Investors are keeping a keen eye on tech giants Amazon and Alphabet, waiting for potential opportunities as these stocks exhibit different trajectories amid a changing market landscape.
While both companies underwent significant stock splits last summer, Amazon’s shares have soared 73% this year, outpacing Alphabet’s 55% rise. This raises the question: Is now the right time to invest in Amazon before its stock becomes even more expensive?
In the past, Amazon’s shares routinely traded at over $2000 per share, but they now sit at $144 per share, recently hitting a new 52-week high.
Last June’s stock split made Amazon’s shares more accessible to smaller investors, albeit with diluted earnings per share due to a higher number of shares outstanding.
Despite this, Wall Street remains bullish on Amazon, as the e-commerce giant shifts its focus toward profitability while expanding into sectors like healthcare, streaming services, and brick-and-mortar retail.
Encouragingly, earnings estimates are aligning with ambitious price targets set by various analysts. Looking at Amazon’s fiscal 2023 outlook, earnings are projected to surge by 214% to reach $2.23 per share, compared to just $0.71 per share in 2022.
Further into fiscal 2024, earnings are anticipated to rise by an additional 38% to $3.08 per share.
What’s even more striking is that Amazon’s FY23 and FY24 EPS estimates have climbed by 42% and 35%, respectively, over the last 60 days.
This trend could explain why Amazon’s shares continue to rally, while Alphabet’s stock performance has shown signs of stagnation.
In contrast, Alphabet’s upward momentum has slowed down, with modest gains of 5% in FY23 earnings estimates over the last two months and a 7% rise in FY24 EPS estimates.
Although Alphabet is expected to report a 24% earnings increase this year and an 18% jump in FY24 to $6.73 per share, the trend in earnings estimate revisions is less compelling. Interestingly, GOOGL shares have remained steady at around $136, still close to their 52-week high of $138 per share reached at the end of August.
As September, historically known for stock market declines, approaches, it’s essential for investors to carefully weigh their options and consider the distinct trajectories of these tech giants in their investment decisions.