Amazon vs Alphabet: Which "Magnificent Seven" Stock Is the Better Buy Right Now?
These two iconic tech stocks are trading at surprisingly modest valuations.
Amazon (AMZN) and Alphabet (GOOG), also known as Google, are two of the world's most valuable companies, with Alphabet boasting a market value of $4.1 trillion and Amazon valued at $2.8 trillion. Both companies are part of the Magnificent Seven, a group of tech stocks that have led the market in recent years. While both stocks have shown impressive growth potential due to artificial intelligence (AI), Alphabet has consistently outperformed Amazon in recent years.
Amazon, the world's largest online marketplace, generated $776 billion in revenue over the past four quarters, while Alphabet generated $446 billion. However, Amazon's larger revenue base may make it more difficult to maintain high growth rates. Alphabet's efficiency and profitability stand out, with operating margins reaching 33% in the past four quarters, compared to Amazon's 12% over the same period.
The forward price-to-earnings (P/E) multiple, which is a better indicator of a stock's value than the trailing P/E, suggests that Amazon is slightly more expensive than the S&P 500 average, while Alphabet's forward P/E of 22 indicates more upside potential. Despite Alphabet's higher market cap, it appears to offer more growth potential, particularly as an AI-driven business with stronger profit margins. Therefore, based on the current data, Alphabet might be the better investment choice at this time.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
