Markets will receive more quarterly results from the Mag 7 this week, with Alphabet GOOGL and Amazon’s AMZN Q4 reports rolling in after-market hours on Wednesday, February 4, and Thursday, February 5, respectively.
Only Nvidia NVDA will be left to report later in the month. The other four Mag 7 members reported last week, and outside of Meta Platforms META, investors seemed to be somewhat underwhelmed as their growth was overshadowed by reemerging CapEx concerns, as it relates to AI.
Of course, as it relates to Alphabet and Amazon, the individual growth of their cloud services will be closely monitored and hopefully echoes further enhancements from AI.
With Alphabet’s Google Cloud and Amazon Web Services (AWS) being direct competitors in the global cloud-computing market, let’s see which of these tech giants may be the better investment at the moment.
Based on Zacks estimates, Alphabet’s Q4 sales are expected to be up 16% to a new peak of $94.7 billion from $81.62 billion a year ago. As the third largest cloud services provider, Zacks projections call for Alphabet’s Google Cloud revenue to be $16.25 billion, a 36% increase from $11.95 billion in Q4 2024.
On the bottom line, Alphabet’s Q4 EPS is thought to have spiked 20% to $2.58 versus $2.15 a share in the comparative quarter.
It’s noteworthy that Alphabet has surpassed the Zacks EPS Consensus for 11 consecutive quarters with a very impressive average earnings surprise of 18.74% in its last four quarterly reports.
Image Source: Zacks Investment Research
Pivoting to Amazon, Q4 sales are expected to come in at a record $211.56 billion, a 12% increase from $187.79 billion last year. Being the largest global cloud provider, AWS revenue is expected to be $35.02 billion, a 21% increase from $28.78 billion in the comparative quarter.
Amazon’s Q4 EPS is expected to rise 6% to $1.98 versus $1.86 per share a year ago.
Notably, Amazon has exceeded EPS expectations for 12 straight quarters with a remarkable average earnings surprise of 22.47% in its last four quarterly reports.
Image Source: Zacks Investment Research
After implementing 20-1 stock splits in 2022, respectively, Alphabet and Amazon stock had largely mirrored each other in price performance in a steady ascension above the $200 a share level. When one bounced higher, the other usually followed.
However, over the last year, Alphabet stock has taken off, surging more than +80% and now up +230% in the last three years. The rally has been attributed to growth in Alphabet’s AI-driven businesses, including momentum in Google Cloud and strong advertising recovery.
