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Dominant tech businesses generate all the buzz from the investment community. In the past, they've been able to produce tremendous returns for shareholders.
Two examples are Amazon (NASDAQ: AMZN) and Apple (NASDAQ: AAPL), successful enterprises that touch the lives of billions of people daily. Despite their massive sizes, they both deserve to be on your investment radar.
Which of these "Magnificent Seven" stocks is the best one to buy right now?
Amazon: Multiple growth levers
In the last 12 months, Amazon reported net sales of $620 billion. This is a gargantuan sum that would make you believe the top line has no upside going forward. But that's a flawed assumption, as Amazon benefits from numerous secular tailwinds.
For starters, the company is the clear leader in the e-commerce market. According to Statista, nearly 40% of all online shopping in the U.S. goes through Amazon.com, well ahead of second-place Walmart. E-commerce spending accounts for just 16% of total retail activity in the U.S., so there is a long growth runway that Amazon can capture.
And besides streaming entertainment and digital advertising, Amazon Web Services (AWS) is making the company a cloud computing leader, commanding 31% global market share in the industry. Revenue growth has accelerated in recent quarters, boosted by heightened customer interest in artificial intelligence (AI).
Recently, Amazon's management team, led by CEO Andy Jassy, has been focused on cost cuts and operational efficiency. A business as large as this one unsurprisingly developed some bloat that needed addressing. This is music to investors' ears.
That's because Amazon's bottom line is expanding at a rapid clip. Operating income soared 55% year over year to $17.4 billion in Q3. And executives believe that figure will increase 36% (at the midpoint) in the just-ended fourth quarter. Wall Street analysts expect revenue to rise 11% in 2025, but they forecast operating income to just 21%. I believe a continuation of this trend is in store for the foreseeable future.
Apple: Incredible brand strength
Apple is the world's most valuable company, with a market cap of just under $3.7 trillion. Getting to this point can be attributed to its strong brand presence, one that consumers associate with a premium status, high-quality offerings, and exceptional design and innovation. This has helped the business benefit from pricing power over the years.
Apple's hardware devices, most notably the iPhone, get a lot of attention. That's warranted, as this single product represented 51% of company revenue in fiscal 2024 (ended Sept. 28). And it's precisely what has made Apple a global icon. But revenue growth here isn't exciting anymore.