Bull Market Ushers in Prime Opportunity for Growth: Amazon and Alphabet Poised for Long-Term Gains

The dawn of 2023 witnessed a significant rally in the U.S. stock market, with major indices like the S&P 500 and Nasdaq Composite recording impressive jumps of 24.2% and 43%, respectively. This upswing persisted into the early months of 2024, with the S&P 500 reaching new peaks as recently as January.

Having surpassed the 20% increase mark from its lowest point in October 2022, and eclipsing its prior peak from January 2022, the S&P 500 has confidently stepped into a bull market phase.

Even though many stocks have seen inflations in value, the market still presents investment opportunities with appealing valuations. Two standout companies worth considering for robust growth are tech giants Alphabet and Amazon.

Alphabet

Alphabet, the powerhouse behind the ubiquitous Google Search, recently surpassed revenue expectations despite a hiccup in ad sales. Given that advertising constitutes a significant portion of its revenue, Alphabet's stock felt the impact of this shortfall. However, despite potential recession concerns, investors should hold steady as Alphabet continues to dominate the global search market with a commanding 91.5% share.

Their incorporation of AI advancements into advertising, paired with the exploration of generative AI in search, is set to offer users more nuanced and relevant results. Alphabet's investments in AI don't stop there; their ambitious Gemini large language model is the latest of such endeavors, aiming to cater to a variety of information needs with multimodal responses.

Another thriving segment of Alphabet's enterprise is the Google Cloud platform, which saw a 26% revenue increase in 2023, owing to the surge in AI-service demands from government and enterprise sectors. This segment is not just expanding; it is profitable, making an impressive $864 million in operating income in the same year.

Given its favorable valuation of just 6 times its past 12 months' sales, Alphabet represents a sound investment option for those thinking long-term.

Amazon

Amazon, too, has outperformed expectations with its fourth-quarter results, propelling share values upwards. The company's dedication to restructuring its distribution network has reaped benefits in the form of accelerated delivery and reduced costs, thereby boosting Prime member purchases and cementing its e-commerce hegemony.

In the realm of cloud computing, Amazon Web Services (AWS) maintains the lead with a 31% market share, its operating margin up considerably to 29.6%. AWS is on a hot streak, achieving a $100 billion annual revenue run rate at 2023's close, despite broader cost-cutting trends in the industry.

Amazon continues to invest in AI, providing clients with a wide array of capabilities to construct AI models and applications on AWS. Its Amazon Bedrock service has rapidly gained popularity, showcasing the platform's ability to support secure, customized AI development.

With these factors in play, Amazon looks to be a wise selection for those investors looking to buy now and hold for the longer haul.

bullmarket, Amazon, Alphabet