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If I Could Only Buy 1 "Magnificent Seven" Stock in October, This Would Be It

AInvestSaturday, Oct 19, 2024 2:51 am ET
1min read
In the realm of technology stocks, the "Magnificent Seven" – Apple, Alphabet, Amazon, Microsoft, Meta, Nvidia, and Taiwan Semiconductor Manufacturing – have consistently outperformed the market. However, if I could only buy one of these stocks in October, my choice would be Amazon.com, Inc. (NASDAQ: AMZN). Here's why:

Amazon's revenue and earnings growth have been remarkable over the past year. The company's North America segment sales increased 9% year-over-year to $90.0 billion in the second quarter of 2024, while international segment sales grew 7% to $31.7 billion. AWS segment sales, Amazon's cloud computing arm, surged 19% to $26.3 billion. These strong results reflect Amazon's diversified business model and its ability to adapt to changing market conditions.

Amazon's performance has outpaced the broader market and its peers in the Magnificent Seven. The company's stock price has risen by more than 10% in the past year, compared to the S&P 500's gain of around 5%. Additionally, Amazon's earnings per share (EPS) have grown at a faster pace than its peers, with a year-over-year increase of 101% compared to the average growth rate of 80% for the Magnificent Seven.

The key drivers behind Amazon's growth include its expanding e-commerce platform, the success of its AWS segment, and its investments in emerging technologies like AI and machine learning. Amazon's AI strategy has evolved over time, with the company investing heavily in research and development to stay competitive in the AI landscape.

One of Amazon's most significant AI milestones was the launch of Amazon Go, a cashierless retail store that uses AI and computer vision to track customer purchases. The company has also made strides in AI-powered personalization, with its recommendation algorithms driving sales and customer engagement. Additionally, Amazon's AI efforts have extended to its AWS segment, with the company offering AI-powered services like Amazon SageMaker and Amazon Personalize to its customers.

Amazon's valuation is attractive compared to its historical averages and its peers in the Magnificent Seven. The company's price-to-earnings (P/E) ratio of 44.99 is in line with its historical average of 45.52 and is lower than the average P/E ratio of its peers, which stands at 48.67. Moreover, Amazon's forward P/E ratio of 32.53 is more attractive than its peers, indicating potential upside in the stock's price.

In conclusion, if I could only buy one "Magnificent Seven" stock in October, it would be Amazon.com, Inc. The company's strong revenue and earnings growth, outperformance compared to the broader market and its peers, and attractive valuation make it an appealing investment opportunity. Amazon's continued investments in AI and other emerging technologies position the company for long-term success and growth.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.