Apple vs. Amazon Stock: Which One Should You Buy?

Apple and Amazon are two of the best technology stocks to hold forever. 

But, If you had a choice to make between Apple and Amazon stock, and you can pick only one, which one would that be? While Apple is currently trading at $115 per share, Amazon trades at $3200 per stock price (both prices in USD). 

Okay, let’s put it this way, you had $1000 dollars to invest today, you can pick either Apple or Amazon stock, which one would that be? 

If you just said Apple, I am more than happy to ask why? Don’t get me wrong, Apple’s a great choice but why did you pick it over Amazon? Just want to know. 

And in case if your choice is Amazon, I need to know why as well 🙂 For the same reasons. 

Anyways, the topic in the discussion today is to compare the Apple and Amazon stocks (using average user metrics) and decide which one is actually better. 

In case you already hold both these stocks in your TFSA’s or RRSP’s, well, no need to panic then. Both are amazing long term holds 🙂 I am a fan of Tim and Jeff 🙂 But, just for this article, I want to pick one clear winner. Let’s dig into the details now. 

Amazon stock

Apple vs. Amazon – Stock Market Returns and Chart 

To get a better understanding of how well these stocks have performed over the years let’s first start with the annual returns of both Apple and Amazon stocks. 

Let’s first start with Apple’s annual returns. 

Apple stock: 

Apple annual stock market return

Source: 1stock1.com

Apple Stock Splits Over the years:

Apple stock split

You need to also consider Apple’s recent stock split after the massive price rally in 2020, July (4 for 1 stock held). For every stock you held, you got 4 more shares. So 100 shares became 400 ex-split dates. 

Now let’s look at the Amazon stock: 

Amazon stock annual returns

Amazon stock split over the years:

Amazon stock split

As you can clearly notice from the above charts, out of the two stocks in comparison here, Amazon’s annual returns have been a clear winner with consistent double-digit returns over time. 

Especially during the pandemic and the market crash around March, Amazon’s stock (NASDAQ: AMZN) dropped less in fact (compared to other FAANG stocks) and the bounce-back was even higher. All thanks to the people sitting at home and ordering multiple items on Amazon. 

Talking about Apple, Apple’s iPad and Mac showed significant growth (yes along with iPhones) as well (with people working from home), it was not the same kind of Quarter growth that Amazon showed us. Amazon is miles ahead.

The bottom line is, whether pandemic or not, Amazon has a better and consistent growth rate amongst the two. Also, Amazon is extremely well diversified with AWS accounting for only 12% of the total revenue. 

Apple stock

Growth chart of the two companies in comparison 

Amazon stock: 

Amazon stock

For the comparison here, I just pulled in Amazon’s stock chart for the past 1 year.

As you can see right around March, during the market crash, Amazon’s drop was less compared to any of the other FAANG or the stocks in general. And also look at the recovery of the stock especially after announcing the quarterly result (10X EPS growth and blow out quarter). 

Apple stock during the pandemic and afterwards: 

apple stock

While the Apple stock has performed extremely well this year, during the market crash, the stock hit bottom’s pretty quick. But, since announcing the quarterly results and the stock split the stocks been on a roller coaster, to say the least.

Remember folks, Amazon did not announce any stock splits or bonuses to jump up the share price, yet the stock performed extremely well. Whereas for Apple and Tesla the stock rose to new highs after announcing the splits and good results as well (But not on par with Amazon).

Either way, both the stocks have performed extremely well since the pandemic crash. But, I genuinely feel Amazon is a better pure-play here when compared to Apple. 

Moving on. 

Amazon’s Growth Trajectory

If you have carefully analyzed the quarterly results (Investor’s relations page) of both these companies, there’s one thing to note. 

Amazon’s recent Quarter report snapshot: 

amazon stock results

That’s the latest Amazon Q2 quarterly result screenshot. 

Couple of things to notice here when compared to Apple or any of the other FAANG stocks:

  1. Look at the Y/Y net sales growth of 43% in NA and 38% International. (Jump but from 20% – 43% for the 3 month period and 18% – 36% for the six months period). Do note that, even before the pandemic Amazon was still growing at 20%+ YOY. Incredible! 

  2. See that Amazon’s net income has almost doubled for the three month period and increased considerably for the 6-month time frame as well. 

Amazon’s Net Revenue from 2007 – 2020 (Quarterly)

Amazon quarterly income growth rate

Source: https://www.statista.com/statistics/273963/quarterly-revenue-of-amazoncom/

Just look at the incredible growth rate that Amazon has been growing Q over Q. 

