Apple (AAPL) and Amazon (AMZN), two of Wall Street’s true heavyweights, have long been mainstays of many investors’ portfolios. Even the lay investor knows that, which is why they’re perhaps the two stocks my investing-agnostic friends and family members most frequently ask me about. Specifically, what they ask is: which is the better long-term investment going forward? With that in mind, I thought it might be useful to break it down with an Apple vs. Amazon stock tale of the tape.
There’s a lot to like about both companies, of course.
Apple remains a cash cow, generating $173 billion in gross profits over the last 12 months, and last year authorizing an additional $90 billion stock buyback plan in an effort to flex its financial muscle and lure more investors (hint: it’s working!).
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Amazon, meanwhile, is arguably the most diversified company in America, having revolutionized the way people shop, launched a video streaming service that rivals Netflix (NFLX), created a profitable cloud computing wing, etc. (all for the purpose of sending founder Jeff Bezos to space, apparently...but that’s another story!).
But there are nits to pick about each company.
Apple has become something of a one-trick pony under Tim Cook, churning out a seemingly endless line of iPhones but failing to innovate the way it did under the late Steve Jobs. With iPhone sales sagging, it will need to create something new to really excite consumers (and investors) again. The Apple TV+ streaming service, launched almost three years ago, looks like a nice start, though launching a streaming service isn’t exactly a novel idea (though it was quite well-timed for the era of social distancing and self-isolating). And it’s clearly lagging behind Disney’s (DIS) Disney+ streaming service, despite the success of shows like Ted Lasso, The Morning Show and Severance.
The problems with Amazon, meanwhile, have more to do with the stock itself—namely, its rich value. AMZN stock currently has a trailing P/E of 60, more than double AAPL’s value. That chasm between the stocks’ valuations is a good place to start when examining the tale of the fundamental tape for Apple vs. Amazon stock.
Here’s a closer look at AAPL and AMZN, broken into a few key numbers:
Tale of the Tape: Apple vs. Amazon Stock
Trailing P/Es: AAPL 27, AMZN 60
Forward P/Es: AAPL 26, AMZN 41
Latest sales growth: AAPL 1.2%, AMZN 11.6%
Cash per share: AAPL $4.73, AMZN $8.35
Institutional ownership: AAPL 56.7%, AMZN 62.8%
On current and future value, AAPL clearly has AMZN beat.
Amazon has more cash and cash per share, with $87 billion in total cash compared to just $73 billion for Apple. Meanwhile, the companies are both heavily owned by institutions, but AMZN does have a slight edge there.
From a fundamental perspective, you’d have to say that’s advantage Apple.
So now let’s move to some technical analysis of the two stocks.
Like most growth stocks, AMZN was flying high until the end of 2021, touching as high as 187 a share (split-adjusted) before pulling back to the low 100s in May and June, bouncing in the late summer, and selling off to pre-pandemic levels to close out the year. Since the end of 2022, however, it’s been a totally different story, with AMZN up 108%.
Apple stock has also done well, rising more than 34% since the beginning of 2023. But it’s come on the heels of far less volatility, as AAPL fell only about 28% in the last bear market (from peak to trough), compared to AMZN’s 54% decline.
In essence, AAPL had less room to recover than AMZN did, and that’s reflected in their performance since the start of 2023.
If look at a longer time horizon, over the last five years, AAPL has returned 266% compared to 98% for AMZN.
With the Magnificent Seven narrative getting long in the tooth, AAPL has been an underperformer in 2024 (down nearly 6% vs a +16% return for AMZN). Apple certainly looks better over the last few years, but over the long haul, I prefer AMZN in the battle of Apple vs. Amazon stock.
AMZN Stock is the Winner
And we’re talking about the long run here, not just the next six to nine months. Both AAPL and AMZN are stocks you’d be wise to hold in your long-term or retirement portfolio. But I think Amazon has the more diversified list of offerings.
If you want to know what other, less obvious growth stocks we’re currently recommending, consider taking a trial subscription to Cabot Top Ten Trader. It’s a weekly list of the market’s 10 best momentum stocks, complete with loss limits and buy ranges.
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*This post is periodically updated to reflect market conditions.
