Alphabet and Amazon: JP Morgan choosing the best Internet stocks to buy prior to earnings

We have a full month of 2025 behind us, and now we are starting to get earnings data from the last quarter of the calendar year 2024. So far, this data is not surprising – the results have not been too far, up or down or down from expectations. But this week we get some big names reporting as Alphabet (Nasdaq: Googl) and Amazon (Nasdaq: Amzn) releases their quarterly results.

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These two mega-cap Internet shares dominate their respective nicher-e trading and online search-and has geared this dominance to bring long-term success. Both companies also prove skilled at adapting to the changing tech environment, making progress in cloud computing and AI. They don’t just jump on these bandwagons – they set leadership positions.

By covering both Alphabet and Amazon to JPMorgan, 5-star analyst Doug Anmuth chooses them as the best Internet share to buy, prior to the earnings call. Anmuth, who is judged by tiers in the top 1% of the street’s analysts, says of the Internet population in general.

“We generally remain positive in the Internet sector on the way into 4Q24 earnings as we expect strong underlying results, but we recognize prospects will be more mixed due to harder 1Q -comp, eg headwinds and growth that generally decelerate from last year’s high levels, ”Anmuth noted.

We have used the TiPranks platform to beat the wider Wall Street view of both of these ‘magnificent 7’ stalwarts; Let’s give them a closer look using the latest data and Anmuth’s comments.

Alphabet

We start with the Alphabet, the parent company on the Internet’s two leading search platforms, Google and YouTube. Google is of course the leading online search engine; YouTube, although best known as a video hosting and posting platform, is also a leading video content search engine. Through these two subsidiaries, the Alphabet Market is leading online search – and has built up a huge warehouse with data on Internet users, search habits and site traffic preferences. This type of data is a valuable raw material in the digital world with applications in online advertising and in AI.

Not surprisingly, Alphabet earns most of its money from online advertising revenue. In 3Q24, the company’s Google Government Generated over $ 65.8 billion in revenue, or 75% of the quarter’s total top line of $ 88.2 billion.

In its previous cover, the alphabet was an early adopter of AI technology. Google started using AI for AutoCorrect more than 20 years ago and for online translations in 2006. Both Google and YouTube use AI to improve search results, offer users suggestions and to enable accurate targeting of online ads. Recently, Alphabet has used AI to operate large language models (LLMs) that allow online translations to work with greater accuracy – an important point for a company that runs business globally in local languages.

But the biggest AI news from Alphabet has recently been the launch of the company’s customer-facing generative AI platform, Gemini. The platform is designed to deal with such problems as language translations and computer coding, and the alphabet is working to integrate Gemini into all its online products – but it puts a special emphasis on working Gemini in the Android operating system for smartphones. The goal is to put a viable AI assistant literally in the palm of the customer’s hand -where it can act as an immediate upgrade to smartphone and tablet applications.

We have already noticed Alphabet’s 3Q24 results. The company is ready to release its 4Q24 and all year 2024 results today after the end of the market. Revenue is predicted near $ 96 billion with an EPS of $ 2.13. We should note here that Alphabet began paying dividends last year, and this last December made its third joint share dividend. The 20-cent yield annually to 80 cents per Stock and provides a modest forward yield-only 0.4%. The key here is that the alphabet has more than $ 93 billion in cash and can easily maintain and increase yields in the future.

Long history short, the prospects of Alphab’s continued growth and for its continued ability to return investors are strong – and this is where JPM’s Anmuth starts with his summary of the company.

“We believe that the Googl mood is improved, with investors who are positive about Google’s technological advances and Genai innovations, combined with continued optimism for further margin expansion and increased return on capital. The DOJ search distribution experiment remains an overhang, but we believe the street sees the potential for a relatively more favorable result under the incoming administration. Our 4Q control has been constructive on Search & YouTube ads – both of which should benefit from strong holiday shop – and Google Cloud, at an accelerating pace in innovation creating Google for a strong 2025 … in our recent study of almost 100 investors who are crooked against only prolonged ranked Google as the best functioning Internet MAG 7 Stock & Best Best priesting advertising stock for 2025, ”Opined Anmuth.

Anmuth quantifies his attitude towards Googl with an overweight (ie purchase) rating and a price target of $ 232, which suggests he is seeing a ~ 13% upward potential for the stock this year.

