Amazon well-positioned in 'battle of the AI titans': Analyst

Amazon's (AMZN) market cap ascended to a $2 trillion valuation last week, while other tech giants Apple (AAPL), Nvidia (NVDA), and Microsoft (MSFT) teeter back and forth between holding the title of most valuable company.

Maxim Group managing director and senior consumer internet analyst Tom Forte is favoring Amazon in the next chapter of the AI race and broader Big Tech growth.

"I think there's an opportunity that their [Amazon] health care initiatives can help them hit the $3 trillion mark. More likely it'll be... advertising, e-commerce, cloud computing growth," Forte tells Market Domination. "I think they're very early stage in their efforts. But I do think there's a potential, given that it's a huge total addressable market [TAM] and maybe one that's potentially ripe for disruption..."

Forte also comments on Apple's own AI initiatives and whether Amazon investors should view regulatory crackdowns as "just noise."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Luke Carberry Mogan.

Video transcript

Well A I related companies notching market cap wins in the first half of the year.

Amazon the latest to reach a milestone hitting $2 trillion in market cap for the first time.

This all while Apple Microsoft NVIDIA battling it out for the title of the most valuable company here with more on what may be in store next for these mega cap names we want to bring in um forte Maxim Group's managing director and senior consumer internet analyst.

It's great to talk to you here.

So here we are set it set up for the second half of the year.

We certainly have seen this massive run up once again.

I mean, the story is very similar going back to 2023.

It's all about a handful of tech names.

Who do you think then Tom is best positioned at this point here for the remainder of the year?

Yeah, so I like Amazon.

So at some point when you think about artificial intelligence, uh it's been dominated today by chips, but at some point, the chips or pictures, picks and shovels are gonna have to result in actual gold.

And I think for Amazon they're well positioned to explore A I, not just at the cloud computing level with what they're doing with Aws, but what they're doing at the fulfillment center level to the extent that they can increase their automation and reduce their cost to serve.

So I think Amazon is well positioned in the battle of the A I Titans Tom.

When you think about, you know, a Amazon, you think about these key drivers, right?

You know, it's ecommerce, it's cloud, uh it's advertising also the the moves they're making in health care.

Tom, I'm interested to get your take there.

How excited do you think investors should be about that opportunity?

So when I think about Amazon hitting two trillion market cap, uh I think there's an opportunity that their health care initiatives can help them hit the three trillion mark.

Uh More likely it'll be as you pointed out advertising e-commerce, cloud computing growth, I think they're very early stage in their efforts.

Uh But I do think there's a potential given that it's a huge total adjustable market and maybe one that's potentially ripe for disruption, but it's something that I guess I'm taking a wait and see attitude to see how their health care efforts ultimately affect their top and bottom line and market cap.

Tom Amazon able to reach this milestone at a time here, obviously, when they're under uh under a tremendous amount of scrutiny from antitrust perspective, I'm curious, not only for Amazon but really what we're seeing from a number of those larger cap tech names.

Should investors be viewing any sort of regulatory crackdown or any sort of regulatory uh criticism here as just noise?

I I don't, I think investors are viewing it as noise but I don't think they should view it as noise.

Uh If I do a compare contrast though on companies that are being sued for antitrust, I think Amazon is better positioned than Apple to the extent that if Amazon were separated into three different companies, a first party retail company, a third party retail company and a cloud computing company, you can make argument that those three individual stocks are worth more than the collective whole today.

I don't think for Apple, the same can be held true.

Meaning if the company is charging too much of a fee on the App store and has to lower its fee, I think that would be, you know, wildly negative for the stock.

You know, Tom stick with Apple.

I mean, it's had, you know, I just looking nice run here, Tom recently.

I mean, um you're still neutral.

What, what do you need to see Tom to get off the sidelines?

What do you need to see to, to move to a buy on Apple?

So if you look at Apple, it has had a really nice run.

First.

They announced $100 billion buy back, then they announced Apple Intelligence and all their strategies surrounding A I the stock that is trading at north of a 30 times forward pe multiple.

If they do as well with an A IL uh upgrade cycle for iphones, we're looking at 9 10% EPS growth next year.

There's still a pretty high peg ratio of C three.

So I'd be more interested in the stock where the valuation uh more to my liking either because the earnings growth is better than I expect or the near term multiple is lower than it is today.

Tom, what do you think that demand is going to look like?

Obviously, we've been reacting to the news that we had gotten out a few weeks ago when it comes to their A I initiatives.

Is that going to be enough?

Do you think to really spark some of that demand that the street's been trying to figure out what more specifically that's going to look like?

So I have become more optimistic in an A il um recycle for Apple.

Uh The challenge though we did some analysis when we compared it against five G. I don't think there's nearly as much pent up demand for an A I enabled smartphone as there was for a five G one.

In addition, you're looking at Europe and China with regulatory challenges for Apple.

Europe's about 20% of Apple sales.

China is about 10%.

So they're not going to be able to roll out Apple Intelligence in September in those markets as of today.

So I think it's an upgrade cycle but not as good as the five G upgrade cycle.

All right, Tom Forte.

Always great to have you.

Thanks so much for making the time to join us here today.

Thank you.