Amazon vs. Apple: The Best Stock to Buy Right Now

When it comes to tech investments, two giants stand out: Amazon and Apple. These companies have significantly impacted the lives of billions around the globe, and they continue to be hot topics among investors. Both of them, despite their immense size, are worth considering for your investment portfolio.

So, which of these stock powerhouses should you buy right now?

Amazon: Diverse Growth Opportunities

Amazon has reported impressive net sales, reaching $620 billion in the last year. This tremendous figure might suggest that there's little room left for growth, but that's not entirely true. The company is well-positioned to take advantage of several long-term trends.

As the leading force in the e-commerce landscape, Amazon accounts for nearly 40% of all online retail sales in the U.S., according to Statista, outpacing its closest competitor, Walmart. Notably, e-commerce still represents only 16% of total U.S. retail spending. This means Amazon has significant growth potential.

In addition to e-commerce, Amazon Web Services (AWS) has emerged as a leader in the cloud computing market, with a 31% share. Recent trends show a boost in revenue growth driven by increased customer interest in artificial intelligence (AI) applications.

Moreover, under the leadership of CEO Andy Jassy, Amazon has prioritized cutting costs and improving operational efficiency. This restructuring is music to the ears of investors, as it has led to rapid growth in the company’s profits. In the third quarter, Amazon’s operating income jumped by 55% compared to the previous year, reaching $17.4 billion. The expectation for the fourth quarter suggests a continued increase in profits. Analysts predict a revenue growth rate of approximately 11% for 2025, alongside a projected 21% growth in operating income, which highlights a strong ongoing trend.

Apple: Unmatched Brand Power

Apple is renowned for being the world’s most valuable company, boasting a market capitalization of close to $3.7 trillion. This impressive success stems largely from the company's strong brand, which is synonymous with quality, innovation, and high-end products that command premium prices.

The iPhone remains Apple's flagship product, contributing to 51% of total revenue in the fiscal year 2024. However, growth in iPhone sales has plateaued, prompting the company to explore other revenue streams.

Apple's software and services business, featuring products like Apple TV+, iCloud, Apple Pay, and advertising, has begun to play a more prominent role. This segment has seen a compound annual growth rate of 12% over the past three years, outperforming the hardware division and benefiting from high gross margins of 74%.

The synergy between Apple's hardware and software creates a robust ecosystem that not only attracts users but also makes it difficult for them to switch to competitors.

Furthermore, Apple enjoys a strong financial position, with a reported net income of $93.7 billion and a profit margin of 24% in fiscal 2024. The company also holds approximately $50 billion in net cash, which lowers financial risks for investors.

The Importance of Valuation

While both Amazon and Apple are remarkable companies, evaluating their stock prices is crucial. Currently, Amazon trades at a forward price-to-earnings ratio of 36, while Apple has a ratio of 33. Given Amazon's stronger growth trajectory compared to Apple's slower expansion, the slightly higher valuation of Amazon can be justified.

Looking ahead, Amazon is positioned to potentially offer a higher return on investment than Apple, suggesting it may be the more attractive stock choice at this time.

Amazon, Apple, Stocks