Apple or Amazon: Which ‘Magnificent 7’ Stock Looks Stronger After Earnings?

Amazon and Apple both reported robust quarterly results, with Amazon's Q3 performance notably boosted by a 20% increase in AWS revenue, driven by AI demand, which exceeded expectations and led to a "Strong Buy" analyst consensus with 19.5% implied upside. Apple also surpassed fiscal Q4 estimates, propelled by strong iPhone 17 sales and Services growth, and projected continued expansion with upcoming AI features, receiving a "Moderate Buy" consensus and 5.8% upside. Despite both companies' strong positions in AI and cloud, analysts currently favor Amazon due to its accelerating cloud momentum and higher projected returns.

Analysis

Amazon (AMZN) reported robust Q3 results, with EPS of $1.95 significantly beating estimates of $1.57, and revenue growing 13.4% year-over-year to $180.2 billion, exceeding forecasts. The standout was a 20% surge in Amazon Web Services (AWS) revenue, driven by AI demand, marking its fastest growth since 2022. This strong cloud momentum led to an optimistic Q4 revenue guidance of $206 billion to $213 billion, surpassing Wall Street's $207.9 billion forecast.

Apple (AAPL) also delivered better-than-expected fiscal Q4 results, with EPS up 13% year-over-year to $1.85 against estimates of $1.78, and revenue growing 8% to $102.5 billion. Performance was bolstered by strong demand for the new iPhone 17 lineup and continued growth in its high-margin Services segment. The company projects fiscal Q1 revenue growth of 10-12%, exceeding analyst estimates, and anticipates a return to growth in China.

Analysts reacted positively to both companies, with multiple price target increases and maintained Buy ratings. Evercore called Amazon a "Top Pick" and Citi reaffirmed it as their top internet stock, citing accelerating AWS growth. While Apple's strong product cycle and AI integration are noted, Wall Street currently favors Amazon, which holds a "Strong Buy" consensus and a 19.5% implied upside, compared to Apple's "Moderate Buy" and 5.8% implied upside.

Key Decisions for Investors

• Investors should closely monitor Amazon's accelerating AWS revenue growth, which at 20% and fueled by AI demand, suggests continued market leadership and potential for further upside.
• Consider Apple's strategic initiatives, particularly the rollout of AI-powered Siri and the anticipated return to growth in the critical China market, as key drivers for its long-term performance.
• Evaluate the differing analyst sentiment and implied upside, with Amazon's 'Strong Buy' consensus and 19.5% potential upside suggesting a more compelling near-term growth opportunity compared to Apple's 'Moderate Buy' and 5.8% upside.