The tech-heavy Nasdaq stock index surged to unprecedented heights during early trading on Friday as Wall Street approaches a crucial two-week juncture. Giants like Alphabet, Microsoft, Apple, and Amazon are gearing up to report their earnings in the final week of October, just before the nation heads to the polls on November 5.
Bulls showed resilience around Nasdaq’s 21-day moving average, yet again proving their mettle in a year marked by numerous such instances. Moreover, the recent stellar performance of Tesla’s stock post-earnings, coupled with Taiwan Semi’s reinforcement of strong artificial intelligence (AI) spending, further bolstered market optimism.
As the tech sector braces for a significant week marked by earnings reports and political anticipation, the focus turns to stock market behemoths Amazon and Meta, inviting investors to delve deeper into these mega-cap technology entities.
Meta: An AI Growth Gem with Enduring Value
Meta Platforms, Inc.’s (META) upcoming Q3 2024 earnings release on October 30th sets the stage for investors eyeing AI-driven growth opportunities. Meta’s strategic positioning alongside the perpetual quest to engage digital consumers in a smartphone-crazed world has borne fruit, evident in the 7% uptick in its daily active users across Facebook, Instagram, and WhatsApp to reach 3.27 billion in Q2.
Embracing the AI evolution, Meta is carving a distinct path in the technology landscape by embracing open-source AI. The company’s fusion of AI prowess, fortified by a robust balance sheet, and the steady expansion of core operations has enamored Wall Street, with 41 out of 48 brokerage recommendations on Zacks pegged as “Strong Buys.”
Despite a stellar 60% surge in share value year-to-date and a staggering 345% surge over two years, Meta’s current valuation trades at a 10% discount relative to the Zacks tech sector and a substantial 70% below its historical highs, boasting a forward 12-month earnings multiple of 23.9X.
Amazon: Positioning for an All-Time High Breakout?
Set to unveil its Q3 2024 earnings on October 31st, Amazon (AMZN) emerges as a compelling prospect for investors eyeing potential growth catalysts. Over the past decade, Amazon’s stock has witnessed a meteoric 1,100% ascent, eclipsing the tech sector’s 333%, Apple’s 770%, and Alphabet’s 500% in returns.
While Amazon’s year-to-date climb of 25% trails behind Meta and other tech titans, the stock appears to be consolidating around its 21-week moving average and prior peaks, poised for a breakout contingent on the delivery of optimistic guidance.
Trading at a substantial 95% discount from its peak valuation and over 50% below its ten-year median, Amazon’s forward 12-month earnings multiple stands at 32.9X, indicating a promising valuation proposition. With nearly 40% of the U.S. e-commerce market share under its belt, Amazon’s dominance is evident, outstripping Walmart’s 7% share. Additionally, the company’s leadership in cloud computing and the surging digital advertising segment further underpin its growth story.
Driven by the strength of higher-margin segments like AWS and ads, coupled with an unwavering commitment to efficiency, Amazon’s earnings trajectory remains robust. Reports of the company’s planned investment exceeding $100 million herald further expansion and innovation, underscoring Amazon’s strategic vision and growth potential.
Unleashing The Beast: Amazon’s Multibillion-Dollar Investment in AI
A Data Center Frenzy
Amazon, the tech giant famous for its vast online marketplace, is gearing up for a monumental shift in the realm of artificial intelligence. With a commitment to plow billions into expanding its data centers over the next decade, Amazon is sending a clear signal to the market – they mean business. The company’s investment isn’t just a drop in the ocean; it’s a tidal wave of support for their AI ambitions.
Projected Growth and Prosperity
Analysts are buzzing with excitement over Amazon’s future prospects, estimating a staggering 64% surge in adjusted earnings for 2024. This significant leap is just the beginning, with a further 23% increase forecasted for the following year. For shareholders, this translates to a meteoric rise from $2.90 per share in FY23 to an impressive $5.84 per share in the subsequent year.
The sales side tells a similarly compelling story, with a projected 10% increase in FY24 and an additional 11% growth in the following year. These figures equate to a mind-blowing $130 billion boost to Amazon’s top-line revenue over a mere two-year period.
Amazon’s Strategic Maneuver
In the ever-evolving landscape of big tech, Amazon appears to have laid its cards on the table with strategic precision. This bold move to fortify its data infrastructure sets the stage for a transformative era of AI expansion. The company’s proactive approach speaks volumes about its commitment to staying ahead of the curve, even in the face of fierce competition.
