The stock market has fluctuated greatly this year. The S&P 500 is up 15% since January yet has dipped 3% since mid-July after a slight sell-off in the tech market.
Tech stocks became a haven for many investors amid economic uncertainty in recent months. However, easing inflation has seen Wall Street reshuffle its investments and venture outside the long-term security of tech. As a result, now could be an excellent time to take advantage of the dip and make an investment in some of tech's best performers.
Amazon (NASDAQ: AMZN) and Apple (NASDAQ: AAPL) are two attractive stocks, dipping 5% and 4%, respectively, since mid-July. These companies have made promising inroads in their respective markets this year and could see significant stock growth as we head into earnings season next month. They're both stocks that can help you get richer in 2024.
1. Amazon: Trading at one of its best values over the last decade
It seemed as if Amazon could do no wrong over the last year. The company has delivered multiple quarters of impressive earnings growth alongside significant investments in some of the fastest-growing markets. Amazon has benefited from a long list of cost-cutting measures that brought its retail business back to profitability and a steady expansion in the budding artificial intelligence (AI) market .
The company's revenue increased 13% in the first quarter of 2024, beating Wall Street forecasts by $750 million. Meanwhile, operating income spiked 220% to more than $15 billion. The solid gains came from key parts of its business, such as third-party seller services, selling ads on its streaming platform Prime Video, subscription services, and its cloud business with Amazon Web Services (AWS).
Amazon has delivered an impressive turnaround in its business after suffering a market downturn in 2022 that led to steep profit declines. The company's free cash flow has risen 170% in the last 12 months, illustrating its ability to successfully navigate unexpected headwinds.
The e-commerce giant has used its boosted cash reserves to reinvest in its business, expanding AWS' reach by building data centers in new regions, enhancing its AI offerings, and venturing into chip development. Amazon will report its Q2 2024 earnings on Aug. 3, which will likely follow recent trends in beating estimates.
Data by YCharts.
Moreover, the above chart shows Amazon is potentially the best-valued stock among its AI rivals. Not only does it have the lowest price-to-sales ratio (P/S) among these companies, but its figure for the metric is also the closest to its 10-year average. As a result, Amazon's stock is a bargain right now, compared to its potential, and could make you rich in 2024.
2. Apple: Carving out a lucrative role in AI
Apple's stock didn't rally many investors in the first half of 2024, with its share price dipping about 1% from Jan. 1 to the start of June. However, recent announcements have made Wall Street bullish again, boosting the stock by 17% since last month.
Apple was largely left out of the rally many tech stocks enjoyed thanks to AI last year. The iPhone maker initially struggled to find its function in the market as companies like Amazon and Microsoft found their AI niches in cloud computing. However, while many of the company's peers are focused on providing businesses with AI services, Apple is prioritizing the consumer market.
The company hosted its annual Worldwide Developer Conference in June, where it announced Apple Intelligence, with the apt tagline, "AI for the rest of us." Apple Intelligence is a range of generative features coming to the company's products, including writing tools with enhanced language capabilities, image generation, access to OpenAI's ChatGPT, and a complete overhaul to Siri.
Apple Intelligence will launch this fall and coincide with the September release of Apple's newest iPhone, its first smartphone designed with a focus on AI. The coming iPhone is among just a few products with access to Apple Intelligence, as the generative features will be reserved for the company's newest devices. Apple's AI strategy is designed to encourage consumers to upgrade their current devices, which could lead to a significant earnings boost in its next quarter.
In addition to potential stock growth from AI, Apple will release its Q3 2024 earnings at the beginning of August. Recent reports have indicated a possible jump in iPhone and Mac sales this quarter, which could lead to a turnaround for the company's product segments after a recent slump.
As a result, it could be worth investing in Apple's stock now before earnings season and the launch of its next iPhone. The company's shares are trading at 35 times its earnings, indicating they're not exactly a bargain. However, that figure has come down over the last week. Meanwhile, Apple's long-term potential suggests its stock is worth its premium price, making it worthy of buying this year.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy .
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