Better Long-Term Buy: Amazon (AMZN) vs. Microsoft (MSFT) Stock
Shares of both Amazon AMZN and Microsoft MSFT have been hurt by the recent market downturn that has seen the likes of Apple AAPL, Netflix NFLX, and other tech giants fall. With that said, both AMZN and MSFT are still up big over the last year and the companies are headed in the right direction.
AMZN Overview
Amazon’s Q3 revenues climbed by 29% to reach $56.6 billion, which fell short of Wall Street estimates and helped show that its days of massive top-line growth might be over simply because of its size. Still, the tech powerhouse is projected to grab roughly 50% of the total U.S. e-commerce market in 2018, up from 44% last year. Plus, Amazon’s advertising business is set to expand as more and more product searches begin on its site.
Jeff Bezos’ firm is now the third-largest digital advertiser behind only Facebook FB and Google GOOGL. On top of that, Amazon has expanded into the pharmaceutical industry and its Prime Video platform looks poised to stand out against Netflix and soon enough Apple AAPL and Disney DIS as it pushes deeper into live sports. And let’s not forget that Amazon is still a cloud-computing powerhouse.
MSFT Overview
Speaking of cloud computing, Microsoft is the second-largest cloud provider—behind only Amazon—having grabbed roughly 14% of the cloud market in the third quarter. This put MSFT in front of IBM IBM, Google, and Alibaba BABA. On top of that, the historic tech firm has continued to dive deeper into artificial intelligence and IoT.
Meanwhile, the company has bolstered its business through some significant acquisitions, which includes its June purchase of open source software powerhouse GitHub. Microsoft also landed some major contracts for its cloud and AI business this year, including Walmart WMT. And let’s not forget that its personal computing business is massive and helped its most recent quarterly revenues jump 19% to $29.1 billion.
Stock Price Movement
As we mentioned at the top, both AMZN and MSFT have seen their stock prices fall recently. Amazon stock is down 16% over the last three months, while Microsoft dipped just around 2%. Yet, Amazon stock has blown away MSFT over the last decade, but that doesn’t really tell us much since the e-commerce firm has been on one of the most impressive runs in Wall Street history.
Investors should note that MSFT stock hovered at around $110 per share through late afternoon trading Friday, which marked a roughly 5% downturn from its 52-week and all-time high. Meanwhile, Amazon stock sat approximately 18% below its recent highs at around $1,686 a share.
Outlook
Looking ahead, Amazon is expected to see its Q4 revenues climb roughly 18.5% to reach $71.61 billion, based on our current Zacks Consensus Estimate. The company’s total fiscal 2018 revenues are projected to jump 30.8% to $232.69 billion. Plus, Amazon’s full-year 2019 revenues are expected to climb over 20% above our current 2018 estimate.
At the bottom end of the income statement, Amazon’s adjusted fourth quarter revenues are projected to skyrocket 153.7% to $5.48 per share. Meanwhile, AMZN’s fiscal 2018 earnings are expected to soar 328%.
Microsoft’s outlook is a bit less impressive, which is to be expected based on its age. MSFT’s current quarter revenues are expected to jump 12.2% to $32.46 billion. The company’s full-year revenues are projected to climb at a similar rate to reach $124.08 billion—with the following year expected to jump 10% above that.
Furthermore, Microsoft’s adjusted quarterly earnings are projected to climb by 13.5% to hit $1.09 per share, while its full-year EPS figure is expected to expand by over 14%.
Bottom Line
Both Amazon and Microsoft have strong management teams and have expanded their offerings to better position themselves for the future. We should note that MSFT has earned more positive earnings estimate revisions recently. Plus, Microsoft has been a dividend payer for years and its valuation picture—trading at 23.7X forward earnings estimates compared to Amazon’s 64.3X—looks much better than its peer.
On the other hand, Amazon will likely pay a dividend once its outsized growth starts to slow. But Bezos and Amazon are poised to continue to expand into as many new industries as possible. Therefore, it seems like it is a toss-up between Amazon and Microsoft at the moment since both stocks offer investors different benefits.
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
See them today for free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
International Business Machines Corporation (IBM) : Free Stock Analysis Report
The Walt Disney Company (DIS) : Free Stock Analysis Report
Netflix, Inc. (NFLX) : Free Stock Analysis Report
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
Facebook, Inc. (FB) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
