, let’s use TipRanks’ Comparison Tool to see how Apple and Amazon stack up after the latest round of earnings.
A Tale of Two FAANG Stocks Coming Off Earnings
Amazon’s post-earnings pop seems warranted, given the magnitude of the beat. Further, it seems less surprising considering how severely shares were punished in 2022. As for Apple, which is coming off fresh all-time highs of $198 and change, I still think the pullback is more or less overdone.
Sure, iPhone and iPad growth appears to be stalling. Even Apple admitted that the U.S. smartphone market is going through a slump, and yes, the latest and greatest tech hardware is more of a discretionary (nice-to-have good) than a staple. With macro headwinds, inflation, and a potential recession to worry about, it’s not a mystery why Americans haven’t been in a rush to upgrade their iPhones over the past few months.
Still, I’m more than willing to give Apple the benefit of the doubt as it looks to double down in higher-growth markets like China and India, all while the U.S. consumer sentiment begins to improve, possibly once we’re given an all-clear that a recession won’t take place over the next year. Further, a new iPhone is just over a month away from its big reveal.
Apple: New Hardware Incoming!
The iPhone 15 will feature significant new camera upgrades, Dynamic Island (a pill-shaped area on the phone) coming standard across all models, and a Pro model with a titanium frame. Indeed, the iPhone 15 may or may not be a must-have when it comes to features over the iPhone 14. That said, there are quite a few iPhone users that are long overdue for an upgrade.
Daniel Ives, an analyst over at Wedbush Securities, is a raging bull on shares of Apple. He thinks the iPhone 15 could kick off a “mini super-cycle.” I think he’s right. There are a ton of aging iPhones out there that may be going well into overtime.
Even if there’s no such “mini super-cycle,” there are a lot of great products coming out of the pipeline. The Apple Vision Pro is still a go for early 2024 in the U.S. With shares revisiting their June keynote lows, I’d argue now is a great time to punch a ticket to Apple stock as others begin to look past the potential of Apple’s first spatial computer.
Finally, Apple’s post-earnings plunge seems to be overlooking the impressive growth in services. Sure, Apple stock already trades at a premium multiple of more than 30 times trailing price-to-earnings. However, I do believe services, the looming Vision Pro launch, and a potential iPhone upgrade cycle all warrant some form of premium. All considered, the stock may deserve an even larger premium (perhaps 35 times earnings).
What is the Price Target for AAPL Stock?
On TipRanks, AAPL stock comes in as a Moderate Buy. Out of 30 analyst ratings, there are 22 Buys and eight Holds. The average Apple stock price target is $208.13, implying upside potential of 15.8%. Analyst price targets range from a low of $167.00 per share to a high of $240.00 per share.
Amazon Stock: Firing on All Cylinders Again
Amazon stock really blew away expectations when it pulled the curtain on its results. The company isn’t just in recovery mode; it appears to be firing on all cylinders. For the second quarter, Amazon clocked in $0.65 in earnings per share (EPS), well ahead of the estimates calling for just $0.35. Revenue also came in at $134.4 billion, up around 5.5% quarter-over-quarter.
Though the post-earnings surge of around 8% was sizeable, especially for a company worth more than $1 trillion, I think the beat could mark the start of a sustained rally to even higher levels. Perhaps new highs could be reached before the year closes out!
Sand Hill’s Global Advisors’ Brenda Vingiello stated that operating margins were three times better than expectations. After such a colossal beat, it should be no surprise to see many analysts hiking their price targets on the stock.
What is the Price Target for AMZN Stock?
On TipRanks, AMZN stock has a Strong Buy consensus rating. Out of 38 analyst ratings, there are 37 Buys and one Hold recommendation. The average Amazon stock price target is $171.76, implying upside potential of 24.6%. Analyst price targets range from a low of $140.00 per share to a high of $204.00 per share.
The Bottom Line
Apple delivered a good quarter, while Amazon blew the numbers away. At this juncture, I’m a fan of both firms. However, I prefer Apple, as investors may have lowered the bar by a bit too much ahead of a slew of incredible new product launches. The iPhone 15 is up ahead, with the Vision Pro coming shortly after!
