Measured by the price-to-earnings ratio, Amazon (AMZN) is more expensive than Apple (AAPL). Apple is a better buy on valuation. What changes after the companies posted quarterly results?
Amazon earned just 3 cents a share in Q4 (non-GAAP). It took a $2.3 billion loss from its investment in Rivian (RIVN). Revenue grew by 8.6% Y/Y to $149.2 billion. The weaker revenue expectation is due mostly to an unfavorable impact from foreign exchange rates.
Amazon no longer has the eye-popping profits from Rivian from 2021. It has minimal profits because it invests heavily in equipment, research and development, and fulfillment centers.
Valued at $2.39 trillion, Apple’s first major revenue decline of -5.5% Y/Y to $117.15 billion is not a concern. The company faced significant disruptions from its Foxconn manufacturing partner in China. After the Oct. to Nov. worker walkout, China ended its zero Covid policy. iPhone production for its top model resumed.
Apple’s next test is in the current quarter (Jan. to Mar.). Apple will complete shipments to customers who could not get their product last quarter. In addition, Apple may rely on its profit growth from services. Higher sales of its inexpensive entry-level iPad and its computer refresh will grow its user base.
Apple is a better value buy. Amazon is an attractive cloud and e-commerce play.
