Tech stocks Alphabet and Amazon recommended as buys despite Nasdaq downturn

From Nasdaq: 2024-08-05 10:54:51

The Nasdaq Composite plummeted into correction territory, flirting with a bear market as the sell-off intensifies. Despite erasing billions in wealth, investors can consider Alphabet (GOOG) and Amazon (AMZN) as compelling buys. Both stocks are rated as a “Strong Buy” and offer long-term investment potential with attractive valuations.

Alphabet exceeded Q2 revenue and EPS expectations, with strong cloud revenue growth. YouTube revenues fell slightly below estimates, prompting a post-earnings sell-off. However, YouTube remains robust as the most-watched streaming platform, benefiting from cord-cutting trends and ad dollar shifts from linear TV.

Analysts show confidence in GOOG stock, with a majority rating it a “Strong Buy” and a mean target price of $202.76, suggesting over 20% upside potential. Despite challenges from competitors like OpenAI, Alphabet’s valuations are favorable compared to historical averages, presenting an attractive risk-reward opportunity.

Amazon, trading below historical averages, offers investment potential with double-digit revenue growth expectations. With a current NTM PE ratio of 32.5x, the stock is more affordable, showing positive results in cash flows and bottom-line growth. Despite a recent stock crash, analysts maintain a bullish outlook on AMZN, considering it a compelling growth investment amidst the tech sell-off.

Both Amazon and Alphabet present viable investment opportunities with growth potential and reasonable valuations. While caution is advised amidst macroeconomic uncertainties, a staggered approach to accumulating shares could be beneficial. Investors should consider these tech giants for their portfolios amid the ongoing market volatility.



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