Generally, there are 29 recent analyst reviews of Googl shares, and the 21 to 8 split favors the buyer over g. The share trades for $ 205.80 and has an average price target of $ 219, which involves a potential gain of ~ 6% of one year horizon. (See Googl stock forecast?

Amazon

Next, the list is Amazon, the world’s largest online dealer – and a leader in AI services and cloud computing. The company has utilized its dominance of e-commerce to become a multi-image dollar Behemoth on Wall Street-Amazon’s $ 2.5 trillion market cap more.

In the four quarters that ended with 3Q24, the last reported, Amazon, generated a total of $ 620 billion in revenue, primarily through its core business in online retail. A look at its numbers in the third quarter tells the story. Total online trading revenues in 3Q24 came to $ 131.4 billion; Of this, $ 95.5 billion came from North America, and $ 35.9 billion came from international sales. However, the company’s fastest growing segment was AWS, its Cloud Computing Service. AWS revenue in the 3rd quarter came to $ 27.5 billion, which is an increase of 19% year-over-year, and surpassed growth in Q3’s total revenue, which at $ 158.9 billion increased 11% year-over- year.

Amazon hasn’t been sitting on these laurels. The company’s success has enabled it.

Amazon has integrated AI technologies into its retail operations and improved the customer boundary surfaces of the site as well as targeted advertising. Among the additions is an AI-driven shopping assistant to improve the site’s search features, allowing customers to find exactly the product and price points they are looking for. In addition, Amazon’s AWS Cloud platform now includes a number of AI tools, and Amazon has worked on its own AI platform, Bedrock, to build generative AI models. The Bedrock project continues in partnership with AI Development Company Anthropic. Amazon is even working on developing a line with AI-Cable Semi-Manager Chips, under the training name, custom built for training and expanding AI and natural language treatment systems.

What all this means is that Amazon is more than just an online dealer. The company has recognized the leading trends in consumer technology – and adapts these technologies to bring in new customers. While online retail is currently Amazon’s bread and butter, the company has mapped a long -term course based on cloud computing and AI.

This makes Amazon extremely profitable. Earnings per Stock in 3Q24 came to $ 1.43 and beat the forecast by 29 cents per year. Stock. Looking ahead, the company has planned its release of 4Q and full-year 2024 results for February 6 after the markets close. The street’s analysts expect to see Q4 EPS on or near $ 1.49 and total quarterly revenue north of $ 187 billion.

A solid position and strong prospects for continued growth are powerful assets for any investment and pose the core of Doug Anmuth’s acquisition of Amazon. Anmuth, who writes up the JPM view on this market leader, says: “We believe that Amzn is well-known and a top choice for many… secular growth, new workloads and growing Genai contributions drives AW’s growth acceleration and 20%+ growth in ’25, & we got away from re: Invent Boying, AWS tightens the Genai Gorge through its full stack approach. We project 6.6% N. America OI margin expansion in 2025 (+64bps Å/ Å) powered by incoming regionalization and storage location, SD plant structure and automation/ robotics. We model FCF at $ 64B in ’25 (+37% Å/Å), which reflects strong growth, even against our expected $ 97B ’25 CAPEX (+29% Å/Å) and we believe that capital returns are possible in 2025. We believe that investors are looking for 4Q net sales of $ 188B- $ 189b, AWS growth of 20%+, & Oi at $ 19B- $ 20b+. We believe that valuation is attractive w/shares that trade with ~ 26.5x 2026E FCF… ”

Anmuth continues to rate Amzn shares as overweight (ie purchase) with a price target of $ 280 pointing to one year’s win for the stock of ~ 16%. (Click here to see Anmuths Track Record)

In general, Amazon has picked up no less than 41 analyst reviews – and these include a skewed division of 40 buyer into 1 team for a strong purchase consensus assessment. The shares are currently price for $ 241.97, and their average price target of $ 261.21 entails a 12-month upward potential of ~ 8%. (See Amzn Stock Prognosis?

To find great ideas for shares that deal with attractive valuations, visit TIRPRANKS ‘best shares to buy, a tool that unites all tipranks’ equity insights.

Disclaimer: The statements expressed in this article are solely as the highlighted analyst. The content is intended only to be used for information purposes. It is very important to perform your own analysis before making any investment.