Moving on. 

Let’s quickly look at Apple now. 

Apple stock

When I look at Apple’s Income statement/Balance sheet there’s a couple of things I can immediately note:

  1. Apple’s extremely cash-rich. The balance sheet is fantastic, to say the least.

  2. Apple’s growth rate is pretty moderate in terms of product sales. The only reason I find that the stock keeps rising is because of the massive buybacks (spending billions) and the general public hype and the overall image of the company. (Lower price with splits and brand value in play)

  3. Q Dividends – Apple pays increasing dividends every year, whereas Amazon does not pay a dime in Dividends. Amazon’s a growth machine. While with Apple you can expect decent dividends. 

  4. Apple’s stock split is something to take note of. When the price of Apple reaches a certain point, the company has consistently issued stock splits (7 for one in 2014, and 4 for in July 2020) which appeals to the end user like you and me. After the split, the stock price further drops (even though the value remains the same) and more investors join the ship. (How many of the so-called investors will understand the value investing, they just look at Apple, the price per share and invest). With Amazon, this is not the case, the price is high at $3200 per share. 

Talking about Apple’s recent earnings report, nothing’s great to note here other than the services revenue which is growing at a significant rate. One important thing to note is, the reason Apple’s pushing extremely hard on the services revenue is because of the operation cost and efficiency. With over a billion active Apple devices worldwide, the services revenue is expected to reach a trillion dollars by 2025. (Projected). 

Along with services revenue, sales of Mac and iPad have also increased due to the pandemic and people working from home. This trend will likely continue this quarter and for the rest of the year as people will continue working from home and pandemic still around for a while. That’s good news for Apple stockholders. 

Apple products

Apple Stock Dividends

If you like getting regular juicy dividends, then Apple’s doing a fairly good job here. 

Apple dividend history

Couple of things to note here: 

  1. Apple has increased the dividend % every year. That’s good news. 

  2. You’ll get paid dividends 4 times per year by holding the Apple stock. Even though Apple’s a pure growth stock in my opinion and dividends are just for namesake. (Its pennies after all unless you hold like 1000 shares) 

The only thing I really like about Apple is, even though it’s wrong ethically, they make people stick to their so-called “ecosystem” and the products work great over time. 

Also, Apple indirectly pressurizes people to get used to and adapt to more money-making techniques.  For example in the recent iPhone 12 launch, Apple has ditched the charging block ($20 if you need one), no more earphones (that’s to push the AirPods), and the battery drain issue to buy new phones and slowing down the phones.

Also, remember in the previous generation, generation phones, Apple ditched the earphone jack and every other company in the world followed it (including Samsung and Google).

As an Apple shareholder, all of the above points are extremely positive for you. The more Apple sells the more your stock makes and so do you (EPS). (Even though it’s wrong to say this way)

Apple vs. Amazon Net Income Reports 

When you look at Apple’s net income report starting from 2005 to the latest Q3 2020, you can see the consistent growth in the net income. The revenue just crossed 20+ Billion for the first time in 2020. 

Apple net income

When we look at Amazon’s net income over time, just look at the massive net growth over time. 

amazon stock net income

Forward-looking Amazon and Apple Shares

First, let’s talk about Apple now. 

Apple will definitely do well in the coming two quarters.  With the launch of the new iPhone 12 and pre-orders looking extremely good around the globe (especially in China, work from home continuing), sales of the new iPad Air and iPad should do very well as well. 

When it comes to Amazon, you can expect a blow out quarter again, with the Prime day surging sales and the stimulus package continuing. With people still sitting at home and the holiday season here, expect nothing less but the stock to reach higher levels. 

Final Words – Apple or Amazon?

Apple and Amazon are two amazing stocks in the modern world. Holding both of them in your portfolio is not only good but it will be very lucrative over the long term (5-10 years at least). 

You can expect the stock prices to double again in the next 5 years, to say the least.

With Apple, you can expect the split again in the next few years. With soaring sales and the pandemic around, the stock will only reach greater heights in the coming years. (Don’t forget the buybacks when it comes to Apple). 

When it comes to Amazon, the company is extremely well diversified with fantastic growth ahead. It is one of the few gems in the stock market which you can only accumulate and never ever think of selling. The only drawback is the entry price of the stock. One single stock is priced at $3200 USD, which is around $5000 Canadian dollars. 

Overall, to conclude, I’ll personally give the edge to Amazon stock over Apple. I hope I have justified why in this post. 

Thanks for reading. Let me know your thoughts and comments below. 

Top 10 Popular Posts Of All Time

Leave a Comment