Time and attention have gravitated toward technological companies ever since the rise of artificial intelligence (AI) began last year.
The spotlight has predominantly shone on giants like Amazon (NASDAQ: AMZN), captivating investors with a 69% surge in stock prices over the past year. Amazon’s success stems from robust growth in its e-commerce wing and substantial investments in the nascent AI sector. This promising trajectory hints at sustained growth for the retail titan in the long run.
Nevertheless, perhaps the time has come to divert attention towards a contender still early in its AI journey (with significant potential for growth) and with a track record of outperforming Amazon’s stock.
Data by YCharts
Amazon has indeed fostered numerous millionaires through its remarkable share price growth, nearly doubling since 2019. However, a glance at the chart above reveals that Apple (NASDAQ: AAPL) has scaled nearly three times higher than Amazon over the same period.
While Amazon has been cautious in its AI endeavors, with Apple trailing since the inception of 2023, recent developments hint at Apple readying to make a significant splash in the domain this year.
Thus, in this battle of millionaires, Apple emerges as the champion and promises to keep minting more.
The Apple Advantage in the AI Consumer Market
Apple has cultivated unparalleled brand loyalty amongst its consumers over the years. Warren Buffett captured this sentiment eloquently last year when he remarked, “If someone offered you $10,000 to never purchase an iPhone again, you wouldn’t accept.” This sentiment, though surprising, resounds with countless consumers who prioritize Apple over other brands.
The company has crafted an intricate ecosystem for its devices, dissuading users from migrating to competitors. Enhanced connectivity and exclusive Apple apps like Messages and FaceTime have become indispensable to many, retaining them within Apple’s ecosystem upon upgrades.
Apple reigns supreme in various product categories, including smartphones, tablets, smartwatches, and headphones. Simultaneously, the widespread acceptance of its products allowed the company to swiftly expand into digital products, with its services arm evolving as the second-highest earner after the iPhone.
While Amazon boasts a vast user base, operating its retail platform in about 20 nations and harboring the dominant cloud platform in Amazon Web Services (AWS), Apple could potentially excel in the consumer AI realm over time by leveraging the popularity of its products.
Apple’s devices possess the potential to catalyze widespread AI adoption among the public, proven by the success of Apple’s digital services. In an event on May 7, Apple unveiled its latest iPad Pro, the maiden device featuring the M4 chip, its most potent chip to date.
The M4 chip significantly broadens Apple’s AI capabilities, offering a glimpse into the company’s forthcoming AI landscape. Apple’s Worldwide Developer Conference slated for June is expected to build on the recent iPad Pro launch by introducing an array of new AI-infused features. Additionally, Bloomberg’s April report hints at Apple revamping its Mac line to prioritize AI offerings.
Unlocking Apple’s Superior Value
Amazon has captured the hearts of many investors this year. Yet, while its upsurge has enriched existing investors, it has also elevated the cost for potential entrants. Meanwhile, recent hurdles have maintained Apple’s stock at a more enticing price point.
Data by YCharts
This graph illustrates Apple’s notably lower forward price-to-earnings (P/E) ratio and price-to-free cash flow ratio. These metrics provide insights into a stock’s value by considering the company’s financial standing. Lower figures indicate better value, and Apple triumphs on both fronts.
Furthermore, Apple’s free cash flow of $101 billion markedly surpasses Amazon’s $46 billion, signaling Apple’s superior capability to invest in its operations and navigate potential challenges.
Backed by unwavering brand loyalty and a burgeoning stance in AI, Apple’s stock stands as a lucrative opportunity that could pave the path to millionaire status with judicious investment.
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