Both companies are chasing Microsoft (NASDAQ:MSFT) in the race to be the richest of the “Cloud Czars.” Apple’s market cap is over $992 billion while Amazon’s market cap is at $891.6 billion. Microsoft stock is king of the hill at just over $1 trillion.
Amazon shares hit an all-time high over $2,000 in July but have since traded as low as $1,750. AMZN stock opened Sept. 16 at $1,824.02. Government antitrust efforts concerning its Marketplace have hurt the stock. But operating cash flow, which Amazon calls its key metric, has yet to slow. It came in during the June quarter at over $9 billion, up from $7.5 billion a year ago.
What’s in Store
Later this month, on Sept. 25, Amazon will host its second annual product-focused press event. Several outlets predict that once again, this event will focus on its Alexa voice interface. The Alexa interface is becoming as important to Amazon as the iPhone is to Apple, because its services tie people into Amazon’s cloud and e-commerce store.
The most anticipated improvement is better sound quality, which could lead customers to upgrade their devices. The interface could also feature connectivity to more Amazon products, expanding its reach throughout consumers’ homes.
Amazon has been seeking hardware partners for Alexa in companies like Anker, Toshiba (OTCMKTS:TOSBF), JVC Kenwood (OTCMKTS:JVCZY) and Grundig. The result should be more support for Fire TV, which is competing for market supremacy with Roku (NASDAQ:ROKU).
One product that would be a surprise is an Amazon phone. The company’s Fire Phone, launched in 2014, was a debacle. Amazon has since taken to selling phones from Lenovo (OTCMKTS:LNVGY) at a discounted price, loaded with Amazon shopping services and advertising.
Another possibility could be improved Kindle e-book readers. Amazon has a virtual monopoly on both e-books and readers. The latest versions are distinguished from the Fire tablet, which also supports Kindle books, by their front-lit, high-resolution displays.
Amazon Stock Needs Some Catalysts
Amazon needs some new earnings catalysts as it faces a chorus of political push back.
While Amazon remains just over half the size of Walmart (NYSE:WMT), the retail giant is successfully portraying itself before regulators as a poor underdog, even while it copies Amazon features like its marketplace and one-day delivery.
This is getting results. In addition to a federal investigation of its marketplace, politicians are now questioning Amazon’s treatment of delivery drivers. Many are classified as independent contractors, like Uber (NYSE:UBER) drivers. Others are employed by third-party contractors, meaning Amazon takes no responsibility for their treatment.
Amazon is expanding employment in Boston, Chicago, Dallas and Nashville, as well as at its Seattle headquarters and “HQ2” operation near Washington DC. The company has spread its technology development to 18 different cities.
The Bottom Line on AMZN Stock
Amazon’s explosive growth has it competing with companies across the media, marketing, technology and retail landscapes, from FedEx (NYSE:FDX) to Walmart, and from Apple to Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL).
It’s not just competing in the marketplace with these companies. Increasingly it’s competing in Washington, and in other nation’s capitals, as companies threatened by its growth seek government protection.
For investors, it means they can now get Amazon for just 75 times last year’s earnings, and less than three times its expected 2019 revenue of $331 billion. Given that it’s still growing at rate of 30% per year, and that profits are no longer a rounding error, that’s looking cheaper by the day.
As has been said about Apple, Amazon is a stock you hold for the long run. Ignore the noise.
Dana Blankenhorn is a financial and technology journalist. He is the author of the environmental story, Bridget O’Flynn and the Bear, available at the Amazon Kindle store. Write him at firstname.lastname@example.org or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in MSFT, AAPL and AMZN.