The Nasdaq jumped to new highs in morning trading Friday heading into a pivotal two-week stretch for Wall Street. Alphabet, Microsoft, Apple, Amazon, and other mega-cap technology stocks report their results during the final week of October, followed closely by the presidential election on November 5.
See the Zacks Earnings Calendar to stay ahead of market-making news.
The bulls held their ground at the Nasdaq’s 21-day moving average, as they have many times this year. On top of that, Tesla stock soared after its earnings release on Wednesday, and Taiwan Semi last week signaled that artificial intelligence (AI) spending remains strong.
Today’s episode of Full Court Finance at Zacks explores the state of the stock market heading into a big week of technology sector earnings and the presidential election.
The episode then dives into Amazon and Meta to explain why investors might want to buy the mega-cap technology stocks before their upcoming earnings releases.
Buy Meta Stock for AI Growth, Stay for Its Impressive Value
Meta Platforms, Inc. META is set to report its Q3 2024 earnings results on Wednesday, October 30.
Meta Platforms grows alongside the never-ending race to reach consumers with digital advertising in a world of smartphone addicts. Meta grew its daily active users across Facebook, Instagram, and WhatsApp by 7% in Q2 to 3.27 billion, with ad impressions and prices both up 10%.
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On top of reaching 3.3 billion people daily, Meta is investing in its AI future. Mark Zuckerberg and Meta are carving out a somewhat unique path in the artificial intelligence arms race by going all in open-source AI. Wall Street has fallen in love with Meta’s winning combination of AI growth, powered by its strong balance sheet, and the steady expansion of its core businesses—41 of the 48 brokerage recommendations Zacks has are “Strong Buys.”
Meta shares have surged 60% YTD and 345% in the last two years as part of a market and Tech sector-crushing run over the last decade. Despite its rebound and its long-term outperformance, Meta trades at a 10% discount to the Zacks tech sector and 70% below its highs at 23.9X forward 12-month earnings.
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Meta is projected to grow its revenue by 20% in 2024 and 14% next year and boost its adjusted earnings by 44% and 13%, respectively. Meta’s improved adjusted earnings outlook helps it land a Zacks Rank #2 (Buy). The company is also a dividend payer.
Buy Amazon Stock Before it Breaks Out to New All-Time Highs?
Amazon AMZN is set to release its Q3 2024 earnings results on Thursday, October 31.
Amazon stock has climbed 1,100% in the last 10 years, crushing Tech’s 333%, Apple’s 770% and Alphabet’s 500%. Yet, Amazon stock’s 25% YTD climb lags far behind Meta and other mega-cap technology stocks. AMZN is only up 130% off its lows and it failed to break out meaningfully above its 2021 peaks back in July.
Amazon trades 21% below its average Zacks price target and it appears to be finding support around its 21-week moving average and its pervious highs. Amazon stock looks ready to possibly break out of its recent holding pattern if it is able to provide upbeat guidance.
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On the valuation front, Amazon trades 95% below its highs and at over a 50% discount to its 10-year median at 32.9X forward 12-month earnings. If we look at its PEG ratio, which factors in its long-term earnings growth outlook, AMZN trades at a 25% discount to Tech at 1.2.
Amazon currently holds nearly 40% of the total e-commerce market share in the U.S., blowing away second-place Walmart’s 7%. On top of that, Amazon runs the world’s largest cloud-computing business and its digital advertising segment is surging.
The strength of its higher-margin AWS and ad segments, along with a commitment to efficiency, are driving Amazon’s earnings growth. Amazon is also reportedly planning to spend more than $100 billion over the next decade on data centers to fuel its AI expansion efforts.
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Amazon is projected to grow its adjusted earnings by 64% in 2024 and another 23% next year to climb from $2.90 a share in FY23 to $5.84 per share next year. The company is also projected to boost its sales by 10% in FY24 and 11% next year, adding roughly $130 billion to the top-line in two years.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention.
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.