3 compelling reasons why Amazon stock is a smarter choice than Apple stock in 2023

Warren Buffett and I don’t have much in common. He is much older than me. He is also a little richer. However, he likes some of the same stocks.

apple (AAPL 3.68%) It ranks as the largest stock among Buffett’s stocks by far. Berkshire Hathaway portfolio. It’s also the largest individual stock in my personal portfolio.

I have owned Apple for many years. Stocks have brought me huge profits. We hope to continue to be long-term winners.But if you have to choose between Apple and Amazon (AMZN 3.56%) For now, the nod will definitely go to Amazon. Here are three compelling reasons why Amazon stock is a smarter choice over Apple stock in 2023.

1. Evaluation

Both Apple and Amazon saw their stock prices drop significantly. But Amazon’s stock took a bigger hit. Apple’s stock is down 30% in the last 12 months, while Amazon’s stock is down nearly 50%. The plunge has made Amazon’s valuations the most attractive in years.

Indeed, Apple’s expected price/earnings ratio (P/E) of 21 is much lower than Amazon’s multiple of 41. But anyone who’s followed Amazon for a while knows that the company’s earnings can be deceiving because they invest so much. Growing.

Amazon’s price-to-sales (P/S) ratio is at its lowest since 2015. Stocks have also historically traded at low valuations based on expected cash flows. Meanwhile, Apple’s P/S multiple is down, but still above early 2020 levels.

2. Possibility of another bull market

of S&P 500 It has fallen more than 19.4% seven times throughout its history, including the 2022 decline. The index surged more than 20% in a year after its steepest decline since 1937. If a new bull market is likely to actually occur sometime this year, I think Amazon is better positioned than Apple to provide a stronger backlash.

Most of my reasoning is based on Amazon’s massive decline over the past 12 months. Amazon has suffered more than Apple, so it has room to do more when things improve.

But more importantly, through most of 2022, Amazon’s performance was more impacted by macroeconomic factors than Apple’s. Last year’s high inflation and fuel prices directly impacted Amazon’s growth. Consumers refrain from spending. Organizations using Amazon Web Services (AWS) sought to cut spending due to economic uncertainty.

A new bull market means investors are hoping for better days to come. This should benefit Amazon more than Apple.

3. Short-term growth opportunities

I definitely believe Apple has solid long-term growth opportunities. Increased adoption of 5G and new augmented reality features should boost sales in the iPhone ecosystem. But I think Amazon has more tangible near-term growth opportunities.

AWS is Amazon’s most important growth engine. If a recession is averted or if only a temporary, mild recession occurs, customers can quickly resume moving apps and data to the cloud.

Two pending acquisitions are particularly important growth markets for Amazon.acquisition of one medical The $3.9 billion investment is an important step for Amazon as it pursues a huge healthcare opportunity. Amazon purchase benefits i robot Expand the company’s presence in the home device market with $1.7 billion.

Both Amazon and Apple could benefit from increased advertising spending if a major recession is avoided. But Amazon runs her third-largest digital advertising platform, so it should enjoy an even bigger tailwind than Apple. Amazon’s advertising business has a lot of room for further growth.