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With the new year upon us, there are many reasons to be bullish about the next 12 months. 2023 has gotten off to a rocky start. Nasdaq Composite It fell 33% due to macroeconomic headwinds. But as 2024 begins, things look even more positive.
The Nasdaq Composite Index rose 43% in 2023, helped by easing inflation and excitement about fast-growing sectors such as artificial intelligence (AI). The market will likely continue its upward trend in the coming months. Now is a great time to consider investing in companies that are set up for growth this year and beyond.
As giants in their respective industries, Amazon (AMZN -0.94%) and apple (AAPL -0.54%) are two attractive growth stocks with exciting developments in 2024. While Amazon has enjoyed several quarters of rapid growth in its retail business, Apple is set to launch its long-awaited virtual/augmented reality (VR/AR) headset.
Now, let’s take a look at whether Amazon or Apple is a better growth stock in 2024.
Amazon: Making a comeback
After suffering a steep decline in its e-commerce business in 2022, Amazon has made a remarkable comeback in the past 12 months.
In its most recent quarter (Q3 2023), the company posted a 13% year-over-year revenue increase, beating Wall Street expectations by $1.5 billion. Meanwhile, operating profit for the North American division exceeded $4 billion, a significant improvement from the $412 million loss reported in the same period last year.
The tech giant has attributed much of its growth over the past year to a variety of cost-cutting measures, including closing dozens of warehouses and halting construction, shutting down unprofitable programs like Amazon Care, and laying off thousands of people. be. The restructuring helped Amazon’s free cash flow increase 427% over the past year to $17 billion.
As a result, the company has started 2024 in great shape. The reduced expenses gave the company the funding to continue expanding in its AI space and accelerate research and development while overcoming potential headwinds.
Amazon leads two important markets in e-commerce and cloud computing services, and its operations are likely to yield significant profits for years to come.
Apple: Temporary issue
Apple didn’t have it as easy as Amazon in 2023, as the economic downturn drove consumers away and caused product sales to frequently decline.
For the fiscal year, the company’s revenue fell 3% year over year, as sales of its most profitable iPhone fell 2%, along with a decline in sales of Macs, iPads and wearables.
However, there is reason to believe that the current challenges are only temporary, which means it’s still worth investing in Apple. The company has built immense brand loyalty with its users, resulting in it ranking third in U.S. e-commerce despite offering significantly fewer products compared to industry leaders Amazon and Amazon.com. gained the largest market share. walmart.
The popularity of Apple products bodes well for the company’s upcoming Vision Pro, the company’s first VR/AR headset, which is expected to hit stores in 2024. Data from Fortune Business Insights shows that the VR market itself is expected to expand at a compound annual growth rate of 31% until at least 2030.
Apple, on the other hand, has a reputation for entering new markets and rapidly gaining dominance, attracting consumers with a focus on quality, connectivity across devices, and an easy-to-use design language.
Apple has nearly $100 billion in free cash flow in 2023. Along with its profitable digital services business, the company remains an attractive growth stock in the new year.
Is Amazon or Apple the better growth stock for 2024?
Amazon and Apple dominate their respective industries and are unlikely to be dethroned anytime soon. They have a long history of consistently delivering strong returns, making them some of the best growth stocks. However, just because a company is an industry leader does not necessarily mean that it is trading at a reasonable price.
Data by YCharts
This graph compares the price-to-sales (P/S) ratios of the two companies, and Amazon’s lower number suggests that its stock is better valued at the moment. P/S is calculated by dividing a company’s market capitalization by its trailing 12-month earnings. As a result, Amazon’s solid performance and financial growth make it a better growth stock and a better investment heading into 2024.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Dani Cook has no position in any stocks mentioned. The Motley Fool has positions in and recommends Amazon, Apple, and Walmart. The Motley Fool has a disclosure policy.
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