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Buy, Sell, or Hold These Mag 7 Stocks After Earnings: AAPL, AMZN
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Markets haven’t kept the momentum investors were hoping for after receiving much-anticipated quarterly results from Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) last Thursday.
While both were able to exceed top and bottom-line expectations, their guidance was somewhat underwhelming compared to the more reassuring outlook given by other Mag-7 tech giants like Meta Platforms (META - Free Report) and Microsoft (MSFT - Free Report) .
Amazon’s Q1 Review
Following previous news reports that Amazon had planned to highlight how higher tariffs are raising prices on its platform, the e-commerce giant stated it’s working to keep prices low amid an uncertain moment for consumers. Amazon’s Q1 sales rose 10% year over year to $155.66 billion and eclipsed estimates of $154.56 billion. Notably, Amazon’s cloud computing division, AWS, contributed to 19% of its Q1 sales and increased 17% YoY to $29.3 billion.
On the bottom line, Q1 EPS of $1.59 comfortably exceeded expectations of $1.35 by 17% and spiked 40% from $1.13 per share a year ago. Amazon has exceeded sales estimates in three of its last four quarterly reports and has beaten earnings expectations for 10 consecutive quarters.
Image Source: Zacks Investment Research
Apple’s Q2 Review
Reporting results for its fiscal second quarter, Apple’s Q2 sales were up 5% to $95.35 billion and topped estimates of $94.26 billion. Apple also highlighted that its services segment achieved an all-time revenue record of $26.7 billion, which increased 12% from the comparative quarter and was driven by strong performance across Apple Music, Apple TV+, and iCloud, among other subscription-based services.
Apple’s Q2 EPS of $1.65 was up 8% from $1.53 in the prior period and beat estimates of $1.61 per share by 2%. Furthermore, Apple has exceeded its top and bottom-line expectations for nine consecutive quarters.
Image Source: Zacks Investment Research
Amazon & Apple’s Guidance
Amazon expects Q2 sales at $159-$164 billion with the current Zacks Consensus at $161.62 billion or 9% growth (Current Qtr below). Still, Amazon stated the external environment remains complex, with its Q2 operating income guidance of $13-$17.5 billion coming short of many analyst expectations of $17.8 billion.
Image Source: Zacks Investment Research
As for Apple, the company expects its Q3 sales to grow by low to mid-single digits, with the Zacks Consensus at $89.12 billion or 4% growth. Weighing on investor sentiment was that Apple expects $900 million in tariff-related costs on a 16% tax rate, although it projects its Q3 gross margins between 45.5%-46.5%.
Apple expects Q3 operating expenses between $15.3-$15.4 billion. It’s noteworthy that Apple does plan to source 19 billion chips from a dozen states this year, including tens of millions of advanced chips being made in Arizona, which should help to relieve tax-related pressures from a heavy reliance on international manufacturing in China, Taiwan, and India.
Image Source: Zacks Investment Research
What the Zacks Rank Suggests
While it may be tempting to buy the 14% and 20% year-to-date drop in Amazon and Apple’s stock, respectively, the Zacks Rank suggests there could still be better buying opportunities ahead. To that point, their EPS growth is still enticing, but fiscal 2025 and FY26 earnings estimate revisions have continued to decline for Amazon and Apple over the last 30 days.
That said, at their current levels, Amazon and Apple stock should offer long-term value to shareholders as they currently land a Zacks Rank #3 (Hold). However, a further decline in EPS estimates could lead to a sell rating, while a significant uptick could lead to a buy rating, but may not be plausible at the moment, given their somewhat underwhelming guidance.
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Buy, Sell, or Hold These Mag 7 Stocks After Earnings: AAPL, AMZN
Markets haven’t kept the momentum investors were hoping for after receiving much-anticipated quarterly results from Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) last Thursday.
While both were able to exceed top and bottom-line expectations, their guidance was somewhat underwhelming compared to the more reassuring outlook given by other Mag-7 tech giants like Meta Platforms (META - Free Report) and Microsoft (MSFT - Free Report) .
Amazon’s Q1 Review
Following previous news reports that Amazon had planned to highlight how higher tariffs are raising prices on its platform, the e-commerce giant stated it’s working to keep prices low amid an uncertain moment for consumers. Amazon’s Q1 sales rose 10% year over year to $155.66 billion and eclipsed estimates of $154.56 billion. Notably, Amazon’s cloud computing division, AWS, contributed to 19% of its Q1 sales and increased 17% YoY to $29.3 billion.
On the bottom line, Q1 EPS of $1.59 comfortably exceeded expectations of $1.35 by 17% and spiked 40% from $1.13 per share a year ago. Amazon has exceeded sales estimates in three of its last four quarterly reports and has beaten earnings expectations for 10 consecutive quarters.
Image Source: Zacks Investment Research
Apple’s Q2 Review
Reporting results for its fiscal second quarter, Apple’s Q2 sales were up 5% to $95.35 billion and topped estimates of $94.26 billion. Apple also highlighted that its services segment achieved an all-time revenue record of $26.7 billion, which increased 12% from the comparative quarter and was driven by strong performance across Apple Music, Apple TV+, and iCloud, among other subscription-based services.
Apple’s Q2 EPS of $1.65 was up 8% from $1.53 in the prior period and beat estimates of $1.61 per share by 2%. Furthermore, Apple has exceeded its top and bottom-line expectations for nine consecutive quarters.
Image Source: Zacks Investment Research
Amazon & Apple’s Guidance
Amazon expects Q2 sales at $159-$164 billion with the current Zacks Consensus at $161.62 billion or 9% growth (Current Qtr below). Still, Amazon stated the external environment remains complex, with its Q2 operating income guidance of $13-$17.5 billion coming short of many analyst expectations of $17.8 billion.
Image Source: Zacks Investment Research
As for Apple, the company expects its Q3 sales to grow by low to mid-single digits, with the Zacks Consensus at $89.12 billion or 4% growth. Weighing on investor sentiment was that Apple expects $900 million in tariff-related costs on a 16% tax rate, although it projects its Q3 gross margins between 45.5%-46.5%.
Apple expects Q3 operating expenses between $15.3-$15.4 billion. It’s noteworthy that Apple does plan to source 19 billion chips from a dozen states this year, including tens of millions of advanced chips being made in Arizona, which should help to relieve tax-related pressures from a heavy reliance on international manufacturing in China, Taiwan, and India.
Image Source: Zacks Investment Research
What the Zacks Rank Suggests
While it may be tempting to buy the 14% and 20% year-to-date drop in Amazon and Apple’s stock, respectively, the Zacks Rank suggests there could still be better buying opportunities ahead. To that point, their EPS growth is still enticing, but fiscal 2025 and FY26 earnings estimate revisions have continued to decline for Amazon and Apple over the last 30 days.
That said, at their current levels, Amazon and Apple stock should offer long-term value to shareholders as they currently land a Zacks Rank #3 (Hold). However, a further decline in EPS estimates could lead to a sell rating, while a significant uptick could lead to a buy rating, but may not be plausible at the moment, given their somewhat underwhelming guidance.